Kodak India

TO THE MEMBERS 
  
 The Directors herewith present the 30th Annual Report of your Company
 together with the audited Balance Sheet as at 31st March, 2004 and the
 Profit and Loss Account for the 15 month period ended on that date.
  
 FINANCIAL RESULTS 15 month 
 
                                               Year ended   Period ended 
                                              31st December, 31st March, 
                                                  2004          2002
                                              Rs. in Lakhs  Rs. in Lakhs
  
 Profit before depreciation/amortisation 
 and taxation                                      8072.87       5648.25
 
 Less: Depreciation                                1474.34       1223.01
 
 Profit before taxation                            6598.53       4425.24
 
 Less: Provision for Taxation 
 (Including Deferred Tax)                          2391.00       1822.30
 
 Profit After Taxation                             4207.53       2602.94
 
 Opening Balance in Profit and Loss Account        2355.31        769.74
 
 Profit available for appropriation                6562.84       3372.68
  
 Appropriation 
  
 Dividend                                           838.89        671.10
 
 Tax Thereon                                        107.48         85.98
 
 Transfer to General Reserve                        420.75        260.29
 
 Profit and Loss Account Balance                   5195.72       2355.31 
 
                                                   6562.84       3372.68 
  
 CHANGE IN ACCOUNTING YEAR: 
  
 In order to fall in line with the financial year for the purpose of
 taxation and also for administrative convenience, your Company has
 decided to change its financial year from 31st December to 31st March
 i.e. on April/March basis. Accordingly, the Accounts for the year under
 review have been compiled for the 15 month period ended 31st March,
 2004. The figures in respect of the previous year, however, relate to
 12 months ended 31st December, 2002 and hence are not strictly
 comparable.
  
 OPERATIONS: 
  
 The total sales for the 15 month period ended 31st March, 2004 were
 Rs.1162.97 Crores as against Rs. 820.88 crores for the year ended 31st
 December, 2002, registering an increase of about 13.34%, on an
 annualized basis. Exports for the 15 month period ended 31st March,
 2004 were Rs.42.25 crores as against Rs. 24.78 crores in the preceding
 year. The profit before taxation was Rs.65.98 crores for the 15 month
 period ended 31st March, 2004 as compared to Rs.44.25 crores for the
 year ended 31st December, 2002. The profit after tax was Rs.42.07
 crores as compared to Rs.26.02 crores for the previous year.
  
 The operating profit of the Company for the 15 month period ended 31st
 March 2004 has improved on account of strong control on the operating
 costs, favourable exchange rate of the Rupee vis-a-vis US Dollar and
 reduction in interest cost.
  
 The Company is totally debt free except for unclaimed public deposits
 of Rs. 1.11 lakhs.
  
 DIVIDEND: 
  
 The Directors recommend payment of Dividend of Rs.7.50 per share for
 the 15 month period ended 31st March, 2004 as compared to Rs. 6.00 per
 share (including Rs. 1.50 per share as Special Dividend) for the
 preceding year ended 31st December, 2002. The Dividend, if approved by
 the Members at the 30th Annual General Meeting, will absorb Rs.9.46
 crores, including tax on dividend.
  
 FIXED DEPOSITS: 
  
 As at 31st March, 2004, there are unclaimed deposits amounting to
 Rs.1.11 lakhs out of which deposits aggregating to Rs. 0.12 lakhs have
 been paid upto 31st May, 2004.
  
 OPEN OFFER BY KODAK LIMITED : 
  
 Kodak Limited, U.K. (Acquirer) and Eastman Kodak Company, U.S.A.
 (Person Acting in Concert) made an Open Offer to the shareholders of
 the Company for purchase of upto 28,23,385 issued equity shares of the
 Company, representing 25.24% of the outstanding issued equity share
 capital of the Company at a price of Rs. 350/- per share.
  
 The equity shares of the Company have been delisted on the Stock
 Exchanges. At the time of delisting of equity shares, The Stock
 Exchange, Mumbai had stipulated that the Acquirers should provide an
 Exit Option to the remaining shareholders for a period of one year i.e.
 10th June, 2003 to 9th June, 2004. The said Exit Option has ended on
 9th June, 2004, and the Acquirer's shareholding in the Company is now
 97.75% of the paid-up Share Capital of the Company.
  
 SCHEME OF ARRANGEMENT: 
  
 At the Board Meeting held on 15th June, 2004, the Board has considered
 the Scheme of Arrangement subject to approval of the Members of the
 Company and the High Court, Mumbai. The meeting of the shareholders
 will be convened as per the directions of the High Court, Mumbai.
  
 As per Section 77 read with Section 100 and Section 391 of the
 Companies Act, 1956 (the Act), the Company proposes to purchase its
 own shares, but pre-requisite of Section 77 is that unless there is a
 consequent cancellation and reduction of Equity Shares so proposed
 under Section 100 of the Act, no Company can purchase its own shares.
 Hence, the Board has considered recommending a Special Resolution for
 this purpose in the ensuing Annual General Meeting.
  
 AUDIT COMMITTEE 
  
 In Compliance with Section 292A of the Companies Act, 1956, composition
 of the Audit Committee of your Company is as under:
  
 Mr. H.K. Bilpodiwala - Chairman
 Mr. H. Dhanrajgir - Member
 Mr. J.N. Mehrotra - Member
 Mr. A.R. Sonawane - Secretary 
  
 DIRECTORS 
  
 Mr. Henri Petit resigned as a Director of the Company with effect from
 20th April, 2004. Your Directors wish to place on record their
 appreciation of the valuable services rendered by Mr. Henri Petit
 during his tenure as a Director of the Company. The casual vacancy has
 been filled by appointing Ms. Karen Smith-Pilkington as a Director,
 pursuant to the provisions of Section 262 of the Companies Act, 1956
 and Article 115 of the Articles of Association of the Company.
  
 Mr. John Tseng resigned from the Board of your Company with effect from
 20th April, 2004. Your Directors wish to place on record their
 appreciation of the services rendered by Mr. John Tseng during his
 tenure as a Director. The casual vacancy has been filled by appointing
 Mr. Peter Sanguinetti - Legal Director - Greater Asia Region, Eastman
 Kodak Company, as a Director, pursuant to the provisions of Section 262
 of the Companies Act, 1956 and Articles 115 of the Articles of
 Association of the Company. He will hold office upto the ensuing Annual
 General Meeting. Necessary resolution will be placed before the
 forthcoming Annual General Meeting for appointment of Mr. Peter F.
 Sanguinetti as a Director of the Company.
  
 The Board of Directors at its meeting held on 20th April, 2004
 appointed Mr. Rakesh Dhamija, Controller - Greater Asia Region &
 Finance Director - North Asia, India, ASEAN Countries, EKC as an
 additional Director of the Company subject to the approval of the
 Members in the General Meeting. Necessary resolution regarding his
 appointment has been incorporated in the Notice for the Annual General
 Meeting.
  
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. Humayun Dhanrajgir retires
 by rotation and being eligible, offers himself for reappointment.
  
 DIRECTORS' RESPONSIBILITY STATEMENT 
  
 To the best of their knowledge and belief and according to the
 information and explanations obtained by them, your Directors make the
 following statement in terms of Section 217(2AA) of the Companies Act,
 1956:
  
 1. That in the preparation of the accounts for the 15 month period
 ended 31st March, 2004, the applicable accounting standards have been
 followed and that there are no material departures.
  
 2. That significant accounting policies as mentioned in Note 1 Schedule
 R of the Accounts have been selected and applied consistently and
 judgement and estimates that are reasonable and prudent made so as to
 give a true and fair view of the state of affairs of the Company at the
 end of the 15 month period ended 31st March, 2004 and of the profit and
 cash flow of the Company for that period of 15 months.
  
 3. That 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.
  
 4. That the accounts for the 15 month period ended 31st March, 2004
 have been prepared. on a going concern basis.
  
 MOTION PICTURE FRONT-END LAB : 
  
 During the year under reference, the Board approved setting up of a
 Motion Picture front-end laboratory and post-production facility in
 Mumbai. This unit will cater to the requirements of the high quality
 conscious television commercial makers and the high-end feature film
 producers. This project will also help the Entertainment Imaging
 Division of the Company to maintain its market share in the highly
 successful colour negative business. The Laboratory is expected to
 commence production during the current year. This new facility will set
 the bench-mark for quality film processing in the country.
  
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS & OUTGO :
  
 The information required under Section 217(1)(e) of the Companies Act,
 1956, read with the Companies (Disclosure of Particulars in the Report
 of the Board of Directors) Rules, 1988, is annexed hereto and forms
 part of this Report.
  
 STAFF RELATIONS: 
  
 The Directors hereby place on record their appreciation for the support
 and contribution of all employees of the Company.
  
 AUDITORS: 
  
 M/s. Price Waterhouse, Chartered Accountants, retire as Auditors of the
 Company and are eligible for reappointment.
  
 PARTICULARS OF EMPLOYEES : 
  
 Information as per Section 217(2A) of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975, forms part
 of this Report. However, as per the provisions of Section 219(1)(b)(iv)
 of the Companies Act, 1956, the Report and Accounts are being sent to
 all shareholders of the Company excluding the Statement of Particulars
 of Employees under Section 217(2A) of the Act. Any shareholder
 interested in obtaining a copy of the statement may write to the
 Secretary or inspect the same on any working day at the Registered
 Office of the Company.
  
 ACKNOWLEDGEMENTS : 
  
 We thank our highly valued Customers, our Suppliers and the Government
 Authorities for their support. We also thank Eastman Kodak Company, USA
 and Kodak Limited, U.K., for their close involvement and support to the
 Company during the period under review.
  
                                   On behalf of the Board of Directors 
  
                                           H.K. BILPODIWALA 
                                               Chairman 
  
 Mumbai,
 15th June, 2004 
  
 ANNEXURE TO DIRECTORS' REPORT 
  
 Annexure - I 
  
 INFORMATION REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN
 THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.
  
 (A) Conservation of Energy : 
  
 (a) Energy conservation measures taken : 
  
 Energy conservation is an on-going process. The following are the steps
 taken by the Company in our Plants.
  
 (i) Power Capacitors are installed. 
  
 (ii) Preventing energy loss by providing Wall/Roof insulation and
 Vapour barrier treatment & installation of Auto power Factor Corrector
 Relay.
  
 (iii) Providing insulation for ducting and piping and installation of
 Heat Recovery Units in Airconditioning systems.
  
 (iv) Continuous upgrading of process technology to reduce Electrical
 Energy consumption.
  
 (v) Providing auto reset timers and visual and cycle indication in
 various equipments. Constant reviewing of various measures to reduce
 the energy consumption.
  
 (vi) Use of variable frequency drives. 
  
 (b) Additional investment and proposals, if any, for reduction of
 consumption of energy:
  
 Installation of Electrical/Electronic controllers for power factor and
 temperature for improving the efficiency.
  
 (c) Impact of (a) and (b): 
  
 In all the three plants power consumption has been reduced wherever
 possible, which has a direct impact on the cost of production. Diesel
 oil usage has been monitored efficiently. However, the increase in
 tariff rates of energy may nullify the cost saving in this behalf.
  
 (d) Total energy consumption and energy consumption per unit of
 production:-
  
 Not applicable. 
  
 (B) Technology Absorption 
  
 FORM - B 
  
 Research & Development (R & D) 
  
 1. Specific areas in which R&D carried out by the Company: 
  
 (a) Product development and process improvement. 
  
 (b) Development of import substitutes. 
  
 2. Benefits derived as a result of the above R&D. 
  
 (a) Higher production resulting in lower unit cost. 
  
 (b) Spares and components are developed indigenously to substitute
 imported components and spares.
  
 (c) Saving of valuable foreign exchange. 
  
 3. Future plan of action. 
  
 The Company intends to continue its efforts in advancement of
 technology and by maintaining quality control and developing various
 components indigenously as import substitutes, reduce the cost of
 production and improve the quality of its products.
  
 4. Expenditure on R & D 
  
 (Rs. in Lakhs) 
  
 (a) Capital - 
  
 (b) Recurring 9.93 
  
 (c) Total 9.93 
  
 (d) Total R&D expenditure as a percentage of total turnover - 
  
 Technology Absorption, Adaptation and Innovation: 
  
 1. Efforts, in brief, made towards technology absorption, adaptation
 and innovation:
  
 (a) The Company has been deputing its technical personnel for training
 in various disciplines, such as process planning, tool designing,
 programming, methods of manufacturing, quality assurance and
 maintenance, to the parent Company's plants in USA, Europe and the Far
 East.
  
 (b) The Company has been availing of the services of technicians from
 the parent Company for setting up and improvement in the production
 process.
  
 2. Benefits derived as a result of the above efforts:- 
  
 Product improvement, cost reduction, product development, import
 substitution, etc.
  
 The Company has been able to keep pace with the world by maintaining
 the high quality standard of its products. The above efforts have
 helped the Company to acquire a reputation for technical excellence.
 This in turn has enabled the Company sustain its quality leadership.
  
 3. Imported Technology: 
  
 There is no specific technology imported but the Company receives
 relevant ongoing technical information from its parent Company and
 associates.
  
 (C) Foreign Exchange Earnings and Outgo : 
  
 The foreign exchange outgo/expenditure and foreign exchange earned by
 the Company during the year are detailed in Note Nos. 14,15,16 and 17
 to the Accounts.
  
 The Company's plants have been able to maintain world-wide high quality
 standards, which has resulted in exports of 35mm cameras, Medical &
 X-ray film and Photo Chemicals amounting to Rs. 42.25 Crores.
  
 Subject to global demand, the Company expects to increase its exports. 
  
                                   On behalf of the Board of Directors 
  
 Mumbai,                                    H.K. BILPODIWALA
 15th June, 2004                                Chairman