The Directors have the pleasure of submitting the 18th Annual Report
of the Company together with the audited annual accounts showing the
financial position of the Company for the year ended on March 31, 2007.
1. Financial results (Rs. in mn)
Increase Over 20006-07 2005-06
Sales turnover 36.12% 15,141.44 11,123.60
(after deduction of excise duty
amount of Rs. 1,908.99 millions
for 2006-07 and Rs. l.,450.85 millions
Other income 43.54 43.18
Profit for the year before interest. 13.01% 1,045.65 925.23
exchange rate difference,
taxation and exceptional items
-Depreciation/amortisation 100.23 86.40
- Interest and discounting charges 324.24 209.42
- Exchange rate difference (gain)/loss (70.07) 83.91
Profit before taxation and 691.25 545.50
Exceptional items 38.45 17.42
Profit before taxation for the year 23.62% 652.80 528.08
- Provision for taxation 167.59 109.48
Net profit after taxation for the year 15.91% 485.21 418.60
Adjusting therein (debit)/credit:
- Balance of profit brought forward 459.03 242.07
from previous year
- Transfer from/(to):-
(a) Debenture redemption reserve - 45.00
(b) Capital redemption reserve - (31.36
Amount available for appropriations 944.24 674.31
Increase Over 2006-07 2005-06
34.62% 14,687.61 10,910.28
12.87% 1,005.04 890.97
23.04% 622.18 505.66
15.02% 459.73 399.69
Appropriations made by the Board of Directors :
Increase Over 2006-05 2005-06
- General Reserve 200.00 100.00
- Dividends on equity and preference shares:
- Interim dividend 54.58 42.44
- Final dividend 64.67 58.66
- Income tax on dividends 18.65 14.18
- Leaving balance of profit 606.34 459.03
carried to balance sheets
Earnings per equity share (EPS):
-Basic 11.49% 15.53 13.93
-Diluted 7.75% 15.01 13.93
Increase Over 2006-07 2005-06
10.79% 14.68 13.25
7.32% 14.22 13.25
Consolidated results include the results of Petroleum Specialities Pte.
Ltd., Singapore, and Poweroil Speciality Products FZE, Sharjah - both
wholly owned subsidiaries of the Company.
a. The Company paid the following interim dividend in the financial
On 24,252,023 equity shares
At a rate of Rs. 1.50 (1 5%) per share on the face value of Rs. 10
amounting to Rs. 36,378,035.
On 3,445,978 - 5.40% cumulative convertible preference shares carrying
participating rights as equity shareholders
At a rate of 5.40% per share pro-rata for the period from April 1, 2006
October 10, 2006 amounting to Rs. 18,202,978.
The members are requested to confirm the above interim dividends at the
ensuing Annual General Meeting (AGM) of the Company.
b. Final dividend
Considering the improved financial results achieved during the year
under review compared to the previous year, the Board of Directors
recommended the final dividend for the financial year 2006-07 on
32,336,031 equity shares at a rate of Rs. 2.00 (20%) per share.
This final dividend is payable after declaration by shareholders at the
ensuing Annual General Meeting (AGM) and you are requested to declare
3. Management Discussion and Analysis
4. Expansion/development plan
(i) Transformer and other speciality oils division
With the phased installation of additional storage facilities and
balancing equipment at the Silvassa unit, the division will increase
its production. Efforts are continuously being made to increase exports
by exploring the international market.
The Companys application to the project approval board of the
government for the proposed licence and technical know-how agreement
with ENI SpA of Italy for manufacture of the famous Agip brand of
automotive lubricants is expected to be approved shortly. For marketing
of the said oils, a 50:50-joint venture Company with ChemateK SpA,
Italy was incorporated; the product is expected to be launched in the
second quarter of the current year.
(ii) Conductor division
Trial production started at the Nalaghar unit and faced teething
troubles, which have since been resolved, normal production commenced
in April 2007.
(iii) Polymers division
The divisions restructuring and expansion project was largely
completed towards the end of 2006- 07, except for a few parts which are
expected to be completed in the first half of 2007-08.
5. Share capital
During the year under review, the Company
(a) Reclassified its preference share capital of Rs. 659,987,500,
comprising 3,567,500 preference shares of Rs.185 each as equity share
capital comprising 65,998,750 equity shares of Rs. 10 each and
consequently, the authorised share capital of the Company now is
91,998,750 equity shares of Rs. 10 each amounting to Rs. 919,987,500.
(b) Issued and allotted 3,445,978 equity shares of Rs. 10 each at the
premium of Rs. 175 per share to Shinny Limited, Mauritius (CLSA Group),
on conversion of 3,445,978 - 5.40% cumulative compulsorily convertible
preference shares of Rs. 185 each.
(c) Issued and allotted 80,84,008 bonus equity shares of Rs. 1.0 each
to the existing equity shareholders of the Company in the ratio of one
bonus equity share against every three equity shares held. No
fractional bonus entitlements were issued but the same were
consolidated into shares and net sale proceeds of such shares were
distributed to concerned shareholders at a rate of Rs. 47.57 per
After the issuance of the aforesaid equity shares, the issued and
paid-up equity share capita! of the Company increased from Rs.
208,060,450 to Rs. 323,360,310.
a) Mr. Richard Owen Pyvis, who was appointed by M/s Shinny Limited in
terms of Clause 7 of the Investment Agreement, ceased to be a Director
and in his place, Ms. Josephine Price was appointed as a Director in
the casual vacancy and Mr. Gary Ng Jit Meng was appointed as an
Alternate Director with effect from May 30, 2007.
b) The Board of Directors at its meeting held on January 25, 2007, has
re-appointed, subject to the approval of shareholders at the ensuing
Annual General Meeting, Mr. Kushal N. Desai as Managing Director and
Mr. C.N. Desai as Joint Managing Director of the Company for a further
period of five years with revision in their remuneration with effect
from January 1, 2007. The Board recommends the reappointment of the
above Directors with a revision in their remuneration.
c) Mr. H.N. Shah, Mr. M.M. Patel and Mr. V.A. Gore, Directors, shall
retire by rotation at the ensuing Annual General Meeting of the Company
and they being eligible offer themselves for reappointment. The Board
recommends the reappointment of these Directors.
7. Directors Responsibility Statement
Pursuant to the requirement under
Section 217(2AA) of the Companies Act, 1956 with regard to the
Directors Responsibility Statement, it is hereby confirmed that:
i. In the preparation of the Annual Accounts for the financial year
ended March 31, 2007, the applicable accounting standards were foljowed
along with proper explanation relating to material departures, if any;
ii. Appropriate accounting policies were selected and applied
consistently; judgements and estimates were made that were reasonable
aqd prudent to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the
Company for the financial year under review;
iii. Proper and sufficient care was 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.
iv. The annual accounts were prepared on a going concern basis.
8. Corporate Governance
Pursuant to Clause 49 of the Listing Agreement with stock exchanges
with regard to the code of Corporate Governance, Management Discussion
and Analysis, is covered herein above, on page 13.
The Notes to the Accounts referred to
in the attached Auditors Report are self explanatory and therefore do
not call for any further comments or explanations.
M/s. RSM & Co., Chartered Accountants, Mumbai, statutory auditors of
the Company, do not seek re-appointment in view of the merger of their
professional services with Price Waterhouse (PW). Consent of PW to act
as auditors of the Company was received and the Board recommends their
appointment as statutory auditors of the Company for the financial year
10. Cost auditor
As per the orders of the Government of India, the Board has reappointed
Mr. B.C. Desai, cost accountant, to carry out the cost audit of the
Companys conductors and polymers divisions.
11. Other information
a. Attached to and forming part of this report are the following:
(i) Particulars relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo.
(ii) Information with respect to certain Di recto rs/em ployees.
(iii) Report on Corporate Governance and Auditors Certificate
regarding the compliance of conditions of Corporate Governance.
b. The Company was granted exemption for the year ended March 31, 2007
by the Ministry of Company Affairs, vide its letter dated April 2,
2007, (exemption letter), from attaching to its balance sheet the
annual report of the Companys wholly owned foreign subsidiaries viz.
Petroleum Specialities Pte. Ltd, Singapore, and Speciality Products
FZE, Sharjah. As per the terms of the exemption, a statement containing
brief financial details of the said subsidiaries for the year ended
March 31, 2007 are included in the annual report. The annual accounts
of the subsidiary and related information will be made available to any
member of the Company seeking such information at any point of time and
are also available for inspection by any member of the Company at the
registered office of the Company.
c. As on March 31, 2007, there was no unclaimed deposit from the
Your Directors wish to place on record their sincere appreciation-for
the continuous co-operation, support and assistance provided by
stakeholders, shareholders, financial institutions, banks, government
bodies, technical collaborators, customers, dealers and suppliers of
the Company. Your Directors also wish to place on record their
appreciation for the dedicated services rendered by the loyal employees
of the Company.
For and on behalf of the Board,
(Dr. N.D. Desai)
Date: May 30, 2007