Annual Report 07

E.I.D.-Parry (India) Limited


A N N U A L R E P O R T 2 0 0 6 - 2 0 0 7


“Dare House”, Parrys Corner, Chennai 600 001

Ph: +91-44-25306789 Fax: +91-44-25340858

www.eidparry.com

FORWARD LOOKING STATEMENTThis Annual Report contains certain “Forward Looking Statements” relating to our future business developments and

economic performance. These are based on our judgement and future expectations. The actual results could be

materially different in terms of future performance and outlook due to a number of risks, uncertainties and other

important factors and E.I.D.- Parry is under no obligation to publicly revise any forward looking statement to reflect

future events or circumstances.

Beyond ChallengesWith every vision comes a challenge.

With every serious challenge comes the opportunity to redefine success.

Only, if we can keep our nerve and stare the challenge in the eye.

And that itself is not enough. Our ability to anticipate the challenge, sagacity to build

the reserves to take it head-on and alacrity to seize even half an opportunity, also count.

The steep slopes of adversities have often given our ascent that vertical lift, to rise even

higher. Now again, as another step tests our hold and seeks to rock our balance, we are

ready to stride up these cliffs like intrepid climbers. For centuries, we have been scaling

these heights. And we haven't just survived but thrived. It is time to relive our track

record. And reinstate the fact that we are the country's oldest sugar company. And that

we just can't be stopped.

Rock climbing is a fascinating adventure. It dates back to 400 BC. It helped man survive and hunt for food. Just as jumping, running or swimming, it became a test of his endurance and skill.

Over the years, evolving knowledge of climbing techniques, improved gear and sheer toughness of mind made this deadly sport a thrilling one.

The Legend

olg image

E.I.D. Parry is over two hundred years old. We became the harbinger of sugar industry in India more than 160 years ago, surviving wars, famines, epidemics, industrial and technological revolutions, evolving agrarian trends and patterns and other seemingly insurmountable upheavals. E.I.D. Parry always looks forward to opportunities that come as challenges.

The legend of E.I.D. Parry dates back to 1788, when, on July 17, Thomas Parry, a Welsh trader, first set foot on Indian soil. He foresaw tremendous prospects in India.And established a business in piece goods and banking. In 1819, Parry and John William Dare became partners. And their company began to weave a tale of wonder.

After independence there was a strong impetus to Indianise the company. In 1972, the E.I.D. Parry board resolved to apply to the Government of India for conversion into an Indian company. What followed is history.

A Neverending saga

Now there is a new breed of climbers: urban climbers. Instead of looking for rocks in the wild, they climb the sky-scrapers in full public-view and media-glare. They crawl up the outer walls on their way to the top. Though they do not swing like Spiderman, their feat is no less dramatic.

French skyscraper climber Alain Robert has earned worldwide fame for his numerous daring and successful climbing attempts. Robert doesn't use any tools. No safety devices either. Using only his bare hands and climbing shoes, he has scaled more than 70 giant structures around the world.

New Challenges

The year that went by saw an overall economic slow-down in the sugar industry worldwide. The global statistics show that sugar supply has grown faster than sugar demand and this has placed downward pressure on prices in 2006-07. Sugar production is now at its peak everywhere. Good seasonal conditions have led to higher production in Brazil & India.

With a bumper sugarcane crop in 2006-07 and increased crushing capacities, sugar production in India touched record levels, resulting in huge inventory build-up. This put downward pressure on the sugar prices. To make matters worse, the Government imposed a Sugar Export ban. When the ban was removed in January 2007, domestic sugar prices plummeted. And the international prices of sugar also crashed. This added to the exporter's plight. All these have resulted in the profits from sugar business remaining low during the second half of this year. E.I.D. Parry too suffered a setback.

New Year. New challenges. Newer opportunities.

But E.I.D. Parry has always been a forward looking Based on these growth projections, the Plant Extract company. It plans to bring large-scale investments in the Business – under which NEEMAZAL falls, will also grow.sugar business by leveraging its strengths in this sector in the following directions: – The Nutraceuticals division

which became a part of E.I.D. Parry from 1st September – E.I.D. Parry is 2006 continues to grow in all markets and its products are

expanding its sugar unit capacities across all existing sugar currently exported to 35 countries. Spirulina continues to mills. This will help in optimising the crushing period by be in the forefront in the nutraceuticals business.“Organic increase in throughput, with improvements in process Spirulina” has the highest number of certifications in the efficiencies, sugar recovery gains and reduced energy world. E.I.D. Parry, the only company in the world with consumption. dedicated R & D for all the three types of algae, is

expected to outperform competition in the business for the – E.I.D. Parry is striving to extract years to come.With increasing medical care costs and aging

value from bagasse to produce power (COGEN) to meet population in the west, nutraceuticals (estimated well over the country's growing energy demand. US $ 15 billion per annum) as a category of preventive

health care is bound to grow at a steady pace. – The alarming increase in global warming

has led to the Kyoto Protocol whereby the signatories have E.I.D. Parry has always been an eco-friendly company. Its committed to contain the emission of Green House gases. environmental management system policy commits the Developed countries are increasingly looking for the use of business to prevention of pollution, optimal utilisation of renewable energy sources. The opportunity for India arises resources and reduction in generation of wastes. Be it in from the demand for carbon credits that developed the production of sugar, bio products or nutraceuticals, the countries can buy to honour their commitments under the company uses all renewable resources of nature. Thus, Kyoto Protocol. maintaining the equilibrium in our eco-system. And the

company will continue to keep exploring such possibilities. - The company has also

started adding manufacturing units to straddle the entire value chain of the Distillery from Industrial Alcohol and Rectified Spirit to Extra Neutral Alcohol (ENA) and Fuel Ethanol production. The Government of India has made 5% blending of ethanol with petrol mandatory which is in the process of being implemented across all states and in the sugar producing states, this percentage is proposed to be increased to 10 %. Ethanol prices may also be linked to international petroleum prices.

- The Bio Pesticides division of the company has emerged as a significant player in the Neem based bio-pesticide business and continues to focus on its core product – the NEEMAZAL range of products. The global bio-pesticide market which is estimated at Mn 672 $ currently is expected to grow to Mn 1075 $ by 2010.

Investment in Nutraceuticals

Expansion of existing sugar units

Cogeneration of power

Carbon credits

Other Value-Added products

Investment in Bio-Products

Making adversities work for us.

Nutraceuticals production facility, Oonaiyur

Together we shine

With our business growing over the years, we have joined hands with international giants and taken steps for a brighter future. E.I.D. Parry completed its restructuring during 2005-06 converting its sanitaryware business into a joint venture with Roca Sanitario S.A. Through its subsidiaries Coromandel Fertilisers Ltd. (CFL) and Godavari Fertilisers and Chemicals Ltd. (GFCL) and JV, Parryware Roca Private Limited, it retains a significant presence in the fertiliser and sanitaryware businesses respectively.

The Company also entered into a Joint Venture Agreement with Cargill Asia Pacific Holdings PTE Limited, a wholly owned subsidiary of Cargill International, to form Silkroad Sugar Private Limited. The JV will set up a stand alone sugar refinery at Kakinada, Andhra Pradesh.

Parry Nutraceuticals Limited, which has global presence, was merged with E.I.D Parry during the year.

So, E.I.D. Parry is profiting from its attitude. Over the years its investments made towards the maximum value extraction from the cane, are coming good. The flexibility in its processes to manufacture a more profitable product mix is adding to its strength. The company has leveraged its presence in other categories such as fertilisers and sanitaryware to hive them off into mighty stand-alone entities that are highly profitable market leaders. By entering the lucrative segments such as Bio-Farm-inputs and Nutraceuticals, the company is blazing a trail in the Hi-profit Hi-growth sectors of international business.While in the short term, relief measures are being implemented by the Government to provide relief to the sugar industry to bring back stability of sugar prices, the long-term outlook for sugar remains positive and promising. Despite challenges, E.I.D. Parry is optimistic that it will undoubtedly benefit its stakeholders in future by identifying opportunities lying beyond challenges and creating value out of them.

Financial Highlights 1

Corporate Information 2

Directors’ Report 3

Management Discussion and Analysis Report 10

Report on Corporate Governance 23

General Shareholder Information 30

Financials - E.I.D.-Parry (India) Limited 35

Consolidated Financials 62

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Contents

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E.I.D.-PARRY (INDIA) LIMITED

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Profitability ItemsGross Income 92387 98858 113465 136658 152713 137636 64145 81913 103044 73869

Gross Profit (PBDIT) 11163 14324 14502 15646 15513 11487 9119 15893 17766 20109

Depreciation 3085 3750 3552 4187 4369 4502 3037 2817 2915 3287

PBIT 8078 10574 10950 11459 11144 6985 6082 13076 14851 16822

Interest 3780 5512 4910 6585 5278 3282 753 350 739 (211)

PBT 4298 5062 6040 4874 5866 3703 5329 12726 14112 17033

Tax 440 350 650 410 2383 1020 1006 2300 2528 4291

PAT 3858 4712 5390 4464 3483 2683 4323 10426 11584 12742

Balance Sheet Items

Net Fixed Assets 46150 46959 47557 52098 50621 47978 29428 31460 33322 48256

Investments 9469 9371 10565 7695 7689 7663 11011 10126 11167 11736

Net Current Assets 19773 22280 24545 31751 25863 24803 19420 22680 33131 35616

Total Capital Employed 75392 78610 82667 91544 84173 80444 59859 64266 77620 95608

Shareholders Funds 35122 37924 40538 40808 37384 38573 32877 40850 47939 53005

Borrowings 40270 40686 42129 50736 39107 33469 22160 18340 24880 35236

Deferred Tax Liability 7682 8402 4822 5076 4801 7367

Total 75392 78610 82667 91544 84173 80444 59859 64266 77620 95608

Ratios

Book Value Per Share 188 198 219 228 209 216 184 234 54 60

EPS 20.37 24.78 28.65 24.72 19.48 15.03 24.22 58.41 12.98 14.28

Dividend on Equity % 50 60 70 70 70 60 70 125 225 295

Notes:

1. The Farm Inputs Division was demerged into Coromandel Fertilisers Limited with effect from April 1, 2003.2. The equity shares of Rs. 10 each were subdivided into shares of Rs. 2 each with effect from June 3, 2005.3. The Parryware Division was transferred on March 1, 2006 to Parryware Roca Private Limited (formerly Parryware Glamourooms Private Limited,

a wholly owned subsidiary).4. Parry Nutraceuticals Ltd. was merged effective 1st September, 2006.

Rs. Lakhs

FINANCIAL HIGHLIGHTS - TEN YEARS AT A GLANCE

directors 07.pmd 7/9/2007, 2:20 PM1

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E.I.D. - PARRY (INDIA) LIMITED

CORPORATE INFORMATION

Board of Directors

A. VellayanChairman

P. Rama BabuManaging Director

Anand Narain Bhatia

S. B. Mathur

R. A. Savoor

M. M. Venkatachalam

S. Viswanathan

Corporate Management Team

P. Rama BabuManaging Director

K. RaghunandanPresident (Sugar)

K. RavindranSenior Vice President - Operations (Sugar)

Sebastian K. ThomasChief Executive (Nutraceuticals)

D. KumaraswamyChief Financial Officer

G. Jalaja

Vice President & Company Secretary

Registered Office

‘Dare House’Parrys CornerChennai – 600 001

Auditors

Deloitte Haskins & SellsChartered AccountantsChennai

Bankers

State Bank of India

directors 07.pmd 7/9/2007, 2:20 PM2

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DIRECTORS’ REPORTYour Directors have pleasure in presenting their Report together with the auditedaccounts for the financial year ended 31st March, 2007.

The performance highlights of the Company for the year are summarised below:

FINANCIAL RESULTSRs Lakhs

2006-2007 2005-2006

Income from Operations 70718 97816

Profit Before Interest and Depreciation 20109 17766

Less : Interest (211) 739

Depreciation 3287 2915

Profit Before Tax 17033 14112

Provision for Tax :

- Current (Net of MAT Credit) 1619 2650

- Deferred 2615 (275)

- Fringe Benefit Tax 57 153

Profit After Tax 12742 11584

Add : Surplus brought forward 15554 11541

Balance in Profit and Loss Account of Amalgamating Company (1290) 9

Amount available for Appropriation 27006 23134

APPROPRIATIONS

Transfer to General Reserve 3000 3000

Dividend on Equity Capital :

Interim paid 4016 -

Proposed (Final) 1250 4016

Dividend Tax 776 564

Surplus carried to Balance Sheet 17964 15554

TOTAL 27006 23134

PERFORMANCEThe Company achieved a turnover of Rs. 70718 lakhs including other income

of Rs.15546 lakhs for the year ended 31st March, 2007. The Profit Before Interestand Depreciation grew by 13% to Rs. 20109 lakhs and the Earning Before Taxwas up by 21 % to Rs.17033 lakhs. The Profit After Tax (PAT) was

Rs. 12742 lakhs (10%) compared to that of last year amounting toRs. 11584 lakhs. The profit for the year includes Rs.11812 lakhs representingincome of a non recurring nature compared to Rs.2285 lakhs in previous year.

Excluding this income (Rs.11812 lakhs) and the tax thereon (Rs.2640 lakhs)

the Profit Before Interest and Depreciation was Rs.8297 lakhs, Profit Before

Tax was Rs.5221 lakhs and the Profit After Tax (PAT) was Rs. 3570 lakhs.

SUGAR

With a bumper sugarcane crop and increased crushing capacities, sugar

production in India has recovered in a short span of time to record levels resultingin high inventory build up. Further with untimely government intervention bybanning exports of sugar, realisation has fallen sharply. Recent sugar price fall

below cost of production has forced Government of India to review sugar industrypolicy comprehensively and the process is on. Unless both the State and CentralGovernments revise the policy realistically in terms of cane price, taxes thereon

and export of Sugar and price and movement of Molasses and Ethanol thisindustry will be ruined.The country will face large cane payment arrears withconsequent effect on the fortunes of farmers. Please refer to details provided

in Management Discussion and Analysis report.

The steep decline in sugar prices in the second half has restricted the revenuegrowth to about 22% over the previous fiscal while the operating profits hascome down by about 61%. However co-generation facilities and distillery

contributed to the bottom-line significantly.

The 18 MW co-generation plant commissioned at Pudukottai in March, 2006got stabilised and become fully operational during the year. The 22 MWcogeneration power plant at Pugalur commenced commercial operations in

March, 2007. The Ethanol and ENA projects at Nellikuppam Distillery is inprogress and awaiting final clearance for operations from statutory authorities.

The registration of the assets of New Horizon Sugar Mills Ltd., Ariyur,Puducherry, acquired from Indian Bank under the SARFAESI Act on

24th March, 2005 was completed on 24th August, 2006 and the Ariyur Factorycommenced operations during December, 2006 and commercial production inMarch, 2007.

The long term strategy for the Sugar Division approved by the Board includesincreasing crushing capacities in existing factories, acquisitions, creation ofintegrated sugar complexes to extract value from all parts of the cane stick and

derisk the sugar business. These include setting up of a 20 MW co-generationplant at Pettavaittalai and increasing the overall crushing capacity to 22000TCD. On completion of the projects, the annual sugar production would increase

to about 6 lakh tonnes, power generation would be 127 MW and distillerycapacity would be 200 KLPD.

JOINT VENTURE WITH CARGILL ASIA PACIFIC HOLDINGSPTE LIMITED

The Company entered into a Joint Venture Agreement with Cargill Asia PacificHoldings PTE Limited (Cargill), a wholly owned subsidiary of Cargill

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International, on 8th December, 2006. Consequent to this, the parties havemade an initial subscription to the share capital of Parrys Sugars Refineries

Private Ltd.(name since changed to Silkroad Sugar Private Limited). Thiscompany will set up a stand alone sugar refinery in Kakinada. Your Companyholds 50% of the equity capital in this Joint Venture.

BIO PESTICIDES

The Bio Pesticides division of the Company has emerged as a significantsupplier in the Neem based bio-pesticide business and continues to focus on

its core product - the NEEMAZAL® range of products. The division isconcentrating on development of new products like formulation for combinedfungicide and insecticide activity.

The Division clocked a revenue of Rs.2261 lakhs. Export revenues registered

a growth of 13% over the previous year, with Americas and Europe continuingto be the major markets. With the launch of AVANA, a neem based bio pesticidegranule, the Company is looking forward to gain position in Sugarcane and

Rice in domestic market.

NUTRACEUTICALS

Parry Nutraceuticals Limited (PNL) became a wholly owned subsidiary duringthe year.

Your Board considered it desirable to amalgamate PNL with the Company

with effect from 1st September, 2006 and accordingly approved a Scheme ofAmalgamation between PNL and EID at the Board meeting held on19th October, 2006.

Based on the petition filed by PNL with the Hon’ble High Court of Judicature atMadras under Sections 391 to 394 of the Companies Act, 1956 for sanctioningthe Scheme of Amalgamation, the Hon’ble High Court vide its order dated

17th April, 2007 has approved the Scheme of Amalgamation as well as dissolvedPNL without the process of winding up.

Nutraceuticals is now functioning as a Division of the Company.

The products of Nutraceuticals Division are currently exported to 35 countriesin the world which continued to grow in all the markets serviced by it. Organic

Spirulina, the main product of this business continues to outperformcompetition in its segment. In the current year the division made inroads intoNew Zealand selling Organic Spirulina to one of the largest brands of

Nutraceuticals worldwide.

The Organic Spirulina produced by your Company is the most certified OrganicSpirulina in the world with 5 quality certifications and 3 Organic Certificationsto its credit. The Organic Spirulina of the division was certified to meet stringent

standards such as US Pharmacopeia, USDA and Naturland - Germany.

For the 7 months period ended 31st March, 2007, the division registered aturnover of Rs.1112 lakhs.

The performance of the various divisions during the year 2006-07 is given indetail in the Management Discussion and Analysis Report forming a part of

this report.

DIVIDEND

Considering the one time profit of Rs.118.12 crore being profit on sale of sharesof Parryware Glamourooms Private Ltd. to Roca Sanitario S.A., your Directors

declared a special interim dividend of Rs.4.50 (225%) per equity share ofRs.2/- each fully paid up, for the year ended 31st March, 2007 and the samewas paid during August 2006.

Your Directors are pleased to recommend a final dividend of Rs. 1.40 (70 %)per equity share of Rs.2 /- each for the financial year ended 31st March, 2007.

With this the total dividend declared for the year ended 31st March, 2007 isRs.5.90 (295%) per equity share of Rs.2/- each.

CORPORATE DEVELOPMENTS

PARRYWARE

On 1st June, 2006 the Company transferred 4,32,580 equity shares of Rs.10

each held by the Company in Parryware Glamourooms Private Limited (PGPL),in favour of Roca Sanitario S.A. of Spain, (Roca) for a consideration of aboutRs.118.55 crore. The PGPL Board also allotted 6,34,840 equity shares of Rs.10

each of PGPL to Roca on the same day.

Consequent to this PGPL ceased to be a subsidiary of EID with effect from1st June, 2006 and became a joint venture company in which EID and Rocahold 50% equal stake in the capital. The name of the Company also has been

changed to Parryware Roca Private Limited.

SUBSIDIARY COMPANIES

Coromandel Fertilisers Limited

Coromandel Fertilisers Limited (CFL) achieved a turnover of Rs.2084.22 crore

for the year ended 31st March, 2007 and the Profit after Tax was Rs.100.74 crore.The Company’s Board had recommended a dividend of 100 % for the year.

CFL increased its stake in Godavari Fertilisers & Chemicals Limited (GFCL)from 45.07% to 74.92% and consequently GFCL became a subsidiary of CFL

with effect from 12th April, 2007.

Parry Chemicals Limited

Parry Chemicals Limited, a 100% subsidiary of CFL, achieved a turnover ofRs. 85.35 lakhs for the year ended 31st March, 2007. The Profit after Tax wasRs.0.48 lakhs. With the surplus of Rs. 74.64 lakhs brought forward, the balance

of Rs.75.12 lakhs was carried to Balance Sheet.

Parrys Sugar LimitedDuring the first year of operations, the Company’s turnover was Rs.11.15 lakhs

and the Profit after Tax was Rs. 9.66 lakhs.

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Parry Infrastructure Company Private LimitedThe Company incorporated in January, 2006 to engage in infrastructure projects

like development of Special Economic Zones (“SEZ”), etc. became a whollyowned subsidiary during the year. The Company proposes to promote a foodprocessing SEZ and is taking necessary steps for implementation of this.

Parry America Inc.

Parry America Inc, the 100% subsidiary based in US, reported an income ofUS$ 32.20 lakhs for the year ended 31st March, 2007. The Profit After Tax wasUS$ 0.94 lakhs. After adjusting the carried forward loss of US$ 0.73 lakhs, the

profit carried forward for the year was US$ 0.21 lakhs.

The main business of this Company is to market and sell NeemAzal Technicalin US markets and trading of technical and formulations in Western Countries.

Parrys Investments Limited

The Company has reported a business income of Rs.1.38 lakhs and made aNet Profit after Tax of Rs. 1.03 lakhs for the year ended 31st March, 2007.

Coromandel Bathware Limited

There was no operation during the year and the loss carried forward for the

year was Rs. 193.36 lakhs.

SUBSIDIARY ACCOUNTS

In terms of the approval granted by the Central Government u/s 212 (8) ofthe 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,2007. However as directed by the Central Government, the financial data ofthe subsidiaries have been separately furnished forming part of the Annual

Report. These documents will also be available for inspection at theRegistered 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 SubsidiaryCompanies will be made available to the Holding and Subsidiary Companies’investors seeking such information at any point of time. The Annual Accounts

of the Subsidiary Companies will also be kept for inspection by the investorsat the Registered Office of the Company and that of the Subsidiary Companiesconcerned.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by theCompany in accordance with the applicable Accounting Standards (AS-

21, AS-23 and AS-27) issued by the Institute of Chartered Accountants ofIndia and the same together with Auditors’ Report thereon form part of theAnnual Report.

DIRECTORS

Mr. S.M.Datta, Chairman, retired at the Annual General Meeting held on19th July, 2006 and Mr.A.Vellayan took over as Chairman.

IDBI withdrew the nomination of Mr.Biswajit Choudhuri with effect from

19th July, 2006.

Mr.V.Thyagarajan, resigned from the Board with effect from 19th March, 2007.

The Board places on record its grateful appreciation of the guidance provided,services rendered and valuable contributions made by Mr.S.M.Datta as the

Chairman of the Board as well as the Chairman of the Audit Committee andRemuneration and Nomination Committee of the Board, by Mr.BiswajitChoudhuri and Mr.V.Thyagarajan as Directors and members of the Audit

Committee of the Board during their respective tenure.

Mr.A.Vellayan, Chairman and Mr.S.Viswanathan, Director retire by rotation interms of Articles 102 and 103 of the Articles of Association of the Company andbeing eligible, offer themselves for re-appointment. A brief resume, expertise

and details of other directorships of these Directors is attached along with theNotice of the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a

Management Discussion and Analysis Report, Corporate Governance Reportand Auditors’ Certificate regarding compliance of conditions of CorporateGovernance are made a part of the Annual Report.

Mr.P.Rama Babu, Managing Director and Mr.D.Kumaraswamy, Chief FinancialOfficer, have given a certificate to the Board as contemplated inClause 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 ofRs. 10.64 lakhs being unclaimed dividend, interest on fixed deposit, intereston debentures, unclaimed deposits etc. was transferred during the year to

the Investor Education and Protection Fund established by the CentralGovernment.

DEPOSITS

14 deposits totalling to Rs. 1.26 lakhs due for repayment on or before31st March, 2007 were not claimed by the Depositors on that date. Effortsare being made to contact all such deposit holders to facilitate the refund

to them. The Company has discontinued acceptance of deposits sinceJuly 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 :

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• in the preparation of the Profit & Loss Account for the financial year ended31st March, 2007 and the Balance Sheet as at that date (“financial

statements”), applicable Accounting Standards have been followed;

• appropriate accounting policies have been selected and appliedconsistently and such judgements and estimates that are reasonableand 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 ofthe profit of the Company for that period;

• proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies

Act, 1956 for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities. To ensure this, the Companyhas established internal control systems, consistent with its size and

nature of operations. In weighing the assurance provided by any suchsystem 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 ofcompliance with these systems. The Audit Committee meets at regularintervals 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’sAuditors, 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 proposedthat M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai bere-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. DeloitteHaskins & Sells, Chartered Accountants, Chennai have forwarded their

certificate to the Company, stating that their re-appointment, if made, will bewithin the limit specified in that behalf in Sub-section (1B) of Section 224 of theCompanies Act, 1956.

COST AUDITOR

The Company received the approval of the Central Government for appointmentof Mr.D.Narayanan as Cost Auditor to conduct the cost audits for the financialyear 2006-07.

PARTICULARS OF EMPLOYEES

Under the provisions of Section 217 (2A) of the Companies Act, 1956 read withCompanies (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 thecontribution made by the employees to the Company’s progress during theyear under review.

On behalf of the Board

Chennai A VELLAYANMay 4, 2007 Chairman

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I. CONSERVATION OF ENERGY1. At the Nellikuppam sugar unit for driving belt conveyor the dyno drive

coupled with 50 HP induction motor was replaced with a variablefrequency drive which apart from saving energy has led to increasedthroughput .

2. The 22 MW co-generation power plant at Pugalur commenced commercialoperations in March, 2007.

3. Replacement of Aluminium blades by FRP (light weight) blades in thecooling tower resulted in power saving cost at Thyagavalli Bio-productsunit.

4. At the Oonaiyur nutraceuticals factory, measures like use ofvariable frequency drives in various motor rotating machinery likefans, pumps and separators were adopted. This has resulted inreduction of energy consumption on the Spray Drier fans andSeparators.

Information under Section 217 (1) (e) of the Companies Act,1956 read with the Companies (Disclosure ofparticulars in the Report of Board of Directors), Rules, 1988 and forming part of the Directors’ Report

II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. The concept of cooling in preservation of perishable food product wasextended to Spirulina slurry before spray drying. Overall cooling blanketextended in all areas of slurry contact/storage, designed and implementedin house. Benefits were on improved organoleptic and physicalcharacteristics of the final spray dried powder. A product improvement thatis critical in application where Organic Spirulina powder is used in greenfoods/drinks.

III. During the year towards Research and Development activities in thevarious divisions an amount of Rs. 4.23 crore has been incurred onaccount of revenue expenditure.

IV. FOREIGN EXCHANGE EARNINGS AND OUTGOParticulars 2006-07

Rs.Crore(a) Earnings 33.13(b) Outgo 4.75

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2006-2007 2005-2006

1. ELECTRICITY(a) Purchased

Units (KWH) 6592667 18721739Total Amount (Rs. Lakhs) 398 930Rate per Unit (Rs.) 6.03 4.97

(b) Own Generation(i) Through Emergency Diesel Generator

Units (KWH) 696055 1255253Units per ltr. of Diesel Oil 1.91 2.51Cost per unit ( Rs. ) 11.70 12.91

(ii) Generated Through Steam TurbineOut of Own Bagasse (KWH) 201981277 160927338Out of Outside fuel (KWH) 29817000 28231456

2. FURNACE OILQty. (K. Litres) 665 2440Value (Rs. lakhs) 111 386Average Rate / K. Ltr. 16665 15799

3. OTHERS/INTERNAL GENERATION(a) LPG:

Quantity (MT) – 5649*Total Cost (Rs. Lakhs) – 1621*Rate per MT / (Rs.) – 28695*

(b) HSD:Quantity (KL) 115 223Total Cost (Rs. Lakhs) 40 65

Rate per KL / (Rs.) 34973 29114

* Relates to Parryware Division

B. Consumption per unit of Production

Product (KWH ) Electricity

2006-2007 2005-2006

Sugar Per MT 270.19 246.40


Chennai A. VELLAYANMay 4, 2007 Chairman

V. ENERGY CONSUMPTION

A. Power & Fuel Consumption

9

Information as per Section 217 (2A) read with the Companies (Particulars of Employees) Rules, 1975 andforming part of the Directors’ Report - Details of Remuneration paid for the year ended 31st March, 2007

Name/(Age) Designation of Remuneration Qualification/ Date of com- Previousthe employee/ (Experience Years) mencement Employment

Nature of duties Rs. of employment(1) (2) (3) (4) (5) (6)

(A) EMPLOYED THROUGHOUT THE YEAR ENDED 31ST MARCH 2007 AND WERE IN RECEIPT OF REMUNERATION AGGREGATING NOT LESS THAN RS.24,00,000

D Kumaraswamy(53) Chief Financial Officer 4191419 B.Com., A.C.A., A.C.S.,(30) 07.03.1986 Manager (Finance)Mechnafab Pvt. Ltd.

Dr.M.C.Gopinathan (52) Director (R&D) 2451492 M.Sc, Phd, M.Phil (24) 01.06.1988 All India Project co-ordinatorUniversity of Delhi

K.Raghunandan (49) President 4869270 M.S., Chem. Engg (26) 11.07.1988 Plant Manager (Urea)IEL Ltd

C.R.Rajan (55) Executive 4170590 B.Sc.(Hons), MBA(33) 07.05.1993 General Managerunder deputation MMTC of India Limited

P. Rama Babu (59) Managing Director 10282140 M.A. (Social Work & Labour 15.02.1983 Personnel ManagerWelfare) (35) Flender Macneil Gears Ltd.

K.E.Ranganathan (44) Executive 4327289 B.Com, A.C.A., ACS(23) 10.10.1994 Manager ( Fin & Plg)under deputation TVS Electronics Limited

K. Ravindran (57) Vice President 2793656 M.Sc (Chemistry) (32) 01.01.1976 –

K.N. Radhakrishnan (56) General Manager 2423933 B.Com., A.C.A. (31) 01.03.1995 Navabharat Ferro Alloys Ltd.

Joseph Nathan (51) General Manager 2664606 B.A., B.L., P.G.D.B.A. (26) 02.09.1985 Uttam Reddy & Co. Advocates

G.Jalaja (49) Company Secretary 2499673 B.Com., A.C.A., F.C.S. (23) 05.08.1983 Aicam Engineering Pvt. Ltd.

(B) EMPLOYED FOR PART OF THE YEAR ENDED 31ST MARCH 2007 AND WAS IN RECEIPT OF REMUNERATION AGGREGATING NOT LESS THAN RS.2,00,000 PER MONTH

Dr.Sivaramakrishna Pillai (54) Vice President 2876034 Phd., (28) 19.01.2001 Managing PartnerGemini Inernational Corporation

Sebastian Thomas (58) Chief Executive 2033579 M.Sc. Botany (33) 01.09.1992 Biogenics, California, USA( Nutraceuticals)

1. The nature of employment of all employees above is contractual.2. Remuneration as shown above includes salary, allowances, leave travel assistance, Company’s contribution to Provident Fund, Superannuation Fund

and Gratuity Fund, Medical facilities and perquisites valued in terms of actual expenditure incurred by the Company in providing the benefits to theemployees excepting in case of certain expenses where the actual amount of expenditure cannot be ascertained with reasonable accuracy, and in suchcases, notional amount as per Income-tax Rules has been adopted.

3. None of the employees is related to any Director of the Company.On behalf of the Board

Chennai A.VELLAYANMay 4, 2007 Chairman

10


Review of E.I.D.- Parry’s Business

E.I.D Parry (Parry), completed its restructuring during 2005-06 by entering intoa Joint Venture with Roca Sanitario S.A. for the sanitaryware business toprovide consistent and increasing returns to its shareholders. Parry has nowbecome a sugar focussed company to become a dominant player in this sectorand is also investing in promising areas like Bio-pesticides and Nutraceuticals.Through its subsidiaries and JV, viz, Coromandel Fertilisers Ltd. (CFL), GodavariFertilisers & Chemicals Ltd. (GFCL) and Parryware Roca Private Ltd. (PRPL),it retains a significant presence in the fertiliser and the sanitaryware industriesrespectively. Parry has all its seven manufacturing facilities located inTamil Nadu and Puducherry.

The turnover for the year 2006-07 was Rs. 70718 lakhs (including other incomeof Rs. 15546 lakhs) with the distributable profits amounting to Rs. 12742 lakhs.

Sugar

Established : 1842

Revenue 2006-07 : Rs. 556 Crore

Proportion of Companyís total Income : 94%

Background

Parry has relentlessly made efforts to build on its core competencies of beingone of the lowest cost producer of sugar even as it de-risks sugar business byextracting more value from co-products. Around these competencies, Parry isnow adding and developing new facilities of Cogeneration of Power, Ethanol,Extra Neutral Alcohol, Refined Sugar etc. This capacity build-up in productsand markets will ensure that the Company is well positioned to exploit thelarge opportunities offered by emerging trends in the sugarcane business.

Parry as a Sugar Major

Parry as a focussed entity plans to bring large-scale investments into the Sugarbusiness by leveraging its existing assets and strengths in this sector in threebroad directions.

Expand existing sugar units capacities

1. The Company is currently in the process of expanding its capacityfrom current levels of 16500 TCD to 19500 TCD across its existingmanufacturing locations. These projects are estimated to be fullyoperational by the end of 2007-08. This will help in optimising thecrushing period by the increase in throughput , with improvementsin process efficiencies,sugar recovery gains and reduced energy(steam plus power) consumption. The efficiency norms are beingbenchmarked internationally and should make these units very lowcost producers.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT 2006-07

2. The Units are also being designed to offer a wide range of products toserve broader & more diverse Customer base. The Units with built inflexibility will also enable making of customised product offerings tomeet key customer accounts.

Value addition of Co-products

1. Cogenerated Power: The growing energy consumption in India allowsthe sugar industry to play an increasingly important role in the energyeconomy. Additionally, the power generated and exported by the co-generation unit is environment friendly (ìGreen Powerî) and madeavailable to rural areas where the mills are located. Thus sugarcaneis increasingly becoming a source of energy. This Cogen power is inline with Clean Development Mechanism (CDM) methodologies, whichare now clearly defined and carbon credits are expected to flow soon.

2. Molasses and Alcohols: The Company has started addingmanufacturing units to straddle the entire value chain of the Distilleryñ from Industrial Alcohol and Rectified Spirit to Extra Neutral Alcohol(ENA) and Fuel Ethanol production. Implementation of Kyoto Protocolby India requires fuel ethanol blending in petrol (EBP) to becoming areality. The Government of India has made 5% blending of Ethanolwith petrol mandatory which is in the process of being implementedacross all States. This proportion is likely to increase to 10% shortly,which will create further potential for the producers. Tamil Nadu SugarMills have negotiated with Oil Marketing Companies to supply Ethanolat about Rs.21.50 per litre (ex-factory). The industry is also discussingwith the Government to link ethanol prices to the international petroleumprices. Some operational issues are also being worked with theGovernment including considering a policy change to takeadministrative control of Molasses and Alcohol movements etc., tothe Centre as India needs to implement Kyoto Protocol as a nation.

Future opportunities

The Company will continue to keep exploring the possibilities for growth throughGreen field and also acquisitions. A 2500 TCD mill in Tamil Nadu is underactive consideration and may be commissioned in record time as soon as theGovernment approvals are obtained.

GLOBAL PERSPECTIVE

Growth of Sugar sector

Countries' production levels - surplus across major Sugar countries

The global supply response to high prices in the middle of 2005-06 means thatsugar supply has grown faster than sugar demand and this has placeddownward pressure on prices in 2006-07. The production has surpassedconsumption for the first time in past six years.

directors 07.pmd 7/9/2007, 2:20 PM10

11

INDIAN PERSPECTIVE

Current Situation in the Domestic Market

The Global situation has been more or less reflected in India. The rebound ofthe cane crop and the enthusiastic response to higher cane prices has resultedin substantial surplus for the Sugar Season 2006-07. Latest production estimatesare around 27 MMT for this Sugar year against the estimated consumption of19.5 MMT.

The situation of bumper stock was further aggravated by a Sugar Export baneffective June 2006 by the Government of India (GOI) (made applicable evenfor the mandatory exports under the Advanced Licence Scheme).

World is experiencing concurrent peak production by most of the top sugarproducing countries with the exception of European Union (EU). It is noteworthythat world production has increased by a large 8 MMT in 2006-07.

Exports from Brazil and India, two of the worldís major sugar producing countries,are forecast to increase more than what was expected previously, as goodseasonal conditions have led to higher production in those countries. In contrast,the EU is forecast to reduce exports significantly in 2006-07 in order to meet itsobligations to the World Trade Organisation.

The fairer trade practices demanded by WTO, high prices of oil, global warming,environmental pressure to reduce dependence on fossil fuels and increaseduse of renewable energy have been directly and indirectly impacting the SugarBusiness across the world. The two major cane producing countries ñBraziland India have responded with large scale investments in Sugarcane industry(both Sugar Mills and Ethanol Plants). Developed nations as consumers ofpetrol and diesel have also responded by kick-starting large investments forcreating a bio-fuels industry. USA has been building a large Ethanol Unit basedon Corn almost every 9 days for 18 months now while EU has been developinga bio-diesel production and distribution system. Other important developmentsin the world Ethanol program include the intended Brazil-US Ethanol agreementand Brazil-Japan Ethanol talks. All this has fuelled increase in sugarcane, cornand wheat acreages and prices as land is being used for new end-use of cropsñ the transport energy sector. A new debate has commenced on Food versusFuel as the world attempts to re-align its resources between these twosectors. All this will have a significant impact on World Sugar availability, priceand trade.

As a result, the domestic price of sugar plummeted in the second half of theyear. Simultaneously during this period, the international prices of sugar alsocrashed from $ 400 per MT levels to less than $ 320 per MT. The strengtheningof the Indian Rupee further aggravated the sugar exportersí plight. By the timeGOI finally removed the export ban the net realisation was unremunerative.

The present prices both domestic and export is now below manufacturing costsince cane prices were fixed based on high prices of sugar ruling at early partof last year. There were imminent possibilities of cane arrears mounting. TheGOI finally accepted the Industryís pleas and agreed to a series of immediateterm measures for stabilising the sugar prices. The GOI has now announcedsubsidies at Rs. 1350 per MT (for a Coastal state) to encourage exports. TheGovernment of India has also announced a creation of Buffer stock of 2 MMTto ease the pressure on sugar prices.

Meanwhile alarmed by the deteriorating situation on prices, the amount ofstanding cane remaining and possibility of arrears in cane payment, majorcane producing State Governments have stepped in with relief measures.Leading in this effort is Maharashtra state, which has announced an exportsubsidy of its own of Rs. 1000 per MT, over and above the Central Governmentsubsidy besides a slew of other measures. These include a decrease in caneprice for recovery drops for late season crushing and purchase tax waiver forthe entire season, insurance payment of Rs. 25,000 per acre of standing cropon arrival of monsoon etc. Karnataka has followed with similar relief packages

directors 07.pmd 7/9/2007, 2:20 PM11

12


and Andhra Pradesh and Madhya Pradesh are expected to follow. Tamil Naduhas so far not taken any action to help the mills in the state.

The Way Ahead for Indian Sugar Industry

The policy changes on exports represented a dramatic turnaround in the

Government position but was as usual, only reactive, rather than proactive.

The situation in exports swung through a full cycle of no exports to one of

restrained exports (only ALS obligations) to a export ban and to free exports,

all within one year. This flip-flop has hurt Indiaís reputation, as a sugar exporter,

in the world trade circles and markets.

Even as major policies are being modified on an ad-hoc basis, a plethora of

controls and administrative measures by the Central and State Governments

continue to impact the industry and its overall performance on account of

unresolved contradictions and decision based on political considerations. These

include:

1. Release Order Mechanism: This measure was designed to manage stocks

and prices during times of scarcity and food insecurity. It has lost its relevance in

the current context of assured abundance. It has also become ineffective due to

the ability of the mills to sell above the release orders through court orders.

2. Reacting to prices in domestic Market by Banning Exports: It must be

noted that only 10% of sugar is now required by the Below Poverty Line

consumers with the balance being sold as Free Sale Quota. More than 2/3rd of

this is consumed by Processed Food and Beverages sector. Thus, the Govtís

role to ìcontrolî prices seems more a concern to manage WPI since Sugar

retains a very high (and unduly so) weightage in this Index.

3. Cane Pricing: Cane pricing is at both the State (State Advised Prices- SAPs)

and Central (Statutory Minimum Price- SMP) Governments level. The State

Governments announce cane prices without any way of linking it to Sugar

prices. There needs to be a proper linkage between cane price and sugar price

realisations.

4. Fuel ethanol industry is emerging and its policy framework is justevolving: It is necessary that a fair and progressive framework is evolved to

encourage further investments into the sector. In fact, it is this sector that plays

a larger role in energy security and economic development of the country.

There appears to be conflict of interest between State and Central Govt. in the

area of revenue generated by this sector. While Alcohol sold to Potable Liquor

is excisable by State and forms an important revenue source, Alcohol used to

convert into Ethanol is a revenue for Centre. Thus for the nationís larger cause,

the Central and State Governments need to develop a clear path for Ethanol.

These contradictions have to be resolved soon. All controls on this industry must

be removed and Central Government must play a role only to manage strategic

reserve stock to allay its concern on sugar availability and prices in ration shops.

As a country we need to take a long term view of sugar exports to carve out a

credible and sustainable share in the world sugar trade. The Indian sugar

industry has demonstrated its ability to keep up supplies even in the drought

years and the bogey of food security should not be used to restrain the industry.

Tamil Nadu - a Comparative Advantage assessment

Over 85% of Indian Sugar production is concentrated in and around five states

ñ UP, Maharashtra, Tamil Nadu, Karnataka and Andhra Pradesh.

Tamil Nadu (TN) has several specific advantages which are as follows:-

● Favourable agro climatic conditions and a two monsoons system

leading to longer availability of cane. Thus several mills in TN crush

for about 270 days as against the other states average of about 160

days. The longer crushing season also provides for a profitable

investment in cogeneration which further increases the overall

profitability of operation in TN.

● The sugarcane yield per hectare is significantly higher compared to

the other states and this helps in ensuring higher availability of cane

at an optimal cost as well as sustained farmersí interest in the crop.

● Two good ports in the State provide easy access to the export market

especially, South and South East Asia.

● Good infrastructure including linking roads, agri-credit through Banks,

power supply for irrigation etc.

● Progressive farmers and a strong R&D support from the Sugarcane

Breeding Institute, Tamil Nadu Agricultural University at Coimbatore.

However, the long crushing season is partially offset by low recovery period of

crushing and the distance from sugar deficit markets of India (except Kerala)

and high purchase tax on cane neutralises the above advantages thus

decreasing our competitiveness.

Movement of surplus molasses out of Tamil Nadu to other deficit states and

export is subject to several administrative controls besides payment of export

administrative service fee. On account of this, the producers in Tamil Nadu are

unable to realise better prices at the opportune time.

Current Situation of the State

Tamil Nadu is expected to produce a record high of 2.5 MMT of sugar this year

ñ a substantial jump from the previous year production of 2.17 MMT. Coming in

along with the national surplus, the pressure on prices is felt acutely here too.

SISMA has represented to the State Government for relief measures similar to

that offered by other states, and is awaiting response.

directors 07.pmd 7/9/2007, 2:20 PM12

13

EID Parry (India) Ltd.

Performance review

Execution of the Growth and de-risking strategy:-

1. The companyís fifth sugar plant at Puducherry has commenced

operations and achieved the rated production capacity within a short

period of time. The projects to increase throughputs in the four sugar

units in Tamil Nadu are progressing well and the capacity is likely to

be increased to 19500 TCD by the year end. The Company is also

planning another green-field unit in Tamil Nadu to be completed in

record time to increase the overall capacity to 22000 TCD.

2. The 22 MW Cogeneration unit has been commissioned in Pugalur.

This, in addition to the existing two units with a total capacity of 43

MW is a 50 % increase in cogeneration capacity. Another cogeneration

plant is currently under construction in Pettavaittalai and will be

commissioned by the year end.

3. The existing Distillery at Nellikuppam is being converted into a multi-

product unit with ENA and Ethanol production facilities. The Unit is

also likely to be expanded and with two more distilleries planned, the

Company will be able to value-add all the Molasses it produces

(currently only 1/3rd).

The Company crushed 41.95 lakh tonnes (25.97) of cane with Y-O-Y growth of

62% with a recovery of 8.93% (8.80%), thus sugar production has increased to

3.81 LMT (3.05). The Company continued to make substantial revenues from

co-products, its export to grid were at 1630 lakh units (943) with a Y-O-Y growth

of 73%.

Sugar Score Card

(Rs. Lakhs)

2003-04 2004-05 2005-06 2006-07

Revenue 41517 55254 72463 55592

EBIDT 5510 8928 9909 5764

EBIT 3458 7012 7967 3080

Capital Employed 33912 34631 40082 51427

ROCE 10% 20% 20% 6%

Significant amount of insulation is provided from Cogen and Distillery operations,

which do not follow the sugar cycles. This is leading to a change in the overall

mix of revenues and profitability of the Sugar Division. The profitability of an

integrated sugar model is thus not dependent solely upon sugar prices.

Sugar Daily Price1st April 2003 to 31st March 2007

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Sugar Cogen Distillery Total

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Revenue 48697 67574 5037 2919 1858 1970 55592 72463

EBIDT 1780 8170 2999 1592 985 147 5764 9909

EBIT 221 6815 1929 1052 930 100 3080 7967

Capital Employed 29066 25545 21465 13913 896 624 51427 40082

level and personal accident at the grower level. Parry organises internetkiosks called ìParrys Cornerî to help the farmers avail cane servicesat their doorsteps. Banking services available at their doorstep arespecial services offered for better business partnership.

Marketing:

The Company offers now a wider range of Sugar to broader & more diverseCustomer base. Parry also specialises in making tailor-made products to suitcustomer needs. This diversification effort is not restricted only to Sugar, buthas been further extended to include ENA, Ethanol etc. This allows Companyto extract the inherent & intrinsic value of every part of the stick of Sugarcane.

Expansions:

Taking forward its expansion plans, the Company has operationalised the newlyacquired Puducherry unit at Ariyur, stabilised Pudukottai Cogeneration Unit,commissioned Pugalur Cogeneration unit and is poised for growth in the entiresegment in coming years.

This change in the product mix lends greater stability and predictability to thefinancial performance of the Company. With the completion of new investmentsin Co-products, the share of the profitability from Co-products will increasesubstantially in the coming years and thus de-risking from Sugar cycles.

EID Parry - USPs

Parry has been able to achieve a position of leadership in Tamil Nadu and alsobe a player of national importance with the help of several business practicesand innovations. These practices span all areas of operations.

Sugarcane:

1. Cane R&D:

a. Parry is the only sugar Company in India to run an exclusive R&Dwing and breeding program which has generated several promisingnew high yielding cane varieties with higher sucrose-content and morepest resistance, matching the local soil conditions.

b. Satellite mapping: Parry is involved in conducting soil survey andmap the same with the help of satellite imageries by developing farmland database.

c. Drip irrigation systems: Parry is enabling the farmers to use lowcost drip irrigation system with estimated water savings of about 40%.With the Tamil Nadu State Govtís recently announced capital subsidies,the Company expects to increase cane acreage under drip irrigationto at least 10 %.

2. Cane Development:

a. Extension: Parry gives extensive support to the farmers in managingtheir cane through its Cane Extension team. The team has been furtherstrengthened by employing Agri-graduates from premier universities.The team works closely with the farmers to help them in better farmingpractices, monitoring the crop throughout the year, crop protectionfrom pests and diseases and increasing the land productivity.

b. Farmer Services: Parry transfers good farm management from lab-to-land through demos,farmer training sessions for better yieldimprovements; offers its cane growers agri credit through Banks andunique insurance policies covering both the crop at the individual plot

(Rs. Lakhs)

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Refinery Joint Venture

E.I.D.-Parry (India) Ltd and Cargill International S.A. have entered into a jointventure to set up a port-based stand-alone sugar refinery in Kakinada, AndhraPradesh. With an ultimate capacity to produce one million tons of refined sugarper year, this refinery set up in Kakinada will be the largest in the South Asianregion. The joint venture will be setting up the refinery close to the Kakinadaport. The refinery will be a processing operation, importing the entire rawmaterial, raw sugar, adding value by refining it, and exporting its entireproduction. Parry holds 50% in the joint venture.

Risk Management

The Company continues to practise risk management to increase the probabilityof the Company achieving its set Goals and Objectives.

And Risk Management, though often called as a Process, it is actually a Practicein the Organisation.

The following are the major risks associated with the sugar business:

Raw material risk: Sugarcane is the main raw material for sugar and anydisturbance on its timely availability will have a substantial impact on operationalcost. This is likely to be caused by the following reasons:

Climatic conditions: The crop and availability of cane in TN is influencedby both the monsoon (South-West and North-East). Local weatherconditions over the crop cycle affects both the quantity and quality of caneavailable.

Cane Economics: The profitability of alternative crops will influence thearea of planting under cane; pests and disease and availability of farmlabour also impact the cost incurred by the cane grower.

40 40

180200

Mitigation Measure: The Company has always maintained an amicablerelationship with its farmers. It has paid up all dues on time, despite thearrears having been on the rise in the industry as a whole. With its goodwilland the time tested policy of ethical dealings, the Companyís risk of a rawmaterial short supply will be mitigated with the farmers in the addressablearea continuing to plant sugar cane. Further, with experiments in farmmechanisation, drip irrigation, improved cane varieties (developed throughthe Research and Development facility), carefully monitored scheduling ofcane planting and harvesting, the Company is confident of mitigatingthe risk.

Policy risk: The policies on cane are regulated by both the Central and StateGovernment and they currently have a considerable hold on this industry bybeing able to fix the raw material price and to influence the sugar selling price.Further the control of the Governments (State and Central) include:-

Exports (Permission / incentives)Imports ( Permission/tariffs)Sugar pricing (Release orders and Levy)Command Area demarcation from time to timeMolasses movement control

Mitigation Measure: The Company works closely with ISMA and SISMAtowards developing an industry point of view and appropriate policyrecommendations to have dialogue with the Government. These includeformulation of policy on Ethanol doping, review of cogeneration policy,Decontrol of Sugar, review of sugar weightage in WPI etc.

Price risk: The cyclicality of Sugar business does have a final call on thesugar prices and thus affecting profitability.

Mitigation Measure: The company has taken the following measures toinsulate itself against the price risk by two ways ñ

1. Focusing on value added products like Pharma grade refined sugar,high quality plantation white sugar and retail packs to derive a bettermargin.

2. Direct supplies to large Institutions and retail chains.

Outlook summary:

Indian sugar industry is going through a very critical phase where within ashort period of time the situation has turned from one of ìshort supply and highpricesî to one of ìexcess supply and low pricesî. While part of this is due toGovernment interventions, some of them are due to increased alignment withworld scenario.

While in the short term, relief measures have been announced to bring backstability of sugar prices, the long term outlook for sugar remains positive andpromising for the following reasons:-

ï Growing demand for sugar especially internal consumption led strong GDPgrowth and changing food habits

ï Opportunity from Fuel Ethanol blending program

directors 07.pmd 7/9/2007, 2:20 PM15

16


ï Opportunity from Cogeneration of Power

ï Opportunities for India to become a structural Sugar exporter and participatein the South Asian Sugar market provided an enabling conducive policyframework is put in place by GOI

ï Important developments in the World Ethanol program and its impact onWorld Sugar availability.

Bio Products

A. Bio Pesticides

Established : 1994

Revenue, 2006-07 : Rs.26 Crore

Proportion of Companyís total Income : 4%

Exports : Rs 18 Crore

Highlights 2006-07

ï AVANA - Neem based bio pesticide granule was launched successfullyfor controlling pests in the Sugarcane and Paddy in the domesticmarket.

ï With new registrations, export sales opened up in the markets like Columbia,Brazil, Korea and Australia.

ï Parry America Inc., wholly owned subsidiary of Parry, is taking all effortsto establish significant presence in the Home & Gardens segment inAmerica.

Divisional Performance

ï Revenue at Rs.26 Crores & Aza Technical sales volumes at 4 MT remainedmore or less at the last year's level.

Financial Performance

(Rs. Lakhs)

Details 2004-05 2005-06 2006-07

Revenue 2026 2566 2627

EBIDT 521 629 519

EBIT 389 421 293

Capital employed 2206 3242 3720

ROCE 18% 13% 8%

The Bio Pesticides division of the Company has emerged as a significantsupplier in the Neem based bio-pesticide business and continues to focus onits core product - the NEEMAZAL® range of products.

Industry Scenario and Development

The Global Bio pesticide market is estimated at Mn. 672 $ accounting for 2% ofglobal pesticide sale with the remaining 98% being markets for Syntheticpesticides.

Neem based bio pesticides come under the category of ëPlant extractsí basedbio pesticides which accounts for Mn.60 $. The sale of Aza based products isvalued to be Mn. 25 $.

By 2010, Global Bio pesticide is estimated to grow to Mn 1075 $ at a CAGR of10%. On these growth projections, the Plant Extracts business will be atMn.160 $ and the business for Aza based products will be at Mn. 67 $.

The Bio pesticide market is distributed in Americas (45%), Europe (35%) andrest of the world (20%). Asia offers the highest growth potential because of thesize of the prospective market.

Performance

Export Sales and Revenues registered a growth over the previous year, withAmerica and Europe continuing to be the major markets. China and Korearegistered sales as planned.

During the year, Sales in the domestic markets did not grow due tounfavourable seasonal conditions and change in Sales and Distribution Modelfrom Trade Channel to Institution. This one time correction of shifting toInstitutional model coupled with the season failure has resulted in reducedsales in the Domestic markets.

During the year, Thyagavalli unit reached a landmark of achieving 1000 kg productionin a month demonstrating the potential to reach the name plate capacity.

Operating Results

Sales 2004-05 2005-06 2006-07

100% Technical (Kgs)ñ Domestic 1478 1464 716ñ Exports 2320 2868 3212

Total 3798 4332 3928

directors 07.pmd 7/9/2007, 2:20 PM16

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Risks

a) Significant changes in climatic conditions resulting changes in croppingpattern in the addressable markets are likely to affect the sale of theCompanyís products.

b) A steady increase in the price of neem seeds is eroding the productcontribution and profitability.

c) With 70% of the current revenues coming in from the exports business,adverse exchange rates of the Rupee with US Dollar will impact on theprofitability of the Division.

Managing the risks

a) The division operates in diversified markets across the world, whichfacilitates the management of the risks associated with climatic conditions.

b) Sourcing the Neem seeds in different grades from different States spreadover a longer period of time will partly control the neem seed prices. Parrywould also de-risk the cost partially by realising better values from sale ofby-products.

c) Exchange fluctuations will be managed by taking Exchange cover atappropriate time. The business operates in multiple markets with multiplecurrencies thereby minimising the impact of exchange fluctuations.

Outlook

The Division is operating in the ëPlant Extractsí segment of Bio pesticide industry,which is projected to grow to Mn.160 $ by 2010. The demand for organic andresidue free food is continuing to grow worldwide. The Companyís productscommand a premium over its competitors, both in the domestic and exportmarkets.

The Division is constantly working through its R&D team to continuously comeout with totally new and modified products. This will facilitate the business toaddress the growing and diversified customer requirements across the globalmarkets.

Going forward, the divisionís prospects are expected to be on the growthpath.

B. Nutraceuticals

Parry Nutraceuticals Ltd. merged with Parry effective 1st September, 2006 andis currently functioning as a division of your Company.

The Nutraceuticals division clocked a turnover of Rs. 1112 lakhs for the 7 monthsperiod ended 31st March, 2007. The products of this business continued togrow in all the markets and is currently exported to 35 countries. OrganicSpirulina, the main product of this business continue to outperform competitionin its segment. In the current year the Company made inroads into New Zealandby selling Organic Spirulina to one of the largest brands of Nutraceuticalsworldwide. The Company also got the prestigious account of Cosway, Malaysiafor its Organic Spirulina.

The Organic Spirulina produced by your Company is the most certified OrganicSpirulina in the world with 5 quality certifications and 3 Organic Certificationsto its credit. The Organic Spirulina of the division was certified to meet stringent

standards such as US Pharmacopeia, USDA and Naturland - Germany.

Nutraceuticals division

Business Established : March 2000

Merged with EID Parry : 1st Sep 2006

Revenues from 1st Sep 06 to 31st Mar 07 : Rs 11.12 Crore

Proportion of Company's total Income : 2%

Exports : Rs 9.07 Crore

Highlights 2006-07

During the year, two new strains of Algae were successfully experimented insmall scale for commercial production of Omega 3 EPA and DHA. Additionalponds have been built to expand and commence limited commercial production.The products from these Algae would cater to heart health and brain health

and is expected to hit the market in the 2nd half of the FY 2007-08.

Financial Performance(Rs. Lakhs)

Details 2006-07 (7 months)

Revenue 1112

EBIDT 171

EBIT 130

Capital employed 2403

ROCE 5%

Industry Scenario and Development

The size of the global Nutraceutical industry is estimated well over US $ 15billion per annum growing at 10% per annum. With increasing medical carecosts and aging population in the west, Nutraceuticals as a category ofpreventive health care is bound to grow at a steady pace. Within the category,the Microalgal segment estimated at US $ 300 million and is growing at 7-8 %per annum covering Spirulina, Carotenoids like beta carotene, Astaxanthin andthe fast growing omega 3 fatty acids.

The Nutraceutical industry is increasingly being regulated world wide forstandardisation and product claims. Much money is being spent by leadingplayers in the Nutraceutical industry establishing product claims through clinicalstudies. There is also a clear trend of Nutraceutical integrating with food andthereby establishing a fast growing segment called Functional foods.

The Division currently produces 3 different types of microalgae ñ OrganicSpirulina, Dunaliella (Natural Mixed Carotenoids) and Haematococcus(Astaxanthin) at its Oonaiyur facility. The Company is also developing

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technologies for the production of Omega 3 fatty acids EPA and DHA from 2new strains of microalgae.

Performance

The Division has emerged as a global leader in Organic Spirulina businessand is continuing with its R&D efforts to research new strains of algae to widenits product basket.

During 2006-07, the acceptance of the Companyís products continued to growin all the markets serviced by it.

Risks

Since 82% of the current revenue is from exports, adverse fluctuation in dollarprices will impact the revenues of the division.

The microalgae production is weather dependant and changes inweather patterns will have an adverse impact in productivity and costof production.

Managing the risks

Exchange fluctuations will be managed by taking Exchange cover atappropriate time.

The business operates in multiple markets with multiple currencies therebyminimising the impact of exchange fluctuations.

Operation of multiple algae varieties requiring differing weather conditions will

provide us opportunities to minimise impact due to changes in weather patterns.

Outlook

The Nutraceutical industry is set to play a significant role in managing increasinghealth care costs and improving the quality of life in aging population worldwide, with increasing shift in customer preferences to natural alternateingredients to synthetic components with emphasis on disease prevention ratherthan disease treatment. The Company is set to participate in a very significantsegment of Omega 3 fatty acids which is currently the fastest growing segmentbacked by scientific claims and studies. The Food Safety and Standards Bill2006 will trigger the growth of this nascent industry in India.

Internal Control and Systems

Internal control and proper systems are essential to ensure efficientfunctioning of the operations of the Company. Companyís growth andprofitability can get affected by inadequate and weak internal controls andprocesses. The Company is conscious of the importance of internal processesand controls and has thereby set up a robust business planning and reviewmechanism.

The Company has established a system of internal control across all its businessoperations. The Board, Audit Committee and the Management ensure that the

internal control system operates effectively in the organisation. The Companyíswell established Enterprise Resource Planning (ERP) system helps incontinuously monitoring the adequacy and effectiveness of the internal controlacross the various businesses and the status of compliance with operatingsystems, internal policies and regulatory requirements. Efforts continue to bedirected on securing adequacy and effectiveness of systems and policies thathave been laid down.

In-house Internal Audit team supported by external experts as and whenrequired, review the adequacy of internal control systems and suggestsnecessary checks and balances to increase the effectiveness of the system.Validation of IT security continues to receive attention of the internal audit team,which includes IT audit specialists. Further, Internal Audit team carries outperiodic Audits on Assurance, Operations, Technical , Statutory Complianceand Projects.

The Company views the requirements under the revised listing agreementregarding internal controls as an opportunity and continues to review its internalcontrol systems on an ongoing basis.

Information Technology

The Company continues to make investments in Information Technology forimproving the robustness of the business processes. With ERP in place, ithelps in improving the business processes and thereby the internal controlsystems. Early warning systems helps the business in ensuring the keyparameters are managed through alerts by fixing threshold limits therebyensuring preventive controls.

Besides the above, SAP has in-built controls at the master data, transactionand configuration level to ensure that transactions are recorded accuratelyand interface between all modules are maintained correctly.

During the year, the Company has implemented SAP in its new unit atPuducherry and in Cogeneration plant at Pugalur. Web Enabled CaneProcurement and Management System is implemented successfully and hasbeen functioning well. This will improve controls and also enable quicker servicesto Sugarcane growers. Also, Employee Self Service System has been activatedto capture exhaustively all employee related services.

Financial Review

Revenue:

The Company achieved a Gross Turnover of Rs.58323 lakhs as compared toRs.97846 lakhs (Rs.74693 lakhs excluding Parryware) in 2005-06.

The drop in Turnover was mainly due to a decline of 30.15% in Sugar salesvolume. But Sales of Power showed a growth of 73% over last year mainlydue to commissioning of Cogeneration plant at Pudukottai (18 MW) inMarch, 2006.

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Sales Analysis:

2006-07 2005-06

SEGMENTS Unit Qty Value Realisation Qty Value RealisationRs.Lakhs Rs./Unit Rs.Lakhs Rs./Unit

Sugar Tonnes 266306 46740 17551 380833 65212 17124

Alcohol Kilolitres 105 1858 17.70 109 1970 18.11

Power KWH 1630 5037 3.09 943 2919 3.10

Bio Pesticides Kgs 3928 2121 53993 4332 2226 51879

Nutraceuticals 1112

Sanitaryware & Fittings † † † 23153

Others including services 1455 2366 †

Total 58323 97846

EBIT:

Operating EBIT was Rs. 5010 lakhs as against Rs. 9604 lakhs of previousyear. The reduction in EBIT was mainly on account of 61% decline in Sugarsegment.

Profits:

EBIDTA:

The Earnings before Interest, Depreciation, Tax and Amortisation excludingOne-time Profit on sale of investments was Rs. 8297 lakhs as againstRs.11958 lakhs (after excluding Parryware business and Profit on sale ofinvestment) in 2005-06. The drop in sugar profits by 42% mainly contributedfor lower operating EBIDTA during current year.

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PAT:

PAT excluding Profit on sale of investment and tax thereon, stood at Rs. 3570lakhs as against Rs. 9299 lakhs of previous year. Overall PAT has grown by10 % to Rs.12742 lakhs from Rs.11584 lakhs in 2005-06.

the current assets by Rs.25856 lakhs. Due to the above movements, the netincrease in Net Current Assets was Rs.2485 lakhs.

Rating:

The Company continues to enjoy AA rating for Long Term Debt and P1+ ratingfor short term borrowings from CRISIL and Prime rating from its main bankerState Bank of India.

Book Value and Earnings per Share:

The Book value per share as on 31st March, 2007 was Rs 60.07. The Earningsper share (EPS) for the year was Rs. 14.28 per share. Excluding one-timeprofit on sale of investments, EPS was Rs. 4 per share.

* Previous yearís figure includes Parryware business

Finance Charges:

The Company has incurred finance charges of Rs.1629 lakhs for the year2006-07 as compared to Rs.1234 lakhs in 2005-06. The increase was due tohigher Working Capital Borrowing and higher rate of interest. Correspondingly,the interest income earned in 2006-07 increased to Rs.1840 lakhs as againstRs.495 lakhs in 2005-06 mainly arising from sale of investments held inParryware Glamourooms Pvt Ltd. This resulted in a Net Interest income to thetune of Rs.211 lakhs for 2006-07 as compared to Net Finance charges ofRs.739 lakhs in 2005-06.

Capital Structure:

The Networth of the company increased from Rs. 48563 lakhs in 2005-06 toRs. 53615 lakhs in 2006-07. During the year, adjustment to General Reservewas carried out to the extent of Rs.35 lakhs (net debit) being the excess ofassets over liabilities after adjusting the cost of investments of the Companyin the amalgamating company while accounting for amalgamation of ParryNutraceuticals Limited with the Company and to the extent of Rs.420 lakhson account of transitional provision under AS-15 (Revised ) on Employeebenefits.

Working Capital:

The Net Current Assets as on 31st March, 2007 was at Rs. 35616 lakhs asagainst Rs.33131 lakhs in 2005-06. There was an increase of Rs.16074 lakhsin Short term deposits made out of amounts received towards Business Transferand Sale of investments of Parryware Glamourooms Pvt Ltd. and an increasein Inventory by Rs. 15054 lakhs together resulted in increased Current Asset.However reduction in Trade receivables and Loans and advances brought down

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Ratio Analysis

Key Profitability Ratios

Particulars 2006-07 2005-06

EBIDTA/Total Income 28.44% 18.16%

PAT/Sales 23.10% 12.51%

PAT/ Networth (ROE) 23.77% 23.85%

Higher profitability ratios achieved during the year was mainly due to one timeprofit on sale of investments in Parryware Roca Private Ltd.(formerly ParrywareGlamourooms Private Ltd.) to the tune of Rs. 11812 lakhs.

Key Capital structure Ratios


Debt/Equity ratio 0.66 0.51

Long Term Debt/Equity ratio 0.34 0.44

Outside liabilities/Networth 1.10 0.94

Net Fixed Assets/Networth 0.91 0.70

Net Fixed Assets/Turnover 0.89 0.37

Higher working capital borrowing over previous year by Rs. 13857 lakhs wasdue to higher sugar inventory of 101937 MT (Previous year 2091 MT) whichhas also resulted in higher debt equity ratio as on 31st March, 2007. Repaymentof Long term loans of Rs. 5034 lakhs during the year led to a better long termdebt/equity ratio.

Liquidity Ratios

Particulars 2006-07 2005-06*

Current Ratio 1.46 1.59Inventory Turnover (days) 90 15

Receivables (day gross sales) 46 69

*Previous year Liquidity ratios is after excluding Parryware divison.

Earnings and Dividend Ratios


Dividend 295%* 225%*Dividend Payout 47.40% 39.5%

Earnings Per share (Rs.) 14.28 12.98

* Includes Special Interim dividend of 225% declared during 2006-07 on accountof profit on sale of investments in Parryware Glamourooms Pvt. Ltd. andSpecial Dividend of 90% on account of profit on sale of investment in2005-06.

Risk Management

Risk is any real or potential event, action or omission, internal or external,which will reduce the likelihood of the Organisation achieving the definedobjective.

Risk management is the Culture, processes and structures that are directedtowards the effective management of adverse effects and potential opportunitiesthereby avoiding surprises. Risk management is not a single event orìhappeningî. It is the summation of many management practices and actionsthat permeate and are inherent in business.

Risk management involves the following processes:

ï Identification of risks and risk ownersï Evaluation of the risks as to likelihood and consequencesï Assessment of options for accommodating the risksï Prioritising the risk management effortsï Development of risk management plansï Authorisation for the implementation of the risk management plansï Review of the risk management efforts

Types of Risks

For each of the business, the risks were classified under the following headsand the probability of occurrence and the impact of each of them were mappedand the risk mitigation process was also prepared by the management andpresented to the Board.

ï Business Risksï Operational Risksï Environmental Risksï Management Risksï Financial Risks

This will be a continuous process.

The Company has also formed a Committee called as Risk Committee chairedby the Managing Director and the business heads, Chief Financial Officer andthe Company Secretary as the members.

The Chairman of the Committee would appraise the Board about the risk

assessment and minimisation procedure at periodic intervals.

Human Resources

Every successful company is built on a brand that is taken seriously in themarket place. Towards this, your Company has been focused on building ateam with complementary skills and a common value system to achievebusiness goals year on year. Despite a buoyant talent market, the Parry brandcontinues to attract the required human capital.

The best index of a successful corporation is its longevity. The growth and longevityof your Company come from strong relationships with its stakeholders - Customers,Farmers, Investors, Employees, Govt. and the society at large.

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In an industry which constantly grapples with the unforeseen and uncontrollable,your Company considers Human Resource Management as the key enablerin managing this business reality. The emphasis on offering people opportunitiesfor cross functional and cross business exposure nurtures and challenges theirability and creativity.

To meet the competitive environment, your Company believes in linking HR toits investment plans. Your Company focused on manpower planning for keytalent acquisition for functions which are strategic to business like Projects,Cane, R&D, Extension & Plant Operations. Manning of skilled work force atour new acquisition (Puducherry Plant) was completed smoothly, which enabledcommencement of operations in a record time.

To facilitate speed of execution, the Cane organisation has been re-structuredon a regional basis.

Your Company continued to maintain industrial peace and harmony bycontinuing an environment of trust, transparency, openness and through acollective bargaining process.

The Nellikuppam and Pugalur Plants bagged State level safety awards, anindication of our continued work in the area of Safety, Health and Environment

The total number of employees in EID Parry as of 31st March, 2007 is 1698.

Cautionary Statement

Statements in this Management Discussion and Analysis describing theCompanyís objectives, projections, estimates and expectations may constituteìforward looking statementsî within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressedor implied.


Chennai A. VELLAYANMay 4, 2007 Chairman

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Corporate governance refers to the manner in which a Company is directed,and laws and customs affecting that direction. It includes the manner in whicha Company operates under the laws governing Companies, the bylawsestablished by the Company itself, and the structure of the Company. Thecorporate governance structure specifies the relationship, and the distributionof rights and responsibilities, among primarily three groups of participants, viz.,the board of directors, managers, and shareholders. This system spells out therules and procedures for making decisions on corporate affairs; it also providesthe structure through which the Company objectives are set, as well as themeans of attaining and monitoring the performance of those objectives.

The fundamental concern of corporate governance is to ensure the conditionswhereby a Companyís directors and managers act in the interests of theCompany and its various stakeholders.

Corporate Governance in E.I.D.-Parry

E.I.D.- Parry, a member of the Murugappa Group of Companies, is committedto the principles and features of good corporate governance and follows thesame in every sphere of activities. The Board of Directors, comprising of eminentindividuals from various disciplines, ensure fairness in dealings with allstakeholders of the Company.

Board of Directors

Composition

The Company has seven directors in the Board with a non-executiveChairman. The Board of Directors consist of professionals drawn from diversefields. The majority of the Directors on the Board including the Chairman areNon Executive Directors. The day to day Management of the Company isdone by the Managing Director subject to the supervision and control of theBoard of Directors.

None of the Directors on the Board is a Member on more than 10 Committeesand Chairman of more than 5 Committees (as specified in Clause 49 of theListing Agreement), across all companies in which he is a Director.

The independent directors have confirmed that they satisfy the ëcriteria of

independenceí as stipulated in the amended Clause 49 of the listing agreements.

REPORT ON CORPORATE GOVERNANCE

(a) The composition and category of the Board of Directors as at 31st March, 2007 and the number of other Directorships / Committee membershipsheld by them are as under:

Sl.No. Name of Director Promoter/Executive/ Number of other Number of membership onNon Executive/Independent Directorships* other Board Committees**

1. Mr. A. Vellayan@ Promoter, Non Executive 9 of which 4 as Chairman 4Chairman

2. Mr. Anand Narain Bhatia Non Executive, Independent 1 2 of which 1 as Chairman

3. Mr. S.B. Mathur Non Executive, Independent 13 of which 3 as Chairman 4 of which 1 as Chairman

4. Mr. P. Rama Babu Executive 4 óManaging Director

5. Mr. R.A. Savoor Non Executive, Independent 2 of which 1 as Chairman 4 of which 1 as Chairman

6. Mr. S. Viswanathan Non Executive, Independent 2 ó

7. Mr. M.M. Venkatachalam Promoter, Non Executive 12 of which 2 as Chairman 3 of which 1 as Chairman

@ Took over as Chairman w.e.f. 19.7.2006 * Excludes Private Companies, Foreign Companies and Section 25 Companies. ** Denotes memberships in Audit Committee andShareholders / Investors Grievance Committee.

Changes in the composition of the Board during the year 2006-2007

Sl.No. Name Date of Cessation

1. Mr. S.M. Datta 19.07.2006

2. Mr. Biswajit Choudhuri 19.07.2006

3. Mr. V. Thyagarajan 19.03.2007

(b) Details of Directors reappointment

Mr.A.Vellayan, Chairman, and Mr.S.Viswanathan, Director, retire byrotation at the ensuing Annual General Meeting and being eligible, offerthemselves for reappointment.

Relevant details relating to them are furnished in the Notice conveningthe Annual General Meeting to be held on 26th July, 2007, sent along withthe Annual Report.

(c) Board Meetings and Attendance at Board Meetings & Annual GeneralMeeting

The Board of Directors met 5 times during the financial year 2006-07i.e. 24.4.2006, 19.7.2006, 19.10.2006, 25.1.2007 and 19.3.2007. Themaximum gap between any two meetings was less than 4 months asstipulated under Clause 49 of the Listing Agreement.

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* Retired at the AGM held on 19.7.2006** Nomination withdrawn by IDBI and ceased to be a director w.e.f. 19.7.2006@ Took over as Chairman w.e.f. 19.7.2006$ Co-opted w.e.f. 19.7.2006 and resigned w.e.f. 19.3.2007# Co-opted w.e.f. 19.7.2006

Sl.No. Name Chairman/ Number ofMember Meetings attended

1. Mr. S.M. Datta Chairman * 2

2. Mr. Biswajit Choudhuri Member ** 2

3. Mr. R.A. Savoor Chairman @ 4

4. Mr. S. Viswanathan Member 5

5. Mr. V. Thyagarajan Member $ 1

6 Mr. A. Vellayan Member # 3

The attendance of each Director at these meetings and at the lastAnnual General Meeting was as follows:

Sl.No. Name No. of Board Attendance at lastMeetings attended AGM

1. Mr. S.M. Datta 2 * Yes

2. Mr. A. Vellayan 5 Yes

3. Mr. Anand Narain 5 Yes

Bhatia

4. Mr. Biswajit Choudhuri 2 ** Yes(Nominee of IDBIas Lender)

5. Mr. S.B. Mathur 5 Yes

6. Mr. P. Rama Babu 5 Yes

7. Mr. R.A. Savoor 4 Yes

8. Mr. V. Thyagarajan 3 $ Yes

9. Mr. S. Viswanathan 5 Yes

10. Mr. M.M. Venkatachalam 5 Yes

* Retired at the AGM held on 19.7.2006** Nomination withdrawn by IDBI and ceased to be a director w.e.f. 19.7.2006$ Resigned w.e.f. 19.3.2007

Board CommitteesAudit Committee

Overall purpose/ObjectiveThe purpose of the Audit Committee (the ìCommitteeî) is to assist the Board ofDirectors (the ìBoardî) in reviewing the financial information which will be

provided to the shareholders and others, reviewing the systems of internalcontrols which management and the Board have established, appointing,retaining and reviewing the performance of independent accountants and

overseeing the Companyís accounting and financial reporting processes andthe audits of the Companyís financial statements.

Terms of reference

The Company had constituted an Audit Committee in the year 1987. The termsof reference of the Audit Committee broadly are as under:

a) To hold periodic discussions with the Statutory Auditors and InternalAuditors of the Company concerning the financial reports of the Company,

internal control systems, scope of audit and observations of the Auditors/Internal Auditors;

b) Discussion with internal auditors on significant audit findings and followup thereon;

c) To review compliance with internal control systems;

d) To review the quarterly, half-yearly and annual financial results of theCompany before submission to the Board;

e) To make recommendations to the Board on any matter relating to thefinancial management of the Company, including the Audit Report;

f) Recommending the appointment/reappointment of statutory auditors andfixation of their remuneration.

The scope of the Audit Committee includes amongst other matters which are set

out in Clause 49 of the Listing Agreement with the Stock Exchanges as amendedfrom time to time read with Section 292A of the Companies Act,1956.

Composition & Meetings

The committee at present comprises of three Non-Executive Directors out ofwhich two are independent Directors including the Chairman of the Committee.All the members have good financial knowledge and one of the members is aqualified finance professional.

Audit Committee meetings are attended by the head of internal audit, ChiefFinancial Officer and senior management members. The statutory auditors andcost auditor are also invited to attend the meetings. The Company Secretaryacts as the Secretary of the Audit Committee.

The Committee met five times during the year ended 31st March, 2007 and

the gap between two meetings did not exceed four months.

The composition of the Audit Committee and the attendance of each Directorat these meetings are given below :

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Remuneration and Nomination Committee

Objective

The Committee reviews and determines the Companyís policy on managerialremuneration and recommends to the Board on the specific remuneration ofExecutive Directors, so as to ensure that they are fairly rewarded for theirindividual contributions to the Companyís overall performance and theirremuneration is in line with industry standards.

Terms of Reference

The broad terms of reference to the Remuneration & Nomination Committeeare to recommend to the Board salary (including annual increments), perquisitesand commission / incentives to be paid to the Companyís Managing Director(MD), to finalise the perquisites package within the overall ceiling fixed by theBoard, to recommend to the Board retirement and other benefits to MD. Thecommittee also recommends to the Board on any new appointments includingre-appointments and the tenure of office, whether of executive or of non-executive Directors.


This Committee comprises of three independent non-executive Directors.Mr.R.A. Savoor is the Chairman of the Committee. The Committee met threetimes during the year ended 31

st March, 2007.

The composition and the attendance of each Director at these meetings aregiven below :

Sl.No. Members of the Chairman/ Number ofCommittee Member Meetings attended

1. Mr. S.M. Datta Chairman * 2

2. Mr. R.A. Savoor Member @ 2

3. Mr. S. Viswanathan Member 3

4. Mr. Anand Narain Member 1Bhatia #

* Retired at the AGM held on 19.7.2006@ Took over as Chairman w.e.f. 19.7.2006# Co-opted w.e.f. 19.7.2006

Remuneration Policy

The Company while deciding the remuneration package of the seniormanagement takes into consideration the following items:a. job profile and special skill requirementsb. prevailing compensation structure in companies of similar size and in the

industryc. remuneration package of comparable managerial talent in other industries.

For the last few years, effort has also been made to link the annual variablepay of senior management with the performance of the Company in generaland their individual performance for the relevant year measured against specificKey Result Areas which are aligned to the Companyís objectives.

The Non-Executive Directors (NEDs) are paid remuneration by way ofcommission besides sitting fees. In terms of the shareholders approval and theCentral Government approval obtained from time to time, the commission ispaid at a rate not exceeding 1% per annum out of the profits of the Company(computed in accordance with Section 349 of the Companies Act, 1956). Thedistribution of commission amongst the Non Executive Directors is placed beforethe Board for its decision.

The actual commission paid to the Directors is restricted to a fixed sum. Thissum is reviewed periodically taking into consideration various factors such asperformance of the Company, time spent by the Directors for attending to theaffairs and business of the Company and extent of responsibilities cast onDirectors under general law and other relevant factors. The aggregatecommission paid to all Non-Executive Directors is well within the limit of 1% ofthe net profits as approved by the shareholders. The Non-Executive Directorsare also paid sitting fees as permitted by government regulations for everyBoard / Committee meeting attended by them.

The Company currently does not have stock options scheme.

Remuneration for the year

The eligible Non-Executive Directors are paid commission up to a maximum of1% of the net profits of the Company as specifically computed for this purpose.

Non-Executive Directors are also paid a sitting fee of Rs.15000 for everymeeting of the Board and Rs.10000 for every Committee meeting attended.

All fees/compensation paid to the Non-Executive Directors and IndependentDirectors are approved by Board of Directors and have shareholdersí approval.

Details of the remuneration of Non-executive Directors and Executive Directorsfor the year ended 31st March, 2007 are as follows :

Non-Executive Directors

Name Sitting Fees paid for Commission payableBoard and (Rupees)

Committee Meetings(Rupees)

Mr. S.M. Datta 70000 60274Mr. A. Vellayan 105000 200000

Mr. Anand Narain Bhatia 85000 200000

Mr. Biswajit Choudhuri 50000 60274 @

Mr. S.B. Mathur 75000 200000 @@

Mr. R.A. Savoor 120000 200000

Mr. V. Thyagarajan 55000 193425

Mr. S. Viswanathan 185000 200000

Mr. M.M. Venkatachalam 105000 200000

@ payable to Industrial Development Bank of India Ltd.

@@ payable to Life Insurance Corporation of India

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Code of Conduct

The Board has laid down a ìCode of Conductî (Code) for all the Board membersand the senior management of the Company, and the Code is posted on thewebsite of the Company www.eidparry.com. Annual declaration regardingcompliance with the Code is obtained from every person covered by the Codeof Conduct. A declaration to this effect signed by the MD is forming part of thisreport.

Risk Management

The Company has laid down procedures to inform board members about therisk assessment and minimisation procedures. The Board periodically discussesthe significant business risks identified by the management and the mitigationprocess being taken up.

General Body Meetings

The location and time where the last three Annual General Meetings were

held are given below:

For the year ended Venue Day and date Time31st March

2004 The Music Academy Thursday 10.30 a.m.168 TTK Road, 29.07.2004

Royapettah,Chennai- 600 014

2005 Same as above Saturday 11.00 a.m.23.07.2005

2006 Same as above Wednesday 4.00 p.m.19.07.2006

Details of Special Resolutions passed during the last 3 Annual GeneralMeetings

Date of Whether any Special ParticularsAGM Resolution was passed

29.07.2004 No -

23.07.2005 No -

19.07.2006 No -

Postal Ballot

During the last year no special resolution was passed through postal ballot.

As of now there is no proposal for conducting any special resolution throughpostal ballot.

Executive Director

Name Salary/ Contribution Value of Incentive**Allowances to funds * perquisites (Rupees)

(Rupees) (Rupees) (Rupees)

Mr. P. Rama 9216842 683696 278800 2199060Babu

* Represents contributions to Provident Fund, Superannuation Fund and Gratuity Fund** Represents maximum amount payable. Actual amount will be determined by the

Remuneration and Nomination Committee.

Mr.P.Rama Babu was re-appointed as the Managing Director for a period of 2years with effect from 1st February, 2005 up to 31st January, 2007. On conclusionof this term, the Board has, subject to the approval of the shareholders,reappointed Mr.P.Rama Babu as Managing Director for a period of 15 monthsfrom 1st February, 2007 to 30th April, 2008. The notice period is three monthsand no severance compensation is payable.

Shareholders / Investors Grievance CommitteeTerms of reference

The Shareholders/Investors Grievance Committee oversees the Companyísrelationship with the shareholders and ensures that the shareholders grievancesare redressed in time.


The Committee was constituted in 2001. The Committee consists of threeDirectors of whom Mr. S. Viswanathan, the Chairman is a non-executive andindependent Director. Ms. G. Jalaja, Company Secretary, is the complianceofficer of the Company.

During the year ended 31st March, 2007, the Committee met three times to

review the shareholders correspondence including the complaints receivedfrom the shareholders and their redressal.

The details of the members of the Committee and their attendance at themeetings are given below:

Sl.No. Name Chairman / Number ofMember meetings attended

1. Mr. S. Viswanathan Chairman 3

2. Mr. P. Rama Babu Member 2

3. Mr. M.M. Venkatachalam Member 3

The Shareholders / Investors Grievance Committee has prescribed norms forattending to the shareholders requests and these norms have been mostlycomplied with.

The Company received and redressed 7 complaints during the financial year2006-07.

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As regards the non-mandatory requirements, the following were adopted:

1. As detailed in the earlier paragraphs, the Company has constituted aremuneration and nomination committee.

2. A newsletter from the Managing Director enclosing the financial results forthe half-year ended 30th September, 2006 and highlighting the significantachievements during the six months was sent to all the shareholders of theCompany.

3. The Company has adopted a Whistle Blower Policy with the objective toprovide employees, customers and vendors an avenue to raise concerns,in line with E.I.D.- Parry (India) Limitedís commitment to the highest possiblestandards of ethical, moral and legal business conduct and its commitmentto open communication.

To provide necessary safeguards for protection of employees from reprisalsor victimisation, for whistle blowing in good faith.

The Audit Committee reviews periodically the functioning of the WhistleBlower mechanism.

The Whistle Blower Policy has also been posted in the Companyís websitewww.eidparry.com.

4. Other non mandatory requirements have not been adopted by the Company.

Means of Communication

The quarterly/half yearly Unaudited financial results and the annual auditedfinancial results are normally published in a leading business daily, BusinessStandard (English) or Business Line (English) and in Dinamani (Tamil). Bookclosure and dividend declaration notices are normally published in BusinessStandard (English) and Dinamani (Tamil). The financial results and pressreleases are placed on Companyís website www.eidparry.com. Details ofInvestor/Analysts/Brokers meetings whenever held are also posted on thewebsite.

As per Clause 51 of the Listing Agreement financial results and quarterlycompliance reports on corporate governance are filed on the Electronic DataInformation Filing and Retrieval (EDIFAR) website maintained by NationalInformatics Centre (NIC).

Ms.G.Jalaja, Company Secretary as the Compliance Officer is responsible forfiling the above information in the EDIFAR system.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report forms part of the AnnualReport.

General Shareholder Information

A separate section has been included in the Annual Report furnishing variousdetails viz. AGM Date time and venue, share price movement, distribution ofshareholding etc.


Chennai A.VELLAYANMay 4, 2007 Chairman

Prevention of Insider Trading

The Company has framed a Code of Conduct for Prevention of Insider Tradingbased on SEBI (Insider Trading) Regulations, 1992. This code is applicable toall directors/officers /designated employees. The code ensures the preventionof dealing in Companyís shares by persons having access to unpublished pricesensitive information.

Disclosures

There were no materially significant related party transactions, with Directors/promoters/management which had potential conflict with the interests of theCompany at large.

Periodical disclosures from Senior Management relating to all material financialand commercial transactions, where they had or were deemed to have hadpersonal interest, that might have had a potential conflict with the interest ofthe Company at large were placed before the Board.

Transactions with the Related Parties are disclosed in Note No. 21 of Schedule19 to the Accounts in the Annual Report.

The Company has followed the Guidelines of Accounting Standards laid downby the Institute of Chartered Accountants of India (ICAI) in preparation of itsfinancial statements.

During the year under review, the Company has not raised any funds frompublic issue, rights issue or preferential issue.

During the last three years, there were no strictures or penalties imposed onthe Company either by Stock Exchanges or by SEBI or any statutory authorityfor non-compliance on any matter related to capital markets.

Compliance

The Board reviews periodically compliance reports of all laws applicable to theCompany, prepared by the Company as well as steps taken by the Companyto rectify instances of non compliances, if any.

Subsidiary Companies

The Company does not have any material non listed Indian Subsidiary Company.The Audit Committee reviews the financial statements and in particular, theinvestments made by unlisted subsidiary companies. The minutes of the Boardmeetings as well as statements of all significant transactions of the unlistedsubsidiary companies are placed before the Board of Directors of the Companyfor their review.

Compliance with Corporate Governance Norms

The Company has complied with the mandatory requirements of the Code ofCorporate Governance as stipulated in Clause 49 of the Listing Agreementwith the Stock Exchanges. The Company has submitted the compliance reportin the prescribed format to the stock exchanges for the quarters endedJune 30, 2006, September 30, 2006, December 31, 2006 and March 31, 2007.The Statutory Auditors have certified that the Company has complied with theconditions of corporate governance as stipulated in Clause 49 of the listingagreements with the stock exchanges. The said certificate is annexed to theDirectorsí Report and will be forwarded to the Stock Exchanges and the Registrarof Companies, Tamil Nadu, Chennai, along with the Annual Report.

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To the Members of

E.I.D.- Parry (India) Limited

We have examined the compliance of conditions of corporate governance by E.I.D.-Parry (India) Limited, for the year ended on 31st March, 2007 as stipulated in

Clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation

thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on

the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of

Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the

management has conducted the affairs of the Company.

For Deloitte Haskins & SellsChartered Accountants

GEETHA SURYANARAYANANChennai PartnerMay 4, 2007 Membership No.29519

AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDERCLAUSE 49 OF THE LISTING AGREEMENT(S)

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DECLARATION ON CODE OF CONDUCT

The Board of DirectorsE.I.D.-Parry (India) LimitedDare HouseParrys CornerChennai- 600 001

Dear Sirs,

This is to confirm that the Board has laid down a code of conduct for all Board members and senior management of the Company. The code of conduct has alsobeen posted on the website of the Company.

It is further confirmed that all directors and senior management personnel of the Company have affirmed compliance with the Code of Conduct of the Companyfor the year ended 31st March, 2007, as envisaged in Clause 49 of the Listing Agreement with stock exchanges.

Chennai P.RAMA BABUApril 30, 2007 Managing Director

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• Date and Time 26th July, 2007 at 4.00 p.m.

• Venue The Music Academy

168, TTK Road, Royapettah,

Chennai -600 014.

ii. Financial Year 1st April to 31st March

iii. Date of Book closure 5th July, 2007 to 26th July, 2007

(Both days inclusive)

iv. Dividend Payment Date Within 10 days of AGM

v. Listing on Stock Exchanges Equity shares:

ï Madras Stock Exchange Ltd,

Exchange Building,

Post Box No.183,

11 Second Line Beach,

Chennai ñ 600 001.

ï National Stock Exchange of

India Ltd,

Exchange Plaza, 5th Floor, Plot

No.C/1, G. Block, Bandra Kurla

Complex, Bandra (E),

Mumbai ñ400 051.

ï Bombay Stock Exchange Ltd,

Phiroze Jeejeebhoy Towers,

Dalal Street, Fort,

Mumbai ñ 400 001.

Global Depository

Receipts(GDRs)

ï The Luxembourg Stock Exchange ,

11 Avenue De La Porte- Neuve L-2227,

Luxembourg

Listing fees paid for all the above Stock

Exchanges for 2006-2007

GENERAL SHAREHOLDERINFORMATION

vi. Stock Code

Name of the Stock Exchange/Depository Code/ISIN

Madras Stock Exchange Ltd. (MSE) EID

National Stock Exchange of India Ltd. (NSE) EID PARRY EQ

Bombay Stock Exchange Ltd (BSE) 500125

The Luxembourg Stock Exchange (LSE) EIDParry GDR ne

NSDL & CDSL INE 126A01023

vii. Market Price Data

Bombay Stock Exchange(BSE) National Stock Exchange(NSE)

Period High Low Volume High Low Volume

Rs.P Rs.P (in nos) Rs.P Rs.P (in nos)

Apr 2006 315.00† 262.60† 662856 320.95 251.05 1607534

May 2006 369.00† 241.30† 1426088 365.20 241.00 2294300

Jun 2006 292.00† 160.30† 1026426 304.00 155.60 1861240

Jul 2006 206.60† 163.00† 1166943 206.95 162.00 950322

Aug 2006 220.90† 169.00† 1576487 220.90 169.00 3167805

Sep 2006 175.00† 151.50† 1268982 176.00 151.75 2558458

Oct 2006 175.70† 156.05† 1017256 175.50 156.60 2017797

Nov 2006 165.50† 139.00† 2752524 165.65 139.10 2531586

Dec 2006 153.20† 129.10† 754832 153.50 127.10 1597407

Jan 2007 144.90† 117.00† 1408326 144.90 117.50 2318963

Feb 2007 134.95† 115.00† 1254265 134.90 112.00 4082576

Mar 2007 133.00 118.60 626294 133.40 118.25 3014692

viii. Performance in comparison to broad based indices such as BSESensex, CRISIL index etc.

i. Annual General Meeting

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Month/Year Closing Share Price Closing SensexRs. P

Apr 2006 291.75 12042.56

May 2006 283.30 10398.61

Jun 2006 203.35 10609.25

Jul 2006 186.70 10743.88

Aug 2006 170.80 11699.05

Sep 2006 162.25 12454.42

Oct 2006 163.85 12961.90

Nov 2006 139.75 13696.31

Dec 2006 135.40 13786.91

Jan 2007 118.95 14090.92

Feb 2007 124.60 12938.09

Mar 2007 128.25 13072.10

ix. Registrar and Karvy Computershare Private Limited, Transfer Agents Plot No: 17 to 24, Vittal Rao Nagar,

Madhapur, Hyderabad ñ 500081.

Tel: +91-040-23114058,Fax: +91-040-23420814E-Mail: [email protected];

[email protected]

x. Share Transfer System:

ï Share transfers are approved by a committee of Directors called as MadrasCommittee. Managing Director is individually authorised to approve

transfers up to 5000 shares.

ï Some of the executives along with a director have been jointly authorisedto approve request for transfers up to 1000 shares per transferor/transferee.

ï Certain Executives have also been authorised to approve transfers up to

500 shares per transferor/transferee.

Details of Shares Transferred in physical form

2006-2007 2005-2006Time Taken No. of No. of shares No. of requests No. of shares

requests received &

received & processed

processed

1-10 days 14 2780 20 7462

11-20 days 104 28245 199 38648

21-30 days 57 19665 130 17535

TOTAL 175 50690 349 63645

Complaints received and redressed

Nature of Complaints 2006-07 2005-2006

Received Disposed Received Disposed

Non receipt of shares sent for 7 7 23 23

transfer, stock split,subdivision and consolidationand loss of shares

xi. Distribution of Shareholding as on 31.03.2007a) By Ownership:

Category No. of % of share- shares holding

Promoters 37362905 41.86

Mutual funds and UTI 7384703 8.27

Banks/Financial Institutions

and Insurance Cos. 11773207 13.19

Foreign Institutional Investors/GDRs 10831843 12.14

Private Corporate Bodies 2665648 2.99

Indian Public/HUF/Clearing Members 17953535 20.12

NRIs / OCBs / Foreign nationals 1226679 1.37

Trusts 49995 0.06

Total 89248515 100.00

b) By Number of shares held:

No. of equity No. of % No. of shares %shares held shareholders

1 - 5000 35011 98.42 10473221 11.73

5001-10000 273 0.77 1951701 2.19

10001-20000 120 0.34 1725483 1.93

20001-30000 43 0.12 1110622 1.24

30001-40000 22 0.06 764825 0.86

40001-50000 11 0.03 510418 0.57

50001-100000 21 0.06 1558791 1.75

Above 100000 73 0.20 71153454 79.73

Total 35574 100.00 89248515 100.00

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xiv. Plant Locations

Sugar

1. Sugar Factory & Distillery 2. Sugar FactoryNellikuppam - 607 105 Pettavaithalai - 639 112South Arcot District Tiruchirapalli District

Tamil Nadu Tamil Nadu

3. Sugar Factory 4. Sugar Factory

Pugalur ñ 639 113 Kurumbur ñ 614 622Tiruchirapalli District Aranthangi TalukTamil Nadu Pudukottai District, Tamil Nadu

5. Sugar FactoryAriyur, Kandamangalam PostPuducherry - 605 001

Bio Products6. Bio-Pesticides Factory 7. Nutraceuticals Factory

Thyagavalli Village Kadiapatti, Nemathanpatti Road

Via Alapakkam Rly. Station Panangudi Post - 622 505Cuddalore Taluk - 608 803 Oonaiyur VillageSouth Arcot District Pudukottai District

Tamil Nadu Tamil Nadu

xv. Address for correspondenceE.I.D. ñ Parry (India) Ltd,Secretarial Division,Dare House, Parrys Corner,

Chennai ñ 600 001.Tel: +91-44-25306789Fax: +91-44-25341609

E-Mail: [email protected]

Other information for Shareholders

DIVIDENDS

Shareholders who have not encashed their dividend warrants (for earlierperiods) may approach our Registrars and Transfer Agent M/s. Karvy

Computershare Private Ltd, Hyderabad for issue of duplicate dividend warrantquoting the Folio Number/Client ID. Please note that as per Section 205A ofthe Companies Act 1956, dividend which remains unpaid/unclaimed over a

period of 7 years has to be transferred by the Company to the Investor Education& Protection Fund (IEPF) and no claim shall lie for such unclaimed dividendsfrom IEPF by the members. Year wise details of the amount to be transferred

to IEPF are given below:

No. of % No. of shares %share

holders

Shareholders in: † † † †

Physical Mode 10009 28.14 4509986 5.05

Electronic Mode 25565 71.86 84738529 94.95

ï††††† NSDL 20711 58.22 80660658 90.38

ï††††† CDSL 4854 13.64 4077871 4.57

c) Details of Shares held by Non-executive directors as on 31.03.2007:

Sl No. Name of the Director No. of shares held

1 Mr. A. Vellayan 265270

2 Mr. Anand Narain Bhatia NIL

3 Mr. S. B. Mathur NIL

4 Mr. R. A. Savoor NIL

5 Mr. S. Viswanathan 2250

6 Mr. M. M. Venkatachalam 100250

xii. Dematerialisation of Shares and 94.95 % ofLiquidity outstanding equity

have beendematerialised as on31st March, 2007.

Trading in the equityshares of theCompany is in the

Compulsorydematerialised form.

xiii.Outstanding GDRs/ADRs/Warrants 2395965 GDRs areor any Convertible instruments, outstanding

conversion date and likely as on 31st March, 2007. impact on equity Each GDR represent one

underlying equity share.

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33

Year Dividend Type Dividend Due for transfer topercentage the Investor

Education andProtection Fund

(% )

1999-00 Second Interim 50 05.06.2007

2000-01 Final 70 19.10.2008

2001-02 Interim 20 21.02.2009

2001-02 Final 50 28.08.2009

2002-03 Final 60 25.08.2010

2003-04 Final 75 04.09.2011

2004-05 Final 125 28.08.2012

2005-06 Final 225 24.08.2013

2006-07 Interim 225 24.08.2013

� ECS

The shareholders are advised to avail ìElectronic Clearing Serviceî(ECS)

available in all RBI centers for receiving the dividend by direct electroniccredit to the bank account. ECS provides protection against fraudulentinterception and encashment of dividend warrants or damage to dividend

warrants in transit or problem of revalidation/issuance of duplicate dividendwarrants and there is no extra cost. Option of availing this facility may beinformed to Karvy Computershare Private Ltd. in respect of the shares

held in physical form and to the respective Depository Participant (DP) inrespect of shares held in electronic form.

� NOMINATION FACILITY

Section 109A of the Companies Act, 1956 provides inter alia, the facility of

nomination to share holders. This facility is mainly useful for all holdersholding the shares in single name. In case where the securities are held injoint names, the nomination will be effective only in the event of the death

of all the holders.

Investors are advised to avail of this facility, especially investors holdingsecurities in single name, to avoid the process of transmission by law.

� BENEFITS OF DEMATERIALISATION

5.05 % of the shares are still in physical form. Those shareholders whoare holding shares in physical form are advised to convert their holdingsinto demat form, since the Companyís equity shares are under compulsory

demat trading.

SEBI has, effective 1st February, 2005, removed the following charges relatingto Dematerialisation:

� Opening of a Beneficiary Owner Account (BO Account) except for

statutory charges as may be applicable;

� Credit of securities into the BO Account; and

� Custody of securities in case of opening of a BO Account on orafter 1st February, 2005.

Further, the custody charges of securities have been removed from1st April, 2005 for all the investors.Investors are advised to avail of the above facilities and get benefited.

GENERALShareholders who have still not obtained the new share certificates of Rs.2/-each are requested to surrender the old share certificates of Rs. 10/- each to

our Registrar and Transfer Agents so as to enable them to release the newshare certificates.Shareholders/Beneficial owners are requested to quote their Folio No./DP &

Client ID Nos, Email ids, telephone/Fax numbers for prompt reply to theircommunications by the Company/Registrar and transfer agent.

List of Promoters of the Company belonging to the Murugappa Group pursuantto Regulation 3(e) (i) of SEBI(Substantial Acquisition of Shares & Takeovers)

Regulations, 1997.

Sl No. Name

1. New Ambadi Estates Pvt. Ltd. and subsidiaries

2. Ambadi Enterprises Ltd. and subsidiaries

3. Silkroad Sugar Private Ltd.

4. Tube Investments of India Ltd. and subsidiaries

5. Cholamandalam DBS Finance Ltd. and subsidiaries

6. Coromandel Engineering Company Limited and subsidiaries

7. Carborundum Universal Ltd and subsidiaries

8. Laserwords Private Ltd. & subsidiaries

9. Godavari Fertilisers & Chemicals Ltd

10. Parry Enterprises India Ltd.

11. Presmet Private Ltd.

12. AMM Educational Foundation

13. AMM Arunachalam & Sons P Ltd.

14. AMM Vellayan Sons P Ltd.

directors 07.pmd 7/9/2007, 2:21 PM33

34


Sl No. Name

15. MM Muthiah Sons P Ltd.

16. Kadamane Estates Company

17. Yelnoorkhan Group Estates

18. Murugappa & Sons

19. MM Muthiah Research Foundation

20. A R Lakshmi Achi Trust

21. AMM Foundation

22. AMM Medical Foundation

23. M V Murugappan & family

24. M V Subbiah & family

25. S Vellayan & family

26. A Vellayan & family

27. A Venkatachalam & family

28. M M Murugappan & family

29. M M Venkatachalam & family

30. M A Alagappan & family

31. Arun Alagappan & family

32. M A M Arunachalam & family

Family for the above purpose includes the spouse, dependent childrenand parents.

Sl No. Name

Ministry of Company Affairs, Government of India vide their Letter No.47/94/2007 - CL - III Dated 12th April, 2007 have granted exemption under Section 212(8)

of the Companies Act, 1956 from attaching the financial statements of the subsidiary Companies, to the Companyís accounts for the financial year ended31st March, 2007. The annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiarycompany investors seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any investor

at the head office and that of the subsidiary company concerned.

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35

1. We have audited the attached Balance Sheet of E.I.D.- Parry (India)

Limited as at 31st March, 2007, the Profit and Loss Account and also the

Cash Flow Statement for the year ended on that date annexed thereto.These financial statements are the responsibility of the Companyís

management. Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditorís Report) Order, 2003 issued bythe Central Government of India in terms of sub-section (4A) of Section

227 of the Companies Act, 1956, we enclose in the Annexure a statementon the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above,we report that:

(i) We have obtained all the information and explanations, which to thebest of our knowledge and belief were necessary for the purposes

of our audit;

(ii) In our opinion, proper books of account as required by law have

been kept by the Company so far as appears from our examinationof those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with the booksof account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash

Flow Statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956;

(v) On the basis of written representations received from the directors

and taken on record by the Board of Directors, we report that noneof the directors is disqualified as on 31

st March, 2007 from being

appointed as a director in terms of clause (g) of sub-section (1) of

Section 274 of the Companies Act, 1956 as on the said date;

(vi) In our opinion and to the best of our information and according tothe explanations given to us, the said accounts give the information

required by the Companies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accounting principlesgenerally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of theCompany as at 31

st March, 2007;

(b) in the case of the Profit and Loss Account, of the profit for theyear ended on that date, and

(c) in the case of the Cash Flow Statement, of the cash flows for

the year ended on that date.

For DELOITTE HASKINS & SELLSChartered Accountants

Geetha SuryanarayananPlace: Chennai PartnerDate : May 4, 2007 Membership No.29519

AUDITORS’ REPORT TO THE MEMBERS OFE.I.D.- PARRY (INDIA) LIMITED

directors 07.pmd 7/9/2007, 2:21 PM35

36


1. In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars,including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management

during the year and in accordance with a programme of verificationwhich, in our opinion, is reasonable having regard to the size of theCompany and the nature of its assets. According to the information

and explanations given to us, no material discrepancies were noticedon such verification.

(c) The fixed assets disposed off during the year, in our opinion, do notconstitute a substantial part of the fixed assets of the Company andsuch disposals has, in our opinion, not affected the going concern

status of the Company.

2. In respect of its inventories:

(a) As explained to us, inventories were physically verified by the

management at reasonable intervals.

(b) In our opinion and according to the information and explanationsgiven to us, the procedures of physical verification of inventories

followed by the management were reasonable and adequate inrelation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations

given to us, the Company has maintained proper records of itsinventory. The discrepancies noticed on physical verification betweenphysical stock and book records were not material.

3. (a) According to the information and explanations given to us, theCompany has not granted any loans, secured or unsecured, to

companies, firms or other parties covered in the register maintainedunder Section 301 of the Companies Act, 1956.

(b) According to the information and explanations given to us, the

Company has not taken any loans, secured or unsecured, fromcompanies, firms or other parties covered in the register maintainedunder Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to

us, there are adequate internal control procedures commensurate withthe size of the Company and nature of its business with regard to thepurchase of inventory and fixed assets and for the sale of goods and

services. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in internal controls.

5. In respect of contracts or arrangements referred to in Section 301 of the

Companies Act, 1956:

a. According to the information and explanations given to us, theparticulars of contracts or arrangements that needed to be entered

into the register have been so entered.

b. In our opinion and according to the information and explanations

given to us, the transactions made in pursuance of such contractsor arrangements and exceeding the value of Rs.5,00,000 in respectof any party during the year, have been made at prices which are

prima facie reasonable having regard to prevailing market prices atthe relevant time.


us, the Company has complied with the provisions of Sections 58 and58AA or any other relevant provisions of the Companies Act, 1956 andthe Companies (Acceptance of Deposits) Rules, 1975 with regard to the

deposits accepted from the public in prior years.

7. In our opinion, the Company has an internal audit system commensuratewith the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Companyin respect of products where pursuant to the Rules made by the CentralGovernment, the maintenance of cost records has been prescribed under

Section 209(1)(d) of the Companies Act, 1956 and are of the opinion thatprima facie the prescribed accounts and records have been made andmaintained. We have, however, not made a detailed examination of the

records with a view to determining whether they are accurate or complete.

9. Statutory and other dues

(a) According to the information and explanations given to us, theCompany has been regular in depositing undisputed statutory dues

including Provident Fund, Employeeís State Insurance, Income Tax,Sales Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty,Cess and other material statutory dues with the appropriate

authorities during the year.

(b) According to the information and explanations given to us, no

undisputed amounts payable in respect of Income Tax, Sales Tax,Customs Duty, Wealth Tax, Service Tax, Excise Duty and Cess werein arrears, as at 31

st March, 2007, for a period of more than six

months from the date they became payable.

Annexure referred to in Paragraph 3 of our report of even date

directors 07.pmd 7/9/2007, 2:21 PM36

37

(c) According to the information and explanations given to us, there areno dues of Income Tax, Sales Tax, Customs Duty, Wealth Tax, Service

Tax, Excise Duty and Cess that have not been deposited on accountof any dispute except for the dues referred to in Note No. 23 ofSchedule 19.

10. The Company does not have any accumulated losses at the end of theyear. The Company has not incurred cash losses during the current andimmediately preceding financial year.

11. According to the information and explanations given to us by themanagement, we are of the opinion that the Company has not defaultedin repayment of dues to banks and financial institution.

12. According to the information and explanations given to us and based onour examination of documents and records, we are of the opinion that no

loans or advances have been granted by the Company on the basis ofsecurity by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit

fund/society. Therefore, the provisions of clause 4(xiii) of the Companies(Auditorís Report) Order, 2003 are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, securities,

debentures and other investments. Accordingly, the provisions of clause(xiv) of the Companies (Auditorís Report) Order, 2003 are not applicableto the Company.


us, the terms of conditions of standby letter of credit given by the Company,for loans taken by a subsidiary company from a bank during the year arenot prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given tous, the term loans availed by the Company were, prima facie, applied by

the Company during the year for the purposes for which the loans wereobtained.

17. According to the information and explanations given to us and on an overall

examination of the balance sheet of the Company, funds raised on short termbasis have prima facie, not been used for long term investment.

18. The Company has not made preferential allotment of shares to parties

and companies covered in the register maintained under Section 301 ofthe Act.

19. According to the information and explanations given to us and the recordsexamined by us, the debentures issued during the year are unsecured.

20. The Company has not raised any money by public issues during the year.

21. To the best of our knowledge and belief and according to the information

and explanations given to us, no fraud on or by the Company was noticedor reported during the year.

For DELOITTE HASKINS & SELLSChartered Accountants

Geetha SuryanarayananPlace: Chennai PartnerDate : May 4, 2007 Membership No.29519

directors 07.pmd 7/9/2007, 2:21 PM37

Rs. Lakhs

38


Balance Sheet as at March 31, 2007

Schedule As at As atMarch 31, 2007 March 31, 2006

I. SOURCES OF FUNDS1. SHAREHOLDERS’ FUNDS:

(a) Share Capital 1 1785 1785(b) Reserves and Surplus 2 51884 53669 46943 48728

2. LOAN FUNDS:(a) Secured Loans 3 22212 23124(b) Unsecured Loans 4 13024 35236 1756 24880

3. DEFERRED TAX LIABILITY (Note 18 of Schedule 19) 7367 4801

TOTAL 96272 78409II. APPLICATION OF FUNDS

1. FIXED ASSETS: 5

Gross Block 73681 54407Less: Depreciation 25766 22536(a) Net Block 47915 31871

(b) Capital Work-in-Progress at cost 951 48866 2075 339462. INVESTMENTS 6 11736 111673. CURRENT ASSETS, LOANS AND ADVANCES:

(a) Inventories 7 18239 3185(b) Sundry Debtors 8 9271 31205(c) Cash and Bank Balances 9 24668 8675

(d) Other Current Assets - Interest Accrued 221 104(e) Loans and Advances 10 6791 10713

59190 53882Less :CURRENT LIABILITIES AND PROVISIONS :(a) Liabilities 11 22112 16171

(b) Provisions 12 1462 458023574 20751

NET CURRENT ASSETS 35616 33131

4. MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) 13 54 165

TOTAL 96272 78409NOTES ON ACCOUNTS 19The schedules referred to above form an integral part of these accounts

This is the Balance Sheet referred to in our Report of even date. On behalf of the Board

For Deloitte Haskins & Sells A. VELLAYANChartered Accountants Chairman

GEETHA SURYANARAYANAN G. JALAJA D. KUMARASWAMY P. RAMA BABUPartner Secretary Chief Financial Officer Managing DirectorMembership No. 29519ChennaiMay 4, 2007

Rs. Lakhs

39

Profit and Loss Account for the year ended March 31, 2007

Schedule Year ended Year endedMarch 31, 2007 March 31, 2006

INCOME:Sales and Services 58323 97846Less: Excise Duty 3151 55172 5228 92618Other Income 14 15546 5198

70718 97816EXPENDITURE:Materials 15 34142 56335Employee Cost 16 4107 5662Other Costs 17 12360 18053Depreciation 3301 2932Less: Transfer from fixed assets revaluation reserve 14 3287 17 2915Interest (Net) 18 (211) 739

53685 83704PROFIT BEFORE TAX 17033 14112Profit from continuing operations before tax 17033 11159Less: Provision for Tax (Note 18 of Schedule 19)

Current 1680 1505Less: MAT Credit Entitlement 61 1619 –Deferred 2615 (275)Fringe Benefit Tax 57 4291 88 1318

Profit from continuing operations after tax (a) 12742 9841Profit from discontinuing operations before tax – 2953Less: Provision for Tax

Current – 1145Deferred – –Fringe Benefit Tax – – 65 1210

Profit from discontinuing operations after tax (b) – 1743PROFIT AFTER TAX (a + b) 12742 11584

Surplus brought forward 15554 11541Balance in Profit & Loss Account of Amalgamating Company (1290) 9

Amount available for Appropriation 27006 23134APPROPRIATIONS:Interim Dividend on Equity Share Capital 4016 –Proposed Dividend on Equity Share Capital 1250 4016Dividend Tax 776 564General Reserve 3000 3000Balance carried to Balance Sheet 17964 15554

27006 23134Earnings per Share-Basic and Diluted - in Rs. (Face value Rs. 2) 14.28 12.98(Note 19 of Schedule 19)NOTES ON ACCOUNTS 19The schedules referred to above form an integral part of these accounts

This is the Profit and Loss Account referred to in our Report of even date. On behalf of the Board



Rs. Lakhs

40


Year ended Year endedMarch 31, 2007 March 31, 2006

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 17033 14112

Adjustments for :


Interest expense (net) (211) 739

Investment income (1990) (1510)

(Profit) / Loss on sale of fixed assets (5) (365)

(Profit) / Loss on sale of investments (net) (11812) (2285)

Payment under voluntary separation scheme – (17)

Other non cash items (394) (11125) 71 (452)

Operating profit before working capital changes 5908 13660

Adjustments for : (Increase)/Decrease in:

Trade and other receivables 10005 (12598)

Inventories (14583) 13882

Current liabilities 5798 4263

Net current assets transferred on sale/amalgamation of business – 1220 (6972) (1425)

Cash generated from operations 7128 12235

Direct taxes paid net of refund (3424) (3125)

Net cash flow from operations 3704 9110

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (17765) (15107)

Proceeds on sale of fixed assets 48 516

Proceeds on sale of business 16066 –

Purchase of investments (863) (318)

Investments in subsidiary companies (1652) (164)

Sale of investments 12106 2722

Interest received 1723 572

Investment income 1990 1113

Net cash used in investing activities 11653 (10666)

Cash Flow Statement for the year ended March 31, 2007

Rs. Lakhs

41


C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from long term borrowings 1765 12500

Repayment of long term borrowings (5034) (112)

Proceeds from other term borrowings (net) 11268 (3915)

Change in working capital finance 2241 (2016)

Interest paid (1593) (1263)

Dividends paid (8032) (2231)

Net cash flow from financing activities 615 2963

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 15972 1407

Cash and cash equivalents as at 1st April 8696 7268

Cash and cash equivalents as at 31st March 24668 8675

Cash and cash equivalents as at 1st April, 2006 include Rs. 21 lakhs of the amalgamating company.

This is the Cash Flow Statement referred to in our report of even date.

Cash Flow Statement for the year ended March 31, 2007




Rs. Lakhs

42


As at As atMarch 31, 2007 March 31, 2006

SCHEDULE 1SHARE CAPITAL :AUTHORISED :

Preference Shares:50,00,000 Redeemable Preference Shares of Rs.100 each 5000 5000

Equity Shares:25,75,00,000 Equity Shares of Rs. 2 each 5150 5150(2006- 25,75,00,000 Equity Shares of Rs. 2 each)

10150 10150ISSUED AND SUBSCRIBED

8,92,48,515 Equity Shares of Rs.2 each fully paid up 1785 1785(2006 - 8,92,48,515 Equity Shares of Rs. 2 each)

1785 1785Of the above, 3,44,74,295 Equity Shares of Rs. 2 each have been allotted as fullypaid up for consideration other than cash.

SCHEDULE 2RESERVES AND SURPLUS:

As atAdditions Deductions

As atApril 1, 2006 Additions Deductions March 31, 2007

CAPITAL RESERVES:Capital Reserve 1348 – – 1348Capital Redemption Reserve 3050 – – 3050Fixed Assets Revaluation Reserve # 624 – 14 # 610Securities Premium Account 8092 – – 8092

13114 – 14 13100REVENUE RESERVES:Investment Fluctuation Reserve 1400 – – 1400General Reserve (Notes 2 and 9 of Schedule 19) 16875 3000 455 19420

18275 3000 455 20820PROFIT AND LOSS ACCOUNT BALANCE 15554 17964

46943 51884

# Deduction during the year represents Rs. 14 lakhs transferred to Profit and Loss Account.

As at As atSCHEDULE 3 March 31, 2007 March 31, 2006

SECURED LOANS: (Note 3 of Schedule 19)(a) Term Loans from:

i) Government of India - Sugar Development Fund 2033 369ii) Foreign Currency Loan from Industrial Development Bank of India – 93iii) Banks – Foreign currency Loan – 3590

– Rupee Loan 16250 18283 17500 21552(b) Cash Credit from Bank 3929 1572

22212 23124

Schedules forming part of Accounts

Rs. Lakhs

43

SCHEDULE 4UNSECURED LOANS:

(a) Fixed Deposits – 17

(b) Short Term loan from - Banks - Rupee Loan 13000 – - Other than Banks – 1500

(c) Sales Tax Deferral Scheme – 125

(d) Security Deposits 24 11413024* 1756*

*Repayable within one year 13000 1642



SCHEDULE 5

FIXED ASSETS : Rs. Lakhs

GROSS BLOCK DEPRECIATION NET BLOCK

Cost/Value Additions on Additions Deletions Cost/Value As at Additions on For Withdrawn As at As at As at

As at Amalgamation As at 01-04-2006 Amalgamation the 31-03-2007 31-03-2007 31-03-2006

01-04-2006 31-03-2007 year

Tangible Assets

Freehold Land 2114 24 571 – 2709 – – – – – 2709 2114

Leasehold Land 4 – – – 4 1 – – – 1 3 3

Buildings (Notes 1 and 2) 7045 256 1571 – 8872 2098 15 195 – 2308 6564 4947

Plant and Machinery 41643 863 15625 174 57957 18644 96 2530 101 21169 36788 22999

Furniture and

Office Equipment 2814 21 396 23 3208 1493 6 329 20 1808 1400 1321

Vehicles 557 2 239 97 701 218 – 170 67 321 380 339

Intangible Assets

Patent 230 – – – 230 82 – 77 – 159 71 148

54407 1166 18402 294 73681 22536 117 3301 188 25766 47915 31871

Previous Year 57536 – 10177 13306 54407 25506 – 2932 5902 22536

Capital Work-in-Progress 951 2075

48866 33946

Notes:

1. Includes cost of 131 shares of Rs.100 each (2006 - Rs 0.13 Lakh) in Shri Siddhi Vinayak Co-operative Housing Society Limited.

2. Includes cost of Rs.31 Lakhs ( 2006 - Rs.31 Lakhs) for which title deeds are yet to be received from the Registrar.

Rs. Lakhs

44


SCHEDULE 6 INVESTMENTS:

Nos Rs Lakhs

Nominal Value April, 1 Acquisitions Sales March, 31 April, 1 Acquisitions Sales March, 31Long Term Rs. 2006 2007 2006 2007

(A) Quoted

Equity Shares (Fully Paid up)

Trade Subsidiary Company

Coromandel Fertilisers Limited 2 87,719,035 – – 87,719,035 9,010 – – 9,010

Trade Others

Trichy Distilleries and Chemicals Limited 10 220,000 – – 220,000 9 – – 9

Non Trade Others

Kartik Investments Limited 10 23,600 – – 23,600 4 – – 4

Travancore Sugars and Chemicals Limited 10 100 – – 100 – – – –

State Bank of India 10 6,870 – – 6,870 3 – – 3

Cholamandalam DBS Finance Limited 10 225 – – 225 – – – –

Coromandel Engineering Company Limited 10 42,938 – – 42,938 4 – – 4

Carborundum Universal Limited 2 1,000 – – 1,000 – – – –

(A) Total Quoted Shares 9,030 – – 9030

(B) Unquoted

Equity Shares (Fully paid up)

Trade Subsidiary Companies

Parry America Inc. US $100 500 – – 500 24 – – 24

Parrys Sugar Limited 10 1,500,000 – – 1,500,000 150 – – 150

Parrys Investments Limited 10 250,150 – – 250,150 37 – – 37

Parry Infrastructure Company Private Limited 10 – 10,000 – 10,000 – 1 – 1

Parry Nutraceuticals Limited 10 – 2,050,400 2,050,400 # – – 237 237 # –

Non Trade

Coromandel Bathware Limited 10 1,939,998 – – 1,939,998 68 – – 68

Trade OthersParry Monsanto Seeds Private Limited 10 2,455,031 – – 2,455,031 246 – – 246Southern Energy Development Corporation Limited 10 10,000 – – 10,000 1 – – 1Murugappa Management Services Limited 100 18,270 – – 18,270 18 – – 18

Silkroad Sugar Private Limited 10 – 1,000,000 – 1,000,000 – 362 – 362(formerly Parrys Sugars Refineries Private Limited)Parryware Roca Private Limited 10 1,500,000 – 432,580 1,067,420 150 – 44 106(formerly Parryware Glamourooms Private Limited)

Non Trade - OthersHawker Siddley Group Limited ( Shares of 25 pence each) 125 - - 125 - - - -Indian Dairy Entrepreneur and Agricultural Co Limited 1 10,000 - - 10,000 - - - -( Cost less amount written off Rs. 0.90 lakh)Chennai Wellingdon Corporate Foundation 10 266 - - 266 - - - -

Indian Potash Limited 10 637,200 – - 637,200 32 - - 32

Bio Tech Consortium (India) Limited 10 100,000 - - 100,000 10 - - 10E Commodities Limited 10 300,000 - - 300,000 30 - - 30Murugappa Morgan Thermal Ceramics Limited 10 2 - - 2 - - - -


Rs. Lakhs

45

Nos Rs. Lakhs

Nominal Value April, 1 Acquisitions Sales March, 31 April, 1 Acquisitions Sales March, 31 Rs. 2006 2007 2006 2007

Parry Agrochem Exports Limited 10 9,500 – – 9,500 – – – –Kulittalai Cane Farms Private Limited 100 20 – – 20 – – – –Non Trade - Others Preference SharesNew Ambadi Estates Private Limited – 7% RedeemablePreference Shares 100 250,000 – 250,000 – 250 – 250 –(Redeemed during the year)Parry Nutraceuticals Limited – 7% Redeemable 100 – 1,411,500 1,411,500 # – – 1,415 1,415 # –Preference SharesMutual Funds 10 – 5,000,000 – 5,000,000 – 500 – 500Public Sector BondsNABARD 5 Year 5.4% Redeemable Bonds 10,000 3,000 – – 3,000 300 – – 300National Housing Bank 5 Year 5.45% Redeemable Bonds 10,000 4,700 – – 4,700 470 – – 470Rural Electrical Corporation 5 Year 5.5% Redeemable Bonds 10,000 3,500 – – 3,500 350 – – 350Government Securities ( Lodged as Security deposit) ** – – – – 1 – – 1(B) Total unquoted shares 2,137 2,515 1,946 2,706

(A+B) Total Investments 11,167 2,515 1,946 11,736

Market Value of Quoted Investments 84176 57383

Notes:

a) 15 Shares in Kulittalai Cane Farms Private Limited and 125 shares in Hawker Siddley Group Limited are in the process of being transferred in the name of the Company.

b) The details of investments in Mutual Funds purchased and redeemed during the year are given below ( No of units )DBS Chola Liquid Inst Daily Div Reinvestment Plan 101,685,314; Templeton Management Account Super Inst Plan - Daily Div Reinv 299,925.02 DBS Chola Short Term Floating RateFund - Daily Div Rein Plan 70,024,871.26 ; DBS Chola FMP - Series 4 Qtrly Plan - 1 - Div 60,000,000; DBS Chola FMP - Series 5 Qtrly Plan - 1 - Div 20,000,000; DBS Chola Freedom IncomeSTP inst - Monthly Div 27,468,104.99 HDFC Liquid Fund - Premium Plus Plan - Div 24,244,383.385

# Cancelled on amalgamation** Includes NSC Certificates amounting to Rs. 11,000 acquired on amalgamation

Rs. LakhsAs at As at

March 31, 2007 March 31, 2006

SCHEDULE 7INVENTORIES: Raw Materials 211 349 Work-in-Progress 659 561 Finished Goods 16492 1527

17362 2437 Consumable Stores and Spares 877 748

18239 3185


SCHEDULE 6 (Contd.)

Rs. Lakhs

46




SCHEDULE 8SUNDRY DEBTORS:Debts outstanding for a period exceeding six months: Unsecured - Considered Good 551 586 Unsecured - Considered Doubtful 143 129

694 715Less: Provision for Doubtful Debts 143 551 129 586Other Debts:

Secured - Considered Good – –Unsecured - Considered Good 8720 8720 30619 30619

9271 31205

SCHEDULE 9CASH AND BANK BALANCES:Cash-in-hand and in-transit (including cheques on hand) 108 427

Balance with Scheduled Banks:In Current Account 279 128In Dividend Account 167 81

Short-term Deposit 24109 8035Balance with other Banks:

In Current Accounts (Note 1 below) 5 4

24668 8675

As at Maximum As at MaximumMarch 31, Balance March 31, Balance

2007 during 2006 during1. Balances with Other Banks 2007 2006

Cuddalore District Central Co-operative Bank Limited 3 84 3 105

Vallalar Grama Bank 1 8 1 8Trichy District Co-operative Bank (2006 - Rs. 28,000) 1 79 – 20

SCHEDULE 10LOANS AND ADVANCES:Unsecured and considered Good unless otherwise stated :Loans/ Advances to a Subsidiary Company – 940

Advance Tax less Provision for Tax Rs. 13778 lakhs,including provision for Fringe Benefit Tax Rs. 210 Lakhs (2006 - Rs. 12041 lakhsincluding Fringe Benefit Tax Rs. 153 Lakhs) 1078 571

MAT Credit Entitlement (Note 18 of Schedule 19) 61 –Advance recoverable in cash or in kind or for value to be received:

– Unsecured and Considered Good 5652 9202

– Considered Doubtful 97 1065749 9308

Less: Provision for Doubtful Advances 97 5652 106 9202

6791 10713

Note

Rs. Lakhs

47


SCHEDULE 11

LIABILITIES:Sundry Creditors (Note 8 of Schedule19)– Dues to Small Scale Industrial Undertakings – –– Dues to Other than Small Scale Industrial Undertakings 18527 13506

Advances and Deposits 340 191Due to Directors - Commission (Net) 35 37Investor Education and Protection Fund @

(a) Unpaid Dividend 167 81 (b) Unpaid Matured Deposits 1 3 (c) Unpaid Matured Debentures – 4

(d) Interest accrued on (a) to (c) above 2 170 3 91Other Liabilities 2930 2273Interest accrued but not due on loans 110 73

22112 16171@ None of the amounts disclosed are more than seven years old as on the Balance Sheet date

SCHEDULE 12

PROVISIONS:Proposed Dividend-Final 1250 4016Dividend Tax 212 564

1462 4580

SCHEDULE 13

MISCELLANEOUS EXPENDITURE:Voluntary Separation Scheme:

As per last Balance Sheet 165 259Add: Expenses incurred during the year – 17

165 276

Written off during the year 111 11154 165


Rs. Lakhs

48


Year Ended Year EndedMarch 31, 2007 March 31, 2006

SCHEDULE 14

OTHER INCOME:Profit on sale of Fixed Assets (Net) 5 365Profit on sale of Investments (Net) 11812 2285Liabilities/ Provisions no longer required (Note below) 547 188

Dividend Income:Subsidiary Companies 1491 1316Trade Investments 203 108

Other Investments 296 1990 86 1510Sundry Income 1192 850

15546 5198

Note - Includes Provision made for Doubtful debts/advances written back 22 Nil

SCHEDULE 15

MATERIALS:Raw Materials Consumed 48517 39362Purchase of Finished Goods 299 7185

(Increase)/Decrease in StocksOpening Stock - Work-in-progress 561 532

- Finished Goods 1527 14476

Add : Opening Stock of Amalgamating Company 389 –2477 15008

Less: Stocks relating to erstwhile Parryware division (2006) – 3132

2477 11876Closing Stock - Work-in-progress 659 561

- Finished Goods 16492 1527

17151 (14674) 2088 978834142 56335

SCHEDULE 16

EMPLOYEE COST : (Note Nos. 9 & 17.1 of Schedule 19)

Salaries, Wages and Bonus 3294 4552Contribution to Provident and Other Funds 338 441Workmen and Staff Welfare Expenses 475 669

4107 5662


Rs. Lakhs

49

Year Ended Year EndedMarch 31, 2007 March 31, 2006

SCHEDULE 17

OTHER COSTS :Consumption of Stores 1277 1267Power and Fuel 1071 4020Rent 138 235

Repairs and Maintenance - Buildings 71 84 - Plant and Machinery 2000 2071 1788 1872Insurance 265 315

Rates and Taxes (Net) 1367 497Packing, Despatching and Freight 2381 3672Commission to Selling Agents 24 38

Rebates and Discounts 98 922Auditors’ Fees and Expenses 22 19Directors’ Fees and Commission 46 49

Sales Promotion and Publicity 505 1486Fixed Assets scrapped 3 11Professional Charges 915 847

Provision for Doubtful Debts and Advances 10 46Bad Debts/Advances written off 13 12Less: Provision for Doubtful Debts/ Advances adjusted 3 10 – 12

General Manufacturing, Selling and Administration Expenses 2157 274512360 18053

SCHEDULE 18INTEREST:Interest on

– Debentures 478 197– Other Fixed Loans 971 431

[Net of capitalisation Rs. 370 lakhs (2006 - Rs. 367 lakhs)]– Others 180 606

1629 1234Less: Interest Income on Deposits etc. (Gross) 1840 495

[Tax deducted at source Rs. 392 lakhs ( 2006 - Rs. 87 lakhs)](211) 739


Rs. Lakhs

50


SCHEDULE 19

NOTES ON ACCOUNTS

1.1 Accounting Convention

The financial statements are prepared under the historical costconvention in accordance with the generally accepted accountingprinciples in India and the provisions of the Companies Act, 1956,except for certain fixed assets which are revalued.

1.2 Use of Estimates

The preparation of financial statements requires estimates andassumptions to be made that affect the reported amount of assetsand liabilities on the date of the financial statements and the reportedamount of revenues and expenses during the reporting period.Difference between the actual results and estimates are recognisedin the period in which the results are known / materialised.

1.3 Fixed Assets

Fixed Assets (other than those which have been revalued) are statedat historical cost. Cost includes related taxes, duties, freight, insuranceetc. attributable to acquisition and installation of assets and borrowingcost incurred up to the date of commencing operations, but excludesduties and taxes that are recoverable subsequently from taxingauthorities. The revalued fixed assets are restated at their estimatedcurrent replacement values as on date of revaluation as determinedby the valuers.

Intangible Assets are stated at cost of acquisition less accumulatedamortisation.

1.4 Depreciation

Depreciation on fixed assets (other than revalued land and buildingsand leased assets) is calculated on Straight line method on followingbasis:

Assets acquired up to June 30, 1987 on the basis of specified periodunder section 205(2) (b) of the Companies Act, 1956.

In respect of assets acquired after June 30, 1987, Buildings and Plantand Machinery are depreciated based on estimated useful life of theassets determined by technical evaluation at the following annual rates:

Buildings 1.67% to 3.65%

Plant and Machinery 4.75% to 25.89%

Vehicles, Computers and Furnitures and Office Equipments are beingdepreciated based on estimated useful life at the following annualrates as against rates specified in Schedule XIV to the CompaniesAct, 1956 :

Vehicles 23.75%

Computers 31.67%

Furniture & Office Equipments 4.75 % to 23.75%

1. SIGNIFICANT ACCOUNTING POLICIES Leased assets are fully depreciated over the primary lease period. Inrespect of additions and deletions during the year, depreciation chargeis provided on pro- rata basis. Assets costing individually Rs 5,000 orless are fully depreciated in the year of addition.

The difference between the depreciation for the year on revaluedbuildings and depreciation calculated on the original cost is recoupedfrom the fixed assets revaluation reserve.

Cost of patent are amortised over the expected period of future benefits.

1.5 Investments

Long term investments are stated at cost. The diminution in the marketvalue of such investment is not recognised unless such diminution isconsidered permanent in nature. Current Investments are carried atlower of cost or market value.

1.6 Inventories

Raw materials, consumables and stores and spares are valued at orbelow cost. Cost in respect of raw materials is ascertained on First inFirst out basis and for others on weighted average basis. Cost includesall taxes and duties, but excludes duties and taxes that aresubsequently recoverable from taxing authorities. Work in progresshas been valued at or below cost. By-products are valued at netrealisable value. Finished Goods have been valued at lower of costand net realisable value.

Cost includes all direct costs and applicable production overheads tobring the inventories to the present location and condition.

1.7 Revenue Recognition

i) Sales include Excise duty recovered and is net of trade discountsand sales returns.

ii) Export benefits under DEPB License are accounted on accrualbasis.

iii) Dividend income is accounted for in the year in which the right toreceive payment is established.

1.8 Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchangeprevailing on the date of the transaction. At the year end, all monetaryassets and liabilities denominated in foreign currency are restated atthe year end exchange rates. The premium/discount on forwardcontracts are amortised over the period of the contract. Exchangedifferences arising on actual payment/realisation and year endreinstatement referred to above are adjusted:

i) in respect of fixed assets acquired outside the country to the relatedcost of fixed assets and

ii) in all other cases in the profit and loss account.


Rs. Lakhs

51

SCHEDULE 19 (Contd.)

NOTES ON ACCOUNTS

1.9 Research and Development

Revenue expenditure on research and development is charged off asand when incurred.

1.10 Employee Benefits

i. DEFINED CONTRIBUTION PLANS

a. Provident Fund

Contributions are made to the Company’s EmployeesProvident Fund Trust in accordance with the fund rules. Theinterest rate payable by the trust to the beneficiaries everyyear is being notified by the Government. The Company hasan obligation to make good the shortfall, if any, between thereturn from the investments of the trust and the notified interestrate.

The Company also contributes to a government administeredpension fund on behalf of its employees.

b. Superannuation

Fixed contributions to the Superannuation Fund, which isadministered by trustees and managed by LIC, are chargedto the Profit and Loss Account. The Company has no liabilityfor future Superannuation Fund benefits other than its annualcontribution and recognises such contributions as an expensein the year incurred.

ii. DEFINED BENEFIT PLAN

Gratuity

The Company makes annual contribution to a Gratuity Fundadministered by trustees and managed by LIC. The Companyaccounts its liability for future gratuity benefits based on actuarialvaluation, as at the balance sheet date, determined every yearby LIC using the Projected Unit Credit method.

iii. SHORT TERM EMPLOYEE BENEFIT

Short term employee benefits, including accumulatedcompensated absences, are recognised as an expense as perthe Company’s scheme based on expected obligations onundiscounted basis.

1.11 Miscellaneous Expenditure

Voluntary Separation Scheme expenditure is amortised over theexpected period of future benefits.

1.12 Taxation

Provision for Current tax is made based on the liability computed inaccordance with the relevant tax rates and tax laws. Provision fordeferred tax is made for timing differences arising between the taxable

income and accounting income computed using the tax rates and thelaws that have been enacted or substantively enacted as of the balancesheet date. Deferred tax assets are recognised only if there is a virtualcertainty that they will be realised and reviewed for the appropriatenessof their carrying values at each balance sheet date.

1.13 Impairment of Fixed Assets

Consideration is given at each balance sheet date to determine whetherthere is any indication of impairment of the carrying amount of theCompany’s fixed assets. If any indication exists, an asset’s recoverableamount is estimated. An impairment loss is recognised whenever thecarrying amount of an asset exceeds recoverable amount.

1.14 Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurementare recognised when there is a present obligation as a result of pastevents and it is probable that there will be an outflow of resources.Contingent Liabilities are not recognised but are disclosed in the notes.Contingent Assets are neither recognised nor disclosed in the financialstatements.

2. AMALGAMATION

Parry Nutraceuticals Limited (PNL), a wholly owned subsidiary, wasamalgamated with the Company effective September 1, 2006 as perthe Order of the Hon’ble High Court of Madras, dated April 17, 2007.PNL was carrying on the business of manufacture of natural foodsupplements.The amalgamation has been accounted for under the“pooling of interest” method as prescribed by the Accounting Standard14 “Accounting for Amalgamations” issued by the Institute of CharteredAccountants of India. In accordance with the scheme of amalgamationsanctioned by the Hon’ble High Court of Madras, the assets, liabilitiesand reserves of PNL as at September 1,2006 have been taken overat their book value and Rs.35 lakhs being the excess of assets overliabilities after adjusting the cost of investments of the Company in theamalgamating company has been debited to the General Reserve.

3. SECURED LOANS

Term Loans and Cash Credit

i) Loan from Sugar Development Fund (Government of India)for modernisation/expansion/Cogeneration amounting toRs.1832 lakhs is secured by an exclusive second charge on thewhole of the movable properties including plant and machinery(save and except book debts) relating to Pugalur sugar unit andfurther secured by an exclusive second charge on the immovableproperties of the Pugalur sugar unit by way of an equitablemortgage to the extent of Rs.81 lakhs and by way of a BankGuarantee from State Bank of India to the extent of Rs.1751 lakhs.


Rs. Lakhs

52




NOTES ON ACCOUNTS

ii) Working Capital facilities from State Bank of India and guaranteegiven by it in respect of the Sugar Development Fund Loanamounting to Rs.233 lakhs from Government of India are securedby hypothecation of sugar and other stocks, stores, book debtsand liquid assets and further secured by a second charge overthe immovable properties of the Company (other than Pugalur)and a third charge on the movable and immovable properties ofthe Pugalur sugar unit.

iii) The Rupee term loan from BNP Paribas amounting toRs.5000 lakhs is secured by a pari passu first charge by way ofhypothecation of all movable fixed assets, both present and futuresituated at Cuddalore, Nellikuppam and Pudukottai and furthersecured by a pari passu first charge on the immovable propertiesboth present and future situated at Cuddalore, Nellikuppam andPudukottai.

iv) The Rupee term loan from HDFC Bank Limited amounting toRs.2500 lakhs is secured by a pari passu first charge by way ofhypothecation of all the movable plant and machinery and othermovable assets both present and future situated at Pugalur andPudukottai and further secured by a pari passu first charge onthe immovable properties both present and future situated atPugalur and Pudukottai.

v) The corporate / term loan from State Bank of India amounting toRs.10000 lakhs is secured by a pari passu first charge by way ofhypothecation of all the movable plant and machinery and othermovable assets both present and future situated at Nellikuppam,Pugalur and Pudukottai and further secured by a pari passu firstcharge on the immovable properties situated at Nellikuppam,Pugalur and Pudukottai.

2007 2006

Rs.Lakhs Rs.Lakhs

4. a) Estimated amount of contracts remaining to be executed on capital account and not provided for 9280 4667

b) Claims for excise duty under dispute in respect of fixed assets Nil 77

5. Other monies for which the Company is contingently liable

(a) Letters of Credit & Bank Guarantees established for purchases of Raw Materials, Spares and CapitalGoods and for financing a subsidiary 5325 1110

(b) Income Tax demands contested for which no Provision has been made 526 1974

(c) Claims against the Company for Sales Tax, Excise Duty and others including Industrial Disputes notacknowledged as Debt and not provided for 563 483

(d) Certain Industrial Disputes are pending before Tribunal / High Courts. No provision has been made in theaccounts as the liability of the Company in respect of these disputes depends upon the final outcome ofsuch cases and the quantum of which is not currently ascertainable.

(e) The Statutory Minimum Price of sugar cane for the sugar year 2002-03 notified on December 12, 2002 at 1115 826Rs.645/MT was increased to Rs.695/MT on January 9, 2003. Since the increase was arbitrary the same waslegally challenged by the South Indian Sugar Mills Association (of which the Company is a member) and thematter is pending before the Hon’ble Supreme Court of India. Based on legal advice, pending disposal of cases,no provision has been considered in the Accounts.

The Statutory Minimum Price of sugar cane for the sugar year 2003-04 was fixed at Rs. 730/MT, which waschallenged by the South Indian Sugar Mills Association and the matter is pending before the Hon’ble High Courtof Madras. Pending disposal of cases, no provision has been considered in the Accounts.

(f) The Company had an opening export obligation of 73,841 MT arising out of raw sugar imported against Advancelicences in earlier years. No fresh raw sugar imports were made during the year and hence no additional exportobligation has arisen. Balance export obligations out of the opening export obligations of 73,841 MT is 23,160MT as on 31st March, 2007. The time limit for export of this balance obligation quantity is up to February, 2008.

Rs. Lakhs

53



NOTES ON ACCOUNTS

2007 2006

Rs. Lakhs Rs. Lakhs

6. Capital advances included in Loans and Advances 1815 1062

7. Exchange difference

a) Debited to Profit and Loss account 80 248

b) in respect of forward exchange contracts to be accounted in the subsequent period Nil 25

8. Sundry creditors under Schedule 11 include amount due to Small Scale Industrial undertaking (SSI) as per informationavailable with the Company. There are no dues to SSIs which are outstanding for more than 30 days. Based on theinformation available with the Company, there are no dues outstanding to Micro and Small Enterprises as definedunder Micro, Small and Medium Enterprises Development Act, 2006 for more than 45 days as at March 31, 2007.

9. The Company has adopted Accounting Standard-15 (Revised 2005) “Employee Benefits” effective from 1st April2006. Pursuant to this, the Company has reassessed its liability on various employee benefits as on that date and theadditional liability arising thereon amounting to Rs. 420 lakhs (net of tax expense of Rs. 88 lakhs) has been adjustedagainst General Reserve in accordance with the transitional provisions in the Standard. Further, as a result of thischange, the charge to profit & loss account for the year is higher by Rs. 56 Lakhs.

The following table sets forth the status of the Gratuity Plan of the Company, which are wholly funded and theamounts recognised in the Balance Sheet and Profit and Loss Account.

Particulars 2007Rs. Lakhs

Present Value of obligations at the beginning of the period 546

Current service cost 14Interest cost 43Actuarial loss/(gain) 66Benefits paid (65)Present Value of obligations at the end of the period 604Amounts recognised in the balance sheetProjected benefit obligation at the end of the period 604Fair value of plan assets at end of the period 714Funded status of the plans – (asset)/ liability (110)

recognised in the balance sheetCost for the periodCurrent service cost 14Interest cost 43Expected return on plan assets (48)Net actuarial (gain)/loss recognised in the period 36Net cost 45AssumptionsDiscount rate 7.50%Expected rate of salary increases 3.50%Note : This being the first year of disclosure, previous year figures have not been furnished.

Nil Nil

Rs. Lakhs

54



NOTES ON ACCOUNTS


2007 2006Rs. Lakhs Rs. Lakhs

10. Total Excise Duty on Sales for the year has been disclosed as reduction from the turnover.Excise duty related to the difference between the closing stock and opening stock has beenincluded in Schedule 17 “ Other Costs”.

11. Depreciation for the year includes Rs.114 Lakhs being the extra charge on account of change inestimated useful life of certain classes of assets.

12. Rates & Taxes included in Raw material consumption 3374 2366

13. Revenue expenses on Research and Development included under various heads of accounts. 423 355

14. General Manufacturing, Selling and Administration expenses include an amount of donationmade to a political party. 5 Nil

15. Repairs and maintenance includes Stores and spare parts consumed 1349 1126

16. Auditors’ remuneration and Expenses:i) Audit fees 8 8ii) Tax Audit 2 2iii) Fees for other services 10 7iv) Reimbursement of out of pocket expenses 2 2

22 19@

@ Includes paid to Branch auditor Nil 1

17. Directors’ Remuneration:

17.1 Whole time Directors

Salaries and Allowances 56 46

Contribution to Provident and other Funds 7 6

Other Benefits 20 16

Commission 22 22

105 90

17.2 Non Whole time Directors:

Commission to Non Whole Time Directors 15 18

Directors’ Sitting Fees 9 9

24 27

17.3 Computation of Directors Commission

Profit as per Profit & Loss Account: 17033 14112

Add:

Directors’ Sitting Fees 9 9

Whole Time Directors’ Remuneration including Commission / Non Whole Time Directors’ Commission 120 108

Provision for Doubtful Debts/ Advances 10 46

Voluntary Separation Scheme 111 111

17283 14386

Rs. Lakhs

55

2007 2006Rs. Lakhs Lakhs

Less:

Provision for Deferred Repairs/Doubtful Debts / Advances/Contingencies Written back (Net) 22 35Profit on sale of Fixed Assets as per books (Net) 5 365Profit on sale of Investments (Net) 11812 2285

11839 2685

Profit as per Section 349 5444 11701

Commission to Whole Time Director restricted to 22 22

Commission at 1% on the profit as per Section 349 54 117

Commission at 1% as above for Non-Whole Time Directors restricted to 15 18

18. Provision for Tax and Deferred Tax

(a) Provision for Tax amounting to Rs. 1680 lakhs has been made under the provisions of Section115JB of the Income Tax Act, 1961 and MAT Credit has been taken to the extent of Rs. 61 lakhs,being the difference between the tax computed under Section 115JB and the tax payable based onthe computation under the provisions other than Section 115JB.

(b) Break up of Net Deferred Tax Liability is as under 2007 2006Deferred Tax Deferred Tax

Liability/(Asset) Liability/(Asset)Rs. Lakhs Rs. Lakhs

Difference between tax and book written down value of fixed assets 7531 4847

Debited on account of AS-15 (Revised) Transitional provision (88) -

Others (76) (46)

Net Deferred Tax Liability 7367 4801

19. Earnings per share:

Profit after tax as per Profit and Loss Account - Rs. Lakhs 12742 11584

Number of Equity shares of Rs. 2 each outstanding at the begining of the year (2006 - Rs. 10) 8,92,48,515 1,78,49,703

Number of Equity shares of Rs. 2 each outstanding at end of the year 8,92,48,515 8,92,48,515

Earnings per Share - Basic and Diluted (Rs.) 14.28 12.98

20. Segment Reporting as at March 31, 2007

Composition of Business Segments

Primary SegmentsSugar Bio products Others

Sugar, Chemicals and Power Neem, Organic Manure and Nutraceuticals Corporate

Secondary SegmentsNorth America Europe Rest of the World India

Inter Segment Transfer Pricing:

Inter Segment prices are normally negotiated amongst the segments with reference to cost, market prices and business risks, within an overall optimisationobjective for the enterprise.


NOTES ON ACCOUNTS


Rs. Lakhs

56



NOTES ON ACCOUNTS Primary Segments

Sugar Parryware Bio Products Others Elimination Overall

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

Revenue (Sales/Income): 11 Months ended

28.02.2006

(Gross of Excise Duty)

External Customers 55592 72463 – 23248 3747 2566 728 972 60067 99249

Inter-segmental Sales 958 451 – – – – – – (958) (451)

Total 56550 72914 – 23248 3747 2566 728 972 (958) (451) 60067 99249

Results :

Operating Profit/(Loss) 3080 7967 – 2962 423 421 (483) (294) 3020 11056

Profit on Sale of Investments 11812 2285

Dividend Income 1990 1510

Interest Expenses (Net) 211 (739)

Profit before Tax 17033 14112

Income Tax - Current

(Net of MAT Credit) (1619) (2650)

- Deferred (2615) 275

- Fringe Benefit Tax (57) (153)

Net Profit 12742 11584

Other Information :

Segment Assets 71265 54377 – – 6479 3340 29227 28765 106971 86482

Unallocated Corporate Assets 12875 12678

Total Assets 119846 99160

Segment Liabilities 19838 14295 – – 356 98 3380 6358 23574 20751

Unallocated Corporate Liabilities 42603 29681

Shareholders’ Funds 53669 48728

Total Liabilities 119846 99160

Capital Expenditure 16123 11026 – 752 772 119 383 90 17278 11987

Depreciation 2684 1942 – 561 267 208 336 204 3287 2915

Non-cash expenditure 94 124 – 29 1 – 39 27 134 180 (excluding Depreciation)

Secondary Segments

North America Europe Rest of the World India Total

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

Segment Revenue 1469 1160 848 13504 984 643 56766 83942 60067 99249

Carrying Amounts of :

Segment Assets 954 565 212 4045 189 62 118491 94488 119846 99160

Segment Liabilities 119846 99160 119846 99160

Capital Expenditure 17278 11987 17278 11987


Rs. Lakhs

Rs. Lakhs

57

21. Related Party Disclosures for the year ended March 31, 2007List of related Parties :

21.1 Subsidiary Companies

1. Coromandel Fertilisers Limited

2. Parry Chemicals Limited

3. Parry America Inc.

4. Parrys Investments Limited

5. Coromandel Bathware Limited

6. Parrys Sugar Limited

7. Parry Infrastructure Company Private Limited

Associates/Joint Venture Companies

1. Parryware Roca Private Limited (formerly Parryware Glamourooms Private Limited)

2. Parry Monsanto Seeds Private Limited

3. Godavari Fertilisers and Chemicals Limited

4. Prathyusha Chemicals and Fertilisers Limited

5. Silkroad Sugar Private Limited (formerly Parrys Sugars Refineries Private Limited)

21.2 Key Management Personnel (KMP)

Mr.P.Rama Babu, Managing Director

21.3 Transactions with related parties Rs. Lakhs

2007 2006

Subsidiary Associates/ KMP Subsidiary Associates/ KMPCompanies Joint Companies Joint

Ventures VentureSale of Goods 1281 1104

Rendering of services 42 250 95

Receiving of services 1

Dividend Income 1491 196 1316 106

Interest Income 34 3

Deputation Charges Received 104 24

Purchase/Receipt of Goods 34 57 2887

Letter of Credit Established 446

Subscription to Equity Shares 363

Inter Corporate Deposits - Given/Repaid 3120 940

Closing Balance - Debit 900 20 17613 2

For remuneration to KMP refer Note 17.1 above.



NOTES ON ACCOUNTS

Rs. Lakhs

58


22. Details of Interest of the Company in Joint Venture: Rs. Lakhs

Name of the Joint Venture entity Country of Incorporation Principal Activities Ownership interest Original cost of Investment

Parry Monsanto Seeds Private India Development, Production 49% 246Limited & Marketing of hybrid

seed varieties

Parryware Roca Private Limited India Manufacture and trading 50% 106of Sanitaryware

Silkroad Sugar Private Limited India Manufacture of Sugar 50% 362

Aggregate amounts related to interest in Joint Venture Entities:

Parry Monsanto Parry Monsanto Parryware Parryware Silkroad SugarSeeds Private Seeds Private Roca Private Roca Private Private

Limited Limited Limited Limited Limited2007 2006 2007 2006 2007*

Assets 583 607 12273 10954 364

Liabilities 234 316 2325 10285 1

Income 808 866 13988 5602 –

Expenditure 611 651 13049 6143 –

Profit after Tax 197 215 939 (541) –

*Note: This being the first year of operations for the Company, Profit and Loss Account has not been drawn by the Company.

23. Disputed Statutory dues:

The following dues have not been deposited on account of a dispute

Sl No Name of the Statute Nature of Dues Rs. Lakhs Rs. Lakhs Forum where the dispute is2007 2006 pending

1. Central Excise Act, 1944 Excise Duty 569 570 Assistant Commissioner / DeputyCommissioner, Commissioner, CESTAT

2. Finance Act, 1994 (Service Tax) Service Tax dues 9 1 Commissioner (Appeals)

3. Customs Act, 1962 Customs Duty Nil 77 Deputy Commissioner

4. Various State Sales Tax Acts Sales Tax Local 153 160 Assistant Commissioner / DeputyCommissioner, Tribunal

5. Central Sales Tax Act, 1956 Sales Tax CST 29 27 Assistant Commissioner / DeputyCommissioner, Tribunal, High Court

6. Tamil Nadu General Sales Tax TNGST Act 12 Nil Assistant Commissioner/ DeputyAct, 1959 Commissioner, Tribunal, High Court

7. Income Tax Act, 1961 Income Tax 82 210 Income Tax Appellate Tribunal



NOTES ON ACCOUNTS

Rs. Lakhs

59


24. Licensed/installed capacities and production details for the year ended March 31, 2007 (As Certified by the Management)LICENSED INSTALLED ACTUALCAPACITY CAPACITY PRODUCTION

CLASSES OF GOODS ** UNIT 2007 2006 2007 2006 2007 2006

Sugar CANE MT/DAY NA NA 16,500 14,500 380,718 304,953Spirit KLTS/YEAR NA NA 13,500 13,500 10,673 9,694Sanitaryware MT/YEAR NA NA Nil 34,500 Nil 30,414Power KWH NA NA 64,500 42,500 248,533,452 147,541,619Neem Technicals KGS/YEAR NA NA 7,500 7,500 5,333 5,552Algae KGS/YEAR NA NA 524,100 Nil 74,415 Nil

** Details furnished only in terms of Finished products

NA-Not applicable. These products are not covered by the list of Industries in respect of which industrial licensing is compulsory.

25. Particulars in respect of Finished Goods Stock

OPENING STOCK CLOSING STOCK2007 2006 2007 2006

CLASSES OF GOODS QTY VALUE QTY VALUE QTY VALUE QTY VALUERs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs

Sugar MT 2091 338 78056 11,090 101937 14,687 2091 338Sanitaryware and Fittings Nil — 1,980 Nil — Nil

Others 1189 1,406 1,805 1,189

1527 14,476 16,492 1,527

Closing stock excludes excess / shortages including damaged stocks.

26. Particulars in respect of Finished Goods – Purchases and Sales

PURCHASES SALES2007 2006 2007 2006

CLASSES OF GOODS QTY VALUE QTY VALUE QTY VALUE QTY VALUERs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs

Sugar 266306 46,740 380833 65,212

Sanitaryware and Fittings Nil 7,160 Nil 23,153Others including services 299 25 11,583 9,481

299 7,185 58,323 97,846

27. Analysis of raw materials consumed

2007 2006DESCRIPTION UNIT QTY Value QTY Value

Rs. Lakhs Rs. Lakhs

Sugarcane MT 4093000 47,277 2596519 26,983

Raw Sugar MT 1538 187 83368 9,974Others 1,053 2,405

48,517 39,362


NOTES ON ACCOUNTS

Rs. Lakhs

60


28. Value of imported Raw materials and stores and spare parts consumed and the value of all indigenous raw materialsand stores and spare parts similarly consumed and percentage of each to total consumption

2007 2006Rs. Lakhs % Rs. Lakhs %

Imported 230 Nil 10017 24

Indigenous 50914 100 31738 76

51144 100 41755 100

Raw Materials 48517 39362

Stores and Spare Parts 2627 239351144 41755

29. Value of Imports on C.I.F basis

Raw Materials Nil 8909

Components, Stores and Spare Parts 49 32

Traded Goods 54 35

Capital Goods 27 10130 8986

30. Expenditure in Foreign Currency

Travel 40 38

Interest 123 408

Professional Fee 18 35

Others 164 125

345 606

31. Earnings in Foreign Exchange

FOB Value of Exports 3273 15289

Other Income—Despatch Money 40 183313 15307

32. Remittances in foreign currencies of dividendsto non resident shareholders of the Company

Equity EquityShares Shares

No.of Shareholders 42 42

No. of Shares held 3180605 3429305

Net amount remitted (Rs. lakhs) 286 86



NOTES ON ACCOUNTS

Rs. Lakhs

61


33. Balance Sheet abstract and Company's general business profile as per Part IV to Schedule VI to the Companies Act, 1956.Particulars

I Registration DetailsRegistration No. 6989State Code 18Balance Sheet Date March 31, 2007

II Capital raised during the year (Amount in Rupees Thousand)Public Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL

III Position of Mobilisation and Deployment of funds :(Amount in Rupees Thousand)Total Liabilities 1,19,84,575Total Assets 1,19,84,575Sources of Funds:

Paid-up Capital 17,84,97Reserves and Surplus 51,88,391Secured Loans 22,21,242Unsecured Loans 13,02,367Deferred Tax liability 7,36,744

Application of Funds:Net Fixed Assets 48,86,576Investments 11,73,645Net Current Assets 35,61,623Miscellaneous Expenditure 5,397

IV Performance of the Company :(Amount in Rupees Thousand)Turnover (including other income) 70,71,804Total Expenditure 53,68,494Profit / (Loss) before tax 17,03,309Profit / (Loss) after tax 12,74,210Earnings Per Share (Rs.) 14.28Dividend Rate (%) 295

V Generic Names of principal products of the CompanyItem Code No. (ITC Code) 170111.00Product Description SugarItem Code No. (ITC Code) 380810Product Description InsecticidesItem Code No. (ITC Code) 12122009Product Description Algae

34. Previous year's figures include the figures of erstwhile Parryware division for a period of 11 months and the Current Year’s figures include the figures oferstwhile Parry Nutraceuticals Limited for a period of 7 months and hence strictly not comparable.

35. Previous year’s figures have been regrouped to conform to the presentation of Current year’s accounts.


Chennai G. JALAJA D. KUMARASWAMY P. RAMA BABU A.VELLAYANMay 4, 2007 Secretary Chief Financial Officer Managing Director Chairman


62


ConsolidatedFinancial Statements

63

1. We have audited the attached Consolidated Balance Sheet of E.I.D.Parry

(India) Limited and its subsidiaries Coromandel Fertilisers Limited andits subsidiaries and associates, Parry America Inc., Parry InfrastructureCompany Private Limited, Parrys Sugar Limited, Coromandel Bathware

Limited, Parrys Investments Limited and its Joint Venture Parry MonsantoSeeds Private Limited, Silkroad Sugar Private Limited (formerly ParrysSugars Refineries Private Limited) and Parryware Roca Private Limited

(formerly Parryware Glamourooms Private Limited) as at 31st March,2007 and also the Consolidated Profit and Loss Account and theconsolidated cash flow statement for the year ended on that date annexed

thereto. These financial statements are the responsibility of E.I.D.Parry(India) Limited's management and have been prepared by themanagement on the basis of separate financial statements and other

financial information regarding components. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes, examiningon a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiary companies

viz.,Coromandel Fertilisers Limited and its subsidiaries and associates,Parry America Inc., Coromandel Bathware Limited, Parry InfrastructureCompany Private Limited, Parrys Investments Limited, Parrys Sugar

Limited, and its Joint Venture Parry Monsanto Seeds Private Limitedand Parryware Roca Private Limited (formerly Parryware GlamouroomsPrivate Limited), whose financial statements reflect total assets of

Rs.187,117 lakhs as at 31.3.2007, the total revenues ofRs.222,550 lakhs and cash flows amounting to Rs.14,087 lakhs for theyear then ended. These financial statements and other financial

information have been audited by other auditors whose reports havebeen furnished to us, and our opinion, is based solely on the report of

Auditors’ Report to the Board of Directors of E.I.D. - Parry (India) Limited on the Consolidated Financial Statements ofE.I.D. - Parry (India) Limited and its Subsidiaries, Associates and Joint Ventures

the other auditors. As stated in Note 14 in Schedule 18 to the consolidated

financial statements, the valuation of investments in Joint VentureCompanies have been done based on un-audited financial statements.

4. Attention is invited to Note No. 4 of Schedule 18 regarding accrual ofsubsidy amounting to Rs.3261.81 lakhs for the period July 1, 2006 toMarch 31, 2007 based on management estimates pending final

announcement by the Government of India.

5. We report that the consolidated financial statements have been preparedby the Company in accordance with the requirements of Accounting

Standard (AS) 21, Consolidated Financial Statements, AccountingStandard (AS) 23, Accounting for Investments in Associates inConsolidated Financial Statements, and Accounting Standard (AS) 27,

Financial Reporting of Interests in Joint Ventures, issued by the Instituteof Chartered Accountants of India.

6. Based on our audit and on consideration of reports of other auditors on

separate financial statements and on the other financial information ofthe components, and to the best of our information and according to theexplanations given to us, we are of the opinion that the attached

consolidated financial statements read with paragraph 4 (a) above givea true and fair view in conformity with the accounting principles generallyaccepted in India:

(a) In the case of Consolidated Balance Sheet, the state of affairs of

E.I.D.-Parry (India) Limited and its subsidiaries, associates and JointVentures as at 31st March, 2007; and

(b) In the case of Consolidated Profit and Loss Account, of the profit forthe year ended on that date; and

(c) In the case of Consolidated Cash Flow Statement, of the cash flowsfor the year ended on that date.

For Deloitte Haskins & SellsChartered Accountants

Geetha SuryanarayananChennai PartnerMay 4, 2007 Membership No. 29519

64


Schedule As at As atMarch 31, 2007 March 31, 2006

Rs. Lakhs Rs. Lakhs

I. SOURCES OF FUNDS1. SHAREHOLDERS’ FUNDS:

(a) ShareCapital 1 1785 1785(b) Reserves and Surplus 2 86146 64719(c) Capital Suspense 16 –(d) Capital Reserve on Consolidation 5183 93130 5183 71687

2. MINORITY INTEREST 17051 142573. LOAN FUNDS:

(a) Secured Loans 3 48856 44217(b) Unsecured Loans 4 41381 90237 23624 67841

4. DEFERRED TAX LIABILITY (Net) 15371 13508TOTAL 215789 167293

II. APPLICATION OF FUNDS1. FIXED ASSETS: 5

(a) Gross Block 146585 129938(b) Less: Depreciation 61051 54579

Net Block 85534 75359(c) Share in Joint Ventures 6870 8(d) Capital Work-in-Progress at cost 2078 94482 5575 80942

2. INVESTMENTS 6 23952 209123. CURRENT ASSETS, LOANS AND ADVANCES :

(a) Inventories 7 61195 46816(b) Sundry Debtors 8 25507 26194(c) Cash and Bank Balances 9 42935 13347(d) Other Current Assets - Interest Accrued 238 118(e) Loans and Advances 10 50584 57748

180459 144223Less :CURRENT LIABILITIES AND PROVISIONS :(a) Liabilities 11 78080 70524(b) Provisions 12 5082 8425

83162 78949NET CURRENT ASSETS 97297 65274

4. MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) 58 165TOTAL 215789 167293

NOTES ON ACCOUNTS 18The schedules referred to above form an integral part of these accounts

Consolidated Balance Sheet As at March 31, 2007

This is the Balance Sheet referred to in our Report of even date

For Deloitte Haskins & Sells On behalf of the BoardChartered Accountants

Geetha Suryanarayanan

PartnerMembership No.29519 G. JALAJA D. KUMARASWAMY P. RAMA BABUChennai Secretary Chief Financial Officer Managing DirectorMay 4, 2007

A. VELLAYANChairman

65

Year ended Year endedSchedule March 31, 2007 March 31, 2006

Rs. Lakhs Rs. LakhsIncome :Sales and Services 268812 297530Less : Excise Duty (6813) (9013)Add : Sales - Share in Joint Ventures 14149 276148 720 289237Other Income 13 15818 5227

291966 294464Expenditure :Materials 14 187199 202217Employee Cost 15 12469 11118Other Costs 16 50286 46524Depreciation 7727 6681Interest 17 2809 2199

260490 268739

PROFIT BEFORE TAX 31476 25725Less : Provision for Tax

– Current 6897 7225– MAT Credit Entitlement (61) –– Deferred 2776 (244)– Fringe Benefit Tax 171 275– Excess Tax provision written back (288) 9495 (204) 7052

PROFIT AFTER TAX 21981 18673Share of Associates Profit 1598 1065Minority Interest (3523) (2588)

20056 17150Balance brought forward 9342 6047Surplus brought forward from Amalgamation of Parry Nutraceuticals Limited (1290) –Surplus brought forward from Amalgamation & Coromandel Bathware Limited – (162)Balance brought forward- Share in Joint Venture 61 –Amount Available for Appropriation 28169 23035APPROPRIATIONS:Interim Dividend paid on Equity Share Capital 4139 98Proposed Dividend on Equity Share Capital 2212 4684Dividend Tax 1257 881Transferred to General Reserve 9595 8030Transferred to Debenture Redemption Reserve 311 –Balance Carried to Balance Sheet 10655 9342

28169 23035Earnings per Share-Basic and Diluted - in Rs. (Face Value Rs.2) 22.47 19.22(2006-Face value Rs.2; EPS: Rs.19.22) Note 12 of Schedule 18NOTES ON ACCOUNTS 18The schedules referred to above form an integral part of these accounts

Consolidated Profit and Loss Account For the year ended March 31, 2007

This is the Profit & Loss Account referred to in our Report of even date




A. VELLAYANChairman

66


Consolidated Cash Flow Statement for the year ended March 31, 2007


Rs. Lakhs Rs. Lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 31476 25725

Adjustments for :


Interest expense (net) 2809 2199

Investment income (513) (401)

(Profit) / loss on sale of fixed assets 170 59

(Profit) / loss on sale of investments (net) (11842) (2286)

Preoperative Expenses (4) –

Payment under voluntary separation scheme – (17)

Other non cash items (924) (2577) 220 6455

Operating profit before working capital changes 28899 32180

Adjustments for (increase)/decrease in:

Trade and other receivables 4149 (22822)

Inventories (14582) (2572)

Current liabilities 4664 27939

Net current assets trfd on sale/amalgamation – (5769) (6972) (4427)

Cash generated from operations 23130 27753

Direct taxes paid net of refund (9472) (5480)

Net cash flow from operating activities 13658 22273

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (26580) (28573)

Proceeds on sale of fixed assets 185 601

Proceeds on sale of business 16066 –

Purchase of investments (2779) (23571)

Investments in subsidiary companies (1652) (2857)

Sale of Investments 12335 25391

Interest received 1837 571

Grant received/Inter Corp Deposits 1650 –

Investment income 832 (42)

Net Cash flow from investing activities 1894 (28480)

67

Consolidated Cash Flow Statement for the year ended March 31, 2007

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of share capital 9212 –

Proceeds from long term borrowings 11233 13511

Repayment of long term borrowings (8950) (2290)

Proceeds from other term borrowings (net) 10798 6273

Change in working capital finance 6372 (2254)

Interest paid (4662) (3437)

Dividends paid (9127) (3192)

Net cash flow from financing activities 14876 8611

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 30428 2404

Cash and cash equivalents as at 1st April 12507 10943

Cash and cash equivalents as at 31st March 42935 13347

Note :

1. Cash and cash equivalents as at 1st April, 2006,

a. excludes Rs.980 lakhs relating to Parryware Glamourooms Pvt. Ltd. being a Joint Venture between the Company andRoca Sanitario SA on 50:50 basis.

b. includes Rs. 119 lakhs of Ficom Organics Ltd. and Rasilah Investments Limited on their amalgamation withCoromandel Fertilisers Ltd, subsidiary of EID Parry.

c. includes Rs. 21 lakhs of Parry Nutraceuticals Ltd. on amalgamation with the Company during the year.

This is the Cash Flow Statement referred to in our report of even date


Rs. Lakhs Rs. Lakhs




A. VELLAYANChairman

68


Schedules forming part of Consolidated Accounts


Rs. Lakhs Rs. Lakhs

SCHEDULE 1SHARE CAPITAL :AUTHORISED :

Preference Shares:50,00,000 Redeemable Preference Shares of Rs.100 each 5000 5000

Equity Shares:25,75,00,000 Equity Shares of Rs.2 each 5150 5150(2006 - 25,75,00,000 Equity shares of Rs. 2 each)

10150 10150ISSUED AND SUBSCRIBED

8,92,48,515 Equity Shares of Rs.2 each fully paid up 1785 1785(2006 - 8,92,48,515 Equity shares of Rs 2 each)

1785 1785

Of the above 3,44,74,295 Equity Shares of Rs. 2 each have been allotted as fully paid up for consideration other than cash.

SCHEDULE 2RESERVES AND SURPLUS: Rs. Lakhs

As atAdditions Deductions

As atMarch 31, 2006 March 31, 2007

CAPITAL RESERVESCapital Subsidy 11 – – 11Capital Reserve 1348 890 – 2238Capital Redemption Reserve 3536 – – 3536Fixed Assets Revaluation Reserve (Note 1 ) 624 – 14 610Securities Premium Account 14098 8670 – 22768Debenture Redemption Reserve 1304 311 – 1615

20921 9871 14 30778

REVENUE RESERVESStatutory Reserve 2 – – 2Pre acquisition Reserve 6889 – – 6889Investment Fluctuation Reserve 1400 – – 1400General Reserve (Note 2) 49363 12188 962 60589Profit and Loss Account balance 9342 1313 – 10655Adjustments on Consolidation as per AS-21/23/27 ( Note 3) (23198) (969) – (24167)

64719 22403 976 86146

Note :1. Deduction during the year represents Rs.14 lakhs transferred to profit and loss account.2. Addition during the year includes adjustment for prior year dividend received Rs.1491 lakhs.3. Detailed Break up of Adjustments

Transfer to Capital Reserve on Consolidation (5183) (5183)Effect on conversion of subsidiary into JV – 788Transfer to minority interest (10882) (12741)Adjusted as Pre-acquisition Reserve (7142) (7142)Share of Pre/Post-acquisition Reserves in Associates 8 111Share in Joint Venture 1 –

(23198) (24167)

69

SCHEDULE 3

SECURED LOANS:(a) Debentures 7500 7500(b) Term Loans from:

i) Government of India -Sugar Development Fund 2033 369ii) Financial Institutions – 93iii) Banks 31796 28584

33829 29046(c) Cash Credit from Banks 7527 7671

48856 44217

SCHEDULE 4UNSECURED LOANS:

(a) Fixed Deposits – 17(b) Short Term loan from Banks 24780 18445(c) Sales Tax Deferral Scheme 63 –(d) Other than Banks

- Short term 13000 1500- Others 3538 3662

16538 516241381 23624


SCHEDULE 5

FIXED ASSETS : Rs. Lakhs

GROSS BLOCK DEPRECIATION NET BLOCKCost/Value Additions Additions Dele- Cost/ As at Additions For the With- As at As at As at

As at on tions/ Value 31-03-06 on Year drawn/ 31-03-07 31-03-07 31-03-0631-03-06 Amalga- Adjust- As at Amalga- Adjust-

mation ments 31-03-07 mation mentsLeasehold Land 1862 451 – 661 1652 103 – 25 1 127 1525 1759Freehold Land 2636 24 571 162 3069 – – – – – 3069 2636Buildings (Note 1 & 2) 13486 423 1952 1561 14300 3295 15 328 9 3629 10671 10191Railway Siding 471 – 33 – 504 206 – 24 – 230 274 265Plant and Machinery 105547 2933 17734 5372 120842 48003 96 6141 645 53595 67247 57544Furniture andOffice Equipments 4520 50 528 427 4671 2384 6 438 127 2701 1970 2136Motor Vehicles 1175 41 432 342 1306 495 – 262 158 599 707 680Patent 241 – – – 241 93 – 77 – 170 71 148

129938 3922 21250 8525 146585 54579 117 7295 940 61051 85534 75359PREVIOUS YEAR 124035 – 21512 15609 129938 54961 – 6700 7082 54579Capital Work-in-Progress 2078 5575Add: Share in Joint Venture 6870 8

94482 80942

Notes:

1. Includes cost of 131 shares of Rs.100 each (2006 - Rs 0.13 Lakh) in Shri Siddhi Vinayak Co-operative Housing Society Limited.

2. Includes cost of Rs.31 Lakhs ( 2006 - Rs.31 Lakhs) for which title deeds are yet to be received from the Registrar.


Rs. Lakhs Rs. Lakhs

70



Rs. Lakhs Rs. Lakhs

SCHEDULE 6

INVESTMENTS :

Long Term

A) QUOTED (Fully Paid)Trade - Equity Shares :

- Associates 17225 15483[Capital Reserve/ (Goodwill) on acquisition of shares in Associates is Rs.10009 lakhs]

Others 12 9Non-Trade - Equity Shares :

- Others 211 22

17448 15514

B) UNQUOTED (Fully Paid)Trade - Equity Shares :

- Associates – 393

[Capital Reserve/ (Goodwill) on acquisition of shares in Associates - Rs.234 lakhs]Others 4056 2716Non-Trade - Equity Shares :

- Others 332 4324388 3541

C) NON-TRADE - OTHERSOthers 2 726

2 726

D) Mutual Funds - Unquoted 993 –

E) Government Securities 1 1

F) Public sector Bonds 1120 1130

(A+B+C+D+E+F) 23952 20912

Market Value of Quoted Investments 17470 11934

SCHEDULE 7

INVENTORIES:

Raw Materials 18166 18940

Work-in-Progress 1496 1572

Finished Goods 36071 23180

55733 43692

Consumable Stores and Spares 3157 3119

Add : Share in Joint Ventures 2305 5

61195 46816


71


Rs. Lakhs Rs. Lakhs

SCHEDULE 8

SUNDRY DEBTORS:

Debts outstanding for a period exceeding six months:

Secured - Considered Good 78 53

Unsecured - Considered Good 1102 967

Unsecured - Considered Doubtful 743 817

1923 1837

Less: Provision for Doubtful Debts 743 1180 817 1020

Other Debts:

Secured - Considered Good 2074 1565

Unsecured - Considered Good 21343 23417 23588 25153


25507 26194

SCHEDULE 9

CASH AND BANK BALANCES:

Cash-in-hand and in-transit (including cheques on hand) 119 453

Balance with Scheduled Banks:

In Current Account 17274 3236

In Dividend Account 167 110

Short-term Deposit 24136 9484

Balance with other Banks:

In Current Account 6 4


42935 13347

SCHEDULE 10

LOANS AND ADVANCES:

Unsecured and considered Good unless otherwise stated:

MAT Credit entitlement Account 61 –

Advance recoverable in cash or in kind or for value to be received

– Unsecured and Considered Good 49555 57722

– Considered Doubtful 103 120

49658 57842

Less: Provision for Doubtful Advances 103 49555 120 57722


50584 57748


72



Rs. Lakhs Rs. Lakhs

SCHEDULE 11

LIABILITIES:

Sundry Creditors 68948 64548

Advances and Deposits 1918 1857Due to Directors - Commission (Net) 35 37Investor Education and Protection Fund

(a) Unpaid Dividend 203 110(b) Unpaid Matured Deposits 2 7(c) Unpaid Matured Debentures – 4(d) Interest accrued on (a) to (c) above 3 208 4 125

Other Liabilities 3919 3075Interest accrued but not due on loans 815 648Add : Share in Joint Ventures 2237 234

78080 70524

SCHEDULE 12PROVISIONS :Provision for Tax (Net) 1003 2487Deferred Repairs – 149Proposed Dividend on Equity Shares - Final 2212 4684Dividend Tax 647 867Others 1068 236Add: Share in Joint Ventures 152 2

5082 8425


Rs. Lakhs Rs. Lakhs

SCHEDULE 13OTHER INCOME:Profit on sale of Investments (Net) 11812 2286Liabilities/Provisions no longer required written back 655 387Investment Income 499 386Sundry Income 2547 2022Add : Share in Joint Ventures 305 146

15818 5227


73


Rs. Lakhs Rs. Lakhs

SCHEDULE 14MATERIALS:Raw Materials consumed 188151 168328Purchase of Finished Goods 9104 27700Purchase of Work-in-Progress 164(Increase) / Decrease in StocksOpening Stock - Work-in-progress (Note No.2(c) of Sch 18) 1469 1476

- Finished Goods (Note No.2(c) of Sch 18) 20766 2906322235 30539

Closing Stock - Work-in-progress 1496 1572- Finished Goods 36071 23180

37567 (15332) 24752 5787

Add : Share in Joint Ventures 5276 238187199 202217

SCHEDULE 15EMPLOYEE COST :Salaries, Wages and Bonus 8604 9001Contribution to Provident and other Funds 843 842Workmen and Staff Welfare Expenses 1134 1244Add : Share in Joint Ventures 1888 31

12469 11118

SCHEDULE 16OTHER COSTS :Consumption of Stores 7429 6099Power and Fuel 6782 9887Rent 400 410Repairs and Maintenance - Buildings 239 127

- Plant & Machinery 4667 4906 3984 4111Insurance 558 604Rates and Taxes (Net) 1955 1170Packing, Despatching and Freight 14515 13577Commission to Selling Agents 143 77Rebates and Discounts 98 1025Auditors’ Fees and Expenses 24 28Directors’ Fees and Commission 55 58Sales Promotion and Publicity 505 1537Fixed Assets scrapped 3 11Loss on sale of fixed assets 163 59Provision for Doubtful Debts and Advances 66 190Bad Debts/Advances written off 121 217General Manufacturing, Selling and Administration Expenses 7156 7187Add : Share in Joint Ventures 5407 277

50286 46524


74


SCHEDULE 18

NOTES ON ACCOUNTS:

Statement of Significant Accounting Policies

1. a. Basis of Preparation of Financial Statement

The financial statements are prepared under the historical cost convention except so far as they relate to revaluation of certain land and buildings inaccordance with generally accepted accounting principles in India.

b. Principles of consolidation

i) The consolidated financial statements relate to E.I.D. - Parry (India) Limited ('the Company') and its Subsidiary Companies, Associates and Joint

Venture Companies. The consolidated financial statements have been prepared on the following basis.

The financial statements of the Company and its Subsidiaries have been prepared based on a line-by-line consolidation by adding together the book

values of like items of assets, liabilities, income and expenses as per the respective financial statements duly certified by the auditors of therespective companies except in the case of Coromandel Bathware Limited, which is consolidated based on unaudited accounts. Intra-group balancesand intra-group transactions and the unrealised profits on stocks arising out of intra-group transactions have been eliminated.

Equity method of Accounting has been followed for Investments in Associates in accordance with AS 23- Accounting for Investments in Associates,

wherein Goodwill/ Capital Reserve arising at the time of acquisition and share of profit or losses after the date of acquisition has been adjusted ininvestment value, based on the unaudited financial statements of the associates. Investors share in assets, liabilities, income and expenses asappearing in the unaudited financial statements of the Joint Venture companies Parry Monsanto Seeds Private Ltd. and Silkroad Sugar Private Ltd.

and audited financial statements for Parryware Roca Private Limited have been included, as per AS 27 Financial Reporting of Interest in JointVenture.

The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similarcircumstances except in the case of certain Subsidiaries and Associates the impact of which is not quantifiable.

The excess/lower of cost to the Company and its subsidiaries of their investments in their subsidiaries/fellow subsidiaries is recognised in thefinancial statements as goodwill/capital reserve.


Rs. Lakhs Rs. Lakhs

SCHEDULE 17INTEREST :Interest on

– Debentures 2258 1551– Other Fixed Loans 971 669

– Others 1606 1666Add : Share in Joint Ventures (39) 2

4796 3888Less: Interest Income on loans and advances and others (Gross) 1987 1689

2809 2199


75


ii) The Subsidiary Companies considered in the consolidated financial statements are :

Name of the Company Country of % of voting power % of voting powerincorporation held on held on

March 31, 2007 March 31, 2006Direct Indirect Direct Indirect

Parry Chemicals Limited (PCHL) India 69.05 69.05Parry America Inc. (PAI) U S A 100.00 100.00Coromandel Bathware Limited (CBL) India 99.99 99.99Coromandel Fertilisers Limited (CFL) India 69.05 69.05Parry Infrastructure Company Pvt Ltd (PICPL) India 100.00 –Parrys Investments Limited (PIL) India 100.00 100.00Parrys Sugar Limited (PSL) India 100.00 100.00Parryware Roca Private Ltd. (PRPL) @ India – 100.00

The financial statement of Parry Chemicals (subsidiary) and GFCL ( Associate) of Coromandel Fertilisers Limited have been drawn up toMarch 31, 2007 and those of Prathyusha Chemicals & Fertilisers Limited (PCFL) are for the year ended March 31,2006. Since the Group share oflosses in PCFL has exceeded the carrying amount of the investment in Coromandel Fertilisers Ltd, recognition of further losses has been discontinuedand the investment is reported at 'nil' value in the consolidated financial statement of Coromandel Fertilisers Ltd.

iii) Details of Interest in Joint Venture Companies

Name of the Company Country of % of voting power % of voting powerIncorporation held on held on

March 31, 2007 March 31, 2006

Parry Monsanto Seeds Private Limited (PMSL) India 49% 49%

Parryware Roca Private Limited (PRPL) @ India 50% –

Silkroad Sugar Private Limited (SSPL) India 50% 49%

@ became joint venture pursuant to agreement entered into with Roca Sanitario of Spain .

iv) Details of Investments in associates held by the Company directly or indirectly through its Subsidiaries : Rs. Lakhs

Name of the Associate Country Ownership Original Costof incorporation Interest % of Investments

Godavari Fertilisers & Chemicals Limited (GFCL) India 45.07 13418Prathyusha Chemicals & Fertilisers Limited (PCFL) India 26.00 143

Total 13561

c. Other Significant Accounting PoliciesThese are set out in the notes to accounts under 'Significant Accounting Policies' of the financial statements of the Company and its subsidiariesPCHL, PAI, CBL, CFL, PICPL, PIL and PSL , Associates GFCL and PCFL and PRPL, PMSL, and SSPL Joint Venture Companies.

2. AMALGAMATIONa. Amalgamation of Parry Nutraceuticals Ltd. (PNL) with the Company

Parry Nutraceuticals Limited (PNL) a wholly owned subsidiary was amalgamated with the Company effective September 1, 2006 as per the Orderof the Hon'ble High Court of Madras dated April 17, 2007. PNL was carrying on the business of manufacture of natural food supplements.The

amalgamation has been accounted for under the "pooling of interest" method as prescribed by the Accounting Standard 14 "Accounting forAmalgamations" issued by the Institute of Chartered Accountants of India. In accordance with the scheme of amalgamation sanctioned by theHon'ble High Court of Madras, the assets, liabilities and reserves of PNL as at September 1,2006 have been taken over at their book value and


76


Rs 35 lakhs being the excess of assets over liabilities after adjusting the cost of investments of the Company in the amalgamating company has

been debited to the General Reserve.

b. Amalgamation of Ficom Organics Limited and its wholly owned subsidiary, Rasilah Investments Limited with Coromandel FertilisersLtd, subsidiary of the Company

a) Pursuant to the Scheme of Amalgamation ('the Scheme') of the erstwhile Ficom Organics Limited ('Ficom') and its wholly owned subsidiary, RasilahInvestments Limited (Rasilah) with Coromandel Fertilisers Ltd. (CFL)as approved by the Hon'ble High Courts of Judicature of Andhra Pradesh and

Bombay on 10th April, 2007 and 27th April, 2007, respectively, the entire business and undertaking of Ficom and Rasilah including all assets,liabilities, duties and obligations have been transferred to and vested in CFL with effect from April 1, 2006. CFL is in the process of completing certainformalities, (including filing of certified copies of the sanction/approvals of the Hon'ble High Courts with the Registrars of Companies, Maharashtra

and Andhra Pradesh) in this regard.

b) The operations of Ficom include manufacture and sale of agrochemicals of technical grade and pesticides. Rasilah is engaged in the business ofinvestment and finance.

c) The Amalgamation has been accounted for under the 'Purchase Method' as prescribed by Accounting Standard 14, "Accounting for Amalgamations",

issued by the Institute of Chartered Accountants of India. In accordance with the Scheme, the assets and liabilities of Ficom and Rasilah have beentaken over at their fair values determined by an independent valuer as on April 1, 2006 and Rs. 852.88 lakhs being the excess of the fair value of thenet assets over the consideration payable has been credited to the Capital Reserve in the books of CFL.

d) As per the Scheme, 3,140,567 Equity Shares of Rs. 10/- each of Ficom held by the Company and 91,000 Equity Shares of Rs. 10/- each of Rasilah

held by Ficom, stand cancelled.

e) In terms of the Scheme, CFL required to allot 831,981 Equity Shares of Rs. 2/- each as fully paid-up to the shareholders of Ficom in the proportionof three fully paid-up Equity Shares of Rs. 2/- each of CFL for every eleven fully paid-up Equity Shares of Rs. 10/- each of Ficom.

f) Investments, assets, liabilities and licenses held in the name of erstwhile Ficom Organics Limited and erstwhile Rasilah Investments Limited are inthe process of being transferred in the name of CFL.

c. Opening Stock adjustment

Opening Stock as at April 1, 2006 includes Rs. 430 lakhs of Stock taken over, pursuant to the amalgamation of Ficom Organics Limited and RasilahInvestments Limited with Coromandel Fertilisers Ltd. and Rs. 389 lakhs of stock taken over by EID Parry from Parry Nutraceuticals Ltd. (PNL) onmerger of PNL with EID Parry during the year. It excludes stock valuing Rs. 3336 lakhs pertaining to Parryware Roca Pvt Ltd, included in the closing

stock as at 31.03.2006 as subsidiary which became Joint Venture Company during the year 2006-07.

31.3.2007 31.3.2006Rs. Lakhs Rs. Lakhs

3. a Estimated amount of contracts remaining to be executed 10055 6600on capital account and not provided for

b. Commitment towards Investments * 17445 Nil

c. Claims for Excise duty/stamp duty under dispute in Nil 77

respect of fixed assets

d. Obligations for duty free imports under EPCG Scheme 143 –

* Includes Rs.14329 lakhs, pursuant to the Share Purchase Agreement with Indian Farmers Fertilisers Co-operative Limited (IFFCO) and the

consequent open offer made to the shareholders of Godavari Fertilisers Limited (GFCL) in accordance with the Securities and Exchange Board ofIndia (Substantial Acquisition of Shares and Takeover) Regulations, 1997. The Company has since acquired equity shares of GFCL - 15,51,960through the open offer and 80,01,000 from IFFCO at Rs.150/ per share on April 2, 2007 and April 12,2007 respectively.



77

e. Other monies for which the Group is contingently liable:

i. Letters of Credit established for purchases of Raw Materials, Spares and Capital Goodsand financing a subsidiary. 5377 1256

ii. Income tax demands contested for which no provision has been made. 816 2264

iii. Claims against the company for Sales Tax, Excise Duty and others including Industrial Disputes not 703 899acknowledged as Debt and not provided for.

iv. Certain Industrial disputes are pending before Tribunal/High Courts. No provision has been made in theaccounts as the liability of the Company in respect of these disputes depends upon the final outcome ofsuch case and the quantum of which is not currently ascertainable.

v. The Statutory Minimum Price of sugar cane for the sugar year 2002-03 notified on 12th December 2002,at Rs. 645/MT was increased to Rs. 695/MT on 9th January, 2003. Since the increase was arbitrary thesame was legally challenged by the South Indian Sugar Mills Association (of which the Company is amember) and the matter is pending before the Hon'ble Supreme Court of India. Based on legal advice,pending disposal of these cases, amount not provided for in the accounts.

The Statutory Minimum Price of sugar cane for the sugar year 2003-04 was fixed at Rs. 730 / MTwhich was challenged by South Indian Sugar Mills Association and the matter is pending beforethe High Court of Madras, pending disposal of cases, no provision has been considered in the accounts.

vi. The Company had an opening export obligation of 73841 MT arising out of raw sugar importedagainst Advance licenses in earlier years. No fresh raw sugar imports were made during theyear & hence no additional export obligation has arisen. Balance export obligation out of theopening export obligation of 73841 MT is 23160 MT as on 31st March, 2007. The time limit forexport of this balance obligation quantity is up to February, 2008.

4. The Government of India grants price concessions on sale of Phosphatic Fertilisers to Coromandel Fertilisers Limited. Pending announcement of final rates ofconcession for the period July 1, 2006 to March 31, 2007, differential subsidy income ( in excess of the Base rate ) of Rs.3261.81 lakhs has been recognisedhaving regard to the existing concession scheme and according to the management estimates of final price concession receivable.

5. During the year, CFL has received a grant of Rs.99.29 lakhs from United Nations Industrial Development Organisation towards implementation of theMontreal Protocol for eliminating ozone depleting substances. As per the requirements of the Accounting Standard 12, 'Accounting for GovernmentGrants', the said grant has been adjusted against the cost of the fixed Assets, towards which it was received.

6. Employee Benefits

The Company has adopted Accounting Standard-15 (Revised 2005) "Employee Benefits "effective from 1st April 2006. Pursuant to this, the company hasreassessed its liability on various employee benefits as on that date and the additional liability arising thereon amounting to Rs.420 lakhs (net of taxexpenses of Rs.88 lakhs) in case of EID and Rs.506.67 lakhs (net of tax expenses of Rs.257.07 lakhs) in case of CFL has been adjusted against GeneralReserve in accordance with the transitional provisions in the Standard. Further in the case of EID as a result of this change the charge to profit & lossaccount for the year is higher by Rs.56 lakhs.

i. DEFINED CONTRIBUTION PLANS

a. Provident FundContributions are made to the Company's Employees Provident Fund Trust in accordance with the fund rules. The interest rate payable by the trustto the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the shortfall, if any, between the

return from the investments of the trust and the notified interest rate. The company also contributes to a government administered pension fund onbehalf of its employees


SCHEDULE 18 (Contd.) 31.3.2007 31.3.2006Rs. Lakhs Rs. Lakhs

1115 826

78


b. Superannuation

Fixed contributions to the Superannuation Fund, which is administered by trustees and managed by LIC are charged to the Profit and Loss Account.The Company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contributions as an

expense in the year incurred.

ii. DEFINED BENEFIT PLAN

GratuityThe company makes annual contribution to a Gratuity Fund administered by trustees and managed by LIC. The company accounts its liability forfuture gratuity benefits based on actuarial valuation, as at the balance sheet date, determined every year by LIC using the Projected Unit Credit

method.

iii. SHORT TERM EMPLOYEE BENEFIT

Short term employee benefits, including accumulated compensated absences, are recognized as an expense as per the Company's scheme based

on expected obligations on undiscounted basis.

In the case of one subsidiary, Coromandel Fertilisers Ltd, the company has considered a portion of employee leave encashment as long termbenefits, whereas the same has been considered as short term benefits by EID.-Parry.

7. MISCELLANEOUS EXPENDITUREVoluntary separation scheme expenditure is amortised over the period the expected period of future benefits.

8. MINORITY INTEREST31.3.2007 31.3. 2006Rs Lakhs Rs Lakhs

Minority Interest as at the date of Investment in the Subsidiaries 5166 5166Minority Interest in post acquisition Reserve 7646 5864Minority Interest in net Income / (Losses) 3523 2588Minority Interest in Associate's Net Worth 716 639

Total 17051 14257

9. In respect of overseas subsidiary company, Income and Expenses are translated at the average exchange rate for the year. Current assets andliabilities are translated at period end exchange rate. The fixed assets are translated at the rate that prevailed on the date of transactions. Net foreignexchange difference on translation is recognised in the Profit and Loss account.

10. Composition of Business Segments :Primary Segments

Farm Inputs Sugar Bio products OthersFertilisers Sugar, Neem CorporatePesticides Chemicals Organic Manure Others

Power Nutraceuticals

Secondary SegmentsNorth America India Rest of the World Europe

Inter Segment Transfer Pricing :Inter Segment prices are normally negotiated amongst the segments with reference to cost, market prices and business risks, within an overalloptimisation objective for the enterprise.

Schedules forming part of Consolidated AccountsSCHEDULE 18 (Contd.)

79

Segment Revenues, Results and Other Information :Rs.Lakhs

Primary SegmentsFarm Inputs Sugar Parryware Bio Others Elimination Overall

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006Revenue(Sales/Income) :(Gross of Excise Duty)External Customers 211781 189853 55592 82321 25211 3923 2146 16326 3946 287622 303477Inter-segmental Sales - - 958 451 – – (958) (451) – –Total 211781 189853 56550 82772 25211 3923 2146 16326 3946 (958) (451) 287622 303477

Results :Operating Profit/(Loss) 17413 12591 3080 9348 3251 528 60 (484) 1969 2285 20537 24934Profit on sale of Investments 11812 2285Dividend Income 499 386Share in Joint Venture PBIT 1476 319Interest Expenses (Net) (2848) (2199)Profit before Tax 31476 25725Income Tax - Current (6897) (7021)

- MAT Credit Entitlement 61 –- Deferred (2488) 244- Fringe Benefit Tax (171) (275)

Net Profit before Minority Interest 21981 18673Less : Minority Interest’s share (3523) (2588)Add : Share of Associates’ Profits 1598 1065Net Profit relating to the Group 20056 17150

Other Information :

Segment Assets 155879 133854 71265 54377 21360 6261 2929 29301 12690 262706 225210Share in Joint Venture 12293 120Unallocated Corporate Assets 23952 20912Total Assets 298951 246242Segment Liabilities 53674 51255 19838 14295 - 4442 408 (125) 1918 6359 75838 76226Share in Joint Venture 2560 236Unallocated Corporate Liabilities 108910 83836Shareholders’ Funds 94592 71687Minority Interest 17051 14257Total Liabilities 298951 246242Capital Expenditure 6155 3438 16123 18268 3686 763 120 383 90 23424 25602Depreciation 3992 3716 2684 1942 609 269 209 336 204 7281 6680Depreciation-Share in Joint Venture 446 1Non-cash expenditure 232 94 124 - 30 1 19 27 134 413(excluding Depreciation)

Secondary SegmentsIndia North America Europe Rest of the World Total

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006Segment Revenue 282864 288184 2926 1160 848 13490 984 643 287622 303477Carrying Amounts of :Segment Assets 297987 245731 964 511 298951 246242Segment Liabilities 298025 245900 926 342 298951 246242Capital Expenditure 23413 25601 11 1 23424 25602


80


11. Related Party transactions

List of Related Parties:

a) Associates / Joint Venture Companies

1. Prathyusha Chemicals & Fertilisers Limited2. Godavari Fertilisers & Chemicals Limited3. Parry Monsanto Seeds Private Limited

4. Silkroad Sugar Private Limited5. Parryware Roca Private Limited

b) Key Management Personnel (KMP)1. Mr. P. Rama Babu, Managing Director in E.I.D.- Parry (India) Limited2. Mr. V. Ravichandran, Managing Director in Coromandel Fertilisers Limited

c) Transactions with related parties

Rs. Lakhs

2006-2007 2005-2006Associates/ KMP Associates/ KMP

Joint-venture Joint-venture

Sale of Goods 404 94

Purchase of Assets 44

Purchase of Goods 59 2965

Rendering of services 449 24

Receiving of services 184

Interest Income 39

Dividend Income 484 250

Purchase of Investments 363

Material given/returned on loan 856 534

Material taken/returned on loan 704 489

Managerial Remuneration *

Loan recovered/refunded – 10 4

Intercorporate Deposit given/received 4120 1000

Closing Balance–Debit 73 1080

Closing balance–Credit – 13

* Details of remuneration to Directors is disclosed in the respective accounts of the Company and its subsidiary - CFL.


81

12. Earnings per Share

31.3.2007 31.3.2006

a. Profit after tax as per Consolidated Profit and Loss 20056 17150Account (Rs. lakhs)

b. Number of Equity Shares of Rs. 2/10 each outstanding 89248515 17849703at the beginning of the year

c. Number of Equity Shares of Rs.2 each outstanding 89248515 89248515during the year

d. Earnings per Share-Basic and Diluted (Rs) 22.47 19.22

13. Deferred Tax

Break up of Net Deferred Tax Liability is as under

2007 2006

Deferred Tax Deferred TaxLiability/ (Assets) Liability/ (Assets)

Rs. Lakhs Rs. Lakhs

Difference between tax and book written down value of fixed assets 16355 13866

Debited on account of AS- 15 (Revised) Transitional Provision (345) –

Others (639) (358)

Net Deferred Tax Liability 15371 13508

14. The equity accounting of associates and financial reporting of interest in joint ventures for the current year are based on unaudited/audited financial statements.The previous year's figures which were earlier based on unaudited financial statements have been revised to give effect to change in the audited financials.

15. Previous year figures have been regrouped to conform to the presentation of current year’s accounts.


A. VELLAYANChairman

Chennai G. JALAJA D. KUMARASWAMY P. RAMA BABUMay 4, 2007 Secretary Chief Financial Officer Managing Director


82


Statement pursuant to exemption received under Section 212(8) of the Companies Act, 1956relating to subsidiary companies

$ (Secured Loan + Unsecured Loan + Deferred Tax Liability + Current Liabilities – Deferred Tax Assets)# (Net Fixed Assets + Current Assets + Investments)@ including capital suspense of Rs.16 lakhs.

Name of Subsidiary Coromandel Fertilisers Parry Chemicals Limited Coromandel Parry Infrastructure Parrys Investments Parry America Inc Parrys SugarCompany Limited Bathware Limited Co. Pvt. Ltd. Limited Ltd.

for the period for the period ended ended

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 31-03-2007 2006-07 2005-06 2006-07 2005-06 31-03-2007

Share Capital 2558 @ 2541 50 50 194 194 1 25 25 22 22 150Reserves & Surplus 51678 41258 75 75 (193) (193) – 14 13 9 (32) 10Other Liabilities $ 118788 105733 411 1031 – – – – – 930 521 –Total Assets # 173024 149532 536 1156 1 1 1 39 38 961 511 160Total Income (including other income) 212085 190606 85 3265 – 1 – 1 1 1400 665 11Profit Before Tax 14635 11536 6 21 – (22) – 1 1 44 (10) 10Provision for Tax 4561 3182 6 14 – – – – – 3 4 –Profit after Tax 10074 8354 – 7 – (22) – 1 1 41 (14) 10Proposed Dividend(including Dividend Tax) 2557 2462 – – – – – – – – – –Details of Investments(Other than in Subsidiaries)Long Term - At costTradeQuoted Equity SharesGodavari Fertilisers and Chemicals Ltd 13419 13419Rs 10 each fully paid (Nos.) 14422252 14422252Chennai Petroleum Corporation Ltd – –Rs 10 each fully paid (Nos.) 300 300

Glaxo Smithkline Pharmaceuticals LtdRs. 10/- each Fully paid(No of eq. Shares - 38)Morarjee Realties LtdRs. 10/- each Fully paid(No of eq. Shares - 49)TATA Motors LtdRs. 10/- each Fully paid(No of eq. Shares - 28)Alpha Laval LtdRs. 10/- each Fully paid(No of eq. Shares - 47) 3Corporation Bank LtdRs. 10/- each Fully paid(No of eq. Shares - 500)Birla Global Finance LtdRs. 10/- each Fully paid(No of eq. Shares - 36)PH Capital LtdRs. 10/- each Fully paid(No of eq. Shares - 2900)Gupta Carpets Udyog LtdRs. 10/- each Fully paid(No of eq. Shares - 140)Indian Card Clothing Co LtdRs. 10/- each Fully paid(No of eq. Shares - 2)Indian Seamless Metal Tubes LtdRs. 10/- each Fully paid(No of eq. Shares - 100)Indian Seamless Steel Alloys LtdRs. 10/- each Fully paid(No of eq. Shares - 300)I G Petrochemicals LtdRs. 10/- each Fully paid(No of eq. Shares - 13000)

Rs. Lakhs

83

Name of Subsidiary Coromandel Fertilisers Parry Chemicals Limited Coromandel Parry Infrastructure Parrys Investments Parry America Inc Parrys SugarCompany Limited Bathware Limited Co. Pvt. Ltd. Limited Ltd.

for the period for the period ended ended 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 31-03-2007 2006-07 2005-06 2006-07 2005-06 31-03-2007

Laxmi Electricals Control Systems LtdRs. 10/- each Fully paid(No of eq. Shares - 2)UTI Master SharesRs. 10/- each Fully paid(No of eq. Shares - 1000)Super Sales Agencies LtdRs. 10/- each Fully paid(No of eq. Shares - 80)Tata Iron and Steel Co LtdRs. 10/- each Fully paid(No of eq. Shares - 49)Tata Power Co LtdRs. 10/- each Fully paid(No of eq. Shares - 120)Indian Seamless Steel Alloys LtdRs. 10/- each Fully paid(No of debentures- 30)

Unquoted Equity SharesIndian Potash Limited 5 5Rs 10 each fully paid (Nos.) 90000 90000Prathyusha Chemicals & Fertilisers Ltd 143 143Rs 10 each fully paid (Nos.) 1430000 1430000Foskor (PTY) Limited 2693 2693South African Rand 1 each fully paid (Nos.) 199590 199590“B” Class shares of South AfricanRand 1 each fully paid up (Nos.) 23500000 23500000Tunisian Indian Fertilisers S.A. 1193Tunisian Dinars 10 each (Nos.) 1350000Bharuch Enviro Infrastructure Limited 1Rs.10/- each fully paid (Nos.) 16100Bharuch Eco Aqua Infrastructure Limited 28Rs.10/- each fully paid (Nos.) 275000Other than Trade Investments UnquotedIDBI Flexibonds 2 –Murugappa Management Services Ltd 8 8Rs 100 each fully paid (Nos.) 8001 8001Cholamandalam Factoring Limited 1 1Rs 10 each fully paid (Nos.) 6500 6500Silkroad Sugar Pvt Ltd Rs 49000Rs 10 each fully paid (Nos.) 4900Parry Infrastructure Company Pvt. Ltd. Rs 49000Rs 10 each fully paid (Nos.) 4900


A. VELLAYANChairman

Chennai G. JALAJA D. KUMARASWAMY P. RAMA BABUMay 4, 2007 Secretary Chief Financial Officer Managing Director

Rs. Lakhs

FORWARD LOOKING STATEMENTThis Annual Report contains certain “Forward Looking Statements” relating to our future business developments and

economic performance. These are based on our judgement and future expectations. The actual results could be

materially different in terms of future performance and outlook due to a number of risks, uncertainties and other

important factors and E.I.D.- Parry is under no obligation to publicly revise any forward looking statement to reflect

future events or circumstances.



A N N U A L R E P O R T 2 0 0 6 - 2 0 0 7


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Ph: +91-44-25306789 Fax: +91-44-25340858

www.eidparry.com

Annual Report 07

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Transcript of Annual Report 07