The Directors present their 41st Annual Report together with the
 audited statement of accounts of the Company for the financial year
 ended 31 March 2012.
 
 OPERATING RESULTS
 
                                                         (Rs. in Crore) 
 
                                                 2011-12       2010-11 
 
 Income from Operations                          3308.91       1743.39
 
 Other income                                      13.79         14.46
 
 Total income                                    3322.70       1757.85
 
 Profit before interest, depreciation             161.06        197.91 
 and tax
 
 Finance Cost                                      80.24         26.98
 
 Depreciation                                      61.21         88.95
 
 Profit before tax                                 19.61         81.98
 
 Provision for tax                                 25.92             -
 
 Profit/(loss) after tax                           (6.31)        81.98
 
 FINANCE
 
 The Company recorded a revenue of Rs.3308.91 Crore and profit before
 tax of Rs.19.61 Crore as against previous year revenue of Rs.1743.39
 Crore and profit before tax of Rs.81.98 Crore respectively. The
 Company''s profit from ordinary activities before finance cost and
 exceptional items is Rs.71.59 Crore as against Rs.3.11 Crore in the
 previous year. The improvement in the profit is mainly due to Urea
 Plant operating at its full capacity coupled with energy efficiency
 measures undertaken by the Company. The Company incurred a loss of
 Rs.6.31 Crore in comparison to Profit after tax of Rs.81.98 Crore in
 the previous year. The loss is mainly due to provision for exchange
 currency fluctuation of Rs.61.75 Crore, Interest of Rs.34.46 Crore on
 delayed payment to secured lenders (included in the Finance Cost) and
 provision for MAT pertaining to earlier periods amounting Rs.25.92
 Crore. The above results include both continuing and discontinuing
 operations.
 
 The Company fi led a Scheme of Compromise and Arrangement with certain
 creditors u/s 391 of the Companies Act, 1956 during December 2011
 before the Hon''ble High Court, Madras and pursuant to the directions of
 the Hon''ble High Court, the meeting of the creditors of the Company was
 held on 24 February 2012 at Chennai. The Scheme was approved by the
 requisite majority of creditors and thereafter the Company has fi led a
 Petition before the Hon''ble High Court, Madras for the sanction of the
 Scheme and the Order is awaited.
 
 OPERATIONS: 
 
 Fertilizer Division
 
 The Nitrogenous Plants which recommenced its operations during October
 2010 achieved a production of 6.204 Lac MT (recording 100% of its
 re-assessed capacity). The Fertilizer division achieved a turnover of
 Rs.3096.96 Crore.(including other income) earning an operational profit
 (before exceptional items) of Rs.137.96 Crore. The results of the
 Phosphatic division, till divestment during October 2011, are included
 in the above results.
 
 The production and sales performance of the Fertilizer Division are as
 follows:
 
                                                           Qty in MT
 
 Product                     Category            2011-12     2010-11
 
                             Production           620407     #297650
 Urea
                             Sales                627442      290529
 
                             Production           106521*    **31116
 
 DAP
                             Sales                106579*      30974
 
 Complex                     Production           124377*     175566
 Fertilizer
                             Sales                127903*     171294
 
                             Production              490*      14528
 SSP
                             Sales                  8751*       5074
 
 Alf                         Production             2248*       3388
 3
                             Sales                  2228*       4656
 
 Gypsum                      Sales                 85667*     205371
 
 *Until divestment # Production recommenced during October 2010 **
 Production recommenced during November 2010 Fertilizer Policy
 
 The Government is proposing to implement Modified NPS III Policy
 for Urea shortly and it is expected that all Naphtha and Fuel Oil based
 plants producing Urea will be granted time till March 2014 to convert
 to Natural Gas. Your Company has taken up with Department of
 Fertilizers (DoF) for firm allocation of gas to your Company and also
 for creating necessary gas transportation infrastructure in the State
 of Tamil Nadu to facilitate gas connectivity to your Company. The
 Company has engaged a leading Process Engineering Company to carryout
 basic engineering for gas conversion, to make your Company ready to
 receive the gas as and when the pipe line connectivity is established.
 
 Pharmaceuticals Division
 
 SPIC''s Pharmaceuticals Division comprises of Penicillin-G (Pen-G),
 Active Pharmaceutical Ingredients (APIs), Formulations and Industrial
 Enzymes. Pen-G: The plant could not be restarted and the operations
 were discontinued due to competition from cheap Chinese imports, low
 market prices, high cost of inputs and non-imposition of anti-dumping
 duty. The assets of the division at Cuddalore were taken over by Asset
 Reconstruction Company (India) Limited (ARCIL) during the year.  API:
 The operations have not been carried out during the year owing to
 environmental constraints and restrictions imposed by Pollution Control
 Board. Formulations: Due to low demand for its products and uncertain
 power situation, the operations have been discontinued. Enzymes: The
 operations are being discontinued in view of uneconomical business size
 and constraints of fund infusion for revival/restart-up of the
 operations.
 
 Agri-business Division
 
 The Division achieved higher turnover of Rs.15.21 Crore as against
 Rs.12.36 Crore in the previous year, due to increase in volume of high
 breed seed business.
 
 SUBSIDIARIES/JOINT VENTURES/INVESTMENTS SPEL Semiconductor Limited
 (SPEL)
 
 SPEL had accounted sales of Rs.80 Crore (excluding other income) with a
 PAT of Rs.0.57 Crore for the financial year 2011- 12. According to the
 Semiconductor Industry Association forecast, the year 2012 looks
 promising with a 10% growth. Global semiconductor revenues are expected
 to reach US3.2 Billion up from US2.2 Billion. SPEL is taking
 steps to enhance its sales for the financial year 2012-13 by
 exploiting the potential of the industry.
 
 Tamilnadu Petroproducts Limited (TPL)
 
 During the year, the Company achieved a turnover and a net profit of
 Rs.1309 Crore and Rs.5.94 Crore as compared to Rs.1066 Crore and a
 profit of Rs.29.47 Crore respectively during the previous year.  The
 Company declared a dividend of 5% during the year. LAB production was
 maintained at high levels due to the installation of new molecular
 sieves in 2010. Despite unstable crude prices and power shortage, the
 reduction in energy consumption (due to energy audit, advance process
 control, etc.) and optimal use of raw materials helped in controlling
 the cost of production. The first phase of Prefrac revamp was completed
 during March 2012 and the benefi t will be realised from the second
 quarter of 2012-13.  TPL continues to meet sizeable demand of the
 domestic market for LAB and supplies to major international detergent
 manufacturers.  Epichlorohydrin (ECH) Unit performed reasonably well
 with a capacity utilisation of about 85%. The increase in the crude
 price was offset by increase in the sales realisation. TPL continues to
 supply a substantial portion of its production to the joint venture
 Company M/s Petro Araldite Private Limited. The imports of ECH and
 Epoxy Resin from European markets add to the competition in the market.
 Chlor Alkali Unit performed better with the capacity utilisation
 exceeding 90%. The power shortage, increase in power cost, high crude
 prices and fuel oil prices, adversely impacted the business.
 
 Tuticorin Alkali Chemicals and Fertilisers Limited (TAC)
 
 Since the restart of the plants last year, TAC continued the production
 and fine tuned the operational parameters to bring down the production
 cost. The Company produced 86,855 MT of Soda Ash and 78,350 MT of
 Ammonium Chloride representing 75.7% capacity utilization. The Company
 recorded a total income of Rs.217.49 Crore with a net loss of Rs.12.79
 Crore. Competition from import touching an all time high has affected
 the market. BIFR proceedings are in progress and a Draft Rehabilitation
 Scheme (DRS) is under process.
 
 SPIC Fertilizers And Chemicals FZE, Dubai (SFC FZE) and SPIC
 Fertilizers and Chemicals Ltd., Mauritius (SFCL, Mauritius)
 
 During the fi rst quarter of the Financial Year 2010-11, as part of
 recovery process, the Jebel Ali Free Zone Authority (JAFZA) in Dubai,
 had taken over the land, Plant & Machinery of SFC FZE and the Company
 did not have any other option in the matter.  Simultaneously, the Plant
 & Machinery stored in the Ras Al Khaimah Port (RAK) were auctioned to
 realise the storage charges payable to the RAK Port Authorities. The
 Promoters viz., SPIC and the Emirates Trading Agency, Dubai have
 jointly decided to close the operations of SFC FZE, Dubai.
 
 SPIC PETROCHEMICALS LIMITED (SPIC Petro)
 
 Consequent to the takeover of the assets and effects of SPIC Petro by
 the Official Liquidator (OL) during May 2010, the Company ceased to be
 a subsidiary of SPIC. On the basis of the Petition filed by ARCIL u/s
 13(4) of the Securitisation and Reconstruction of Financial Assets and
 Enforcement of Security Interest Act 2002 (SARFAESI ACT), the Hon''ble
 High Court of Madras, vide its Order dated 20 December 2010 directed
 the OL to handover the possession of the assets and effects of SPIC
 Petro to ARCIL. ArCIL took possession of the same during January 2011.
 Meanwhile, Chennai Petroleum Corporation Limited (CPCL) has fi led an
 application to set aside the above Order and in the meanwhile an
 interim stay has been granted by the Hon''ble High Court of Madras
 restraining ARCIL from selling the land belonging to SPIC Petro. ARCIL
 filed a Counter against the Order.
 
 PREFERENTIAL ALLOTMENT OF SECURITIES
 
 During the year under review, at the request of Secured Lenders and in
 line with the rework package approved by Corporate Debt Restructuring
 Empowered Group, three Secured Lenders were cumulatively allotted
 2,03,175 (14%) Secured Non-Convertible Debentures of the face value of
 Rs.100/- each, amounting to Rs.2.03 Crore by conversion of part of
 their secured debt. These debentures are redeemable in seven equal
 quarterly instalments commencing from 31 March 12.
 
 GOING CONCERN
 
 The financial statements of the Company have been prepared on a going
 concern basis, despite the erosion of net worth due to the reasons as
 explained in Note 30 of Notes on Accounts.
 
 DIVIDEND
 
 In view of the accumulated losses, the Board of Directors is not in a
 position to recommend dividend on the Preference and Equity Share
 capital of the Company.
 
 SUBSIDIARY COMPANIES
 
 In accordance with the general circular issued by the Ministry of
 Corporate Affairs, Government of India, the Balance Sheet, Statement of
 Profit and Loss and other documents of the subsidiary companies are not
 being attached with this Annual Report. However, the financial
 information of the subsidiary companies is disclosed in the Annual
 Report in compliance with the said Circular. The Company will make
 available the said documents to any member of the Company, who may be
 interested in obtaining the same. The said documents will also be kept
 open for inspection by any member of the Company / its Subsidiary(ies)
 at the Office of the Company, SPIC House, 88 Mount Road, Guindy,
 Chennai - 600 032. and that of the respective subsidiary Companies. The
 consolidated financial statements include the financial results of its
 Subsidiary Companies.
 
 DISCONTINUED OPERATIONS
 
 The operations of Pen-G Unit was discontinued due to low sales
 realisation, increased cost of inputs, rejection of anti-dumping duty
 and the eventual take over of its assets at Cuddalore by ARCIL. The
 operations of Active Pharmaceutical Ingredients Unit have not been
 carried out due to reasons, inter alia, including environmental
 constraints, the restrictions imposed by Pollution Control Board and
 the uneconomical business size. Consequently, the operations of the
 connected Research & Development was also closed. The Formulations Unit
 discontinued its operations due to low demand in the market and
 uncertain power situation. The SMO Division and the Phosphatics
 Business of the Company were divested, pursuant to the approval of
 CDR-EG (Empowered Group) and the consent of the shareholders obtained
 through postal ballot.
 
 PUBLIC DEPOSITS
 
 As on 31 March 2012, there were no outstanding public deposits and the
 overdue unclaimed deposits covering 15 depositors, amounted to Rs 3.33
 lac.
 
 HUMAN RESOURCE DEVELOPMENT
 
 The Company, as always, places great emphasis on its human capital, and
 the need to retain and develop talent in realising Corporate
 objectives. The Company provides a conducive and challenging work
 environment and opportunities for professional development of its
 employees.
 
 INDUSTRIAL RELATIONS
 
 Industrial Relations in the Company has been cordial during the year
 under review. A memorandum of settlement u/s 12 (3 ) of the Industrial
 Disputes Act, 1947, has been entered into with SPIC Employees Union in
 September 2011 .
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 In accordance with the requirements of Section 217(2AA) of the
 Companies Act, 1956, the Directors of the Company declare that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at 31 March 2012.
 
 (iii) the Directors have taken proper and sufficient care 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; and
 
 (iv) the Directors have prepared the annual accounts on a going concern
 basis for the reasons stated in Note 30 of the Notes on Accounts.
 
 DIRECTORS
 
 Dr A C Muthiah resigned as Chairman and Managing Director of the
 Company with effect from 16 November 2011. The Board places on record
 the guidance, advice and valuable contribution made by Dr A C Muthiah
 during the long tenure of his association with the Company. The Board
 of Directors at its Meeting held on 16 November 2011, elected Thiru
 Ashwin C Muthiah as the Chairman of the Company.
 
 Thiru M Jayasankar, Director who retires by rotation at this Annual
 General Meeting, being eligible, offers himself for reappointment.  In
 accordance with Clause 49 of the Listing Agreement, particulars
 relating to the appointment of Thiru M Jayasankar, seeking
 re-election/appointment at the ensuing Annual General Meeting are
 furnished in the annexure to the Notice.
 
 Thiru K K Rajagopalan was co-opted as Additional Director and
 designated as Whole-time Director of the Company with effect from 16
 November 2011 and a resolution seeking his appointment as the
 Whole-time Director is being placed before the shareholders in this
 Annual General Meeting of the Company.
 
 During April 2012, ARCIL withdrew the nomination of Thirumathi Neeta
 Mukerji from the Board and the Board places on record its appreciation
 for the contribution made by Thirumathi Neeta Mukerji during her
 tenure.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 The Management Discussion and Analysis Report for the year under review
 as stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchange is presented in a separate section forming part of the Annual
 Report.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with the Accounting Standard AS21 on Consolidated
 financial statements read with Accounting Standard AS23 on Accounting
 for investments in associates in Consolidated Financial Statements and
 AS27 on Financial reporting of interests in Joint Ventures, the audited
 Consolidated Financial Statements are provided in the Annual Report. As
 Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets of
 SFC FZE, Dubai, SFCL Mauritius lost control over its subsidiary SFC FZE
 Dubai. Therefore financial statements of SPIC''s Subsidiary Company,
 SFCL, Mauritius have not been considered for consolidation. However,
 full provision has already been made in the earlier years.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 In terms of Section 217(1)(e) of the Companies Act, 1956, read with
 Rule-2 of the Companies (Disclosure of Particulars in the report of
 Board of Directors) Rules 1988, information relating to conservation of
 energy is set out in the annexure forming part of this Report. The
 Company has no information to provide in respect of technology
 absorption, foreign exchange earnings and outgo and research and
 development.
 
 PARTICULARS OF EMPLOYEES
 
 None of the employees of the Company was in receipt of remuneration in
 excess of the amount prescribed by Section 217 (2A) of the Companies
 Act, 1956 read with Companies (Particulars of Employees) Rules,1975, as
 amended.
 
 COST AUDITOR
 
 Thiru P R Tantri, Cost Accountant, Bengaluru was appointed as the Cost
 Auditor of the Company for the financial year 2011-12 pursuant to
 Section 233B of the Companies Act, 1956 to carry out the audit of your
 Company''s cost records. The Cost Audit report for the year ended 31
 March 2011 certified by Thiru P R Tantri was filed on 29 September 2011
 with the Ministry of Corporate Affairs.
 
 ACKNOWLEDGEMENT
 
 Your Company is grateful for the co-operation and continued support
 extended by the Department of Fertilizers, Ministry of Chemicals and
 Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of
 Agriculture, Ministry of Corporate Affairs and other departments in the
 Central Government, the Government of Tamilnadu, other State
 Governments, Tamilnadu Industrial Development Corporation Limited,
 Tamil Nadu Electricity Board, ARCIL, Financial Institutions and Banks.
 The Directors appreciate the dedicated and sincere services rendered by
 all employees of your Company.
 
                                               On behalf of the Board 
 
 Place: Chennai                                      ASHWIN C MUTHIAH
 
 Date 30 May 2012                                            Chairman