Dr R P Goenka - pcblltd.com Dr R P Goenka Chairman Emeritus Board of Directors Mr Sanjiv Goenka,...

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Dr R P Goenka

Chairman Emeritus

Board of Directors

Mr Sanjiv Goenka, ChairmanMr B M KhaitanMr C R PaulDr Ram S TarnejaMr K S B SanyalMr Paras K ChowdharyMr O P MalhotraMr Ashok Goyal, Managing Director

Company Secretary

Mr Kaushik Mukherjee

Banks

Bank of BarodaAllahabad BankState Bank of Bikaner & JaipurExport Import Bank of IndiaIDBI Bank LimitedState Bank of IndiaICICI Bank LimitedState Bank of TravancoreSyndicate BankCitibank, N. A.

Auditors

Price WaterhouseChartered Accountants

Solicitors

Khaitan & Co.

Registered Office

31 Netaji Subhas RoadKolkata 700 001

C

hallenging the Lim

its

Phillips Carbon Black Limited

Contents

Notice 2

Directors’ Report and 4

Management Discussion and Analysis

Corporate Governance Report 10

Auditors’ Report 15

Balance Sheet 18

Profit & Loss Account 19

Schedules to the Accounts 20

Cash Flow Statement 34

Financial Summary 36

Cover : The recently commissioned 30 MW PCBLco-generation power plant at Durgapur, West Bengal.The chimney is 110 meters tall.

Notice

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Notice is hereby given that the Forty-eighth Annual GeneralMeeting of the Members of Phillips Carbon Black Limitedwill be held at “Madhusudan Mancha”, 2 No.GariahatRoad (South), Dhakuria, Kolkata-700068 on Friday, the 24thday of July, 2009 at 10.30 a.m to transact the following business:

1. To receive, consider and adopt the Profit and Loss Accountfor the year ended 31st March, 2009, the Balance Sheetas at that date, and the Reports of the Directors andAuditors.

2. To appoint a Director in place of Mr. Sanjiv Goenka,who retires by rotation and being eligible, offers himselffor re-appointment.

3. To appoint a Director in place of Mr. B. M. Khaitan,who retires by rotation and being eligible, offers himselffor re-appointment.

4. To appoint Auditors and to authorise the Board to fix theirremuneration.

Registered Office :31, Netaji Subhas RoadKolkata-700 00128th April, 2009

By Order of the Board

Kaushik MukherjeeCompany Secretary

NOTES:

1. A Member entitled to attend and vote is entitled toappoint a proxy to attend and vote instead of himselfand the proxy need not be a Member.

2. The instrument appointing the proxy should, however, bedeposited at the Registered Office of the Company notless than 48 hours before the commencement of theMeeting.

3. The Register of Members of the Company shall remainclosed from 15th July, 2009 to 24th July, 2009 (both daysinclusive).

4. The Company has transferred all unclaimed or unpaidDividend declared upto the financial year ended30th September, 2001 to the Investor Educationand Protection Fund (IEPF) of the Central Governmentpursuant to Section 205A(5) of the CompaniesAct, 1956.

5. Dividends for the Financial Year ended 30th September,2002 and thereafter, which remain unclaimed or unpaidfor a period of seven years will be transferred to the IEPFunder Section 205A(5) of the Act. Members who havenot encashed the dividend warrant(s) so far for the financialyear ended 30th September, 2002 or any subsequentfinancial years are requested to submit their claims to theRegistered Office of the Company. It may also be notedthat once the unclaimed dividend is transferred to IEPFas stated above, no further claim shall be entertained bythe Company in respect thereof. The dividend for thefinancial year ended 30th September, 2002 is due to betransferred to the aforesaid Fund immediately after3rd May, 2010.

6. Members can avail of the nomination facility, under Section109A of the Companies Act, 1956 by submitting FormNo. 2B of the Companies (Central Government’s) GeneralRules and Forms, 1956 with the Company. Blank formswill be made available on request.

7. Members are requested to notify immediately anychange of address:

i) To their Depository Participant (DPs) in respect ofthe electronic shares accounts, and

ii) To the Registrars and Share Transfer Agent/ ShareDepartment of the Company in respect of physicalshares accounts.

In case the mailing address mentioned on the AttendanceSlip is without the PINCODE, Members are requestedto kindly inform the PINCODE immediately.

8. Brief Profile of Directors seeking re-appointment at theAnnual General Meeting is annexed to this Notice.

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Brief Profile of Directors seeking re-appointment at the Annual General Meeting

Mr. Sanjiv Goenka

Date of Birth 29th January,1961

Qualification B. Com

Expertise in Specific Functional Areas Mr. Sanjiv Goenka is Vice Chairman, RPG Enterprises, one of India’s topIndustrial houses. The Group’s core activities include power, tyre, transmission,IT, retail, entertainment, carbon black and technology.

Directorship held in other Companies RPG Enterprises Ltd., CESC Ltd., Saregama India Ltd., Spencer InternationalHotels Ltd., Spencer and Company Limited, Graphite India Limited, Spencer’sTravel Services Ltd., Harrisons Malayalam Ltd., Noida Power Company Ltd.,Eveready Industries India Ltd., Woodlands Medical Centre Ltd.

Committee Membership in Member of Audit Committee of CESC Limited, Eveready Industries India Ltd.other Companies Chairman of Shareholders/Investores Grievance Committee of CESC Limited

and Saregama India Ltd.

Shareholdings in the Company Mr. Sanjiv Goenka does not hold any Share in the Company.

Mr. Brij Mohan Khaitan

Date of Birth 14th August, 1927

Qualification Bachelor of Commerce from Calcutta University

Expertise in Specific Functional Areas Mr. B.M Khaitan is a renowned Industrialist having interest in Tea, Batteries andEngineering. Mr. Khaitan has great contributions to the Tea Industry with whichhe has been associated for over five decades. He is a Director of number ofrenowned Companies having diversified business interests.

Directorship held in other Companies Williamson Magor & Co. Limited, McLeod Russel India Limited, EvereadyIndustries India Ltd., Jayshree Tea & Industries Limited, CESC Limited, BabcockBorsig Limited.

Committee Membership in Member of Audit Committee of CESC Limited.other Companies

Shareholdings in the Company Mr. B. M. Khaitan does not hold any Share in the Company.

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Phillips Carbon Black LimitedDirectors’ Report, Management Discussion and Analysis

particularly during October to December 2008 which createda panic situation and overseas carbon black manufacturersstarted dumping carbon black in India. Thus, ripple effect ofglobal financial meltdown started impacting domestic carbonblack prices and demand.

Global carbon black demand during second half of FY09 isestimated to be down by 35%. A few global players have shut-down/mothballed unviable capacities aggregating 0.50 millionMT. In India, carbon black demand dropped by 25% duringsecond half of FY09 over corresponding period last year. Thesituation was further aggravated by large-scale imports ofcarbon black in India.

There was no addition to production capacity for carbon blackin domestic industry, however, actual capacity utilization for theindustry dropped from 91% in FY08 to 82% in FY09. YourCompany also had to take production cut during second halfof FY09 as a consequence of production cuts taken by tyrecompanies, wide spread tendency to de-stock due to liquiditycrunch during Q3FY09 and large scale imports. The Companycould achieve market share of 38% during FY09 though thesales volumes reduced significantly due to imports andproduction cuts. Domestic demand however has revived fromMarch 09 onwards.

Anti-dumping investigation against import of carbon blackfrom Thailand, Australia, China, Russia, etc. is in progressand it is expected to be concluded in due course duringFY10.

PERFORMANCE

Carbon Black

Your Company, has incurred operating loss (PBDIT) of Rs.48.30 crore in FY09 vis-à-vis operating profit of Rs. 152.37crore in the previous year. A few major reasons for this swingin operating profit are – drop in demand, increase in import,drop in sale price and higher finance cost due to sharpdepreciation in value of rupee vis-à-vis US$.

Power

Drop in carbon black production had severe impact on availabilityof gas for power generation as well. However, with judiciousallocation of production among three plants, the Company hasbeen able to marginally improve upon its revenue from sale ofpower during FY09 to Rs. 15.51 crore from Rs. 14.94 crore inFY08. The Company’s initiative to derisk its carbon blackbusiness through power has been put through acid testduring FY09.

Manufacturing

Production volume during FY09 was 212,154 MT as comparedto 250,484 MT during FY08. The green-field project at Mundrawas delayed because of global meltdown and it is nowscheduled to be commissioned during Q2FY10. This will increasesubstantially manufacturing capacity of the Company. Overall,

Your Directors hereby present the Forty-eighth Report andAccounts of Phillips Carbon Black Limited for the financial yearended 31st March, 2009.

Financial Highlights

(Rs. in crore)

Year ended 31.03.09 31.03. 08

Carbon black 1,147.77 1,018.25

Power 15.51 14.94

Other Income 16.32 6.12

Total Turnover 1,179.60 1,039.31

PBDIT (48.30) 152.37

Less: Interest 29.36 19.45

PBDT (77.66) 132.92

Less: Depreciation 19.64 20.14

PBT (97.30) 112.78

Tax expense/(release) (32.46) 23.47

PAT (64.84) 89.31

Surplus brought forward 104.33 35.84

Profit available for Appropriation 39.49 125.15

Proposed Dividend -- 10.10

Tax on proposed dividend -- 1.72

Transfer to General Reserve -- 9.00

Balance carried forwardto next year 39.49 104.33

DIVIDEND

In view of the absence of profit during the year under review,your Directors are unable to recommend any dividend for thefinancial year ended 31st March, 2009.

INDUSTRY STRUCTURE & DEVELOPMENT

FY09 was probably the most challenging year in the history ofthe Company and was witness to one of the most severerecessions particularly in USA, Europe and Japan. Almost allcompanies in the auto sector in the aforesaid markets wereoperating at 60 – 75% of capacity, particularly during secondhalf of FY09. Collapse of one of the largest investment banksin the US triggered widespread risk aversion and credit flowcame to a grinding halt, resulting in large scale productioncuts, lay-offs and drop in demand for vehicles, tyres and carbonblack. Unlike India, the aforesaid markets have significantdependence on demand from the Original EquipmentManufacturer (OEM) segment which is extremely sensitive tointerest rates/credit flows. Carbon Black companies wereseverely hit by cancellation of existing and future orders,

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capacity utilization during FY09 was 79% vis-à-vis 93% inprevious year. Your Company’s plant at Cochin has beenawarded ISO/TS 16949 certificate during FY09 for conformanceof quality systems according to the requirements of internationalstandards .

Research & Development

Research and Development activities received major thurstduring FY09 which resulted into developing various specialgrades particularly for plastic and paint industries. The qualityof these grades are comparable to those offered by other globalplayers in India.

Environment, Health, Safety & Social Responsibility

Your Company progressed further on various initiatives toachieve greater heights in the field of Environment, Healthand Safety (EHS). Progressing towards the desired goal,your Company has brought in fresh policies for greenersurroundings.

The Company has strictly adhered to the Environment, Healthand Safety norms at all its manufacturing locations.

Concerted efforts to incorporate efficient Corporate SocialResponsibility continued during FY09, encompassing PulsePolio Immunization Programme, Free Eye Check-up Camps,Rural Area Development, Free distribution of Medicines atMedical Camps, Aids Awareness Programme and supportto a few institutions involved in social service.

Human Resource Development

Human Resources continue to be a focus area for your Company.Several initiatives were taken to facilitate the performance anddevelopmental requirements of all employees. Our efforts inenhancing the effectiveness of the Balanced Business Scorecardremained unabated. This was supported by a newly launched360 degree appraisal system and online web-based trainingprogramme.

The Company’s manpower requirement for the expansionin Mundra and existing manufacturing units have beencarefully planned and benchmarked with global organizations.Recruitments for the Mundra plant have already commenced.

Industrial relations scenario continues to be healthy.

Internal Control System and Adequacy

Your Company has established adequate internal controlsystems in all areas of operation by utilizing the services ofinternal and external auditors and also by its in-house expertsand resources. Moreover, the Company continuously upgradesthese systems in line with the best available practices. Thesereports and variance analysis are regularly discussed withmembers of Management Committee and actions taken.Operations Report is tabled at each Board Meeting, afterdiscussion at the Audit Committee Meeting.

An independent Audit Committee of the Board reviews theadequacy of Internal Control.

Segment wise Performance

The Performance of Carbon Black and Power segment hasbeen covered in this Report earlier.

Opportunities and Threats

Your Company continonusly identifies opportunities and threatsthat exist in the business and is geared up to make the best ofthe opportunities while facing the threats.

Opportunities

● The growth in domestic economy should translate intohigher demand for carbon black, particularly for replacementtyre demand.

● Launch of smaller cars is likely to generate demand fortyres for OEM segment and India may emerge as an autosector hub for smaller cars which will have favourable impacton carbon black demand.

● The Company can convert lean gases (which are currentlyflared in one of its plants) to generate electricity and boostprofitability.

Threats

● Carbon black / tyre import.

● New entrant.

● Inadequate infrastructure at ports, resulting in detention ofvessels and higher freight costs.

● Sharp drop in carbon black demand.

Risks and Concern

The raw material for the Company (carbon black feedstock) isresidual oil from distillation of crude and has witnessed volatilityin recent past whereas the price of carbon black is generallyrevised every quarter. Drop in demand for carbon black andincrease in import of carbon black have serious implicationsfor the activity level and resultantly the availability of lean gasfor power generation is impacted.

The Company is also exposed to risks from fluctuation of IndianRupee vis-à-vis other currencies, interest rate and regulationsrelating to environment.

Major Expansion Plans

The 30 MW Co-generation power plant at Durgapurcommenced commercial operation from 1st April, 2009. The30 MW co-generation power plant is the single largest leangas based power plant in the country.

The green-field project at Mundra, Gujarat is expected to becommissioned during Q2 FY10. Progress on Cochin andVietnam Projects will catch speed with the recovery of carbonblack demand in domestic as well as overseas markets.

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Preferential issue

Pursuant to SEBI Guidelines and necessary approval of themembers, 30,00,000 convertible warrants of Rs.149/- eachwhich were allotted during March, 2007, were converted into30,00,000 Equity Shares of Rs. 10/- each fully paid up on15th September, 2008.

Wholly Owned Subsidiary

The first accounting period of Phillips Carbon Black CyprusHoldings Limited, a wholly owned subsidiary of the Companywill be ending on 30th September,2009. Accordingly,attachment of the balance sheet and other particulars ofthe subsidiary in terms of Section 212 of the CompaniesAct,1956 are not applicable for the financial year ended31st March, 2009.

FUTURE OUTLOOK

Carbon Black

The market uncertainty in the recent past has restricted visibilityfor future demand to a large extent. Based on recent flow oforders from domestic customers, it appears that demand forcarbon black in the domestic market has revived. However,entry of a new player in domestic market and increase in importsof carbon black may affect demand supply equation adversely.As regards export market, the bottoming process may continuefor some more time. The Company has increased its efforts toadd new customers/geographies to its export segment topartially mitigate the impact of prolonged slow down in someof the key markets.

Power

Profit from power segment remained intact despite an extremelychallenging year and has increased your Company’s resolveto pursue maximization of power generation. Commencementof commercial operation of 30 MW co-generation power plantat Durgapur with effect from 1st April, 2009 will significantlyboost the bottomline of the Company. Total installed capacityincreased to 44.50 MW in April 2009 and is expected to increaseto 60.50 MW later during FY10 with the commissioning of16 MW CPP at Mundra. The prevailing gap between demandand supply of electricity is expected to continue providingopportunities to your Company to increase share of profit fromthis segment. Saleable power will increase couple of foldsduring FY10.

Conservation Of Energy, Technology Absorption, ForeignExchange Earnings and Outgo

A statement giving details of conservation of energy, technologyabsorption, foreign exchange earnings and outgo, as requiredunder Section 217(1)(e) of the Companies Act, 1956 read withCompanies (Disclosure of Particulars in the Report of the Boardof Directors) Rules, 1988 is annexed. This forms an integralpart of this Report.

Public Deposits

The Company does not have any Fixed Deposit Scheme andhave repaid all Fixed Deposits that matured and were claimedby depositors under the earlier Fixed Deposit Schemes. Maturedunclaimed deposits as on 31st March, 2009 is Rs. 6,50,000/-.Apart from matured unclaimed deposits, no amount isoutstanding as on 31st March, 2009. Reminders have beensent to all depositors who have not claimed repayment of theirmatured deposits.

Particulars of Employees

In terms of the provision of section 217(2A) of the CompaniesAct, 1956 read with the Companies (Particulars of Employees)Rules, 1975, as amended, the Particulars of Employees, thoughforming part of this Report is not being mailed to memberspursuant to the provision of Section 219(1)(b)(iv) of theCompanies Act, 1956. The said statement is available forinspection at the Registered Office of the Company duringworking hours for a period of twenty-one days before the dateof AGM. Any member interested in obtaining a copy of the saidstatement may write to the Company Secretary at the RegisteredOffice.

Corporate Governance

Under Clause 49 of the Listing Agreement with the StockExchanges, a section on Corporate Governance together witha certificate from the Company’s Auditors confirming complianceis set out in the Annexure forming part of this Annual Report.

Directors’ Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, theDirectors to the best of their knowledge and belief confirm that:

i) in the preparation of the annual accounts, the applicableaccounting standards have been followed, and that thereare no material departures;

ii) appropriate accounting policies have been selected andapplied consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the endof financial year and of profit or loss of the Company forthe period;

iii) proper and sufficient care has been taken for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assetsof the Company and for preventing and detecting fraud andother irregularities;

iv) the annual accounts have been prepared on a goingconcern basis.

Auditors

The Auditors, Messrs Price Waterhouse, retire at the ensuingAnnual General Meeting and are eligible for re-appointment.

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Kolkata28th April, 2009

For and on behalf of the Board

Sanjiv GoenkaChairman

Cost Audit

The Central Government had directed an audit of thecost accounts maintained by the Company in respect ofcarbon black. The Central Government has approved theappointment of Messrs Shome & Banerjee, Cost Accountants,for conducting the cost audit for the financial year ended31st March, 2009.

Messrs Shome & Banerjee, Cost Accountants, have given theirconsent for conducting the audit of the cost accounts forthe financial year ending 31st March, 2010, if appointed.

Directors

Mr. Sanjiv Goenka and Mr. B. M. khaitan retire by rotationand being eligible offer themselves for reappointment.

Forward-Looking Statement

This Report contains forward looking statements that involverisks and uncertainties. Actual results, performance orachievements could differ materially from those expressed orimplied in such forward-looking statements. Significant factors

that could make a difference to the Company’s operationsinclude domestic and international economic conditions affectingdemand-supply and price conditions, foreign exchangefluctuations, changes in government regulations, tax regimesand other statutes.

Acknowledgement

Your Directors record their grateful appreciation for theencouragement, assistance and co-operation received fromshareholders, Government authorities, financial institutions,banks and customers. They thank them for the trust reposedin the Management and wish to thank all employees for theircommitment and achievements.

Annexures to Directors’ Report

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Statement in accordance with Section 217(1)(e) of the CompaniesAct,1956 read with the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules,1988 and forming part ofthe Directors’ Report for the year ended 31st March, 2009.

1.A. Conservation of Energy

(a) Energy conservation measures taken:

The process of manufacture of Carbon Black results in generationof lean gases which have both sensible heat and low calorificvalue.

Instead of wasting the energy, PCBL has installed extremelyspecialised and state of the art 12 MW Co-generation PowerPlant (CPP) at Baroda and 30 MW Co-generation Power Plantat Durgapur.

The 30 MW Co-generation Power Plant at Durgapur has startedcommercial operation from 1st April,2009.

The entire lean gas is used to generate power for meeting theentire internal process reqirements for production of CarbonBlack as well as to sell the surplus to the Grid.

(b) Additional investments and proposals, if any, beingimplemented for reduction of consumption of energy:

Experience gathered from Baroda CPP and 30 MW Co-generationPower Plant at Durgapur is being extended to Kochi where aproposal to set up initially a 10 MWPP is being considered.

(c) Impact of measures (a) and (b) above for reduction of energyconsumption and consequent impact on the cost ofproduction of goods:

- Power (KWH) consumed per MT of Carbon Black reduced from319 to 307.

(d) Total energy consumption and energy consumption perunit of production as per Form-A of the Annexure to theRules in respect of Industries specified in the Schedulethereto:

Form – AForm for disclosure of particulars with respect to Conservationof Energy

Current PreviousYear Year

A. Power and Fuel consumption :

1. Electricity

(a) Purchased units (KWH) 7160208 8130242Total amount (Rs. in lakhs) 408.52 505.47Rate per unit (Rs.) 5.7 6.22

(b) Own generation(i) Through diesel

generators units (KWH) 86245 88450Units per ltr. of dieseloil (KWH) 1.63 1.31Cost per unit (Rs.) 21.48 25.23

(ii) Through steam/turbinegenerators units (KWH) — —Units per ltr. of fuel/gas oil (KWH) — —Cost per unit (Rs.) — —

(iii) Through co-gen powerplants (lean-gas burning)units (KWH) 57721576 71607201Units per ltr. offuel oil (KWH) 607.58 339.57Cost per unit (Rs.) 0.12 0.16


2. Coal (specify quality and where used)

Quantity (tonnes) — —

Total Cost (Rs. in lakhs) — —

Average rate (Rs.) — —

3. Furnace Oil

Quantity (K. ltr.) — —

Total Cost (Rs. in lakhs) — —

Average rate (Rs.) — —

4. Others/internal generation[process steam Quantity (MT)] 94192.63 97358

Total Cost (Rs. in lakhs) 13 17.02

Average rate (Rs.) 13.8 17.48

5. Consumption per unit of production :

CARBON BLACK

(i) Electricity (KWH/MT) 307 319

(ii) Furnace Oil (Ltr./MT) — —

(iii) Coal — —

(iv) Others – process steam (MT/MT) 0.44 0.39

B. Technology Absorption :

(a) Efforts made in technology absorption as per Form – Bof the Annexure.

Form – BForm for disclosure of particulars, with respect to absorption :

Research & Development (R&D) :

1. Specific areas in which R&D carried out by the Company :

– PCBL has successfully developed new grades such as P1201,P842, PC501 and N134 for international and domestic markets.

– Improvement of product characteristics to meet more stringentcustomer specifications.

– Continuous recasting of Standard Operating Procedures.

2. Benefits derived as a result of the above R&D :

– Improved sales in domestic and export market.

– Higher price realisation in markets.

3. Future Plan of Action :

1. Development of specialised grades for specific applications inconjunction with customers.

2. Improved Reactor design for higher yield.

4. Expenditure on R&D :

(Rs. in Lakhs)


(a) Capital — —

(b) Recurring 299.58 309.15

(c) Total 299.58 309.15

(d) Total R&D Expenditure asa percentage of total expenditure 0.23 0.33

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Technology absorption, adaptation & innovation :

1. Efforts in brief towards technology absorption, adaptation &innovation :

– The revision in standard operating procedures resulted inimproved yields and lower consumption of power to produceCarbon Black and overall lower costs to produce each ton ofproduct.

2. Benefits derived as a result of the above efforts :

– Improved quality of the product.

3. Particulars of Imported Technology in the last 5 years :

(a) Technology Imported : Not applicable

(b) Year of Import : Not applicable

(c) Has the technologybeen fully absorbed? : Not applicable

(d) If not fully absorbed,areas where this hasnot taken place, reasonsthereof and futureplans of action : Not applicable

C. Foreign Exchange Earnings and Outgo :

(a) Activities relating to exports, initiatives taken to increase exports,development of new export markets for products and servicesand export plans :

Various initiatives relating to improvement in quality and service,developing new markets, etc. have resulted in exports ofRs. 25566.71 lakhs.

(b) Total foreign exchange used and earned :

(Rs. in Lakhs)

Current Year Previous Year

Foreign Exchange used 80053.50 60293.85

Foreign Exchange earned 25566.71 22243.81




Corporate Governance Report

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I. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

The Company continues to focus on good Corporate Governance,which aims to improve the Company’s efficiency, effectiveness andsocial responsibility. The basic philosophy of Corporate Governancein the Company emphasizes on highest levels of transparency,accountability and equity, in all respects of its operations. TheCompany believes that the governance process should ensureeconomic prosperity and long term value creation for the enterpriseand its shareholders keeping in view the needs and interests of allits stakeholders. The Company also respects the rights of itsshareholders and other stakeholders to information on theperformance of the Company based on highest professional, ethicaland financial reporting standards.

II. COMPOSITION OF THE BOARD OF DIRECTORS AS ON 31STMARCH, 2009.

(a) The Board of Directors of the Company comprises

l 2 Non - Executive Directors

l 5 Non - Executive Independent Directors

l 1 Executive Director who is Managing Director

The names and categories of Director, the number of Directorshipsand Committee positions held by them in other companies and alsothe shareholdings in the Company are given below :

Name of the Category No. of No. of other No. ofDirector of Directorships Committee Shares

Director in other Membership(s)/ held inPublic Limited Chairman- the

Companies ship(s) Companyincorporated held #

in India

Mr. Sanjiv Goenka Non-Executive 10 4 NIL(Chairman) (including 2 as

Chairman)

Mr. B. M. Khaitan Non-Executive 6 1 NIL& Independent

Mr. C. R. Paul Non-Executive 1 1 NIL& Independent

Dr. Ram S. Tarneja Non-Executive 11 7 NIL& Independent (including 2

as Chairman)

Mr. K. S. B. Sanyal Non-Executive 4 5 NIL& Independent (including 2

as Chairman)

Mr. Paras K. Non-Executive 6 1 NILChowdhary

Mr. O. P. Malhotra Non-Executive 10 — 200& Independent

Mr. Ashok Goyal Managing — — NILDirector

# Committee positions held only in Audit and Shareholders/InvestorsGrievance Committees of other companies are considered.

(b) Attendance Record of the Directors at the Board Meetingsheld on 28th April, 2008, 30th July, 2008, 24th October, 2008,

and 28th January, 2009 and Annual General Meeting held on

30th July, 2008 are given below :

Name of the Board Meetings Attendance

Director at the last

Annual General

Meeting

Mr. Sanjiv Goenka 4 4 No

Mr. B. M. Khaitan 4 2 No

Mr. C. R. Paul 4 4 Yes

Dr. Ram S. Tarneja 4 3 Yes

Mr. K. S. B. Sanyal 4 3 Yes

Mr. Paras K. Chowdhary 4 0 No

Mr. O. P. Malhotra 4 4 Yes

Mr. Ashok Goyal 4 4 Yes

III. AUDIT COMMITTEE

1. Terms of Reference

The terms of reference include the powers as stipulated in Clause49II(C), the role of the Audit Committee as laid down in Clause 49II(D) and review of information pursuant to Clause 49II(E) of theListing Agreement with the stock exchanges. The terms of referencealso fully conform to the requirements of Section 292A of theCompanies Act, 1956.

2. Composition

The Audit Committee comprises 4 Directors out of which 3 are Non- Executive Independent Directors and 1 is Non-Executive Director.The composition of the Audit Committee meetings held andattendance thereof are as below:

Name of the Position No. of MeetingsDirector held

Held Attended

during tenure

Mr. K. S. B. Sanyal

(Non-Executive

& Independent) Chairman 4 3

Mr. Paras K. Chowdhary

(Non-Executive) Member 4 0

Mr. C. R. Paul Member 4 4

(Non-Executive &

Independent)

Mr. O. P. Malhotra Member 4 4

(Non-Executive

& Independent)

3. Meetings

● Audit Committee Meetings were held on 28th April, 2008,30th July, 2008, 24th October, 2008 and 28th January, 2009.The Annual Accounts for the year ended 31st March, 2008 wasreviewed by the Audit Committee at its meeting held on

Held Attendedduring tenure

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28th April, 2008. The Audit Committee also reviewed theunaudited financial results for the quarters ended 31st March,2008, 30th June, 2008, 30th September, 2008 and31st December, 2008 before recommending their adoption tothe Board.

● Audit Committee Meetings were also attended by the ManagingDirector, Chief Financial Officer, Internal Auditor, StatutoryAuditors and Cost Auditors of the Company.

● The Company Secretary acts as Secretary to the AuditCommittee.

● Members of the Audit Committee are eminent persons in theirfields having expertise in Finance and Accounting.

● The Chairman of the Audit Committee attended the last AnnualGeneral Meeting of the Company held on 30th July, 2008.

IV. REMUNERATION COMMITTEE

1. Terms of Reference

The Remuneration Committee has been constituted to review andrecommend to the Board of Directors the remuneration payableto the Managing Director.

2. Composition

The Remuneration Committee comprises 3 Directors, all of whomare Non - Executive Independent Directors. The composition of theRemuneration Committee meetings held and attendance thereofare as below:

Name of the Position held No. of Meetings

Director Held during Attendedtenure

Mr. K. S. B. Sanyal Chairman 1 1

Mr. C. R. Paul Member 1 1

Mr. O. P. Malhotra Member 1 1

3. Meetings

During the year ended 31st March, 2009 the RemunerationCommittee met once on 30th July, 2008.

4. Remuneration Policy

a. Remuneration structure for the Managing Director comprisessalary, perquisites as well as contribution to the Provident,Superannuation, Gratuity Fund, Performance Bonus andManagement Supplement as per the Agreement enteredbetween the Managing Director and the Company. TheAgreement is placed before the Board for approval andsubsequently the approval of the shareholders is obtained atthe Annual General Meeting of the Company.

b. The Non-Executive Directors do not draw any remunerationfrom the Company except the sitting fees for Board andCommittee meetings.

5. Details of Sitting Fees/ Remuneration

A. Sitting Fees paid to the Non-Executive DirectorsThe sitting fees for the Board and the Committee meetings

paid to the Non-Executive Directors during the year ended31st March, 2009 are as follows:

Name of the Director Amount (Rs.)

Mr. Sanjiv Goenka 80,000/-

Mr. B. M. Khaitan 40,000/-

Mr. C. R. Paul 1,40,000/-

Dr. Ram S. Tarneja 60,000/-

Mr. K. S. B. Sanyal 1,10,000/-

Mr. Paras K. Chowdhary --

Mr. O. P. Malhotra 1,25,000/-

B. Remuneration paid to the Executive Director

Executive Business relation- All elements of remunerationDirector ships with the package, i.e. salary, benefits

Company, if any bonuses, pension etc.for the year ended31st March, 2009

Description Amount (Rs. in lakhs)

Mr. Ashok Managing Salary and 152.55Goyal # Director Allowances,

Contribution 9.97to Provident,Gratuity andSuperannuationFunds,Perquisites 4.15

Total 166.67

# Service Contract : For a period of three years from 23rd October,2006.

# Notice Period : Ninety days notice from either side.

# Severance Fees : Ninety days salary in lieu of notice.

# Stock Options : Nil

V. SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

1. Composition

The Shareholders / Investors Grievance Committee of the Boardof Directors under the Chairmanship of a Non-Executive IndependentDirector meets at regular intervals and specifically looks into theaspect of redressal of Shareholders / Investors Grievances. Thecomposition of the Shareholders / Investors Grievance Committee

meetings held and attendance thereof are as below:

Name of the Position held No. of Meetings

Director Held during Attendedtenure

Mr. C. R. Paul Chairman 2 2

Mr. K.S.B. Sanyal Member 2 2

Name and designation of Compliance Officer : Mr. Kaushik Mukherjee,

Company Secretary.

12


2. Status of Shareholders’ Complaints

Number of Number of Number ofcomplaints complaints complaints

received during resolved during pendingthe year ended the year as on

31st March, 2009 ended 31st March, 31st March,as per records 2009 2009

of the Company

NIL NIL NIL**

** The Company has received confirmations from National StockExchange of India Limited and Bombay Stock Exchange Limitedthat no investor complaints are pending against the Company ason 31st March, 2009.

3. Share Transfer

Mr. Ashok Goyal, Managing Director, Mr. Altaf Jiwani, Chief FinancialOfficer and Mr. Kaushik Mukherjee, Company Secretary areseverally authorised to approve share transfers in physical mode.

4. Meetings

During the year ended 31st March, 2009, Shareholders / InvestorsGrievance Committee met twice on 30th July, 2008 and 28th January,2009 which was attended by all the members.

VI. GENERAL BODY MEETINGS

1. Location and time of the last 3 Annual General Meetings(AGM) held :

AGM Date Venue Time SpecialResolution

Passed

47th 30th July, 2008 “Madhusudan Mancha” 10.30 A.M. Yes

46th 27th July, 2007 “Uttam Mancha” 10.30 A.M. No

45th 21st July, 2006 “Uttam Mancha” 10.30 A.M. Yes

Neither any resolution was put through postal ballot last year nor anyresolution is proposed to be conducted through postal ballot in theensuing Annual General Meeting.

2. Disclosure regarding appointment or reappointment of Directors inaccordance with Clause 49IV(G)(i) of the Listing Agreement hasbeen provided in the Notice convening the Annual General Meetingof the Company.

VII. DISCLOSURES

1. Disclosures on materially significant related party transactions,i.e. transactions of the Company of material nature, with itspromoters, the Directors, or the management, their subsidiariesor relatives, etc. that may have potential conflict with theinterests of the Company at large :

l No such transactions took place during the year ended 31stMarch, 2009.

2. Disclosure by Senior Management in accordance withClause 49IV(F) (ii) of the Listing Agreement:

The Senior Management of the Company has confirmed to theBoard of Directors that they do not have any personal interest

relating to material, financial and commercial transactions with theCompany that may have a potential conflict with the interests of theCompany at large.

3. Disclosures on compliance of law :

The Company has complied with the mandatory requirements ofthe Stock Exchanges, SEBI and other statutory authorities on allmatters related to capital markets during the last three years.No penalties or strictures were imposed by SEBI, Stock Exchanges,or any statutory authorities on any matter related to capital marketsduring the last three years.

4. Whistle Blower Policy:

The Company does not have any Whistle Blower Policy as of nowbut no personnel are being denied any access to the Audit Committee.

5. Details of compliance with mandatory requirements andadoption of non-mandatory requirements

All mandatory requirements have been complied with and the non-mandatory requirements are dealt with at the end of the Report.

6. Certificate from the Managing Director and the Head of Finance

Certificate from Mr. Ashok Goyal, Managing Director and Mr.AltafJiwani, Chief Financial Officer, in terms of Clause 49 (V) of theListing Agreement with the Stock Exchanges for the financialyear ended 31st March, 2009 was placed before the Board ofDirectors of the Company in its meeting held on 28th April, 2009.

7. Code of Conduct

The Board has laid down a Code of Conduct for all Board Membersand Senior Management of the Company which is posted on thewebsite of the Company.

All Board Members and Senior Management personnel have affirmedcompliance with the Code on an annual basis. A declaration tothis effect signed by the Managing Director forms part of thisAnnual Report.

VIII. MEANS OF COMMUNICATION

1. In compliance with Clause 41 of the Listing Agreement, theCompany sends the quarterly / half yearly / audited results tothe Stock Exchanges. Results are published in the FinancialExpress (all editions) and Aajkal (Kolkata)

2. Information and details of the Company in all respects areposted on the Company’s website: www.pcblltd.com. TheCompany also posts its results and shareholding pattern to theElectronic Data Information Filing and Retrieval System (EDIFAR)site of SEBI.

3. Whenever the Company issues any press release, it is sent tothe Stock Exchanges as well as posted on the Company’swebsite.

4. Management Discussion and Analysis forms a part of theDirectors’ Report.

IX. GENERAL SHAREHOLDER INFORMATION

l Annual General Meeting date, time and venue:

Date : 24th July, 2009 at 10.30 a. m. to be held at “MadhusudanMancha”, 2 No. Gariahat Road (South), Dhakuria,Kolkata-700 068

l Financial Year : 1st April, 2008 to 31st March, 2009

l Book Closure: 15th July, 2009 to 24th July, 2009 (both daysinclusive)

l Dividend Payment date : Not Applicable

l Listing on Stock Exchanges and Stock Codes :

a) The Calcutta Stock Exchange - 26125Association Ltd.7, Lyons Range,Kolkata – 700 001

b) Bombay Stock Exchange Limited - 506590 (B2)Phiroze Jeejeebhoy Towers,Dalal Street, Mumbai – 400 001.

c) National Stock Exchange of India Ltd. - PHILIPCARBExchange Plaza,Bandra Kurla ComplexBandra (E), Mumbai – 400 051.

Listing Fees for all the above Stock Exchanges for 2009 – 2010have been paid.

l Market Price high, low, close during each month from April,2008 to March, 2009 (in Rs.) (as available from the websiteof National Stock Exchange of India Limited and BombayStock Exchange Limited)

Month High Low Close

NSE BSE NSE BSE NSE BSE

Apr. – 08 222.00 229.80 132.65 148.25 202.15 202.55

May– 08 206.80 207.00 171.00 172.00 173.65 173.40

Jun. – 08 176.80 179.50 134.65 145.35 158.45 160.00

Jul. – 08 168.00 168.00 131.05 142.10 159.35 158.40

Aug.– 08 176.90 175.95 143.00 153.00 161.30 161.85

Sep. – 08 164.00 163.00 125.00 119.00 131.80 133.65

Oct. – 08 139.00 138.00 52.10 52.05 54.15 54.45

Nov.– 08 69.95 69.00 32.60 34.05 36.05 36.40

Dec. – 08 43.30 43.05 32.60 32.55 36.30 36.25

Jan. – 09 44.00 44.00 32.00 32.15 33.75 33.55

Feb.– 09 36.00 35.80 28.10 29.15 30.20 30.45

Mar. – 09 36.00 35.00 24.25 26.55 33.20 33.30

Monthly Comparison Chart of the Share Prices (in Rs.) withthe NSE Nifty and BSE SENSEX along with the No. of Sharestraded during the period April, 2008 to March, 2009.

Month Nifty/Sensex Share Price No. of(Close) (Close) Shares

(Rs.) Traded

NSE BSE NSE BSE NSE BSE

Apr. – 08 5165.90 17287.31 202.15 202.55 463128 410620

May– 08 4870.10 16415.57 173.65 173.40 182808 173096

Jun. – 08 4040.55 13461.60 158.45 160.00 153774 393787

Jul. – 08 4332.95 14355.75 159.35 158.40 302569 116295

Aug.– 08 4360.00 14564.53 161.30 161.85 410601 369739

Sep. – 08 3921.20 12860.43 131.80 133.65 137184 68260

Oct. – 08 2885.60 9788.06 54.15 54.45 288359 239080

Nov.– 08 2755.10 9092.72 36.05 36.40 450507 403496

Dec. – 08 2959.15 9647.31 36.30 36.25 733054 560892

Jan. – 09 2874.80 9424.24 33.75 33.55 791282 694278

Feb.– 09 2763.65 8891.61 30.20 30.45 209067 183372

Mar. – 09 3020.95 9708.50 33.20 33.30 959786 609211

13


l Registrars and Share Transfer Agent :Link Intime India Pvt. Ltd.(Formerly Intime Spectrum Registry Limited)59C, Chowringhee Road, 3rd FloorKolkata - 700 020Telephone : (033) 2289-0539/40, Fax : (033) 2289-0539E-mail : [email protected]

l Share Transfer ProcessThe shares in physical form for transfer should be lodged at theoffice of the Company’s Registrar and Share Transfer Agent, LinkIntime India Pvt. Ltd., Kolkata or at the Registered Office of theCompany. The transfers are processed within 14 days from the dateof receipt of such request for transfer, if technically found to be inorder and complete in all respects. As per directives issued by SEBI,it is compulsory to trade in securities of any Company’s equityshares in dematerialized form.

l Dematerialisation

The process of conversion of shares from physical form to electronicform is known as dematerialisation. For dematerializing the shares,the shareholders should open a demat account with a DepositoryParticipant (DP). He/She is required to submit a Demat RequestForm duly filled up alongwith the share certificates to his/her DP.The DP will allocate a demat request number and shall forward therequest physically as well as electronically, through NSDL/CDSL,to the Registrar and Transfer Agent. On receipt of the demat requestboth physically and electronically and after verification, the sharesare dematerialised and an electronic credit of shares is given in theaccount of the shareholder.

l Distribution of Shareholding as on 31st March, 2009

Shareholding No. of Percentage No. of PercentagePattern – Size Shares (%) to Shareholders (%) toof Holdings Share Capital Total holders

1 – 500 2346442 8.31 24678 93.82

501 – 1000 722365 2.56 939 3.57

1001 – 2000 546460 1.93 368 1.40

2001 – 3000 243135 0.86 95 0.36

3001 – 4000 159726 0.57 46 0.17

4001 – 5000 211754 0.75 44 0.17

5001 – 10000 412655 1.46 58 0.22

10001 & above 23610659 83.57 75 0.29

TOTAL 28253196 100.00 26303 100.00

l Shareholding Pattern as on 31st March, 2009

No. of Holdings No. of No. of Shares Percentage Shareholders of Holdings

Non Resident Indians 637 146093 0.52

Institutional Investors 47 3806250 13.47

Promoter** Includes personsacting in concert 23 15222821 53.88

Bodies Corporate 575 4582246 16.22

Resident Individuals 25021 4495786 15.91

TOTAL 26303 28253196 100.00

14


l Dematerialisation of shares :

Shares %

NSDL 23519078 83.24

CDSL 935025 3.31

TOTAL 24454103 86.55

l ISIN NO. INE 602A01015

l Outstanding GDRs/ADRs/Warrants or any convertibleinstruments, conversion date and likely impact on equity

Nil

l Plant Locations

A list of locations of Company’s Plants has been given separately

in this Annual Report.

l Address for correspondence :

1) Registrar and Share Transfer Agent :(For share and dividend related queries)

Link Intime India Pvt. Ltd.(Formerly Intime Spectrum Registry Limited)59C, Chowringhee Road, 3rd FloorKolkata - 700 020Telephone : (033) 2289-0539/40, Fax : (033) 2289-0539E-mail : [email protected]

2) Company

(For any other matter and unresolved complaints)

Company SecretaryPhillips Carbon Black Limited31, Netaji Subhas RoadKolkata - 700 001Phones : (033) 6625 1000, 6625 1500Fax : (033) 2248 0140E-mail : [email protected]

X. STATUS OF ADOPTION OF THE NON MANDATORYREQUIREMENTS

Remuneration Committee

The Company has a Remuneration Committee as reported in SectionIV above.

Audit Qualification

The statutory auditors have not qualified their opinion on theCompany’s Financial Statement.

Other Items

The rest of the Non-Mandatory Requirements will be implementedby the Company as and when required and/or deemed necessaryby the Board.




Auditors’ Certificate

AUDITORS’ CERTIFICATE REGARDING COMPLIANCE OFCONDITIONS OF CORPORATE GOVERNANCE

To the Members of


We have examined the compliance of conditions of CorporateGovernance by Phillips Carbon Black Limited, for the year ended 31stMarch, 2009, as stipulated in Clause 49 of the Listing Agreements ofthe said Company with stock exchanges in India.

The compliance of conditions of Corporate Governance is theresponsibility of the Company’s management. Our examination wascarried out in accordance with the Guidance Note on Certification ofCorporate Governance (as stipulated in Clause 49 of the ListingAgreement), issued by the Institute of Chartered Accountants of Indiaand was limited to procedures and implementation thereof, adoptedby the Company for ensuring the compliance of the conditions of

Corporate Governance. It is neither an audit nor an expression ofopinion on the financial statements of the Company.

In our opinion and to the best of our information and according to theexplanations given to us, we certify that the Company has compliedwith the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreements.

We state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with whichthe management has conducted the affairs of the Company.

Place : Kolkata,Date : 28th April, 2009

P. LawPartner

Membership No. 51790For and on behalf of

PRICE WATERHOUSEChartered Accountants

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49I(D)(ii) OF THE LISTING AGREEMENT

I, Ashok Goyal, Managing Director of Phillips Carbon Black Limited, declare that all the Members of the Board of Directors and Senior Management

personnel have, for the year ended 31st March, 2009, affirmed compliance with the Code of Conduct laid down by the Board of Directors in terms

of the Listing Agreement entered with the Stock Exchanges.

Ashok Goyal

Managing DirectorKolkata28th April, 2009

Phillips Carbon Black LimitedAuditors’ Report

15

3.2 (a) The inventory (excluding stocks with third parties)

has been physically verified by the management

during the year. In respect of inventory lying with

third parties, these have been confirmed by them.

In our opinion, the frequency of verification is

reasonable.

(b) In our opinion, the procedures of physical verification

of inventory followed by the management are

reasonable and adequate in relation to the size of

the Company and the nature of its business.

(c) On the basis of our examination of the inventory

records, in our opinion, the Company has maintained

proper records of inventory. The discrepancies

noticed on physical verification of inventory as

compared to the book records were not material.

3.3 (a) The Company has not granted any loans, secured

or unsecured, to companies, firms or other parties

covered in the register maintained under Section

301 of the Act. Accordingly, the paragraphs 4(iii) (b),

4(iii) (c) and 4(iii) (d) of the Order are not applicable.

(b) The Company has not taken any loans, secured or

unsecured, from companies, firms or other parties

covered in the register maintained under Section

301 of the Act. Accordingly, the paragraphs 4(iii) (f)

and 4(iii) (g) of the Order are not applicable.

3.4 In our opinion and according to the information and

explanations given to us, there is an adequate internal

control system commensurate with the size of the

Company and the nature of its business for the purchase

of inventory, fixed assets and for the sale of goods. The

Company has not provided any service during the year.

Further, on the basis of our examination of the books

and records of the Company, and according to the

information and explanations given to us, we have neither

come across nor have been informed of any continuing

failure to correct major weaknesses in the aforesaid

internal control system.

3.5 According to the information and explanations given to

us, there have been no contracts or arrangements referred

to in Section 301 of the Act during the year to be entered

in the register required to be maintained under that

Section. Accordingly, commenting on transactions made

in pursuance of such contracts or arrangements does

not arise.

TO THE MEMBERS OF PHILLIPS CARBON BLACK LIMITED

1. We have audited the attached Balance Sheet of Phillips

Carbon Black Limited, as at 31st March 2009, and the

related Profit and Loss Account and Cash Flow Statement

for the year ended on that date annexed thereto, which

we have signed under reference to this report. These

financial statements are the responsibility of the

Company’s management. Our responsibility is to express

an opinion on these financial statements based on

our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit 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 the financial statements.

An audit also includes assessing the accounting principles

used and significant estimates made by management,

as well as evaluating the overall financial statement

presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,

2003, as amended by the Companies (Auditor’s Report)

(Amendment) Order, 2004, (together ‘the Order’) issued

by the Central Government of India in terms of sub-

section (4A) of Section 227 of ‘The Companies Act,

1956’ of India (the ‘Act’) and on the basis of such checks

of the books and records of the Company as we

considered appropriate and according to the information

and explanations given to us, we further report that:

3.1 (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 no material

discrepancies between the book records and

the physical inventory have been noticed. In our

opinion, the frequency of verification is reasonable.

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

explanations given to us, a substantial part of fixed

assets has not been disposed of by the Company

during the year.

16


3.6 The Company has not accepted during the year any

deposits from the public within the meaning of Sections

58A and 58AA of the Act and the rules framed

there under.

3.7 In our opinion, the Company has an internal audit system

commensurate with its size and nature of its business.

3.8 We have broadly reviewed the books of account

maintained by the Company in respect of products where,

pursuant to the Rules made by the Central Government

of India maintenance of cost records has been prescribed

under clause (d) of sub-section (1) of Section 209 of the

Act and are of the opinion that prima facie, the prescribed

accounts and records have been made and maintained.

We have not, however, made a detailed examination of

the records with a view to determine whether they are

accurate or complete.

3.9 (a) According to the information and explanations given

to us and the records of the Company examined by

us, in our opinion, the Company is generally regular

in depositing the undisputed statutory dues

including provident fund, investor education and

protection fund, employees’ state insurance,

income-tax, sales-tax, wealth tax, service tax,

customs duty, excise duty, cess and other

material statutory dues as applicable with the

appropriate authorities.

(b) According to the information and explanations given

to us and the records of the Company examined

by us, there are no dues of income-tax, sales tax,

wealth tax, service tax, customs duty, excise duty

and cess as at 31st March, 2009 which have

not been deposited on account of a dispute.

3.10 The Company has no accumulated losses as at

31st March, 2009 and it has not incurred any cash

losses in the financial year ended on that date or in the

immediately preceding financial year.

3.11 According to the information and explanations given

and the records of the Company examined by us, the

Company has not defaulted in repayment of dues to

any financial institution or bank or debenture holders,

as applicable, as at the Balance Sheet date.

3.12 The Company has not granted any loans and advances

on the basis of security by way of pledge of shares,

debentures and other securities.

3.13 The provisions of any special statute applicable to chit

fund/ nidhi /mutual benefit fund/ societies are not

applicable to the Company.

3.14 In our opinion, the Company is not a dealer or trader

in shares, securities, debentures and other investments.


explanations given to us, the Company has not given

any guarantee for loans taken by others from banks or

financial institutions during the year.


explanations given to us, on an overall basis, the term

loans have been applied for the purposes for which they

were obtained.

3.17 On the basis of an overall examination of the Balance

Sheet of the Company, in our opinion and according to

the information and explanations given to us, there are

no funds raised on a short-term basis which have been

used for long term investment.

3.18 The Company has not made any preferential allotment

of shares to parties and companies covered in the

register maintained under Section 301 of the Act during

the year.

3.19 The Company has no debentures outstanding at the

year-end.

3.20 The Company has not recently raised any money by

public issue.

3.21 During the course of our examination of the books and

records of the Company, carried out in accordance with

the generally accepted auditing practices in India, and

according to the information and explanations given to

us, we have neither come across any instance of fraud

on or by the Company, noticed or reported during the

year, nor have we been informed of such case by the

management.

4. Further to our comments in paragraph 3 above, we

report that:

(a) We have obtained all the information and

explanations, which to the best of our knowledge

and belief were necessary for the purposes of

our audit;

(b) In our opinion, proper books of account as required

17


by law have been kept by the Company so far as

appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and

Cash Flow Statement dealt with by this report

are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss

Account and Cash Flow Statement dealt with by

this report comply with the accounting standards

referred to in sub-section (3C) of Section 211 of

the Act;

(e) On the basis of written representations received

from the directors, as on 31st March, 2009 and

taken on record by the Board of Directors, none of

the directors is disqualified as on 31st March, 2009

from being appointed as a director in terms of clause

(g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and

according to the explanations given to us, the said

financial statements together with the notes

thereon and attached thereto give in the prescribed

manner the information required by the Act, and

give a true and fair view in conformity with the

accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the

state of affairs of the Company as at

31st March, 2009;

(ii) in the case of the Profit and Loss Account, of

the loss for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the

cash flows for the year ended on that date.

Kolkata, 28th April, 2009

P. LAWPartner

(Membership no. 51790)for and on behalf of

PRICE WATERHOUSE,

Chartered Accountants.

18

Phillips Carbon Black LimitedBalance Sheet as at 31st March, 2009

This is the Balance Sheet referred to in our report of even date. The Schedules referred to above and the attachednotes form part of the Balance Sheet.

P. LawPartner

(Membership no. 51790)For and on behalf ofPRICE WATERHOUSEChartered Accountants

Kolkata,28th April, 2009


Ashok GoyalManaging Director

K.S.B. SanyalDirector

O.P. MalhotraDirector

As at As at31st March, 2009 31st March, 2008

Schedule Rupees in Lakhs Rupees in LakhsSOURCES OF FUNDSSHAREHOLDERS’ FUNDS

Share Capital 1 2,825.26 2,525.25Convertible Warrants issued and allotted(Note 2 on Schedule 19) -- 447.00Reserves and Surplus 2 18,993.28 21,307.38

21,818.54 24,279.63LOAN FUNDS 3

Secured Loans 41,259.87 26,457.96Unsecured Loans 1,295.83 2,583.41

42,555.70 29,041.37

Deferred Tax Liability (Net) [Note 12 on Schedule 19] 171.10 3,530.23

64,545.34 56,851.23APPLICATION OF FUNDSFIXED ASSETS 4

Gross Block 44,048.56 45,065.68Less : Depreciation 21,250.69 20,575.23

Net Block 22,797.87 24,490.45Capital Expenditure in Progress (Note 11.4 on Schedule 19) 38,276.64 13,051.04

61,074.51 37,541.49INVESTMENTS 5 3,776.10 2,805.52CURRENT ASSETS, LOANS AND ADVANCES

Inventories 6 12,096.97 15,528.47Sundry Debtors 7 18,075.62 21,756.76Cash and Bank Balances 8 713.47 1,506.09Other Current Assets 9 4,781.74 4,633.00Loans and Advances 10 3,654.75 1,547.18

39,322.55 44,971.50Less :CURRENT LIABILITIES AND PROVISIONS

Liabilities 11 39,700.19 27,373.49Provisions 12 -- 1,181.80

39,700.19 28,555.29

NET CURRENT ASSETS (377.64) 16,416.21MISCELLANEOUS EXPENDITURE (TO THEEXTENT NOT WRITTEN OFF OR ADJUSTED)Payments under Voluntary Retirement Schemes 72.37 88.01

64,545.34 56,851.23NOTES ON ACCOUNTS 19

Profit & Loss Account for the year ended 31st March, 2009

19


Year ended Year ended31st March, 2009 31st March, 2008

ScheduleRupees in Lakhs Rupees in Lakhs

INCOME

Sales - Carbon Black 127,208.19 114,983.75

Less : Excise Duty 12,431.13 13,159.12

114,777.06 101,824.63

Sales - Power 1,550.79 1,493.53

Other Income 13 1,632.46 612.22

Closing Stock of Finished Goods 3,115.89 2,114.92121,076.20 106,045.30

EXPENDITURE

Opening Stock of Finished Goods 2,114.92 1,399.13

Raw Materials Consumed 14 93,999.47 64,066.26

Expenses 15 23,870.51 25,802.65

Depreciation 1,963.67 2,013.59

Finance and Other Expenses 16 8,857.68 1,485.23

130,806.25 94,766.86

PROFIT/ (LOSS) BEFORE TAXATION (9,730.05) 11,278.44

Provision for Taxation 17 (3,245.91) 2,347.59

PROFIT AFTER TAXATION (6,484.14) 8,930.85

Balance brought forward from

previous year 10,433.53 3,584.48

Profit available for Appropriation 3,949.39 12,515.33

Proposed Dividend -- 1,010.13

Tax on Proposed Dividend -- 171.67

3,949.39 11,333.53

Transferred to General Reserve -- 900.00

Balance Carried to Balance Sheet 3,949.39 10,433.53

(Schedule 2)

Earnings per Share (Rs.) 18

– Basic (24.12) 35.37

– Diluted (24.12) 34.19

NOTES ON ACCOUNTS 19

This is the Profit and Loss Account referred to in our report of even date. The Schedules referred to above and the attachednotes form part of Profit and Loss Account.

P. LawPartner


Kolkata,28th April, 2009



K.S.B. SanyalDirector

O.P. MalhotraDirector

SCHEDULE 1 – SHARE CAPITAL

AUTHORISED

50,000,000 (31.03.2008 - 31,500,000)Equity Shares of Rs. 10/- each 5,000.00 3,150.00

ISSUED, SUBSCRIBED AND PAID UP

20,213,779 (31.03.2008 - 17,213,779)Equity Shares of Rs. 10/- eachfully paid up in cash (Note 1 below) 2,021.38 1,721.38

Less : Allotment Money receivable 0.07 0.08

2,021.31 1,721.303,692,750 Equity Shares of Rs. 10/- each

allotted as fully paid up bonus shares bycapitalisation of Share Premium and Revenue Reserve (Note 2 below) 369.28 369.28

4,346,667 Equity Shares of Rs. 10/- each fully 434.67 434.67paid up other than cash

2,825.26 2,525.25

Notes : 1) (a) Including 3,000,000 Equity Shares of Rs. 10/- each issued and allottedduring the year (Refer Note 2 on Schedule 19)

(b) Allotment of 1,823 shares is pending against Rights issue made during 1993-94

2) Of the 3,692,750 Shares, 48 Shares have not been issued to the concernednon-resident shareholders pending approval of the Reserve Bank of India.

SCHEDULE 2 – RESERVES AND SURPLUS

Reserves

Securities Premium

Balance as per last Account 6,644.83 6,644.67

Add : Received during the year (Note 1 below) 4,170.04 0.16

(Note 2 below) 10,814.87 6,644.83

Capital Reserve 156.81 156.81

Debenture Redemption Reserve

Balance as per last Account — 312.50

Less : Transferred to General Reserve — — 312.50 —

General Reserve

Balance as per last Account 4,072.21 2,909.74

Less : Appropriated towards Opening Liabilities on account ofEmployee Benefits in terms of transitional provisioncontained in Accounting Standard (AS) 15 Employee Benefits — 50.03

4,072.21 2,859.71

Add : Transfer from Debenture Redemption Reserve — 312.50

Add : Transfer from Profit and Loss Account — 900.00

4,072.21 4,072.21

SurplusProfit and Loss Account 3,949.39 10,433.53

18,993.28 21,307.38

Notes : 1. Including Rs. 4,170 lakhs received on Equity Shares issued and allotted during the year (Refer Note 2 on Schedule 19)

2. Net of allotment money receivable on account of Share Premium Rs. 0.62 lakh (31.03.2008 - Rs. 0.66 lakh)

Schedules forming part of the Balance Sheet

20



Rupees in Lakhs Rupees in Lakhs

Schedules forming part of the Balance Sheet (Contd.)

21


From Banks

– Cash Credit/Export Packing Credit facilities/Loans (Note 1 below) 3,636.19 10,908.37

[Include Rs. 0.23 lakh (31.03.2008 - Rs. 13.04 lakhs) on account

of interest accrued and due]

– Term Loans from Banks (Note 2 below) 37,623.68 15,549.59

[Include Rs. 33.57 lakhs (31.03.2008 - Rs. 48.77 lakhs) on account

of interest accrued and due]

41,259.87 26,457.96

UNSECURED LOANS

Loan from Bank - Short term — 1,000.00

Dealers Security Deposits 46.00 25.00

Sales Tax Deferred Loans (Note 3 below) 1,249.83 1,384.43

External Commercial Borrowing — 173.98

1,295.83 2,583.41

SCHEDULE 3 – LOAN FUNDS As at As at31st March, 2009 31st March, 2008

Rupees in Lakhs Rupees in LakhsSECURED LOANS

Notes:

1 Cash Credit/ Packing Credit facilities/ Loans - under consortium arrangements are with Bank of Baroda, Allahabad Bank , Export and ImportBank of India, ICICI Bank Ltd., State Bank of Bikaner & Jaipur, Citibank NA and IDBI Bank at Kolkata; State Bank of India, State Bank ofTravancore at Kochi and Syndicate Bank at Mumbai. The above Cash Credit/ Packing Credit facilities/Loans are secured by way of hypothecationin favour of the said banks as and by way of first charge, ranking pari-passu among themselves, of the Company’s existing and future stockof Raw Materials, Finished and Semi Finished Goods, Consumable Stores and Spares, including Stock in Transit and in the possession of anythird party, present and future Book debts, Monies Receivable, Claims, etc. held by any third party to the order of the disposition of the Company(excluding those relating to 30 MW Co-generation Power Plant at Durgapur in West Bengal) and also by a pari-passu second charge createdon the fixed assets of the Company at Durgapur in West Bengal (excluding those relating to 30 MW Co-generation Power Plant at Durgapurin West Bengal), Palej in Gujarat and Karimugal in Kochi. Vehicle loans from banks are secured by way of hypothecation of vehicles financedby such loans.

2 Term Loans from Banks :

Term Loans from Banks other than loan for 30MW Co-generation Power Plant at Durgapur are secured by way of first charge, rankingpari-passu on all the immovable properties of the Company situated at Durgapur in West Bengal (excluding those relating to 30 MW Co-generation Power Plant at Durgapur in West Bengal), Palej in Gujarat and Karimugal in Kochi, and also on the Company’s movable Plant andMachinery, Machinery Spares, Tools and Accessories and other movable properties both present and future excluding those relating to 30 MWCo-generation Power Plant at Durgapur in West Bengal. The Term Loan from Banks are also secured by pari-passu second charge on theCompany’s existing and future stock of Raw Materials, Finished and Semi Finished Goods, Consumable Stores and Spares, including Stockin Transit and in the possession of any third party, present and future Book Debts, Monies Receivable, Claims, etc. held by any third party tothe order or the disposition of the Company excluding those relating to 30 MW Co-generation Power Plant at Durgapur in West Bengal. TermLoan for 30 MW Co-generation Power Plant at Durgapur in West Bengal is secured by an exclusive charge on the immovable and movableproperties pertaining to the said Co-generation Power Plant.

3 Sales Tax Deferred Loans/ Output Tax Deferred Loans allowed by the State Governments of West Bengal and Kerala are repayable in stipulatedperiodic installments commencing from August 2006 (West Bengal) and July 2007 (Kerala) respectively, aggregate amount of such installmentsrepayable within one year is Rs. 338.94 lakhs. (Previous Year -Rs 230.29 lakhs)


22


(Rupees in Lakhs)

DESCRIPTION Or ig inal / Addi t ions/ Adjustment Tota l Or ig inal Depreciat ion Depreciat ion Adjustment Depreciat ion Balance BalanceRevalued Adjustment to Or ig inal / /Revalued as at 31st dur ing the of Depreciat ion as at 31st as at 31st as at 31st

cost of dur ing Revalued cost cost as at March, year on sales March, March, March,Assets the year of Assets for 31st March, 2008 etc. 2009 2009 2008

as at 31st at cost sa les etc. 2009March, 2008 dur ing the year

Freehold Land 601.64 51.85 — 653.49 — — — — 653.49 601.64

Leasehold LandAcquis i t ion andDevelopment Expenses 663.81 135.53 — 799.34 — — — — 799.34 663.81

Bui ld ings (a) 3,122.65 1.31 — 3,123.96 857.95 92.63 — 950.58 2,173.38 2,264.70

Non-Factory Bui ld ingsand Flats 1,569.63 58.27 0.17 1,627.73 280.58 33.44 0.05 313.97 1,313.76 1,289.05

Plant and Machinery 35,270.87 154.00 1,430.41 33,994.46 17,273.13 1,649.99 1,115.23 17,807.89 16,186.57 17,997.74

Electr ica lInsta l la t ions 2,333.76 19.45 135.27 2,217.94 1,230.24 99.29 96.67 1,232.86 985.08 1,103.52

Motor Vehic les 449.03 253.01 185.69 516.35 152.25 48.20 68.59 131.86 384.49 296.78

Furni ture, F ix turesand Off ice Equipment 757.65 84.94 23.94 818.65 485.05 40.12 7.67 517.50 301.15 272.60

Rai lway Sid ings 89.62 — — 89.62 89.01 — — 89.01 0.61 0.61

Sof tware 207.02 — — 207.02 207.02 — — 207.02 — —

45,065.68 758.36 1,775.48 44,048.56 20,575.23 1,963.67 1,288.21 21,250.69 22,797.87 24,490.45

Previous Year 44,717.03 532.12 183.47 45,065.68 18,686.55 2,013.59 124.91 20,575.23 24,490.45

Notes : (a) Cost and accumulated depreciation include Rs. 2,916.88 lakhs (31.03.2008 - Rs. 2,915.57 lakhs) and Rs. 870.16 lakhs (31.03.2008 - Rs. 782.99lakhs) respectively in respect of Buildings on leasehold land.

(b) Includes Rs. 84.00 lakhs (31.03.2008 - Rs. 84.00 lakhs) being cost of renovation of rented office facilities being continuously used since inceptionand Rs. 9.84 lakhs (31.03.2008 - Rs. 9.84 lakhs) being one-sixty share of jointly owned property.

SCHEDULE 4 – FIXED ASSETS

(b)


23



SCHEDULE 5 – INVESTMENTS (Long-Term) Rupees in Lakhs Rupees in Lakhs[Note 1(vi) on Schedule 19]

TRADE –Quoted

4,155,743 Fully paid Equity Shares of Rs 10/- each in CEAT Ltd. 2,614.91 2,614.91-- (31.03.08-1,385,247) Fully paid Equity Shares of Rs 10/- each — —

in CHI Investments Ltd.(Note 3 below)

OTHER THAN TRADE –Quoted

344,130 Fully paid Equity Shares of Rs. 10/- each in CESC Ltd. 1,115.74 150.15(267,130 shares purchased during the year)

7,186 Fully paid Equity Shares of Rs. 10/- each in Bank of Baroda 16.53 16.53 11,400 Fully paid Equity Shares of Rs. 10/- each in Indian Overseas Bank 2.74 2.74600,000 Fully paid Equity Shares of Rs. 10/- each in Norplex-Oak India Ltd. 60.00 60.00

1,910,000 Fully paid Equity Shares of Rs. 10/- each in Maple Circuits Ltd. 191.01 191.01-- (31.03.2008-17,417) 6.75% Tax Free US-64 Bonds of Rs. 100/- each in

Unit Trust of India (redeemed during the year) — 21.091,386.02 441.52

Unquoted50 Fully paid Preference Shares of Rs. 100/- each in 0.05 0.05Norplex Oak India Ltd.50 Fully paid Preference Shares of Rs.100/- each in 0.05 0.05Maple Circuits Ltd.

0.10 0.10Fully paid Equity Shares in Subsidiary Company

Unquoted5,100 Fully paid Equity of Euro 1/- each in Phillips Carbon BlackCyprus Holdings Limited (acquired during the year) 26.18 —

4,027.21 3,056.53Less : Provision for diminution in value of Investments 251.11 251.01

3,776.10 2,805.52

Notes : (1) Aggregate amount of Quoted Investments :Market value (excluding Norplex-Oak India Ltd. and Maple Circuits Ltd. in absenceof any current quotation) Rs. 2,189.35 lakhs (31.03.2008 - Rs. 4,910.75 lakhs) 3,749.92 2,805.42

(2) Aggregate amount of Unquoted Investments 26.18 0.10

3,776.10 2,805.52(3) 1,385,247 Fully paid Equity Shares of Rs. 10/- each in CHI Investment Ltd.-

acquired in 2007-08 pursuant to a Scheme of Arrangement between CEAT Ltd.and CHI Investment Ltd. and held at nil value have been sold during the year.

(4) Units of Mutual Funds purchased and sold during the yearNumber of Book Value

units Rupees in Lakhs

Reliance Floating Rate Fund - Growth Plan - Growth Option 10,037,057 1,302Reliance Monthly Interval Fund - Series II - Institutional Growth Plan 1,794,110 200Reliance Liquidity Fund - Daily Dividend Reinvestment Option 1,000,082 100Reliance Liquidity Fund - Growth Option 8,046,738 1,050DSP Merrill Lynch Cash Plus - Institutional - Growth 166,609 1,800UTI Liquid Cash Plan Institutional - Daily Income Option - Re-Investment 662,772 6,757UTI Liquid Cash Plus Institutional - Growth Option 391,241 5,340UTI Fixed Income Interval Fund-Monthly Interval Plan Series - I --Institutional Growth Plan 9,440,999 1,000Fixed Income Interval Fund-Monthly Interval Plan Series - II - Growth Plan 19,000,000 1,900UTI Liquid Plus Fund Daily Dividend Plan - Re-investment 1,770 18UTI Liquid Plus Fund Institutional Plan ( Growth Plan) 45,504,840 14,708UTI Money Market Fund - Growth Plan 82,112,609 19,800

SCHEDULE 6 – INVENTORIES As at As at[Note 1(vii) on Schedule 19] 31st March, 2009 31st March, 2008


Stores and Spares 2,342.91 1,321.75Raw Materials 6,638.17 12,091.80Finished Goods 3,115.89 2,114.92

12,096.97 15,528.47


24



Rupees in Lakhs Rupees in LakhsSCHEDULE 7 – SUNDRY DEBTORS (UNSECURED)Debts outstanding for a period exceeding six monthsConsidered Good 1,314.94 1,254.50Considered Doubtful 1,213.71 1,177.40Less : Provision 1,213.71 — 1,177.40 —

1,314.94 1,254.50Other Debts – Considered Good 16,760.68 20,502.26

18,075.62 21,756.76SCHEDULE 8 – CASH AND BANK BALANCES

Cash in Hand 8.99 4.12Remittances in Transit 581.75 1,392.69

With Scheduled Banks :

— On Current Accounts 69.64 65.54

— On Unpaid and Unclaimed Dividend Accounts 44.09 34.74 (as per contra Schedule 11)

— On Margin Money Account against 9.00 9.00 Guarantee

713.47 1,506.09

SCHEDULE 9 – OTHER CURRENT ASSETS – Considered GoodBalances with Customs, Port Trust and Excise Authorities etc. 2,510.73 2,580.31Other Deposits 992.09 927.55[including Rs. 0.80 lakh (31.03.2008 – Rs. 0.80 lakh) in the form of National Savings Certificate II Series]Accruals under Duty Exemption Scheme pertaining to exports/deemed exports 1,155.56 952.81Accrued benefit under Duty Drawback 123.36 172.33

4,781.74 4,633.00

SCHEDULE 10 – LOANS AND ADVANCESUnsecured - Considered goodAdvances recoverable in cash or in kind or for value to be received(Note 10 on Schedule 19) 2,148.13 742.28Advance payment of Taxes, etc.[net of provision for taxation Rs. 6,996.45 lakhs,(31.03.2008 - Rs. 6,883.22 lakhs)] 1,506.62 804.90

3,654.75 1,547.18SCHEDULE 11 – LIABILITIES

Sundry Creditors – Dues to Micro Enterprises and Small Enterprises (Note 1 below) 32.89 21.18– Others 39,133.56 26,933.12

39,166.45 26,954.30

Investor Education and Protection Fund shall be creditedby the following amounts (Note 2 below) :

- Unpaid dividend (as per contra Schedule 8) 44.09 34.74- Unpaid matured deposits 6.50 7.34

Interest Accrued but not due on borrowings 483.15 377.11

39,700.19 27,373.49

Notes : 1. Represents amount due to micro enterprises and small enterprises (identified on the basis of information made available during theyear by such enterprises to the Company). No balance is outstanding for 45 days or more. No interest in terms of Micro, Small andMedium Enterprises Development Act, 2006 has either been paid or accrued during the year and remaining unpaid as at31st March, 2009.

2. No amount was due for deposit as on the Balance Sheet date.

SCHEDULE 12 – PROVISIONSProposed Dividend — 1,010.13Tax on Proposed Dividend — 171.67

— 1,181.80

Schedules forming part of the Profit & Loss Account

25



Rupees in Lakhs Rupees in LakhsSCHEDULE 13 – OTHER INCOME

Interest(Gross-Tax deducted at Source Rs.41.45 lakhs;Previous year – Rs. 16.34 lakhs)– On Deposits 182.94 72.44– On Others 5.35 6.01

188.29 78.45Dividend– From Trade Investments 169.71 99.74– From Others 7.29 55.37

177.00 155.11Revenue from Carbon Credit — 277.77Profit on Sale of Investments (net) 1,113.31 5.94Miscellaneous 153.86 94.95

1,632.46 612.22SCHEDULE 14 – RAW MATERIALS CONSUMED

Opening Stock 12,091.80 9,043.24

Add : Purchases [Notes 4.1 and 4.2 on Schedule 19) 88,545.84 67,114.82

100,637.64 76,158.06

Less : Closing Stock 6,638.17 12,091.80

93,999.47 64,066.26SCHEDULE 15 – EXPENSES

Salaries, Wages and Bonus 2,753.32 2,513.38Contribution to Provident Fund, Superannuation Fund and Gratuity Fund 289.73 261.10Labour and Staff Welfare 410.65 282.55Consumption of Stores, Sparesand Packing Materials 3,107.47 3,317.56Power and Fuel 521.48 653.68Water Charges 64.56 102.67Rent 73.61 62.19Rates and Taxes 89.47 84.88Maintenance and Repairs :– Buildings 164.95 102.79– Plant and Machinery 355.39 484.84– Others 201.99 201.37

722.33 789.00

Insurance 91.02 81.19Travelling and Transport Expenses 472.00 534.23Subscriptions and Donations 47.42 99.07Miscellaneous Expenses 2,681.82 2,535.09Freight Outward 2,301.59 2,062.17Commission and Discount 9,474.18 11,612.53Directors’ Fees 5.55 6.85Research and Development Expenses (Note 4.2 on Schedule 19) 299.58 309.15Loss on Disposal of Fixed Assets (net) 379.68 39.63Provision for diminution in value of Investments 0.10 —Bad Debts written off (net) 48.64 342.03

Provision for Doubtful Debts (net) 36.31 113.70

23,870.51 25,802.65

SCHEDULE 16 – FINANCE AND OTHER EXPENSESInterest (Note 23 on Schedule 19)- On Debentures — 64.79- On Fixed Loans 2,517.14 1,498.53- On Others 418.99 2,936.13 381.38 1,944.70Bank & Discounting Charges 1,263.54 713.09(Gain)/Loss on Foreign Exchange Fluctuations (net) 4,658.01 (1,172.56)

8,857.68 1,485.23

26

Phillips Carbon Black LimitedSchedules forming part of the Profit & Loss Account (Contd.)

Total Total TotalNumber of Shares issued 25,206,182 47,014 25,253,196 25,206,182 3,047,014 28,253,196 25,206,182 47,014 25,253,196Nominal Value (Rs.) 252,061,820 470,140 252,531,960 252,061,820 30,470,140 282,531,960 252,061,820 470,140 252,531,960Paid up Value (Rs.) 252,061,820 468,980 252,530,800 252,061,820 30,469,480 282,531,300 252,061,820 460,000 252,521,820Adjusted Number of shares 25,206,182 46,898 25,253,080 25,206,182 3,046,948 28,253,130 25,206,182 46,000 25,252,182

Adjusted Number ofEquity Shares

(1)

As at 31st March, 2008/1st April, 2008

(2)

As at 31st March, 2009

(3)

As at 1st April, 2007

SCHEDULE 17 – PROVISION FOR TAXATION

Current Tax — 3,034.00

(Previous year net of MAT Credit - Rs. 389.51 lakhs)

Deferred Tax (release)/charge (3,359.14) (780.66)

Fringe Benefit Tax 113.23 94.25

(3,245.91) 2,347.59

SCHEDULE 18 – BASIC AND DILUTED EARNINGS PER SHARE

Adjusted Number of Equity Shares at the beginning of the period 25,253,080 25,252,182

Adjusted Number of Equity Shares at the end of the period 28,253,130 25,253,080

Weighted average number of Equity Shares outstanding during the period (Basic EPS) 26,880,510 25,252,616

Weighted average number of Equity Shares outstanding during the period (Diluted EPS) 26,880,510 26,120,288

Nominal Value of each Equity Share (Rs.) 10 10

Profit after Taxation available for Equity Shareholders (Rupees in Lakhs) (6,484.14) 8,930.85

Basic Earnings per Share (Rs.) (24.12) 35.37

Diluted Earnings per Share (Rs.) (24.12) 34.19



(1)

(2)

(4)

(5)

Date No. of Shares Days Proportionate numberOutstanding of shares outstanding

01-Apr-07 25,252,182 78 5,381,613

18-Jun-07 25,252,280 24 1,655,887

12-Jul-07 25,252,476 116 8,003,517

05-Nov-07 25,252,926 36 2,483,894

11Dec-07 25,253,030 100 6,899,735

20-Mar-08 25,253,080 12 827,970

Weighted average number 25,252,616

(6)

Year ended 31st March, 2008

(7)


01-Apr-07 26,119,854 78 5,566,526

18-Jun-07 26,119,952 24 1,712,784

12-Jul-07 26,120,148 116 8,278,517

05-Nov-07 26,120,598 36 2,569,239

11-Dec-07 26,120,702 100 7,136,804

20-Mar-08 26,120,752 12 856,418

Weighted average number 26,120,288

Date No. of Shares Days Proportionate numberOutstanding of shares outstanding

Date No. of Shares Days Proportionate number Date No. of Shares Days Proportionate numberOutstanding of shares outstanding Outstanding of shares outstanding

01-Apr-08 25,253,080 128 8,855,875 01-Apr-08 25,253,080 128 8,855,875

07-Aug-08 25,253,130 39 2,698,280 07-Aug-08 25,253,130 39 2,698,280

15-Sept.-08 25,253,130 198 15,326,355 15-Sept.-08 28,253,130 198 15,326,355

Weighted average number 26,880,510 Weighted average number 26,880,510

(5)


Weighted average number of shares for diluted EPSWeighted average number of shares for basic EPS

(4)


(3)

(1)

(6)

(7)

27


SCHEDULE 19 – NOTES ON ACCOUNTS

1. Significant Accounting Policies:

The Financial Statements are prepared to comply in all materialaspects with all the applicable accounting principles in India, theapplicable accounting standards notified under Section 211(3C)of the Companies Act, 1956 and the relevant provisions of theCompanies Act, 1956.

(i) Fixed Assets

Fixed assets revalued (basis indicated in Note 11.2 below) arestated at revalued amounts less depreciation. Other fixed assetsare stated at cost of acquisition (net of CENVAT credit) orconstruction less depreciation.

Cost of software are capitalised in the period in which thesoftware is implemented for use, where it is expected to providefuture enduring economic benefit. Capitalisation costs includelicense fees and cost of implementation / system integrationservices.

Impairment loss is recognised wherever the carrying amountof fixed assets of a cash generating unit exceeds its recoverableamount i.e. net selling price or value in use, whichever is higher.

(ii) Borrowing Costs

Borrowing costs attributable to acquisition or construction ofqualifying assets (assets which require substantial period oftime to get ready for its intended use) are capitalised as partof the cost of such assets. All other borrowing costs are chargedto revenue.

(iii)Government Grants

Grants of Capital nature (not related to specific fixed assets )are credited to Capital Reserve. Grants related to revenue arecredited to related expense account.

(iv)Depreciation

Depreciation on the incremental amount added on revaluationin respect of revalued item is calculated on straight line methodat rates considered applicable by valuers. Such additionaldepreciation is adjusted against the available balance inRevaluation Reserve in respect of related items.

Software capitalised are amortised over a period of three yearsfrom the date of capitalisation.

Depreciation on original cost of fixed assets is provided eitheron straight line basis or on written down value method at ratesspecified in Schedule XIV to the Companies Act, 1956.

(v) Foreign Currency Transactions

Monetary assets and liabilities relating to foreign currencytransactions remaining unsettled at the year-end are translatedat the prevailing exchange rates and the resultant gains/ lossesare recognised in the Profit and Loss Account.

The premium or discount in respect of forward exchangecontracts are appropriately recognised in the Profit and LossAccount over the period of the contract. Exchange differencearising on such contracts is accounted for in the reportingperiod in which the exchange rate changes.

(vi)Investments

Investments are valued at cost less provision for diminution(other than temporary) in the value thereof as determined bythe Board of Directors based on periodical review.

(vii)Inventories

Inventories are valued at lower of cost and net realisable

value. Cost of Stores and Spares is determined on weightedaverage basis. Cost of Raw Materials is determined on first infirst out basis. Cost of Finished Goods includes material cost(determined on the basis indicated above), appropriate shareof overheads and excise duty payable on subsequent clearancefrom the factory.

(viii)Recognition of Income and Expenditure

(a) Sale of carbon black is recognised on the basis of despatch/ shipment of goods to customers and the sale of poweris recognised based on power off-take by the customer.

(b) Items of income and expenditure are recognised on accrual(except where there are significant uncertainties) andprudent basis.

(ix) Employee Benefits

a. Defined Contribution Plans

Annual contribution payable pursuant to the Company’ssuperannuation scheme to a separate superannuation fundestablished by the Company for payment of pensions to theemployees covered under the scheme and monthly contributionspayable to the provident funds maintained with separate Trustsestablished for Head Office and Durgapur Plant employeesand with Regional Provident Fund Commissioners (RPFCs) forother employees are recognised as charge on accrual basis.The Company has an obligation to make additional contributionto the Trust in case of inadequacy of the aggregate fundsavailable with the Trustees (mainly comprising net annual returnfrom investments of the Trust) for distribution of annual intereston the balances of the beneficiaries at applicable interest ratenotified by the Government.

b. Defined Benefit Plans

Liabilities accrued on account of gratuity [covered under policieswith Life Insurance Corporation of India (LIC)] and leaveencashment benefits payable to the employees on cessationof their employment and liabilities accrued towards postemployment medical benefits extended to certain categoriesof employees [comprising payment of annual medical insurancepremium to cover hospitalisation and reimbursement ofdomiciliary medical expenses within a defined monetary limit]are determined by actuarial valuation based on the methodprescribed by Accounting Standard (AS) 15 Employee Benefitsand are recognised as charge on accrual basis.

c. Termination Benefits

Payments under Voluntary Retirement Schemes are amortisedover the period being lower of : (i) the remaining period ofservice of the related employees, (ii) five years (for paymentsmade upto 31st March, 2006), (iii) year ending 31st March,2010 (in case of payments made from 1st April, 2006).

(x) Research and Development

Revenue expenditure on research and development is chargedto Profit and Loss Account in the the period in which it isincurred.

(xi)Taxes on Income

Current tax is determined as the amount of tax payable inrespect of taxable income for the period based on applicabletax rate and laws. Deferred tax is recognised, subject toconsideration of prudence in respect of deferred tax assets,on timing differences, being the difference between taxableincome and accounting income that originates in one periodand are capable of reversal in one or more subsequent periods

28


Quantity Rupees in Unit Rupees in Quantity Rupees in Unit Rupees in

MT Lakhs Lakhs MT Lakhs Lakhs

(i) Licensed Capacity Not Not Not Not(per annum) applicable applicable applicable applicable

(ii) Installed Capacity (per annum) ascertified by the Management asat Balance Sheet date 270,000 12 MW 270,000 12 MW

Carbon Black :Opening Stock 5,060 2,114.92 4,052 1,399.13Actual Production@ 212,150 250,484Closing Stock 6,657 3,115.89 5,060 2,114.92Sales (includingsweepings) 210,553 127,208.19 249,476 114,983.75

Power :

Generation (Million KWH) 86.54 91.25

Sal

@including production forResearch and Development runs and reprocessing 668 MT 987 MT


6. Particulars of licensed capacity, installed capacity, Finished Goods and Sales :

Carbon Black Power Carbon Black Power


and is measured using tax rate and laws that have been enactedor substantively enacted by the Balance Sheet date. Deferredtax assets are periodically reviewed to reassess realisationthereof.

2. On exercise of the option to subscribe to the Company’s EquityShares by the holders of 3,000,000 Convertible Warrants of Rs.149/- each allotted on 15th March, 2007 pursuant to the approval ofthe members of the Company in accordance with SEBI guidelines,3,000,000 Equity Shares of Rs.10/- each fully paid up have beenissued and allotted on 15th September, 2008 on conversion ofsaid Warrants. Consequently, out of the proceeds of Rs. 4,470lakhs of the Convertible Warrants, Rs. 300 lakhs and Rs. 4,170lakhs have been transferred to Share Capital and SecuritiesPremium Account respectively.

3.1 Managerial Remuneration : Year ended Year ended31st March, 2009 31st March, 2008Rupees in Lakhs Rupees in Lakhs

Amounts paid/payable to :

a) Managing Director

Salaries, Bonus and Allowances 152.55 134.31

Contribution to Provident Fund,Superannuation Fund and Gratuity Fund 9.97 7.25

Perquisites 4.15 2.52

166.67 144.08

b) Other Directors

Directors’ Fees 5.55 6 . 8 5

3.2 Computation of Net Profit under Section 198(1)/349 of theCompanies Act, 1956 has not been provided as no commissionis payable in view of inadequacy of profit.

4.1 Raw Material Purchase is net of Rs. 1747.62 lakhs (Previousyear - Rs. 916.31 lakhs) being benefits under various dutyexemption schemes pertaining to exports / deemed exports.

4.2 Research and Development Expenses includes Raw MaterialsConsumed Rs. 245.40 lakhs (Previous year - Rs.255.88 lakhs),

Salaries, Wages and Bonus Rs.50.33 lakhs (Previous year -Rs. 30.98 lakhs), Contribution to Provident Fund, SuperannuationFund and Gratuity Fund Rs.1.36 lakhs (Previous year - Rs. 3.25lakhs), Labour and Staff Welfare Rs.2.03 lakhs (Previous year -Rs. 1.64 lakhs), Maintenance and Repairs - Building Rs. Nil(Previous year - Rs. 0.19 lakhs), Travelling and Transport ExpensesRs. Nil (Previous year - 3.18 lakhs) and Miscellaneous ExpensesRs. 0.46 lakhs (Previous year - Rs. 14.03 lakhs).

4.3 Auditors’ Remuneration :

Year ended Year ended31st March, 2009 31st March, 2008Rupees in Lakhs Rupees in Lakhs

Audit Fees 16.00 16.00

Tax Audit 4.00 4.00

Others (Certifications) 5.85 5.00

Reimbursement of Expenses 1.35 0.49(including service tax to the extentrouted through profit and loss account)

5. Total Amount of Consumption of Raw Materials, Stores and Spares :

Raw Material Year ended Year ended31st March, 2009 31st March, 2008

Value Value% Rs. in Lakhs % Rs. in Lakhs

Imported 93 86,989.11 94 60,386.60

Indigenous 7 7,010.36 6 3,679.66

Total 100 93,999.47 100 64,066.26

Stores and Spares Year ended Year ended31st March, 2009 31st March, 2008

Value Value% Rs. in Lakhs % Rs. in Lakhs

Imported 8 233.88 7 245.48

Indigenous 92 2,873.59 93 3,072.08

Total 100 3,107.47 100 3,317.56

SCHEDULE 19 – NOTES ON ACCOUNTS (Contd.)

(including Captive (including CaptiveConsumption etc. of 27.38) Consumption etc. of 31.00)

Sales 59.16 1550.79 60.25 1,493.53

29


Year ended Year ended31st March, 2009 31st March, 2008Quantity Rupees Quantity Rupees

MT in Lakhs MT in Lakhs

7. Raw Materials consumed(all indigenous – unlessmentioned otherwise) formanufacturing Carbon Black :

(i) L.D.O. 957 216.62 853 296.41

(ii) Indigeneous CarbonBlack Feed Stock 11,764 3,162.31 10,859 1,825.67

(iii) Imported Carbon Black Feed Stock 357,039 87,179.23 427,380 60,603.32

(iv) Tar Oil 14,467 3,676.38 10,517 1,583.99

(v) Others 76 10.33 32 12.75

384,303 94,244.87 449,641 64,322.14

Less : Consumption throughResearch and Development runs :

Imported Carbon Black

Feed Stock 1,045 190.12 1,449 216.73

Tar Oil 18 3.24 322 39.15

Indigenous feed stock 319 52.04 — —

382,921 93,999.47 447,870 64,066.26


8. CIF Value of Imports :

(a) Raw Materials 76,493.87 57,697.50

(b) Stores and Spares 504.08 242.15

(c) Capital Equipment 703.84 953.05

9. Expenditure in Foreign Currencycharged to the Profit and LossAccount on account of :

(a) Commission on Export Sales 109.28 361.56

(b) Interest 1,590.68 524.99

(c) Others 651.75 514.60

10. Advances of Rs. 2,148.13 lakhs (Previous year - Rs. 742.28 lakhs)includes Rs.0.93 lakh (Previous year - Rs. 1.08 lakhs) due by anOfficer of the Company, maximum amount due at any time duringthe year - Rs.1.09 lakhs (Previous year - Rs.1.24 lakhs).

11.1 For the purpose of these accounts, following methods and ratesof depreciation have been used for depreciating the original costof fixed assets :

(a) Certain items of Plant and Machinery being energy savingdevices added during the period ended 31st March,1987 :Under Straight line method at rates specified in ScheduleXIV of the Companies Act, 1956.

(b) Other assets added upto 31st March,1987 : Under writtendown value method at rates specified in Schedule XIV ofthe Companies Act, 1956.

(c) Additions since 1st April, 1987 : Under Straight line methodat rates specified in Schedule XIV of the CompaniesAct, 1956.

11.2 Based on the valuation reports submitted by the valuers appointedfor the purpose, certain items of the Company’s fixed assets [viz.,Land (Freehold / Leasehold), Acquisition and DevelopmentExpenses, Buildings on such Land, Flats, Electrical Installations,Plant and Machinery and Railway Siding] were revalued on 30thNovember,1984, on 30th September,1991 and also on 30thSeptember, 2001 (except for Railway Siding) after consideringthe following factors:

-- estimated current market value pertaining to Land (Freehold/Leasehold), Acquisition and Development Expenses, Buildingson such Land and Flats

-- values of Electrical Installations, Plant and Machinery andRailway Siding (when applicable) based on their current costof replacement

-- adjustments for the condition, the standard of maintenance,depreciation upto valuation dates, etc.

The resultant revaluation surplus of Rs.1,011.07 lakhs, Rs.2,994.04lakhs and Rs. 5,995.27 lakhs arising from the aforesaid revaluationswere transferred to Revaluation Reserve in the Company’s annualaccounts for the years 1983-84, 1990-91 and 2000-01 respectively.

11.3 Depreciation for the year ended 31st March, 2009 on items offixed assets revalued include an additional charge of Rs. 278.33lakhs (Previous Year - Rs. 279.39 lakhs) over that calculated onoriginal cost at rates prescribed under Schedule XIV of theCompanies Act,1956 as amended during 1993-94 representingdepreciation on the incremental amounts added on revaluationcalculated at the rates considered applicable by the valuers.

11.4 Capital Expenditure in Progress includes:

(a) Capital Advances unsecured, considered good - Rs. 11,105.45lakhs (31st March, 2008 - Rs. 4,738.05 lakhs)

(b) Borrowing cost Rs. 2,938.02 lakhs (31st March, 2008 -Rs. 555.34 lakhs)

12. Details of Deferred Tax Asset/Liability considered in theseaccounts :

As at 31st As at 31stMarch, 2009 March, 2008


Deferred Tax Liability on account of –

– Depreciation 3,717.72 4,046.75

– Others 13.38 0.58

3,731.10 4,047.33

Deferred Tax Asset on account of –

– Items allowable for taxpurpose on payment 3,560.00 517.10

3,560.00 517.10

171.10 3,530.23

13. According to the letters of undertaking given by the Company tothe concerned Financial Institutions, its investments in equity sharesof Maple Circuits Limited and Norplex-Oak India Limited cannot bepledged, charged or otherwise encumbered or disposed off withouttheir prior consent, during the currency of the loan facilities grantedby the Financial Institutions to the said companies.


30


As at As at31st March, 2009 31st March, 2008Rupees in Lakhs Rupees in Lakhs

14. Contingent Liabilities for :

(14.1) Outstanding Bank 377.20 74.96Guarantees etc.

(14.2) Bills discounted 1,923.90 --

(14.3) Guarantees or CounterGuarantees or CounterIndemnity given bythe Company :

(a)on behalf of bodies corporateand others (other than guaranteeswhich according to legal opinion areno longer enforceable againstthe Company)

– Limit 9.00 9.00

– Outstanding 9.00 9.00

(b)for repayment of Housing Loan 6.55 8.90granted by Housing DevelopmentFinance Corporation Ltd. toemployees of the Company


18.1 Reconciliation of opening and closing balances of the present value of defined benefit obligations :

Opening balance 581.24 550.00 92.92 135.10 53.03 44.91

Current Service Cost 36.20 34.41 63.08 16.29 0.63 0.45

Interest cost 41.65 44.96 6.10 11.48 3.98 3.78

Actuarial (loss)/gain 14.51 (6.11) 21.66 (42.76) 12.78 4.65

(Benefits paid) (51.95) (42.02) (23.27) (27.19) 0.00 (0.76)

Closing balance 621.65 581.24 160.49 92.92 70.42 53.03

Funded

Gratuity

As at31st March, 2009






Unfunded

Leave Encashment Medical


Opening balance 515.98 455.98

Expected return on Plan Asset 41.28 36.48

Actuarial loss/(gain) (41.28) (32.57)

Company’s contribution 105.23 98.11

Benefits paid (51.95) (42.02)

Closing balance 569.26 515.98

18.2 Reconciliation of opening and closing balances of the fair value of plan assets* :

Gratuity

Rupees in Lakhs

*Consisting Funds maintained with LIC. Actual Return thereon awaited.

Rupees in Lakhs

(14.4) Claims against the Company notacknowledged as debts :

(a) Income-tax matters 0.87 301.54pending (other than matters setaside for reassessment)

(b) Sales Tax matters -- 193.27

15 Premium on foreign exchange arising from forward exchangecontract to be recognised in the accounts of future periodsRs. 248.30 lakhs (Previous year - Rs. 2.53 lakhs).

16. Earnings in Foreign Exchange on Account of :


Export Sales (F.O.B. Value) 25,566.71 21,966.04

Carbon Credit -- 277.77

17. Capital Commitments (net of advances Rs. 11,105.45 lakhs,31.03.2008 - Rs. 4,738.05 lakhs) not provided for as at31st March, 2009 are estimated at Rs. 10,806 lakhs (31.03.2008

- Rs. 11,950 lakhs).

31



18.3 Amount recognised in Balance Sheet :

Present valueof obligation 621.65 581.24 160.49 92.92 70.42 53.03

Fair Valueof Plan Asset 569.26 515.98 -- -- -- --

Net Asset/(Liability) (52.39) (65.26) (160.49) (92.92) (70.42) (53.03)

Funded

Gratuity







Unfunded


18.7 As regards contribution to the provident fund maintained with separate Trust, the Company’s Actuary has certified that the Trust fund isadequate for distribution of interest at the rate currently prescribed by the Government and based on actuarial valuation carried out in termsof AS 15, no additional contribution to the fund is required from the Company towards any inadequacy.

18.8 For the Defined Contribution Plans amounts aggregating Rs. 196.24 lakhs have been recognised as expenses during the year (PreviousYear - Rs. 187.31 lakhs).

18.4 Amount recognised in Profit and Loss Account -

Current service cost 36.20 34.41 63.08 16.29 0.63 0.45

Interest cost 41.65 44.96 6.10 11.48 3.98 3.78

Expected Returnon Plan Asset (41,28) (36.48) -- -- -- --

Actuarial loss/(gain) 55.79 26.46 21.66 (42.76) 12.78 3.89

Recognised in Profit 92.36 69.35 90.84 (14.99) 17.39 8.12and Loss Account

Under

Gratuity

Year ended31st March, 2009







Contribution to Provident Fund,Superannuation Fund and Gratuity Fund

Salaries, Wages and Bonus Labour and Staff Welfare

The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and otherrelevant factors.


Mortality Table LICI 1994-1996 LICI 1994-1996

Discount rate 7.50% 8.5%

Inflation rate 5.00% 6.0%

Expected Return on assets 8.00% 8.0%

Medical cost trend rates 5.00% 5.0%

Formula used

18.5 Principal Actuarial Assumptions used --

Projected Unit Credit Method

18.6 Effect of increase/decrease of one percentage point in the assumed medical cost trend rates on :

Year ended 31st March, 2009 Year ended 31st March, 2008

Increase Decrease Increase Decrease


Aggregate of current service cost interest cost

Accumulated Post Employment benefit obligationfor medical cost

Rupees in Lakhs

Rupees in Lakhs

2.50 2.50

0.33 0.33

1.72 1.72

0.13 0.13

20. Related Party Disclosures :Name of the transacting related parties, nature of relationship, transactionsand outstanding items:

Name of the Related Parties Nature of Relationship

Phillips Carbon Black Wholly owned SubsidiaryCyprus Holdings Limited Company

PCBL Netherlands Wholly owned SubsidiaryHoldings B.V. Company of Phillips Carbon

Black Cyprus Holdings Limited

Mr. Ashok Goyal, Key Management PersonManaging DirectorTransactions with related parties referred to in above :Equity Contribution to the Subsidiary Rs. 26.18 lakhs (31.03.2008 - Nil)Remuneration paid/payable for the year ended 31st March, 2009 Rs. 166.67lakhs (Previous Year - Rs. 144.08 lakhs)

21. Pending completion of the relevant formalities of transfer of certainassets acquired pursuant to the Scheme of Amalgamation ofTransmission Holdings Limited with the Company in 2001-2002, suchassets remain included in the books of the Company under the nameof the transferor company.

22. Expenses are after adjustment of amounts reimbursed to or by theCompany.

23. Interest expenditure is net of Rs. 278.60 lakhs (Previous Year -Rs. 95.41 lakhs) being interest earned on Fixed Deposits and MarginMoney Deposits [Gross, Tax Deducted at source Rs. 63.13 lakhs(Previous Year - Rs. 21.62 lakhs)]

24. Rent of Rs. 73.61 lakhs (Previous Year - Rs. 62.19 lakhs) relates tocancelable operating leases taken on or after 1.04.2001. These leasearrangements range from 11 months to 3 years and are primarily inrespect of accommodation for employees, offices, warehouses etc.and inter alia include escalation clause and option for renewal.

25. In respect of the investments, in the opinion of the Board, the year -end diminution in value (estimated to be in the region of Rs. 1560.57Lakhs (31.03.2008 - Nil ) is on account of temporary market featuresand these being long term investments, no provision has been deemednecessary. These would, however, be covered adequately by theCompany’s year end free reserves.

26. Previous Year’s figures have been regrouped or rearranged whereconsidered necessary.

Signatures to Schedules numbered 1 to 19

32



The contribution to the Defined Benefit Plans expected to be made by the Company during the annual period beginning after the balancesheet date is yet to be reasonably determined.

19. Segment Reporting

a) Information relating to the two business segments, being carbon black and power has been disclosed as primary segments.

b) Inter-segment transfers being power consumed for manufacture of carbon black are based on price paid for power purchased fromexternal sources.

c) Segment Revenues, Results and Other Information :

Business Segment

Carbon Black Power Total Carbon Black Power Total

(i) Segment RevenueExternal Sales 127,208.19 1,550.79 128,758.98 114,983.75 1,493.53 116,477.28Inter-segment Sales — 788.02 788.02 — 895.94 895.94

127,208.19 2,338.81 129,547.00 114,983.75 2,389.47 117,373.22

(ii) Segment ResultsProfit before interest and tax (5,328.71) 2,020.59 (3,308.12) 14,348.56 2,047.44 16,396.00Unallocated (expenses)/income (net) (3,485.80) (3,172.86)Interest (2,936.13) (1,944.70)

Profit before tax (9,730.05) 11,278.44

(iii) Segment Assets 56,353.54 3,382.21 59,735.75 63,388.50 3,624.26 67,012.76Unallocated 44,509.78 18,393.76

104,245.53 85,406.52

(iv) Segment Liabilities 80,511.45 210.70 80,722.15 54,185.77 809.90 54,995.67Unallocated 1,704.84 6,131.22

82,426.99 61,126.89

(v) Capital Expenditure 758.36 — 758.36 532.12 -- 532.12(vi) Depreciation 1,764.22 199.45 1,963.67 1,814.10 199.49 2,013.59(vii) Non Cash Expense other

than Depreciation (unallocated) 52.84 67.02

Geographical Segment

Within India Outside India Total Within India Outside India Total

(i) Segment Revenue 103,192.27 25,566.71 128,758.98 94,511.24 21,966.04 116,477.28

(ii) Capital Expenditure 758.36 — 758.36 532.12 — 532.12

(iii) Segment Assets 102,367.41 1,687.18 104,054.59 81,207.79 4,198.73 85,406.52

Year ended 31.03.2009 Year ended 31.03.2008

Year ended 31.03.2009 Year ended 31.03.2008

(Rupees in Lakhs)




O. P. MalhotraDirector

K. S. B. SanyalDirector

33



Balance Sheet abstract and Company’s General Business Profile

(i) Registration Details

Registration No. 24602

State Code 21

Balance Sheet Date 31.03.2009

(ii) Capital Raised during the Year(Amount in Rs. Thousands)

Public Issue Nil

Bonus Issue Nil

Rights Issue Nil

Private Placement 30,000

(iii) Position of Mobilisation and Deployment ofFunds (Amount in Rs. Thousands)

Total Liabilities 6,454,534

Total Assets 6,454,534

Sources of Funds

Paid-up Capital 282,526

Convertible Warrants --

Reserve and Surplus 1,899,328

Secured Loan 4,125,987

Unsecured Loans 129,583

Deferred Tax Liability 17,110

Applications of Funds

Net Fixed Assets (incl. CWIP) 6,107,451

Investments 377,610

Net Current Assets (37,764)

Miscellaneous Expenditure 7,237

Accumulated Losses Nil

(iv) Performance of the Company

(Amount in Rs. Thousands)

Turnover (incl. other income) 13,039,144

Total Expenditure 14,012,149

Profit/(Loss) Before Tax (973,005)

Profit/(Loss) After Tax (648,414)

Earning per Share in Rs. (24.12)

Dividend (excl. Dividend Tax) --

(v) Generic Names of Three Principal Products/

Services of the Company (as per monetary terms)

Item Code No. :

(ITC Code) 28030002

Product Description : Carbon Black

(ITC code) Not Specified

Product Description Electricity

Information pursuant to Part IV of Schedule VI of the Companies Act, 1956 :

Cash Flow Statement for the year ended 31st March, 2009

34




A. Cash Flow from Operating Activities

Net Profit before taxation (9,730.05) 11,278.44

Adjustments for :

Depreciation 1,963.67 2,013.59

Loss on sale of fixed assets (net) 379.68 39.63

Unrealised (gain)/loss (net) on foreign exchange fluctuation 201.09 443.76

Income from Dividend (177.00) (155.11)

Interest (Received/Receivable on Inter Corporate Deposits etc.) (188.29) (78.45)

Profit (net) on sale of Investment (1,113.31) (5.94)

Interest (Paid/Payable on loans etc.) 2,936.13 1,944.70

Bad Debts written off (net) 48.64 342.03

Provision for Doubtful Debts (net) 36.31 113.70

Provision for diminution in value of investments 0.10 —

Amortisation of payments under Voluntary Retirement Schemes 52.84 4,139.86 67.02 4,724.93

Operating Profit before Working Capital Changes (5,590.19) 16,003.37

Adjustments for :

Inventories 3,431.50 (4,042.64)

Trade and Other Receivables 2,594.75 (1,059.09)

Trade Payables 11,905.92 (992.29)

17,932.17 (6,094.02)

Cash Generated from Operations 12,341.98 9,909.35

Direct Taxes Paid (including Tax Deducted at source) (947.82) (3,326.46)

Payments under Voluntary Retirement Scheme (37.20) (51.80)

Net Cash from Operating Activities 11,356.96 6,531.09

B. Cash Flow from Investing Activities

Payments for fixed assets (24,345.38) (10,920.21)

Sale proceeds of fixed assets 107.59 18.93

Purchase of Investment (54,939.83) (38,775.68)

Investment in Phillips Carbon Black Cyprus Holdings Ltd. (26.18) —

Sale of Investment 55,104.98 38,781.62

Dividend received from Investments 177.00 155.11

Inter Corporate Deposits given (3,770.00) (1,000.00)

Inter Corporate Deposits realised 3,770.00 1,132.75

Interest Received Others 5.35 139.36

Interest received on Inter Corporate Deposit etc. 141.49 122.71

Net Cash used in Investing Activities (23,774.98) (10,345.41)

Carried over : (12,418.02) (3,814.32)

Cash Flow Statement for the year ended 31st March, 2009

35




Brought forward : (12,418.02) (3814.32)

C. Cash Flow from Financing Activities

Allotment money (including premium) received 4,023.04 0.18

Proceeds from long term borrowings 24,466.92 4,218.80

Proceeds from short term borrowings 10,175.00 4,000.00

Redemption of Debentures — (1,000.00)

Repayment of long term borrowings (2,851.93) (1,543.13)

Repayment of short term borrowings (11,175.00) (3,000.00)

Increase/(Decrease) in cash credit facilities, (7,343.93) 1,332.34temporary overdrafts etc. from banks

Dividends paid (including tax on dividend) (1,172.45) (586.73)

Interest paid (4,496.25) (2,317.46)

Net Cash used in Financing Activities 11,625.40 1,104.00

Net Increase in Cash and Cash Equivalents (792.62) (2,710.32)

Opening Cash and Cash Equivalents 1,506.09 4,216.41

Closing Cash and Cash Equivalents 713.47 1,506.09

Notes :

1. The above Cash Flow Statement has been prepared under the Indirect Method

as set out in the Accounting Standard 3 on Cash Flow Statement.

2. Cash and Cash Equivalents (refer Schedule 8 to Balance Sheet) include balances

with scheduled banks on Margin Money/Special Account, not available for

immediate/ready use by the Company. 11.50 11.50

3. Previous year’s figures have been regrouped or rearranged, where considered necessary.

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

P. LawPartner





O. P. MalhotraDirector

K. S. B. SanyalDirector


Financial Summary2003 - 2009

36

(18 months)

(Rupees in Lakhs)

2008-09 2007-08 2006-07 2005-06 2003-05

Sales 128,758.98 116,477.28 112,330.86 82,550.92 103,172.89

Other Income 1,632.46 612.22 408.69 177.01 406.10

Expenses 140,121.49 105,811.06 108,284.91 84,597.54 101,755.83

Profit Before Tax (9,730.05) 11,278.44 4,454.64 (1869.61) 1,823.16

Taxation (3,245.91) 2,347.59 2,101.44 (362.37) 587.00

Profit After Tax (6,484.14) 8,930.85 2,353.20 (1507.24) 1,236.16

Dividend (including Tax) --- 1,181.80 590.90 --- 303.65

Retained Profits/(Loss) (6,484.14) 7,749.05 1,762.30 (1507.24) 932.51

Capital Employed 64,545.34 56,851.23 45,909.76 47,960.23 49,176.97

Application of Funds --

Fixed Assets (including CWIP) 61,074.51 37,541.49 28,138.09 28,219.99 29,805.34

Investments 3,776.10 2,805.52 2,805.52 2,906.53 2,035.95

Net Current Assets (305.27) 16,504.22 14,966.15 16,833.71 17,335.68

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