It is a pleasure to present this statement to the members along with
 the 47th Annual Report and Audited Accounts for the year ended 31st
 March 2004.
 
 2. The Indian economy performed well in 2003-04 inspiring a surge of
 optimism aptly captured by the Government of India in the slogan `India
 Shining'. According to an United Nations Report, the economies of South
 and East Asia, led by India and China, will grow at an average of about
 6.25 per cent in 2004, whereas the world economy would grow by only 3.5
 per cent. The real GDP growth forecast for India in the current year is
 in fact in excess of 8 per cent. The country's Foreign Exchange
 Reserves crossed 7 bn. in May 2004, inflation is under control and
 the Rupee has been steadily gaining against the Dollar. The macro
 economic outlook is therefore favourable and most of the major markets
 that we serve with our innovative specialty chemicals hold out buoyant
 growth prospects.
 
 Paints: The long-term forecast for the paint industry in India is
 excellent. In the automobile sector, the passenger car and the
 commercial vehicle segments have seen growth at 24% per annum and 32%
 per annum respectively. This has resulted in a sales growth in excess
 of 25% for automotive paints at the original equipment manufacturers'
 level. The continued high demand for housing in the past two years and
 a further softening of home loan interest rates has resulted in a
 growth of 30% in the housing sector and should provide a boost to the
 decorative paints segment. This has prompted the paint suppliers to
 enhance capacity with all the leading paint majors proposing to set up
 new plants.
 
 Textiles: India has all the necessary ingredients to emerge as the
 global textile outsourcing hub in the near future. Its strengths in
 textile and apparel production mainly include abundant and skilled
 workers for this labour intensive industry and sufficient raw material
 supplies, with the largest area under cotton cultivation in the world.
 India's garment exporters are gearing up for the much-awaited
 withdrawal of the global textile quota regime at the end of 2004.
 Indian companies expect to snap up the former quota share of many
 smaller economies and are building new capacity at home. The country is
 expected to clock over 10% growth in the export of textiles and
 garments in 2003-04, with revenues crossing .5 bn. - from  bn. in
 the previous year. The global textile trade is estimated to grow from
 0 bn. to 0 bn. by the year 2010, by which time the Indian •
 textile and apparel exports are expected to touch  bn.
 
 Given the technological obsolescence in the textile industry in India,
 it needs to invest significantly in building scale and upgrading its
 resources. The government has estimated that an investment of
 approximately Rs. 980 bn. would be required to upgrade the entire
 textile industry. In comparison, investments in the textile sector over
 the past few years have been just Rs. 40 bn. per year.
 
 Leather: The long-term prospects for the Indian leather industry which
 produces about 18 million square feet of leather and earns around 
 bn. in exports, looks reasonably good. It is expected that the output
 will double by 2010, increasing India's current share of 2.5% in the
 world leather trade to 4 per cent. With over 21% of world cattle and
 buffalo population and 11% of world sheep and goat population, India
 has a very strong raw material base. The Government has set an
 ambitious target to increase exports of leather and leather products to
  bn. in 2007 from .9 bn. at present.
 
 The central government had allocated Rs. 4 bn. in the Tenth Plan period
 for the modernisation of tanneries and product development against only
 Rs. 1.2 bn. in the Ninth Plan period. It is estimated that a Rs. 4 bn,
 investment by the government would attract investments worth Rs. 20 bn.
 from industry in the Tenth Plan period. These investments would partly
 be for design and product development.
 
 Pharmaceuticals: The Indian pharmaceuticals sector is a net exporter of
 drugs with an export of .5 bn. Assuming a growth rate of 8-9%,
 exports are projected to reach  bn.  by 2010. According to the
 Council of Scientific & Industrial Research, the five big challenges
 before the drugs and pharmaceuticals industry include:
 
 * the introduction of product patents from 2005,
 * the restructuring of the drugs and pharmaceuticals sector,
 * changes in the regulatory apparatus so that people get quality
   medicines,
 * research and innovation,
 * the convergence of traditional and modern medicine.
 
 Agrochemicals: The pesticide industry in India is the fourth largest in
 the world and second largest in the Asia-Pacific region after China.
 There are around 55 basic producers and 300 pesticide formulators.
 Besides, there are a number of small scale players. This Rs. 30 bn.
 industry is dominated by multinational corporations (MNCs) in India who
 account for 65% market share.
 
 With good monsoons in 2003, there is an improvement in domestic
 off-take. The industry projects the pesticides consumption to grow
 annually by around 3-4 per cent.
 
 Pesticide exports are expected to touch Rs. 25 bn. as compared to the
 previous year's Rs. 18 bn. India has a very strong presence in the
 generic pesticide market which constitutes 60% of the global pesticides
 market valued at approximately  bn. More than 200 generic products
 are manufactured in India. The industry is preparing to meet the
 challenges that will emerge when a number of products will come off
 patent in India, by 2005.
 
 Plastics: The plastics market in India is growing at a good pace as the
 per capita consumption of plastic is currently about 4 kgs. compared to
 20 kgs. in Europe and U.S. and 17 kgs. in China. Polymer demand which
 is currently around 5,000 KT is expected to reach 15,000 KT by 2011.
 The face of the plastics industry in India has completely changed. PVC
 once held pride of place as a versatile polymer but now other
 polyolefins such as High Density Polyethylene (HDPE), Polypropylene,
 (PP), Low Density Polyethylene (LDPE) and Linear Low Density
 Polyethylene (LLDPE) are poised for excellent growth. The usage of
 engineering polymers like Polyamide 6, ABS, PC, PET are taking center
 stage for critical applications like automotives and white goods.
 Although PVC is still considered a very versatile cost effective
 commodity polymer which will continue to do well, the real growth will
 come from the Polyolefins and Engineering polymers. India's total
 plastic export goods is expected to touch over ,104 million during
 2003-04.
 
 3. The most significant achievement during the year was the successful
 implementation of the restructuring project.  Faced with continuous
 erosion of earnings in a market that is becoming increasingly
 commoditised, the Company launched a challenging restructuring
 initiative involving the transfer of production of some items to its
 Roha factory. The resulting closure of a few production plants at its
 Thane site and the consequently reduced need for infrastructural
 support services for the remaining production plants rendered a large
 number of employees surplus. The accompanying Voluntary Retirement
 Scheme, the rationale for which was skillfully communicated to the
 employees in advance resulted in the separation of 540 employees. An
 achievement of this magnitude is without parallel in the Clariant
 group. That it was achieved without the sale of any business, with no
 disruption in production and supplies to the markets and was wholly
 self financed (through the sale of land rendered surplus) is
 commendable. With significantly lower overheads, the Company is now
 well placed to take advantage of growing demand in the markets that it
 serves.
 
 During the current year the Company is exploring further opportunities
 for cost reduction in tandem with other Clariant associate companies in
 India. Teams have been formed for all the key functions to identify
 areas of duplication and to examine the feasibility of providing common
 or shared services in these areas so as to eliminate duplication and
 bring down costs.
 
 4. During the year, the Company received an Award from the Dyestuffs
 Manufacturers Association of India for excellent performance by a large
 scale unit in respect of export of pigments. The Colour-Chem stall at
 the Asia Coat + Ink Show 2003 was also awarded the First Prize for the
 best stall display by a large scale manufacturer.
 
 5. In conclusion, I would like to record my special appreciation of the
 management's handling of the restructuring project. I also place on
 record the appreciation of the Board of the efforts of the employees in
 performing well during a very challenging year and take the opportunity
 to thank my colleagues on the Board for their valuable advice and
 guidance.
 
 Sulzbach, 25th May, 2004                                      Chairman