EID Parry (India)

The Directors have pleasure in presenting their Report together with
 the audited accounts for the financial year ended 31st March, 2008.
 
 The performance highlights of the Company for the year are summarised
 below:
 
 FINANCIAL RESULTS
                                                              Rs. Lakhs
                                              2007-2008       2006-2007
 
 Total Income                                    70044           70718
 Profit Before Interest and Depreciation          1898           20109
 Less : Interest                                  1345            (211)
 Depreciation                                     4403            3287
 Profit / (Loss) Before Tax                      (3850)          17033 
 Less : Provision for Tax 
 - Current (Net of MAT Credit)                      -             1619
 - Deferred                                      (2255)           2615
 - Fringe Benefit Tax                               63              57 
 Profit/ (Loss) After Tax                        (1658)          12742 
 Add : Surplus brought forward                   17964           15554 
 Balance in Profit and Loss Account
 of Amalgamating Company                            -            (1290) 
 Amount available for Appropriation              16306           27006 
 
 APPROPRIATIONS
 Transfer to General Reserve                        -             3000
 Dividend on Equity Capital : Interim paid          -             4016
 Proposed                                         446             1250
 Dividend Tax                                      76              776
 Surplus carried to Balance Sheet               15784            17964
 TOTAL                                          16306            27006
 
 PERFORMANCE
 
 The Company’s Total Income was Rs. 70044 lakhs (including other income
 of Rs. 4957 lakhs) for the year ended 31st March, 2008.
 
 Due to low domestic and international prices of sugar, rupee
 appreciation making exports unattractive and high inventory carrying
 cost, the Profit before Interest and Depreciation was lower by 91% at
 Rs. 1898 lakhs and the loss before tax was Rs. 3850 lakhs. The net loss
 after tax was Rs. 1658 lakhs compared to the profit after tax of Rs.
 12742 lakhs last year (which included Rs. 11812 lakhs representing
 income of a non recurring nature).
 
 SUGAR
 
 The year started with high sugar inventory and low sugar prices that
 continued to slide down till December ‘07.  The fall in prices was
 arrested on the basis of good exports, lowering of sugar production
 estimates and reduction in cane planting. While sugar started moving
 out of the country from July 2007, with International market being
 attractive together with Freight Assistance and DEPB for every tonne of
 Sugar export, major sugar producers started exporting than leaving
 surplus stock for the domestic market. This stabilised the domestic
 sugar price slightly during the last quarter of the year.  Given the
 strong fundamentals of the Industry, there is a need for a long term
 policy from both the State and Central Governments in terms of cane
 price, taxes thereon and export of Sugar and price and movement of
 Molasses and Ethanol. (Please refer to details provided in Management
 Discussion and Analysis report)
 
 The Division sold all the sugar produced during the year which resulted
 in the sales volume being higher by 44%.  Due to decline in sugar
 prices by 26%, the topline growth was restricted to 17% over the
 previous year.
 
 The 22 MW co-generation power plant commissioned at Pugalur in March
 2007, became fully operational during the year which resulted in 60%
 increase in export to grid and consequent topline growth. The ENA
 project at Nellikuppam Distillery is in progress and awaiting final
 clearance for operations from statutory authorities.
 
 The recently acquired sugar mill in Ariyur, reached its full capacity
 over the year. Improvements in plant and machinery carried out during
 off season in October / November 2007 helped in obtaining good
 efficiencies during fourth quarter.
 
 The long term de-risking strategy, of maximising the crushing
 capacities in existing units and converting these units into integrated
 sugar complexes to extract value from all parts of the cane stick, is
 well underway. These include setting up of a 20 MW co-generation plant
 at Pettavaittalai and increasing the overall crushing capacity.
 
 Proposed Green Field Distilleries
 
 The Company proposes to set up Green Field Distilleries at Pudukottai
 and Sivaganga entailing an overall investment of about Rs.165 crores.
 The construction work has commenced at Sivaganga unit. The proposed
 distillery at Sivaganga will obtain its molasses from Pugalur and
 Pettavaithalai sugar units. The environmental approvals have been
 obtained for Pudukottai Distillery and design and engineering work is
 in progress.
 
 Awards
 
 The Company has continued to focus on environment efficiency. The
 Nellikuppam Plant bagged State level Energy Conservation Award for our
 initiatives in plant automation, variable frequency drive, DC drives
 for equipments, boiler blow down heat recovery, un burnt fly ash re
 injection etc. Pudukottai Plant bagged the National award for
 ‘Excellent Water Efficient Unit’ for our water saving measures and
 techniques taken in last two years. Pudukottai also was one among the
 three for ‘Best Innovative Case Study’ award by CII.
 
 JOINT VENTURE WITH CARGILL ASIA PACIFIC HOLDINGS PTE LIMITED
 
 During the financial year ended 31st March 2008, your Company invested
 Rs. 4592 lakhs in the equity of the Joint Venture entity viz. Silkroad
 Sugar Private Ltd.
 
 This Company will be setting up a Sugar refinery in Food Processing
 Special Economic Zone of Parry Infrastructure Company Private Limited
 at Vakalapudi, Kakinada rural mandal, Kakinada.
 
 BIO PESTICIDES
 
 Bio Products
 
 The Bio Products division of the Company is the world leader in the
 plant extract based bio pesticides business.  The division’s
 azadirachtin based product range - NEEMAZAL® is registered in over 30
 countries across the globe. In the current year, the registrations
 obtained in Argentina, Brazil, Australia and Korea would augur well for
 the growth of this business. The division, besides broad basing its
 market presence is also in the process of introducing new bioproducts
 which would improve the product basket so as to emerge as a complete
 Organic solution provider.
 
 The division registered a turnover of Rs.2683 lakhs.  Export revenue
 registered a growth of 12% over the previous year with Europe
 contributing significantly through the new registrations obtained in
 Spain.  Participation in the GOI’s organic drive in the domestic market
 resulted in the revenue growth of 125% over the previous year.
 
 Nutraceuticals
 
 During the year, Organic Spirulina sales was higher at 104 MT as
 against the last year sales of 91 MT. However, the Rupee appreciation
 has affected the bottom line of the business. Production of Astaxanthin
 and Haematococeus Algae has been stabilised at the production facility
 at Oonaiyur.
 
 EID has taken a 51% stake in Phytoremedies Biolabs Private Ltd., Pune,
 involved in the extraction of the carotenoid Lycopene from tomato. This
 would expand EID’s product base and also the company’s image in the
 Nutraceuticals market as quality supplier of carotenoids products, as
 EID already has Natural Mixed Carotenoids, Astaxanthin and Lutein (all
 carotenoid products) in its product portfolio.
 
 The performance of the various divisions during the year 2007 – 08 is
 given in detail in the Management Discussion and Analysis Report
 forming a part of this report.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of Re. 0.50 (25%)
 per equity share of Rs.2 /- each for the financial year ended 31st
 March, 2008.
 
 CORPORATE DEVELOPMENTS
 
 JOINT VENTURE WITH ROCA SANITARIO, SA, SPAIN
 
 The Board of Directors have approved sale of 47% equity holding in
 Parryware Roca Private Ltd (50:50 Joint Venture company between E.I.D.-
 Parry (India) Ltd. and Roca Sanitario, SA, Spain) to M/s Roca Bathroom
 Investments S P, an affiliate of Roca Sanitario S.A, Spain, subject to
 the necessary approvals including that of Foreign Investment Promotion
 Board. The consideration for the sale of 47% holding will be Euro
 111,149,111 (Euro One hundred and eleven million one hundred and forty
 nine thousand and one hundred and eleven).
 
 BUY-BACK OF EQUITY SHARES OF THE COMPANY
 
 The Board of Directors of your Company, at their meeting held on 29th
 October, 2007, approved the proposal for buy-back of fully paid-up
 equity shares of the Company of the face value of Rs.2/- each up to a
 limit of 25% of the total paid-up share capital and free reserves of
 the Company and not exceeding 25% of the total paid-up equity capital
 in a financial year at a maximum price of Rs.160/- per equity share and
 the same was approved by the shareholders of the Company through postal
 ballot on 20th December, 2007 with requisite majority.
 
 Considering that the share price since the date of announcement of the
 results of the buy-back on 20th December, 2007 was quoting consistently
 higher than Rs.160/-, your Board after reviewing the then market
 condition, decided that the Company would not be able to implement the
 proposal for buy-back of fully paid-up equity shares of the Company at
 a price not exceeding Rs.160/- per equity share and therefore decided
 to withdraw the offer to buy-back the equity shares of the Company.
 
 The buy-back proposal as approved by the shareholders therefore stands
 withdrawn.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Under the ‘Employee Stock Option Scheme’ (‘the Scheme’) of the Company
 and based on the approval of the shareholders at the Annual General
 Meeting held on 26th July, 2007 your Company has granted 12,75,600
 Options. The Details of the Options granted up to 31st March, 2008, and
 other disclosures as required under Clause 12 of the Securities and
 Exchange Board of India (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure to
 this Report.
 
 The Company’s Auditors, Messrs. Deloitte Haskins & Sells, have
 certified that the Scheme has been implemented in accordance with the
 Securities and Exchange Board of India (Employee Stock Option Scheme
 and Employee Stock Purchase Scheme) Guidelines, 1999 and the
 resolutions passed by the Members in this regard.
 
 SUBSIDIARY COMPANIES Coromandel Fertilisers Limited
 
 Coromandel Fertilisers Limited (CFL) achieved a turnover of Rs.3800.11
 crore for the year ended 31st March, 2008 and the Profit After Tax was
 Rs.209.76 crore.
 
 The Company’s Board had recommended a dividend of 175% for the year.
 
 During the year, Godavari Fertilisers and Chemicals Limited, a
 Subsidiary of CFL, merged with CFL with effect from 1st April, 2007,
 consequent to the approval of the Scheme of Amalgamation by the Hon’ble
 High Court of Andhra Pradesh.
 
 Parry Chemicals Limited
 
 Parry Chemicals Limited, a 100% subsidiary of CFL, achieved a turnover
 of Rs. 100.68 lakhs for the year ended 31st March, 2008. The Profit
 After Tax was Rs. 33.66 lakhs.
 
 Parrys Sugar Limited
 
 The company, during the year ended 31st March 2008, earned an income of
 Rs.12.46 lakhs and after providing for expenses amounting to Rs. 0.57
 lakhs, the Profit before tax was Rs.11.89 lakhs. After providing for
 tax of Rs. 2.65 lakhs, the Profit After Ta x was Rs.9.24 lakhs.  With
 the brought forward amount of Rs. 9.66 lakhs, Rs. 18.90 lakhs is
 carried to Balance sheet.
 
 Parry Infrastructure Company Private Limited
 
 During the year ended 31st March, 2008, the company made a loss of Rs.
 0.66 lakhs. This Company had received formal approval from Government
 of India for development, operation and maintenance of the sector
 specific Special Economic Zone under Special Economic Zones Act, 2005
 for Food Processing at Vakalapudi village, Kakinada Rural Mandal,
 Andhra Pradesh.
 
 Parry America Inc.
 
 Parry America Inc, the 100% subsidiary based in USA, reported an income
 of US$ 3311 thousands for the year ended 31st March, 2008. The Profit
 After Tax was US$ 65 thousands . Including the carried forward profit
 of US$ 21 thousands for the year, the profit carried forward for the
 year was US$ 86 thousands.
 
 The main business of this company is to sell NEEMAZAL® technical in US
 markets and trading of technical and formulations in Western countries.
 
 Parrys Investments Limited
 
 During the year ended 31st March, 2008, the company earned an income of
 Rs.2.20 lakhs and after providing for expenses amounting to Rs.0.37
 lakhs the Profit before tax was Rs.1.83 lakhs. After providing for tax
 of Rs.0.55 lakhs, the Profit After Tax was Rs.1.28 lakhs. There were no
 major activities relating to the Company during the year.
 
 Coromandel Bathware Limited
 
 During the year ended 31st March, 2008, the company recorded a Profit
 of Rs. 0.16 lakhs against a loss of Rs. 0.10 lakhs in the previous
 year. After adjusting this amount, the balance loss of Rs. 193.20 lakhs
 is carried to the balance sheet.
 
 Phytoremedies Biolabs Private Limited
 
 Phytoremedies Biolabs Private Ltd. became a subsidiary of the Company
 with effect from 11th February 2008, consequent to the acquisition of
 51% stake in the said company. During the year ended 31st March, 2008,
 the company made a loss of Rs. 137.93 lakhs.
 
 SUBSIDIARY ACCOUNTS
 
 In terms of the approval granted by the Central Government u/s 212 (8)
 of the Companies Act, 1956, copies of the Balance Sheet, Profit & Loss
 Account, Reports of the Board and the Auditors of all the Subsidiary
 Companies have not been attached to the Balance Sheet of the Company as
 at 31st March, 2008. However, as directed by the Central Government,
 the financial data of the subsidiaries have been separately furnished
 forming part of the Annual Report. These documents will also be
 available for inspection at the Registered Office of the Company and
 the concerned subsidiary companies, during working hours up to the date
 of the Annual General Meeting. However, the related detailed
 information of the Annual Accounts of the Subsidiary Companies will be
 made available to the Holding and Subsidiary Companies’ investors
 seeking such information at any point of time.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 The Consolidated Financial Statements have been prepared by the Company
 in accordance with the applicable Accounting Standards (AS-21, AS-23
 and AS-27) issued by the Institute of Chartered Accountants of India
 and the same together with Auditors’ Report thereon form part of the
 Annual Report.
 
 DIRECTORS
 
 Mr. M.M. Venkatachalam, Director resigned from the Board with effect
 from 29th October, 2007.
 
 The Board places on record its grateful appreciation of the valuable
 services rendered and contributions made by Mr. M.M. Venkatachalam as
 Director during his tenure.
 
 Mr. K. Raghunandan, was appointed as an additional director and also
 designated as Deputy Managing Director with effect from 1st February,
 2008.
 
 Mr. S.B. Mathur, Director and Mr. R.A. Savoor, Director retire by
 rotation in terms of Articles 102 and 103 of the
 
 Articles of Association of the Company and being eligible, offer
 themselves for re-appointment. A brief resume, expertise and details of
 other directorships of these Directors are attached along with the
 Notice of the ensuing Annual General Meeting.
 
 The term of office of Mr.P.Rama Babu, Managing Director is due to
 expire on 30th April, 2008. Mr.P.Rama Babu was a key member of the
 Senior Management Team that brought about the transformation of EID
 Parry through the 80’s and 90’s. He held several positions in the
 Personnel division of EID Parry. In 1992, he moved to manage Business
 operations as Head of the Sugar and related businesses and joined the
 EID Board as an Executive Director in February 2000 and promoted as
 Managing Director with effect from 19th January, 2004.
 
 In all the major activities of the Company, he was actively involved
 which ultimately resulted in the growth, profitability and market
 capitalisation of EID Parry.
 
 The Board of Directors place on record their grateful appreciation of
 the very valuable contributions made by him and wish him all the very
 best in future.
 
 Consequent to retirement of Mr.P.Rama Babu, Mr.K.Raghunandan will take
 over as Managing Director of the Company with effect from 1st May,
 2008.
 
 APPROVAL OF THE CENTRAL GOVERNMENT FOR PAYMENT OF REMUNERATION TO
 MANAGERIAL PERSONNEL
 
 The Shareholders have approved by way of Special Resolutions through
 postal ballot on 7th March, 2008, the following:
 
 i) Payment of salary, allowances and incentive, provision of
 perquisites and other benefits to Mr.P.Rama Babu, Managing Director for
 the period from 1st April, 2007 to 30th April, 2008 in the absence of
 adequate profits for the respective financial years;
 
 ii) Appointment of Mr.K.Raghunandan as Deputy Managing Director for a
 period of 3 years from 1st February, 2008 to 31st January, 2011 and for
 the payment of salary, allowances and incentive, provision of
 perquisites and other benefits in the absence of adequate profits for
 the respective financial years.
 
 The Company had made separate applications under Section 269 of the
 Companies Act, 1956 to the Central Government for the above for which
 requisite approvals from the Government have been received.
 
 CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreements with the Stock
 Exchanges, a Management Discussion and Analysis Report, Corporate
 Governance Report and Auditors’ Certificate regarding compliance of
 conditions of Corporate Governance are made a part of the Annual
 Report.
 
 Mr.P.Rama Babu, Managing Director and Mr. P. Gopalakrishnan, Vice
 President (Finance), have given a certificate to the Board as
 contemplated in Clause 49 of the Listing Agreement.
 
 TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
 
 In terms of Section 205C of the Companies Act, 1956, an amount of Rs.
 9.30 lakhs being unclaimed dividend, interest on fixed deposit and
 unclaimed deposits etc.  was transferred during the year to the
 Investor Education and Protection Fund established by the Central
 Government.
 
 DEPOSITS
 
 11 deposits totalling to Rs. 0.96 lakhs due for repayment on or before
 31st March, 2008 were not claimed by the Depositors on that date.
 Efforts are being made to contact all such deposit holders to
 facilitate the refund to them. The Company has discontinued acceptance
 of deposits since July 2003.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 confirm that, to the best of their knowledge and belief :
 
 - in the preparation of the Profit & Loss Account for the financial
 year ended 31st March, 2008 and the Balance Sheet as at that date
 (“financial statements”), applicable Accounting Standards have been
 followed;
 
 - appropriate accounting policies have been selected and applied
 consistently and such judgements and estimates that are reasonable and
 prudent have been made so as to give a true and fair view of the state
 of affairs of the Company as at the end of the financial year and of
 the Loss of the Company for that period;
 
 - proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities. To ensure
 this, the Company has established internal control systems, consistent
 with its size and nature of operations. In weighing the assurance
 provided by any such system of
 
 -internal controls its inherent limitations should be recognised. These
 systems are reviewed and updated on an ongoing basis. Periodic internal
 audits are conducted to provide reasonable assurance of compliance with
 these systems. The Audit Committee meets at regular intervals to review
 the internal audit function;
 
 - the financial statements have been prepared on a going concern basis.
 
 AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, the
 Company’s Auditors, retire at the conclusion of the forthcoming Annual
 General Meeting and are eligible for re-appointment.
 
 The Board, on the recommendation of the Audit Committee, has proposed
 that M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, be
 re-appointed as the Statutory Auditors of the Company and to hold
 office till the conclusion of the next Annual General Meeting of the
 Company. M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai
 have forwarded their certificate to the Company, stating that their re-
 appointment, if made, will be within the limit specified in that behalf
 in Sub-section (1B) of Section 224 of the Companies Act, 1956.
 
 COST AUDITOR
 
 The Company received the approval of the Central Government for
 appointment of Mr.D.Narayanan as Cost Auditor to conduct the cost
 audits for the financial year 2007-08.
 
 PARTICULARS OF EMPLOYEES
 
 Under the provisions of Section 217 (2A) of the Companies Act, 1956
 read with Companies (Particulars of Employees) Rules, 1975 as amended,
 the names and other particulars of employees are set out in the
 Annexure to the Directors’ Report.
 
 ACKNOWLEDGEMENT
 
 The Directors thank the customers, suppliers, farmers, financial
 institutions, banks and shareholders for their continued support and
 also recognise the contribution made by the employees to the Company’s
 progress during the year under review.
 
                                           On behalf of the Board
 
 Chennai                                      A. VELLAYAN
 April 24, 2008                               Chairman