Zuari Industries

1.  The Directors place before you the Fortieth Annual Report of the
 Company together with Statement of Accounts for the accounting year
 ended 31st March, 2008.
 
 2.  Financial Results and Appropriation:
 
                                                       Previous Year
                                         Rs.in lacs       Rs.in lacs
 
 Profit for the year before 
 depreciation and taxation                 13209.71          7136.74
 
 Less : Depreciation for the year           1727.83          1730.68
 
 Profit/floss) before tax                  11481.88          5406.06
 
 Less : Provision for taxation 
 
 - Current Tax                              2664.70          5592.25
 
 - MAT credit entitlement                       -           (4429.78)
 
 - Tax adjustment relating to earlier year  (123.42)             -
 
 - Deferred Tax charge                      1519.47           196.52
 
 - Fringe Benefit Tax                         80.00            80.00
 
 Profit / (loss) after tax                  7341.13          3967.07
 
 Add : Exceptional Item                         -           35387.44
 
 Add : Balance of profit brought forward   44465.01         10971.61
 
 Less: Transfer to general reserve          1000.00          5000.00
 
 Proposed Dividend : 30% ( PY 25% )          883.22           736.02
 
 Tax on dividend (Including Surcharge)       150.10           125.09
 
 Balance of profit carried forward         49772.82         44465.01
 
 
 3.  Dividend:
 
 The Directors recommend a dividend of Rs.3.00 per equity share (Rs.
 2.50 per equity share in the previous year).
 
 4.  Debt Servicing:
 
 Your Company has met all obligations towards repayment of principal and
 interest on all loans.
 
 5.  Public Deposits:
 
 Public Deposit Scheme of the Company was continued during the year.
 Deposits matured during the year, have been repaid alongwith interest
 as on 31st March, 2008 in accordance with the terms of deposits. 677
 deposits amounting to Rs.l 19.58 lakhs which had matured have not been
 claimed. The Company advises the depositors at regular intervals for
 repayment and/or renewal of the deposits. During the year, the Company
 has transferred an amount of Rs.l.28 lakhs towards unclaimed / unpaid
 deposits and interest thereon to The Investors Education and
 Protection Fund, pursuant to Section 205 C of the Companies Act, 1956.
 
 6.  Directors:
 
 Mr. D.B. Engineer, Mr. S.K. Poddar and Mr. Marco Wadia, retire by
 rotation at the forthcoming Annual General Meeting and are eligible for
 re-appointment. Their resume and details of other directorships and
 Committee memberships are given in Annexure C to this report.
 
 7.  Auditors:
 
 The Auditors M/s. S.R. Batliboi & Co., Chartered Accountants, Gurgaon,
 retire at the forthcoming Annual General Meeting and are eligible for
 re-appointment.
 
 8.  Conservation of Energy:
 
 Information disclosing particulars of conservation of energy is given
 in Annexure A to this report.
 
 9.  Technology Absorption:
 
 No new technology was absorbed during the year 2007-08.
 
 10.  Foreign Exchange earnings and outgo:
 
 By producing fertilizers, of which the country is a net importer, there
 has been savings of valuable foreign exchange to the National
 exchequer. Expenditure incurred in foreign exchange is noted under
 Schedule 20 (Note 9,10,13(ii) and 1 7) of the Annual Report and
 Accounts.
 
 11.  Capital Projects:
 
 During the year, a new Medium Pressure Boiler of 5 MT/ hour capacity
 was installed and commissioned (to replace the old Boiler of 30 MT/hour
 capacity) which is mainly used during the annual turnaround of
 Ammonia/Urea Plants. The old Waste Heat Boiler of DG Set was also
 replaced.
 
 The following Energy Saving Projects were implemented in the Ammonia
 Plant during the year:
 
 (i) A new Dehydrator was installed at the interstage of Synthesis Gas
 Compressor to improve its efficiency.  This system is working
 satisfactorily.
 
 (ii) Installation of Process Air Heating Coil in the convection duct of
 Primary Reformer to recover the waste heat.
 
 12.  Environment & Safety:
 
 The Companys Fertiliser Plant continues to be a Zero Effluent Plant
 since 1990 and the man-made green bed around the Complex continues to
 flourish and attract a variety of wild life.
 
 The Company continues to give thrust to the safety initiatives across
 all functions including contract workers.
 
 External safety audit was conducted during the year by Synergic Safety.
 Engineers, Mumbai.  Their recommendations are under implementation. The
 Company completed 1 .34 million man-hours without reportable lost time
 accident as on March 31, 2008.
 
 13.  Personnel:
 
 The Company continues to make efforts to upgrade the skills and
 effectiveness of its employees irrespective of their cadre through
 various training programmes and developmental activities. There has
 also been a constant endeavour to appraise employees of the need to
 rationalize human processes and optimize output to meet the challenges
 of the fast changing scenario in the fertilizer industry.
 
 The industrial relations in the Company continued to be cordial and
 harmonious during the year.
 
 Particulars of employees to be furnished under Section 217 (2A) of the
 Companies Act, 1956 and the rules framed thereunder, are annexed to
 this Report as Annexure B.
 
 14.  Subsidiary Companies:
 
 In accordance with Accounting Standard 21, Consolidated Financial
 Statements presented by the Company include the financial information
 of its subsidiaries. The Company has received approval of the Central
 Government u/s 212(8) of the Companies Act, 1956 exempting the Company
 from the purview of section 212 of the Act. Therefore the Balance
 Sheet, Profit and Loss Account, Report of the Board of Directors and
 the Auditors of the Subsidiary Companies are not attached.
 
 The Company will make available these documents/ details upon request
 to any member of the Company interested in receiving this information.
 The Annual Accounts of the Subsidiary Companies will also be kept for
 inspection by any investor at the Registered Office of the Company and
 Subsidiaries.
 
 On 1 2th December, 2007 Zuari Developers Private Limited (formerly
 known as Anil Kumar M N Developers Private Limited) became subsidiary
 of Zuari Infrastructure and Developers Limited (formerly known as Zuari
 SEZ Limited), a wholly owned subsidiary of the Company. Consequently,
 Zuari Developers Private Limited became subsidiary of the Company
 effective 12th December, 2007.
 
 A brief review of subsidiaries and joint ventures of the Company is
 given herebelow:-
 
 a.  Indian Furniture Products Limited (IFPL):
 
 IFPL, a wholly owned subsidiary of the Company, is engaged in
 manufacturing of Ready-To-Assemble (RTA) furniture of international
 quality through its state-of-the-art plant at Kakkalur near Chennai.
 The Plant is highly automated and is CNC (Computer Numeric Control)
 controlled. The factory has a floor area of 225,000 sq.ft. and has
 capacity to produce 200,000 units of furniture annually.
 
 The Company has achieved a turnover of Rs. 89.50 crores during the
 current financial year, an increase of over 15% as compared to last
 year. Its mass distribution channel under Zuari brand is doing very
 well and has an all India reach. The Company is strengthening its
 business under office system segment and is well poised to take the
 advantage of the booming economy.
 
 b.  Zuari Seeds Limited (ZSL) :
 
 ZSL, a subsidiary of the Company, is engaged in R&D, production and
 marketing of hybrid seeds. The Company has achieved a turnover of Rs.
 31.65 crores during the current financial year. The company continues
 to focus on providing superior quality hybrid seeds to the farming
 community. The Companys seeds are also exported to Bangladesh and
 other neighbouring countries.
 
 The Company has successfully launched Bt. Cotton in the market and sold
 about 90,000 packets during the year. The Company has plans to sell
 about 2.5 lakh packets during the year 2008-09.
 
 Two new maize hybrids developed by the Company have shown encouraging
 results in multi-locational trials and are expected to be marketed
 during the year 2008-09.
 
 c.  Simon India Limited (SIL) :
 
 SIL, a wholly owned subsidiary of your Company, is engaged in
 Engineering Procurement and Construction (EPC) activities and has
 achieved a turnover of Rs. 30 crores during the current financial year.
 SIL has an order book of Rs. 65 Crores and is currently executing
 several major projects in India and overseas.
 
 SIL continues to provide the Project Management Consultancy services to
 Methanol Chemicals, Saudi Arabia.
 
 SIL has orders for providing detailed Engineering, Procurement Services
 and Technical Consultancy to Durgapur Chemicals Co., Meghmani Organics
 Ltd., Paradeep Phosphates Limited and Methanol Chemicals Co.
 
 d.  Zuari Infrastructure and Developers Limited (formerly known as
 Zuari SEZ Ltd.) :
 
 Zuari Infrastructure and Developers Limited was originally incorporated
 as Zuari SEZ Limited on 6th December, 2006 with an objective to set up
 and develop Special Economic Zone (SEZ) for Information Technology (IT)
 and Information Technology Enabled Services (ITES).
 
 The Company is planning expansion of its business into real estate
 development activities. Accordingly, the Company has changed its name
 and suitably amended its object clause to reflect its business activity
 more prominently. The Company has acquired 100% stake in a Private
 Limited Company based at Bangalore in Karnataka, which has 73.65 acres
 of land. The Company is entering into a land development agreement with
 its subsidiary, Zuari Developers Private Limited, for construction of
 residential and commercial buildings in the land owned by the said
 subsidiary.
 
 e.  Zuari Developers Private Limited ( formerly known as Anil Kumar M N
 Developers Pvt. Ltd.  - a subsidiary of Zuari Infrastructure &
 Developers Ltd.):
 
 Zuari Developers Private Limited, acquired 73.65 acres of land at
 Karnataka. The Company has become 100% subsidiary of Zuari
 Infrastructure and Developers Limited, effective 12th December, 2007.
 
 The Company intends developing the land for commercial/residential
 purpose and will be entering into a suitable agreement with its holding
 Company and other agencies.
 
 15.  Joint Venture Companies:
 
 a.  Zuari Investments Limited :
 
 Zuari Investments Limited, a joint venture with Chambal Fertilizers and
 Chemicals Limited, is a member of both National Stock Exchange (NSE)
 and Bombay Stock Exchange (BSE) for equity as well as Futures & Option
 (F&O) trading. It is a depository participant with National Securities
 Depository Limited (NSDL) and Central Depository Services Limited
 (CDSL). Besides being empanelled with Association of Mutual Fund of
 India (AMFI) for distribution of Mutual Fund products, the Company is
 also a member of Over the Counter Exchange of India (OTCEI) and a
 Category-ll Registrar and Share Transfer Agent registered with
 Securities and Exchange Board of India (SEBI). The Company is also an
 Insurance Regulatory and Development Authority (IRDA) licensed Direct
 Broker for Life and Non-life segment through its wholly owned
 subsidiary Zuari Chambal Insurance Solutions Limited.
 
 The Company plans to enter into Commodity Broking to expand its bouquet
 of Financial Services and to become a one stop shop for Stock Broking,
 Depository Services, Investment Advisory Services, Insurance Broking
 Services and Commodity Broking Services and is fully poised to benefit
 from a buoyant capital market.
 
 b.  Zuari Maroc Phosphates Limtied (ZMPL) :
 
 Zuari Maroc Phosphates Limited (ZMPL) is a 50:50 joint venture with
 Maroc Phosphore S.A., Morocco,
 
 which was established as a Special Purpose Vehicle for acquisition of
 majority stake in Paradeep Phosphates Limited (PPL). ZMPL holds 80.45%
 of equity stake in PPL thereby making it a subsidiary of ZMPL.
 
 PPLs sales and operating revenue including subsidy and other income
 for the year 2007-08 was Rs.2522 crores (previous year Rs.2064 crores).
 
 PPL continues to improve its marketing efficiency by increasing the
 marketing share in the primary markets.  The sales of own fertilizers
 for the year 2007-08 was 1315399 MT as compared to 1318115 MT during
 the previous year.
 
 c.  Zuari Indian Oiltanking Limited (ZIOL) :
 
 Zuari Indian Oiltanking Limited (ZIOL) a 50:50 joint venture between
 Zuari Industries Limited and Indian Oiltanking Limited (IOTL) has
 state-of-the-art terminalling facility for petroleum products namely
 Naphtha, Motor Spirit, High Speed Diesel & Superior Kerosene. The
 Terminal at Goa with 71000 KL tankage is situated 85 M above sea level
 with a 14 Km. long piggable pipeline from Mormugao Harbour, Goa.
 
 The Company provides terminalling services to Zuari Industries Limited,
 Hindustan Petroleum and Bharat Petroleum. ZIOL also provides value
 added services like ethanol blending in petrol to the Oil Companies.
 
 In the year 2007-08, the terminal has achieved a throughput of 606,000
 KL.
 
 d.  Zuari Rotem Speciality Fertilisers Limited :
 
 With a view to meet the demand for Water Soluble Fertilisers (WSF), a
 Speciality Fertiliser in India, the Company has entered into 50:50
 joint venture with Rotem Amfert Negev Limited (Rotem), Israel. Rotem is
 a subsidiary of ICL Group, Israel, which is a USD 3.0 billion
 conglomerate and is a world leader in production and sales of
 speciality fertilizers.
 
 The joint venture Company, namely Zuari Rotem Speciality Fertilisers
 Limtied (ZRSFL) was incorporated in November, 2007 and is now in the
 process of obtaining various central and state level clearances for its
 proposed manufacturing facilities at Baramati, Maharashtra. The Company
 has acquired about 3 acres of land at Baramati, to build a
 state-of-the-art batch operating facility incorporating Israeli
 technology to produce up to 24,000 MT of WSF per annum.
 
 Initially, the plant will manufacture two WSF grades, namely 19:19:19
 and 20:20:20. Subsequently, the plant will produce other grades to meet
 market requirement. The joint venture will utilize the efficient
 marketing and dealer network of your Company.
 
 16.  Corporate Governance :
 
 The Company has complied with all the mandatory requirements of Clause
 49 of the Listing Agreement. The Report on Corporate Governance
 pursuant to Clause 49 of the Listing Agreement is enclosed as Annexure
 C. The Auditors Certificate on Compliance of conditions of Corporate
 Governance is enclosed as Annexure D, Declaration of Managing
 Director as Annexure E and the Management Discussion & Analysis as
 Annexure F.
 
 17.  Social Responsibility:
 
 The Company gives financial support in the form of scholarships to
 meritorious students in Engineering and Agriculture streams, besides
 giving merit scholarships to neighbouring high school students.
 
 To promote excellence in agriculture, Company presents its coveted
 Krishi Samrat award to an outstanding farmer in the marketing area
 and so far ten farmers have won this award.
 
 As part of our social corporate responsibility, the Company has taken
 several initiatives such as sponsoring of rural sports in Companys
 marketing areas, maintenance of public park in Vasco which has been
 appreciated by the public and the green hedge in the divider on the 4
 Km.  stretch highway in front of Goa complex.
 
 18.  Directors Responsibility Statement:
 
 Your Directors hereby report:
 
 i. that in the preparation of annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 ii. that the directors have selected such accounting policies and
 applied them consistently and made judgement 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 31st March, 2008 and of the profit and
 loss account for the period ended 31st March, 2008;
 
 iii. that 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;
 
 iv. that the directors have prepared the annual accounts on a going
 concern basis.
 
 19.  Acknowledgements :
 
 Your Directors wish to place on record their appreciation of the
 dedication, commitment and contribution of every employee of the
 Company.
 
                                    For and on behalf of the Board
 
 New Delhi                                     K. K. BIRLA
 15th May, 2008                                   Chairman