Indian Rayon Annual Report FY2004 PDF
Indian Rayon Annual Report FY2004 PDF
Indian Rayon Annual Report FY2004 PDF
to greater heights”.
SOLICITORS
CORPORATE FINANCE DIVISION
Mulla & Mulla and Craigie, Blunt & Caroe, Mumbai
Mr. Manoj Kedia Sr. Vice President
REGISTERED OFFICE Ms. Pinky Mehta Sr. Vice President (Taxation)
Junagadh-Veraval Road, Veraval - 362 266 (Gujarat) Mr. Anil Rustogi Sr. Vice President – Corporate Finance
Contents
Directors, Executives and Index .............................. 1 Shareholder Information .......................................................... 38
Chairman’s Letter to Shareholders ......................... 2 Directors’ Report ...................................................................... 48
(1)
M C
Y K
THE CHAIRMAN’S
LETTER TO
S HAR E HOL D ERS
Dear Shareholders,
With the economy having gained its sheen, and
having surged at 8 per cent during the year,
backed by a good monsoon, and a resurgence on
all fronts, consumer sentiments naturally revived.
These developments at the macro level had a
salutary effect on your Company’s operations.
Barring textiles all other sectors that your
Company operates in gained in revenues and
earnings. Your Company’s results have been
indeed impressive.
(2)
M C
Y K
The divestment of your Company’s stake in Indo Gulf, has been a value- “Asset sweating,
creating move that unlocked capital. maximizing operational
efficiencies and a tight rein on
Asset sweating, maximizing operational efficiencies and a tight rein on costs wherever possible, continue
costs wherever possible, continue to be the hallmark of your Company. to be the hallmark of your
To amplify the bottom-line, your Company has been increasingly moving Company. To amplify the
towards value-added products that provide innovative customer offerings. bottom-line, your Company
has been increasingly moving
I would now like to brief you on our business sectors and the growth
trajectories that we have blue-printed. towards value-added products
that provide innovative
Viscose Filament Yarn (VFY) continues to be a key contributor to your Company’s profitability.
The Division has had a tough slog in the face of the weavers’ strike. Nevertheless, it outperformed
industry, with regard to volumes and carried the lowest inventories.
To raise the share of value-added yarns, your Company has embarked on the Continuous Spinning
Yarn capacity expansion and is putting up new facilities for the manufacture of coloured yarns, which
is the preference of customers in the global markets. These steps will result in the ongoing profitability
of the VFY business.
Garments
In the branded apparel segment, the Division has had a remarkable turnaround. Undeterred by the intense
competition from global and regional brands, Madura Garments could retain its edge. Cobbling together
innovation in products, design differentiation and range extensions let the Division stay ahead.
To drive profitable growth, the Division will encash on opportunities for garnering retail space in high
streets and top malls. Capitalising on its brand equity, and offering a lifestyle solution for its brands
will be priorities in its forward march too.
(3)
Carbon Black
The buoyancy in the auto and tyre sector in the country continue to fuel your Company’s carbon
black business. Importantly, effective procurement of carbon black feedstock, given the volatile oil
prices, has enabled the Division maintain earnings.
To significantly expand your Company’s presence across the globe, it has ramped up production
capacity to 1,60,000 metric ton per annum.
Textiles
The environment continues to be challenging for the textile business. Higher input costs, lower
realizations and an appreciating rupee has had an adverse bearing on the Division’s bottom-line. It’s
thrust on niche fabrics such as linen and value-added worsted yarns, will continue. To some extent,
this will give the business a leg up.
Insulators
Your Company’s Joint Venture with NGK Insulators for bettering operational efficiencies, higher
yield and introducing high voltage insulators, is progressing well.
A roadmap has been laid out to bring in improved results through capacity expansion, and plant
modernization through debottlenecking. In turn, this will accord your Company with new opportunities
to serve customers of high voltage insulators.
Insurance
The insurance business has a long-gestation period. Its business plans are well on track. Today it is
the second largest player amongst the private insurance companies. It has also attained a leadership
position in group insurance and unit linked products.
The software business has reversed the downward trend in performance. Through its unrelenting
endeavours, it has acquired new customers, improved the revenue flow and curtailed losses. Going
forward, the emphasis will be on strengthening its marketing and delivery capabilities.
(4)
BPO
I am very pleased to record that the BPO business has had an exceptionally strong year. Revenues
have leapfrogged. New clients including some leading Fortune 500 Companies have come within
its fold. The ITES/BPO sector is the fastest growing sector in the country. I have no doubt that,
given TransWorks value proposition of total commitment to its clients businesses, its share in the
industry will grow several-fold and be a major contributor to your Company’s bottom-line.
Outlook
“I believe your Company’s
I believe your Company’s Garment, BPO and Carbon Black Garment, BPO and Carbon Black
businesses will spur growth. Viscose Filament Yarn will continue to businesses will spur growth.
occupy the pride of place as the Company’s major contributor. I Viscose Filament Yarn will
expect enhanced performance from the insurance and insulator
continue to occupy the pride of
businesses as well.
place as the Company’s major
Given your Company’s strong fundamentals and its business focus, I am contributor. I expect enhanced
sure, your Company will continue to sustain growth in revenues and
performance from the insurance
earnings.
and insulator businesses as well.”
Behind your Company’s considerable achievements, lies the intellectual and emotional commitment
that our people bring to their work. Besides operational efficiency and project management skills,
honed under the most demanding and competitive conditions, it is the spirit of entrepreneurship
and the way all of our employees bond cohesively with the organization. I wish to record my
genuine appreciation of their contribution.
(5)
• We entered the land of the dragon, i.e., we ventured into China, with the acquisition of
Liaoning Carbon Black. This 12,000 tonne Carbon Black plant will enhance our global presence
in this business. We are now the fourth largest Carbon Black player globally.
• And finally, coming to market capitalization: The market capitalization of the listed Group
companies in India increased 97.4% over the past year, far outpacing the rise of 62.7% in the
BSE Sensex, over the same period. This measure reflects more than just numbers; it provides a
sense of our standing in terms of governance, and the faith investors repose in us, and a
recognition – at long last - of our efforts at value creation.
The year that has just gone by has been I believe, a watershed year for our Group. Because, in this
year, we have seen the last of the major restructuring initiatives that we needed to undertake.
We have emerged stronger, fitter and a leader in many ways. And, now, we are at an inflection
point. We stand at the threshold of a new phase in the life of our
organisation. I do believe that the rest of the decade – from here on – “All these years, our team
will be marked by a distinctly different theme. The earlier accent – across the Group, has stretched
on restructuring and consolidation – will give way to a phase of
incessantly to make the
growth, not just incremental and normal growth, but accelerated
Aditya Birla Group a great place
growth. So, the dominant theme, from here on, will be aggressive
growth. to work in. In one sentence,
we have sharply focused on
Focus On People creating a meritocracy.
All these years, our team across the Group, has stretched incessantly For us, this meant putting in
to make the Aditya Birla Group a great place to work in. In one place systems to induct the
sentence, we have sharply focused on creating a meritocracy. right talent, for spotting and
For us, this meant putting in place systems to induct the right talent, tracking nascent talent, for
for spotting and tracking nascent talent, for creating leaders with a creating leaders with a cocktail
cocktail of skills, who have exposure to different functions, businesses of skills, who have exposure
and countries. to different functions,
businesses and countries.”
(6)
Working with Hay Consultants, we have carried out an extensive job analysis and evaluation exercise.
More than 4500 jobs have been evaluated and competencies mapped. Succession plans are in place
too. By and large, our objective is to make sure that the leadership-pipeline is always full of talented
individuals who are raring to shoulder responsibilities that our various businesses offer.
To foster a learning culture, at Gyanodaya, the Aditya Birla Institute of Management Learning, which
is now looked upon as a benchmark for training, more than 2130 executives were trained
in 86 diverse programmes for honing their competencies, both for their current and future roles. A
virtual campus has been launched through an e-learning portal. Over 3884 unique users, from top-
down and bottom-up have enrolled in these self-learning projects. More than 25,725 man-hours of
learning have been logged. Our intent is to provide unrivalled learning opportunities to our people
across levels.
“Today, our Group is anchored Today, our Group is anchored by an extraordinary force of 72,000
employees. More than 70 percent of these are under the age of 40
by an extraordinary force of
and over 12,000 of our people are drawn from 20 foreign nationalities.
72,000 employees. More than Even as the focus on managerial capability is becoming much sharper,
70 percent of these are under we are building capabilities not for an Indian manager who works
the age of 40 and over 12,000 internationally, but for a global manager, who happens
of our people are drawn from to be an Indian.
20 foreign nationalities. We are positioned in almost all our businesses at the cusp of a growth
Even as the focus on opportunity. Above all, our people have the passion that brings energy
into the organisation.
managerial capability is
becoming much sharper, we are Best regards,
building capabilities not for an
Yours sincerely,
Indian manager who works
internationally, but for a global
manager, who happens
Kumar Mangalam Birla
Date: 29th April, 2004
(7)
FINANCIAL HIGHLIGHTS
Units 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96 1994-95
PRODUCTION (Quantity)
Garments (Acquired w.e.f. 1st Jan., 00) ‘ 000 Nos. 7,263 5,610 6,602 5,164 2,445 – – – – –
Viscose Filament Rayon Yarn MT 16,060 15,873 12,253 15,496 12,621 14,685 14,273 13,803 13,615 13,217
Caustic Soda MT 39,305 34,875 23,976 30,620 27,419 17,085 13,883 400 – –
Chlorine MT 32,732 28,543 19,258 23,960 21,750 13,751 10,529 349 – –
Spun Yarns MT 14,421 13,781 12,717 13,490 14,113 16,275 15,721 12,549 11,211 12,732
Carbon Black (* Includes trial run production) MT 118,707* 112,563 93,634 89,739 95,828 63,968 42,104 52,209 51,056 43,140
Insulators (Demerged w.e.f. 1st Aug., 02) MT – 7,673 25,277 25,665 24,353 24,026 22,752 21,077 20,728 13,667
White Cement (Demerged w.e.f. 1st Sep., 98) ‘ 000 MT – – – – – 81 199 158 155 150
Cement (Demerged w.e.f. 1st Sep., 98) ‘ 000 MT – – – – – 1,045 3,075 2,934 2,362 1,680
SALES (Quantity)
Garments ‘ 000 Nos. 7,552 6,173 7,068 5,884 1,130 – – – – –
Viscose Filament Rayon Yarn MT 15,694 15,422 12,812 15,326 13,507 13,662 14,322 13,688 13,725 12,527
Caustic Soda MT 39,344 34,207 24,111 31,104 27,516 16,694 13,596 204 – –
Chlorine MT 32,994 28,256 19,290 23,834 21,890 13,784 10,547 159 – –
Spun Yarns MT 14,594 13,882 13,188 13,258 14,641 16,483 15,190 12,568 11,555 10,755
Carbon Black (# Includes trial run sales) MT 118,182# 114,232 94,504 91,735 94,656 61,243 42,118 50,647 51,618 25,935
Insulators (Domestic sales since 03-04) MT 6,813 7,596 25,184 25,691 23,701 23,656 23,088 21,179 20,504 13,969
White Cement ‘ 000 MT – – – – – 79 202 159 153 152
Cement ‘ 000 MT – – – – – 1,054 3,083 2,952 2,314 1,688
Gross Profit 243.00 218.47 146.28 147.25 130.09 206.06 318.73 318.60 274.49 203.27
Depreciation /Amortisation 81.52 71.74 73.54 73.08 72.50 90.70 87.22 69.83 56.74 37.83
Profit before Exceptional Items and Tax 161.48 146.73 72.74 74.17 57.59 115.36 231.51 248.77 217.75 165.44
Exceptional Items Gain/ (Loss) 19.95 (7.18) 1.33 – (298.82)^ – – – – –
(^ Due to exit from Sea Water Magnesia business)
Profit after Exceptional Items 181.43 139.55 74.07 74.17 (241.23) 115.36 231.51 248.77 217.75 165.44
Provision for Current Tax 44.25 9.00 5.00 5.65 – 9.32 19.00 34.00 33.00 32.80
Provision for Deferred Tax 5.90 25.22 25.61 – – – – – – –
Net Profit 131.28 105.33 43.46 68.52 (241.23) 106.04 212.51 214.77 184.75 132.64
Equity Shares Dividend (incl. Dividend tax) 27.02 25.33 19.76 19.79 6.65 29.96 37.11 33.40 28.09 22.15
Retained Profit 104.26 80.00 23.70 48.73 (247.88) 76.08 175.40 181.37 156.66 110.49
(8)
Units 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96 1994-95
BALANCE SHEET Rs. in Crores
Net Fixed Assets 737.47 684.08 761.76 794.38 842.80 1,054.63 1,644.03 1,490.62 1,257.23 883.48
Assest held for disposal (Sea water Magnesia) – – 13.52 19.58 43.07 – – – – –
Long term Strategic Investments 581.63 412.19 435.12 312.63 229.83 224.67 139.31 88.87 54.51 47.55
Other Investments 159.99 102.11 4.67 31.19 114.32 215.52 227.73 200.64 306.38 521.50
Total Investments 741.63 514.30 439.79 343.82 344.16 440.19 367.04 289.51 360.89 569.05
Net Current Assets 318.95 359.85 425.24 438.09 441.41 569.52 576.20 705.48 498.76 311.59
Misc. expenditure not wriitten off or adjusted 2.95 6.88 10.81 14.74 18.67 – – – – –
Capital Employed 1,801.00 1,565.11 1,651.12 1,610.61 1,690.11 2,064.34 2,587.27 2,485.61 2,116.88 1,764.12
Net Worth 1,267.68 1,170.79 1,090.79 1,142.67 1,093.94 1,413.28 1,577.51 1,401.91 1,219.99 1,057.76
Loan Fund
Secured fund 405.81 266.32 443.47 454.48 450.03 638.06 869.04 875.57 720.45 554.97
Unsecured fund 0.00 1.58 15.66 13.46 146.14 13.00 140.72 208.13 176.44 151.39
Total Loan Funds 405.81 267.90 459.13 467.94 596.17 651.06 1,009.76 1,083.70 896.89 706.36
Capital Employed 1,801.00 1,565.11 1,651.12 1,610.61 1,690.11 2,064.34 2,587.27 2,485.61 2,116.88 1,764.12
ROACE (PBIT/ Average Capital Employed) % 10.48 10.47 7.26 8.24 5.89 7.41 11.29 13.27 15.10 14.06
ROAE (Net Profit before exceptional items/
Average Net Worth) % 9.13 9.95 3.77 6.13 4.59 7.09 14.27 16.38 16.22 15.18
ROAE (Net Profit/ Average Net Worth) % 10.77 9.31 3.89 6.13 (19.24) 7.09 14.27 16.38 16.22 15.18
Current Ratio x 2.27 2.61 2.98 3.45 3.30 2.99 2.30 2.43 2.36 1.67
Debt Equity Ratio (Gross) x 0.32 0.23 0.42 0.41 0.54 0.46 0.64 0.77 0.74 0.67
Long Term Debt Equity Ratio x 0.13 0.17 0.26 0.28 0.29 0.38 0.55 0.69 0.62 0.53
Dividend per share Rs. 4.00 3.75 3.30 3.00 1.00 4.00 5.00 6.75 6.25 5.75
Dividend Payout (on Net Profit) % 20.58 24.05 45.47 28.88 (2.76) 28.25 17.46 15.55 15.20 16.70
EPS (Before exceptional items) Rs. 18.59 18.79 7.04 11.44 9.62 15.71 31.49 47.75 41.10 29.69
EPS Rs. 21.92 17.59 7.26 11.44 (40.29) 15.71 31.49 47.75 41.10 29.69
CEPS (Before deferred tax & exceptional items) Rs. 33.19 34.98 23.59 23.65 21.73 29.16 44.42 63.27 53.72 38.16
CEPS Rs. 36.52 33.78 23.82 23.65 (28.18) 29.16 44.42 63.27 53.72 38.16
Book Value per share Rs. 212 196 182 191 183 209 234 312 271 237
No. of Equity Shareholders Numbers 105,365 117,869 124,153 127,257 133,805 155,558 160,539 167,908 174,676 175,426
Closing Market Price Rs. 188.95 75.30 71.75 80.35 55.00 81.55 179.10 293.00 465.00 450.00
Market Capitalization Rs. in Crores 1,131 451 430 481 329 550 1,209 1,318 2,090 2,010
Price /EPS Ratio x 10.16 4.01 10.20 7.02 5.72 5.19 5.69 6.14 11.31 15.15
Price /Book Value Ratio x 0.89 0.39 0.39 0.42 0.30 0.39 0.77 0.94 1.71 1.90
Exports (FOB) Rs. in Crores 382.80 372.76 388.27 397.32 296.00 287.92 297.21 212.79 170.27 139.63
Capital Expenditure Rs. in Crores 105.47 33.02 38.90 23.74 185.26 88.73 244.31 313.70 437.11 404.79
(9)
SIGNIFICANT TRANSFORMATION IN RECENT YEARS
Carbon black
Foray into the BPO 2003 Brownfield Expansion
sector through the at Gummidipoondi
acquisition of
TransWorks
2002
Acquisition of PSI De-merger of
Data Systems from Insulators into a
Group Bull SA, JV with NGK
France of Japan
2001
Insurance Joint
Venture with
Sun Life of Canada
2000
Buy-back of
Equity Shares
1999
Acquisition of
Madura Garments
(10)
QUARTERLY HIGHLIGHTS - FY 2004
Rs. in Crores
PARTICULARS 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter FY 2004
Profit before Exceptional Items and Tax 30.50 48.05 42.42 40.51 161.48
Net Margin before exceptional items 6.36 7.89 6.94 6.95 7.07
EPS -Rs. (Before exceptional items)-Annualised 14.40 22.47 19.08 18.42 18.59
Net Sales
Operating Profit
500 426.44
411.76 80 69.24
396.62
70 62.69 61.06
400 339.02
60 50.56
Rs. in Crores
Rs. in Crores
300 50
40
200
30
100 20
10
0
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04 0
Q1 FY04 Q2 FY04 Q3 FY04 Q4 FY04
(11)
MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW
The Indian economy staged a smart recovery, after witnessing a sluggish growth phase during the last 3 years.
Buoyed by a good monsoon, the resultant robustness in the agricultural sector and strong industrial and services
sector activity, the economy clocked an impressive growth of 8% for the fiscal 2003-04 (FY04), against only 4%
in the previous year. This led to a revival in consumer sentiments and improved demand across businesses that
Your Company operates.
Regardless, each of your Company’s business had its own challenges to meet. Among these were: the impact of
a 50-day weavers strike against the introduction of Value Added Tax, a 11 days nationwide transporters strike,
heightened volatility in input prices, intensified competition and threat of cheaper imports from China in
various business segments.
Viewed against this backdrop, the overall performance of your Company has been satisfactory. Revenues have
grown by 9% from Rs. 1,442.4 Crores in the previous year to Rs. 1,573.8 Crores. Profit before taxes and
exceptional items is also 10% higher at Rs. 161.5 Crores.
STRATEGIC MOVE: ENTRY INTO BPO BUSINESS
India continues to dominate the Business Process Outsourcing market growing at over 50% annually, driven by
a low cost base, and an efficient English speaking manpower. The Indian ITeS/BPO sector is projected to grow
from $2 billion in 2002 to $12 billion in 2006.
Indian Rayon, an ambitious player in knowledge and services sectors, has got a running start into the fast-
growing BPO sector with the acquisition of a 100% stake in TransWorks in July 2003. The Company has
invested Rs. 68.8 Crores on acquisition. With this acquisition, Indian Rayon aspires to become a prominent
BPO player by providing superior, distinctive and dependable services to the customers and in the process
generate superior returns for the shareholders.
TransWorks is the world’s first Company to be certified to the COPC2000@ Standard (Release 3.2), (Customer
Operation Performance Center). TransWorks has built a strong, state of art delivery platform to serve Fortune
500 companies worldwide. Its service offerings include 24x7 outbound and inbound voice services, live chat and
web support, and transaction and document processing. TransWorks is performing well after coming in the fold
of Indian Rayon.
VALUE UNLOCKED FROM DIVESTMENT OF IGFL STAKE
In yet another value creating move, your Company has divested its stake in Indo Gulf Fertilizers Ltd. (IGFL).
These shares were sold for Rs. 29.4 Crores and have resulted in exceptional gain of Rs. 20 Crores.
SEGMENTAL ANALYSIS AND REVIEW
Revenue Mix
The VFY, Carbon Black, Garment and Textiles businesses contribute almost equally to the total revenues. Over
the previous year there is marginal change in revenue share.
Revenue Mix
FY 2004 FY 2003
Garments Garments
24% 23%
Carbon Carbon
Black Black
22% 23%
(12)
PBDIT Mix
VFY and Carbon Black are the largest contributors to operating profits as compared to equal share of the
businesses in revenues. Strategic initiatives in Garments business has paid off and its share has increased from
4% to 11%.
PBDIT Mix
FY 2004 FY 2003
Carbon Carbon
Garments
Black
11% Black Garments
30%
29% 4%
(13)
VFY realization fell by 6% due to pressure on domestic realization and larger share of exports volume. The
domestic market saw stock liquidation by all the major players and competition from cheaper imports in the
lower end of the market. Domestic realization was also impaired by lower export orders for VFY based apparels as
fabric sampling was reduced due to higher VFY prices last year.
Chemical business performed well with an 18% increase in revenues to Rs. 55.8 Crores, as realizations improved
and volumes rose. Electro Chemical Unit (ECU) realization moved up 3% from Rs. 16,854 per tonne to
Rs. 17,300 per tonne. The volume growth of 15% was aided by an increase of 5,000 TPA through de-bottlenecking
in the Caustic Soda capacity.
Operating profits fall contained by operational efficiency and initiatives
Operating profits at Rs. 99.4 Crores were lower by 15% over the previous year as there was a steep rise in raw
material prices. Wood pulp prices reached US $ 640/tonne and steam coal prices climbed up to Rs. 2,034/ tonne.
The lower VFY realization and higher raw material cost could only be partially offset by operational efficiency
and management initiatives. Operations were benefited by lower utilities cost including lower water cost due to
better rainfall. This was backed well by higher capacity utilisation of VFY and Caustic plant. However, ROCE is
still at the level of 29%.
Sector Outlook is stable with challenges
The long-term outlook is stable, as domestic demand is projected to grow with favourable fashion trends, new
applications of VFY and demand for VFY based products picking up. The export market has potential for high
quality and value added yarns.
However, in the short-term high inventory levels in the Industry has led to pricing pressures. The lowering of
the effective custom duty will increase competition from cheaper Chinese imports. Rising input prices will have
pressure on margins.
Indian Rayon’s VFY business has geared up to meet the challenges
Efforts are on to improve quality levels and to increase the share of value added yarns by developing new
products. Endeavours are on for developing new application and uses of VFY by the industry. Providing superior
customer service and earning premium with a strong RAY ONE brand in the market is a thrust area as well as it
will enable Indian Rayon to focus on the high-end market and thereby improve its realization.
The CSY capacity expansion is progressing and will be completed by Sept’2004. Furthermore, Capex initiatives
for Rs. 34 Crores have been taken to set up facilities for coloured yarns for exports market. To lower the power
cost, an increase in captive power plant capacity is being examined. A continuous emphasis on raising employee
productivity and improving operating efficiencies is another priority area.
(14)
The Division has reversed the de-growth and profit erosion in last year through strategic initiatives and
improved consumer sentiments
The Garments Division has gained from a better business environment and implementation of various strategic
initiatives to grow volumes, control costs and enhancement in overall profitability. Despite intensified competition
from domestic/new players, global brands and aggressive promotions by all the brands, the Division has maintained
market leadership in both the premium and popular segments.
By and large, consumer sentiments have improved with the improving economic environment. However, retail
off-take was below par in relation to other consumer products and services. The business has maintained market
dominance of power brands and has revived the Peter England as a mega brand. Product innovation, new
launches and gestating activities have facilitated in the process.
Revenues at Rs. 391.9 Crores have grown by 20% driven by higher volumes, larger share of value added
products, enhanced branded and contract exports.
The volume for the year is up by 20% to 74.3 lac pieces, through a slew of initiatives in each segment, while
significant improvement in merchandise and product development has remained the key driver.
Peter England in the popular segment has been revived with the turnaround strategy yielding positive results.
The brand has bounced back with a healthy growth of 23% in volumes, as the market has responded well to the
lowering of price point through product innovation.
The “Power Brands” of the Company viz. Louis Philippe, Van Heusen and Allen Solly maintained their market
leadership, with volume growth of 23% and healthy margins. Louis Philippe merchandise quality and price grid
has been taken up, to more aptly reflect the premium positioning.
The response to new launches viz. Suits, SF Jeans, knits and outwear jackets segment has been encouraging. The
accessories business has been further strengthened with the introduction of socks and leather products.
Contract exports have soared by 27.5% and branded exports by 10.2%. The exports contributed 17% to the
Divisions revenues.
Profitability jumps on the wings of strong performance and cost control efforts
Operating profits (before advertisements and royalty) have surged by 40% to Rs. 67.9 Crores from Rs. 48.4
Crores in the previous year due to higher volumes, better margins and cost effective measures in the area of
dormancy and discounting. Operating profit after advertisement costs and royalty has grown to Rs. 23.0 Crores
from Rs. 0.9 Crores.
Advertisement expenses have been kept to the last year’s level despite a 20% growth in revenue and as a
percentage of revenue are lower from 12% to 10%. Effective media buying and focused advertisement efforts
helped.
Royalty expenses have come down sharply at Rs. 5.5 Crores as against Rs. 8.2 Crores in the previous year as your
Company acquired trademark/brand rights along with technology from its wholly owned subsidiary, Aditya
Vikram Global Trading House Limited (‘AVGTHL’), Mauritius. Consequently no royalty/commission was
payable from October 2003. The buyout resulted in a payment of Rs. 42.5 Crores.
Besides control over costs, effective supply chain management through SAP further improved efficiency.
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Strong brand image ratified by various awards
The Division was adjudged “The Best Apparel Company of the Year” at the Images Fashion Award. Other
accolades received include “Allen Solly – Best Trouser Brand of the Year”, “Allen Solly Women’s Wear – the
Best Women’s Wear Brand of the Year” and “SF Jeans – the Best Brand Launch of the Year”.
Retail distribution network has been fortified. In an evolving retail environment it has become imperative to
manage the retail network, as consumers are demanding a complete shopping experience. Therefore high street
and mall culture has become prominent and there has been stiff competition for prime retail space there. The
exclusive retail space has been strengthened to 2 lac sq feet and our retail formats such as, Planet Fashion and
Trouser Town, as at the end of the year stood at 41 and 9 respectively. The Company has 9 Planet Fashions in
the Middle East as well.
The overall long-term outlook is positive with the growing preference for readymade garments and industry
efforts to grow the market. The branded apparel segment is slated to grow nationally aided by retail mall
expansion. Improving economic outlook has boosted consumer sentiments and augurs well for the industry in
the short term. However, competition has intensified with the entry of global brands / new players (In store
brands / regional brands). The removal of quota under WTO regime is both an opportunity for exports growth
and a threat from cheaper imports/ competition from international brands.
The business will focus on growing volume in both the popular and premium segment, through product innovation,
differentiated merchandise, better design and choice to consumers. Peter England is being reinforced as a mega
brand. A complete wardrobe solution is being offered under all the brands for faster growth. To maintain market
dominance, a lifestyle solution is planned under the Power Brands. Retail network is being strengthened for
better consumer reach, by further expansion from 2-lac sq. ft to 2.5 lac sq. ft. A tight control over dormancy,
discounting and advertisement costs should bolster the bottom line. The business is also examining global
sourcing alternatives and benefit from growing the exports, by capitalizing on present relationship with global
brands. To produce shirts and trousers, new facilities are being created through associate companies at a capex of
Rs. 20 Crores.
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Auto sector demand and enhanced capacity boosts overall performance
The Carbon Black business has clocked in an impressive performance boosted by strong demand from the auto
and tyre sector, which has maintained momentum by registering a growth of 16% year-on-year. However the
business environment remained challenging. The transporters strike impairing volumes during the first quarter,
the threat of cheaper imports from China and Russia, volatile CBFS prices and increasing sea freight, were some
of the issues the Division has had to contend with.
The Division’s production capacity stands raised from 1,10,000 TPA to 1,60,000 TPA. Through de-bottlenecking
it could add 10,000 TPA in September-2003. Subsequently, with the completion of the Brownfield expansion, it
could augment capacities by another 40,000 TPA. The completion of the Brownfield expansion in 207 days sets
a benchmark too.
Revenue grows with increase in Sales Volume
Revenues at Rs. 343.4 Crores as against Rs. 327.8 Crores in the previous year are in line with the increase in
sales volumes, which is 3% up to 1,18,182 tons driven by higher exports. The average realization was marginally
upto Rs. 29,054 per ton.
Production advanced by 5% to 118,707 tons supported by the extended capacity. However, capacity utilization
stood at 100%. With the stabilization of additional capacity, there is clearly the possibility of reaching higher
levels of production.
Operating Profits and ROCE
Operating profit at Rs. 79.6 Crores rose by 11% vis-à-vis Rs. 71.7 Crores in the previous year. Operating profit
per ton has grown by 7% from Rs. 6,277 to Rs. 6,735, with higher sales volume and higher revenue from energy
sales. The latter escalated by 27% to Rs.12.3 Crores, masking the impact of higher Carbon Black Feed Stock
(CBFS) cost.
As volatile oil prices have moved northward, CBFS followed the trend. Coupled with abnormally high sea
freight CBFS cost increased by 14%. As the Division procured CBFS proactively, it could limit its costs to a 5%
increase.
The completion of Brownfield expansion led to a 24% increase in Capital Employed in the business to Rs. 333
Crores. Thus ROCE lowered from 22% to 19%. The full benefit of the additional capacity will accrue from this
year onwards.
Demand outlook is positive, though challenges prevail
The overall outlook for the sector is positive as the Auto and Tyre industry continue their upward swing, spurred
by the robust economic growth.
The reduction in customs duty on Carbon Black from 25% to 20% has resulted in the duty differential between
Carbon Black and Carbon Black Feed Stock coming down to zero. This has impaired domestic realization as
import price parity is maintained in the market. Import of Carbon Black from Russia, Australia and CIS
countries is gaining ground in India.
Volatile CBFS prices and the prevailing high sea freight will continue to adversely impact the input cost.
Indian Rayon’s Carbon Black business shall strive to improve performance
Higher volumes will flow from the completion of the Brownfield expansion. This has resulted in 33% increase in
production capacity. Higher production will help capture the growing domestic demand while the balance will
be exported.
The benefit of economies of scale should yield operational efficiencies and a more competitive cost structure.
The locational advantage of the Chennai plant and export seeding efforts in the current year will also fuel the
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Division’s fortunes. Efforts are on to produce specialty products from the pilot plant, which will be subsequently
taken on a larger scale. The Company will remain focused on optimizing the input material cost proactively.
Your Company is amongst the lowest cost producer in India. The Company’s Birla Carbon brand is well
established in the market and facilitates in maintaining strong bondage with customers. In partnership with
customers, your Company is working on master batch project (for making un-vulcanized rubber sheets – a value
added product), which will add value to the customers and augment domestic off-take.
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FINANCIAL REVIEW AND ANALYSIS Rs. Crores
2003-04 2002-03 Change (%)
Net Sales 1,573.8 1,442.4 9%
Other Income 14.3 10.0 43%
Operating Profit (PBDIT) 257.8 240.1 7%
Net Interest 14.8 21.7 –32%
Depreciation 81.5 71.7 14%
Profit Before Tax and Exceptional Items 161.5 146.7 10%
Exceptional Items 20.0 (7.2)
Profit after Exceptional Items 181.4 139.5 30%
Provision for Current Tax 44.3 9.0 392%
Provision for Deferred Tax 5.9 25.2 –77%
Net Profit 131.3 105.3 25%
Revenues
Your Company has posted a revenue growth of 9% at Rs. 1,573.8 Crores vis-à-vis Rs. 1442.4 Crores in the
previous year, despite adverse business conditions. Garments, Carbon Black and Textiles have reported higher
revenues during the year, while VFY revenues have remained stable despite a lower realization.
Operating Profit
Operating profits have grown by 7% from Rs. 240.1 Crores in the previous year to Rs. 257.8 Crores in the
current year.
VFY is down by 15% with lower realization but continues to be the largest contributor, with a 38% share in the
Company’s total profitability. In Garments operating profits before royalty have more than trebled to Rs. 28.4
Crores with higher volumes, better realization and control over costs. Carbon Black is up by 11% due to higher
volumes and improvement in operating efficiencies. In Textiles, profitability was negated by higher input costs.
Insulators domestic marketing contributed 8% to profitability.
The Company has acquired brand rights from AVGTHL and royalty payment has been stopped from October
2003. This has curtailed Royalty expense to Rs. 5.5 Crores against Rs. 8.2 Crores in the previous year.
Interest
Interest expenses are lower by 45% to Rs. 24 Crores due to repayment of loans and better working capital
management. Your Company has leveraged the low interest rates prevailing in the markets.
On the other hand interest income has come down to Rs. 9.2 Crores against Rs. 22 Crores in previous year. In
the earlier year, an interest income of Rs. 9.6 Crores was received by way of Income tax refund and Rs. 5.1
Crores on Debentures allotted on the demerger of Insulators business. Besides, as compared to ICD, we preferred
to deploy funds in mutual funds considering the overall advantage.
Depreciation
Depreciation is higher by Rs. 9.8 Crores to Rs. 81.5 Crores consequent to a change in depreciation policy.
The Company has provided for an additional depreciation of Rs. 4.1 Crores, on trade marks/brands as required,
on Accounting Standard 26 becoming effective, and higher depreciation of Rs. 6.2 Crores on fast depreciating
items like computers, vehicles and furniture, due to change of policy. Had these changes not been made, the
profit (net of tax) for the year would have been up by Rs. 6.6 Crores.
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Exceptional Items Rs. Crores
2003-04 2002-03
Exceptional Items
– Gain on Sales of IGFL Shares 20.0 –
– Loss on Sales of MRPL Shares – (57.1)
– Gain on transfer of Insulator Business – 38.4
– Tax provision for no longer required – 11.5
Exceptional Items 20.0 (7.2)
Exceptional items during the year resulted in a gain of Rs. 20 Crores on the sale of IGFL shares.
Net Profit
Net profit for the current year is up 25% to Rs. 131.3 Crores as against Rs. 105.3 Crores in the previous year,
reflecting an overall superior performance.
The Company’s Earnings Per Share (EPS) is up by 25% to Rs. 21.9 while Cash Earning Per Share (CEPS) has
gone up by 8% from Rs. 33.8 to Rs. 36.5 in FY04.
Dividend
The Board has proposed a dividend of Rs. 4 per share for the year 2003-04. As, the Company will also pay a
dividend tax of 12.81%, the total dividend outgo will be Rs. 27 Crores in the current financial year.
SOURCES OF CASH
Cash flow from operations (Net of Tax) 203.2
Non-operating cash-flows (includes dividend income) 10.0
Decrease in Working Capital 11.5
Proceeds from Borrowings
Long Term Borrowings 126.0
Short Term Borrowings 123.4
TOTAL 474.1
USES OF CASH
Net Capital Expenditure 144.7
Repayment of Borrowings 111.1
Change in Long-Term Strategic Investments 169.5
Change in Other Investments 36.7
Net Interest 14.8
Dividend Paid (for the year 2002-2003) 25.3
Increase/(Decrease) in Cash and Cash Equivalents (28.0)
TOTAL 474.1
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Sources of Cash
Operating cash flow for the year is Rs. 203.2 Crores. VFY and Carbon Black remain the main contributors to the
operating cash flows.
Inventories are up by Rs. 31.5 Crores, as Garments inventory increased due to lower year-end dispatches and
Carbon Black inventory increased due to receipt of Carbon Black Feed Stock consignment.
Debtors are up by Rs. 35.2 Crores. Major additions were on account of Insulator domestic marketing.
As the long-term interest rates are falling, the Company has taken the advantage of cheaper funds. In January
2004, an ECB of US$10 million (Rs. 45.6 Crores) was taken to finance Carbon Black Expansion. This loan is
swapped to Rupee, and on a fully hedged basis, our cost is 5.2%. p.a.
Similarly, FCNRB loan of US$ 8 million (Rs. 36.6 Crores) to finance the acquisition of brand rights will cost us
4.2% p.a. for a fully swapped Rupee liability.
The Company has also raised Rs. 35 Crores loans under the Textile Upgradation Fund, which has interest
subsidy of 5%. The effective cost of borrowing works out to 1.6% p.a.
Further, a sum of Rs. 123.4 Crores was raised by the way of cheaper working capital borrowings from Banks, such
as packing credit foreign currency loans and buyers credit.
Uses of Cash
The Company invested a sum of Rs. 59.4 Crores mainly in setting up the Brownfield Carbon Black plant at
Gummidipoondi. During the year the Company acquired brand rights along with technology held by its wholly
owned subsidiary at a cost of Rs. 42.5 Crores. Normal capital expenditure in various Divisions of the Company
includes Rs. 14.7 Crores at Garments, Rs. 6.5 Crores at VFY and Rs. 7.7 Crores at Textiles.
Repayment of Borrowings
The Company has redeemed Debentures worth Rs. 106.6 Crores during the year. In addition Term Loans
amounting to Rs. 4.45 Crores were also repaid during the year.
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Changes in Long-term Strategic Investments
Rs. Crores
RISK MANAGEMENT
The Company is exposed to risks from market fluctuations of foreign exchange, interest rate and commodity
prices.
FOREIGN EXCHANGE RISK
The Company’s policy is to systematically hedge its long-term foreign exchange risk as well as short-term
exposures. Long-term foreign exchange liabilities are fully hedged. The Company has reported aggregate exports
of Rs. 382.8 Crores and imports of Rs. 467.8 Crores in FY 2004, including Rs. 74.8 Crores of Capital Goods
imports.
INTEREST RATE RISK
The Company has a mixed basket of fixed and floating rate borrowings both in rupees and US Dollar. The
Company is continuously monitoring its interest rate exposures and wherever required uses derivative instruments
to minimize interest rate risk and interest cost. In view of continuous risk mitigating strategy adopted by the
Company, it does not perceive interest rate risk as having any material impact on the profitability of the
Company.
COMMODITY PRICE RISK
The Company is exposed to the risk of price fluctuation on raw materials as well as finished goods in all its
products. These risks are not significant considering the inventory levels and normal correlation in the price of
raw materials and finished goods.
RISK ELEMENT IN INDIVIDUAL BUSINESSES
Apart from the risk on account of interest rate, foreign exchange and regulatory changes, various businesses of
the Company are exposed to certain operating business risks, which is mitigated by regular monitoring and
corrective actions.
INTERNAL CONTROL SYSTEM
The Company has appropriate internal control systems for business processes across various Profit Centres, with
regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations, etc. The
Internal control system is supplemented by extensive audits conducted by the Corporate Audit Cell.
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Clearly defined roles and responsibilities down the line for all managerial positions have been institutionalised.
Regular internal audits and checks ensure that responsibilities are executed effectively. The Audit Committee of
the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests
improvements for strengthening them.
The Management Information System (MIS) is the backbone of the Company’s control mechanism. All operating
parameters are monitored and controlled. Any material change in the business outlook is reported to the Board.
Material deviations from the annual planning and budgeting if any are reported on a quarterly basis to the Board.
An effective budgetary control on all capital expenditure ensures that actual spending is in line with the capital
budget.
The Company is institutionalising “value based management system” wherein the renewed focus has been given
on value creation through the EVA concept. EVA focuses on the optimisation of capital at all levels in the
Company, to reflect the value creation.
HUMAN RESOURCE MANAGEMENT
The Company presently has 7,625 employees on its rolls. These are basically its human resource assets and are
integral to the Company’s ongoing successes. They have played a significant role and enable the Company to
deliver superior performance year after year. The Company’s Human Resource processes have been covered in
depth in the Director’s Report.
SUBSIDIARY AND JOINT VENTURE COMPANIES
The Company has invested Rs. 385.2 Crores in subsidiary companies and Rs. 109.3 Crores in joint venture
companies.
Subsidiary investments include: Rs. 216.1 Crores in Birla Sun Life Insurance Company Ltd, Rs. 100.3 Crores in
PSI Data Systems Ltd. and Rs. 68.8 Crores in TransWorks Information Services Ltd.
Joint Venture investments include: Rs. 12.5 Crores in BIRLA NGK Insulators Pvt. Ltd. and Rs. 96.8 Crores in
IDEA Cellular Limited.
SUBSIDIARY COMPANIES
Birla Sun Life Insurance Company Limited
Birla Sun Life Insurance (BSLI) has maintained its leadership position and is amongst the top 3 life insurance
players including LIC, on annualized premium basis. It has surpassed other private players in the group fund
business. The Company has pioneered the unit-linked segment and holds a commendable position.
The Company has completed its third year on a highly successful note. Birla Sun Life Insurance Company has
recorded a jump of 274% in Premium Income to Rs. 537.5 Crores and the Annualized Premium has grown by
253% to Rs. 462.6 Crores. The business continues to retain the number two position amongst private life
insurance Companies. The Company is a front-runner in group insurance business and unit-linked products.
The Company has also strengthened its reach to 33 branches covering 27 cities with 10,274 agents and 89
corporate agents. It has spawned innovative distribution strategies like alternate channels and bancassurance and
prolific products like the unit linked products in India. The Company has been the first one to offer insurance
policies on the Internet.
The Company has successfully launched 2 new products - ‘Classic Life’ with unique features of Top Ups and
Loyalty Additions and ‘Critical Illness Plus’ rider covering 17 different illnesses. It has also repackaged two
existing products – the Flexi Product line and the ‘My Child’ packaged product, giving various combinations
within the standard product.
BSLI has increased its share capital from Rs. 180 Crores in the previous year to Rs. 290 Crores during the year.
Accordingly Indian Rayon’s contribution has gone up by Rs. 81.4 Crores to Rs. 216.1 Crores and it now holds
74% of equity.
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The insurance business is poised to grow. The premium market in India is about Rs. 20,000 Crores and has
grown by 160% over the last year. Life Insurance Corporation has an 84% market share. The balance is
distributed amongst 12 private players. The Company has a share of 1.75% of the total market. BSLI aims to
increase its share to 3% by FY 05-06 and continue to be amongst the leading players in a growing market.
PSI Data Systems Limited achieved success in its strategic initiatives and moved towards profitability while
building a strong growth platform for the future. The planned exit from non-core areas, strengthening delivery
capabilities in chosen areas of business solutions, banking and insurance, developing relationships in high
potential markets and tight control over costs, led to the transformation. The renewed strength in the IT sector
also augurs well for the future.
Despite losses and downsizing, PSI rallied to fight back and carved a credible story to win projects. It was
successfully assessed for SEI CMM level 5 for its Bangalore center placing PSI amongst a select band of high
maturity organizations worldwide. In yet another strategic move, PSI has signed an MOU with the Steria group
of France that will help PSI build business in Western Europe.
The operations of the Company witnessed a gradual, yet sustained improvement throughout the year with the
order book size growing over 26%. It bagged 21 new clients and several prestigious orders with 3 orders valued
over $ 1 million. Reflecting this transformation, the consolidated (PSI Data Systems Limited and its subsidiary
Birla Technologies Limited) revenues have grown by 21% from Rs. 71.3 Crores to Rs. 86 Crores during the year.
Operating losses have been curtailed by 65% from Rs. 19.2 Crores to Rs. 6.7 Crores. More significantly the
business turned cash profitable during the month of March 2004, which is another indication of the transformation.
The overall outlook for the business is positive with the Indian IT industry regaining momentum on the back of
global recovery, and off-shoring becoming mainstream. PSI’s initiatives of the last year are yielding results. The
Company’s value proposition of top class delivery capabilities coupled with exceptional client focus, is winning
business from new and old clients. With the continuous sharpening of capabilities, the Company is poised to
deliver a superior and sustained financial performance in the coming years.
TransWorks performance has been impressive, during the year. Revenues have jumped 152% from Rs. 27.5
Crores to Rs. 69.4 Crores and with positive EBDITA of Rs. 2.6 Crores. However after providing the depreciation
on facilities, the net loss was Rs. 4.1 Crores (Rs. 10.2 Crores)
• Operations have been scaled up from about 750-customer interaction agents to about 1,370 agents - a
growth of over 80%, taking the total staff strength to about 2,000 people.
• A third facility of over 800 seats has become operational in Bangalore, which will takes the total capacity to
1,600 seats.
• New clients, including three Fortune 500 clients, have been added.
The ITeS/BPO sector is the fastest growing sector in India. TransWorks is committed to increase its share in the
industry. The value proposition of TransWorks is total commitment to its client’s business through:
a) Adherence to quality, stringent data security norms and best of breed operations processes
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c) An experienced management team and a highly skilled employee pool
d) Increase in non-voice services to improve asset utilization
e) Focus on high value added segments
TransWorks is well positioned to maintain the profitable growth momentum. The Company will continue to
focus on meeting customer’s expectations with execution excellence. The vision of TransWorks is to be a
globally reputed, high quality provider of call center/BPO services and to add true value to clients across
multiple service lines through superior service innovation and distinctive delivery.
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CONCLUSION
In the backdrop of various initiatives taken and strong performance during the year, Indian Rayon is on the path
to superior performance. The Company has strategically moved into various growth businesses and these are
backed by traditional businesses that generate strong cash flows to drive growth. The following chart indicates
the rising share of new businesses in aggregate revenues:
3,000 45%
2,500
31%
2,000
27%
23%
1,500
5%
1,000
500
0
FY00 FY01 FY02 FY03 FY04
Traditional Business Garments Insurance Software/BPO New business as % of total sales
Your Company is expected to improve performance across businesses. Various growth plans are in place:
• Garments will maintain profitable growth through market leadership, strong growth in volumes and retail
expansion.
• BPO segment will benefit from expanded capacity, quality delivery and customer building.
• Software is geared to enhance performance focusing on client building and entering new geographies.
• Insurance business will be on a high growth path backed by increased reach, better service and returns to
customers.
These growth initiatives are on a platform of traditional business that will provide strong and stable cash flow:
• VFY will gain from superior quality and increasing share of value added products.
• Carbon black will grow on the back of domestic demand and enhanced capacities.
• Textiles will ride on the retailing of linen and improving margins from the worsted segment.
• Insulators will benefit from improving yield, quality and enhanced capacity.
The overall outlook for the Company’s future is bright.
CAUTIONARY STATEMENT
Statements in this “Management’s Discussion and Analysis” describing the Company’s objectives, projections, estimates, expectations
or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results
could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations
include global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing
in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the
countries within which the Company conducts business and other factors such as litigation and labour negotiations.
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CORPORATE GOVERNANCE REPORT
Corporate Governance, in our view, relates to systems and processes that direct corporate resources and
management strategies towards maximising value for stakeholders while ensuring accountability, probity and
openness in the conduct of business within the acceptable legal and ethical framework. A good governance
process should thus provide sufficient transparency over corporate policies, strategies and the decision making
process while strengthening internal control systems and building relationship with stakeholders, including
employees and shareholders. The adherence to good governance practices in true spirit, not just in letter, will
help align interests of stakeholders, enhance investor confidence and provide access to cheaper capital, in turn
facilitating the creation of superior value on a sustainable basis.
The Aditya Birla Group is committed to the adoption of best governance practices and their adherence in true
spirit across companies at all times. Our governance practices are a product of self desire to change and its
improvement is a continuous process, with no upper bound. Our governance philosophy rests on five basic tenets
viz., Protection of rights and interests of shareholders, Equality in treatment of all our shareholders, Disclosure of
timely and accurate information, Strategic guidance and effective monitoring by the Board and the Board
accountability to company and its shareholders. Above all, our governance practices reflect the true spirit of the
trusteeship that is deeply ingrained in the value system and reflected in the strategic thought process, at all
times.
It is in this context, Indian Rayon And Industries Limited, a flagship of the Aditya Birla Group, has been
striving for excellence through adoption of best governance and disclosure practices over the last few years. The
Company has been making significant disclosures on the Board composition and functioning, management
thoughts on business performance and outlook as well as the significant risks and protective measures taken by
the Company. During the year under review, the Company has further strengthened the quality of disclosures in
this Annual Report while continuing its practice of benchmarking practices with the recommendations of the
SEBI Committee on Corporate Governance, highlighted in this report.
Compliance with the SEBI Code on Corporate Governance
1. The Board should have an optimum combination of Executive and Non-executive Directors and at least
50% of the Board should comprise of Non-executive Directors. Further, at least one-third of the Board
should comprise of independent Directors where Chairman is non-executive and at least half of the Board
should be independent in case of an executive Chairman.
Your Company’s Board comprises fully of Non-executive Directors with considerable experience in their respective
fields. More than 50% of the Board comprises of Independent Directors, including a representative of Life Insurance
Corporation of India, an Investor.
Director Executive / No.of Outside No. of Outside Committee
Non-Executive / Directorships held Positions Held
Independent Public Private Member Chairman/
Chairperson
Mr. Kumar Mangalam Birla Non-Executive 11 5 1 -
Mrs. Rajashree Birla Non-Executive 5 6 - -
Mr. H. J. Vaidya Independent 1 - - -
Mr. B. L. Shah Non-Executive 4 1 1 -
Mr. P. Murari Independent 10 - 6 1
Mr. B. R. Gupta Independent 5 1 4 1
Ms. Tarjani Vakil Independent 2 1 1 1
Mr. Vikram Rao Non-Executive1 1 - - -
2
Mr. H. V. Lodha Independent 11 - 5 4
3
Mr. S. C. Bhargava Independent 1 - - -
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1 Employee of another company of the Aditya Birla Group.
2 Joined the Board on 2nd August, 2003.
3 Joined the Board on 29th April, 2004 as a representative of Life Insurance Corporation of India, an Investor in
place of Mr. B. R. Gupta.
Note :
Independent director, as defined in Clause 49 of the Listing Agreement, is one, who apart from receiving Director’s
remuneration, does not have any other material pecuniary relationship or transactions with the Company, its
promoters, management or its subsidiaries, which in judgement of the Board may affect independence of judgement of
the Director.
No Director is related to other Directors on the Board, except that Mr. Kumar Mangalam Birla is Son of
Mrs. Rajashree Birla.
2. The Board should set up a committee under the chairmanship of a Non-executive/Independent Director to
specifically look into shareholder issues including share transfer and redressing of shareholder complaints.
Your Company has an “Investor Relations and Finance Committee” at the Board level to inter alia look into issues
relating to Share / Debenture holders, including transfer and transmission of Shares/Debentures, issue of duplicate
Share/Debenture Certificates, non-receipt of dividend, Annual Report, etc. The Committee meets inter alia to ratify
share transfers and approve transmission of shares and issue duplicate Share/Debenture certificates from time to time.
The composition of the committee is as under:
• Mr. P.Murari, Chairman
• Mr. H.J.Vaidya, Member
• Mr. B.L.Shah, Member
During the year under review, the Committee met four times to deliberate on various matters and details of
attendance by the members of the Committee are as follows:
Held Attended
Mr. P. Murari 4 3
Mr. H. J. Vaidya 4 4
Mr. B. L. Shah 4 4
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4. The Corporate Governance Section of the Annual Report should make disclosures on remuneration paid
to directors in all forms including salary, benefits, bonuses, stock options, pension and other fixed as well
as performance linked incentives paid to the Directors.
During the year no remuneration has been paid to the Board of Directors except sitting fees and reimbursement of
expenses for attending the Board / Committee meetings except as stated hereunder. The details of payment of sitting
fees made to Directors are highlighted in Para 5 below.
The Board of Directors has recommended to the shareholders of the Company, for consideration at the next Annual
General Meeting, payment of commission totaling to Rs.75 lacs for the financial year 2003-04 to Non-executive
Directors with a view to compensate them suitably for the time spent, responsibilities undertaken and contributions
made by them.
5. The Board meetings should be held at least four times in a year, with a maximum time gap of four months
between any two meetings and all information recommended by the SEBI Committee should be placed at
the Board.
The Board of the Company met 5 times during the year as detailed below. The Agenda papers alongwith clarificatory
notes were circulated well in advance of each meeting. The Company placed before the Board, the working of Units,
statements and information pursuant to Corporate Governance Practices, as required under Clause-49 of the Listing
Agreement with the Stock Exchanges.
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6. As a part of disclosures related to management, in addition to the Directors’ Report, Management’s Discussion
and Analysis should form part of the Annual Report.
Management’s Discussion and Analysis Report forms part of this Annual Report and is in accordance with the
requirements laid out in Clause 49 of the Listing Agreement with Stock Exchanges.
7. All company related information like quarterly results, presentation made by companies to analysts may be
put on the Company’s web-site or may be sent in such a form so as to enable the stock exchange on which
the company is listed to put it on its own web-site.
All Company related information like quarterly results, presentations meant for investors and press releases are made
available on the websites of the Company (www.indianrayon.com) as well as the Aditya Birla Group
(www.adityabirla.com).
Presentations are made by the Company to the Institutional Investors and Equity Analysts on a half yearly basis.
The Company is also furnishing financial results and shareholding pattern on SEBI website, www.sebiedifar.nic.in.
8. There should be a separate section on Corporate Governance in the Annual Report, with details on the
level of compliance by the Company. Non-compliance of any mandatory recommendation with reasons
thereof and the extent to which the non-mandatory recommendations have been adopted should be specifically
highlighted.
A separate section on Corporate Governance forms part of the Annual Report of Indian Rayon. Certificate from the
Statutory Auditors confirming compliance with the conditions of Corporate Governance as stipulated in Clause 49 of
the listing agreement with the Stock Exchanges in India forms part of this Annual Report.
9. The Non-Executive Chairman of the Company should be entitled to maintain a office at the Company’s
expense and also allowed reimbursement of expenses incurred in performance of his duties. This will enable
him to discharge the responsibilities effectively (This is a non-mandatory recommendation).
The Corporate Office of the Company supports the Chairman in discharging the responsibilities. Besides Corporate
Office, the Chairman does not have a separate office in the Company.
10. A qualified and an independent “Audit Committee” should be set up at the Board level as it would go a long
way in enhancing credibility of the financial disclosures and promoting transparency.
Your Company has an Audit Committee at the Board level with the powers and the role that are in accordance with
Clause 49 of the Listing Agreement. The Committee acts as a link between the management, the statutory and
internal auditors and the Board of Directors and oversees the financial reporting process. The Audit Committee
comprises of three Independent/Non-Executive Directors as per details mentioned hereunder.
• Ms. Tarjani Vakil, Chairperson
• Mr. P. Murari, Member
• Mr. B.R. Gupta, Member
The Audit Committee met 6 times during the year to deliberate on various matters. Details of attendance of meetings
of the Audit Committee of the Board are as follows:
Name of Director No. of Meetings
Held Attended
Ms. Tarjani Vakil 6 6
Mr. P.Murari 6 5
Mr. B.R.Gupta 6 6
Mr. Adesh Gupta, CFO is a permanent invitee and the Statutory and Internal Auditors of the Company are also
invited to the Audit Committee Meetings. Mr. Devendra Bhandari, Company Secretary, acts as the Secretary of the
Committee.
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11. The Board should set up a “Remuneration Committee” to determine on their behalf and on behalf of the
shareholders with agreed terms of reference, the company’s policy on specific remuneration packages for
executive directors including pension rights and any compensation payment.
There being no Executive and/or Whole-time Director on the Board of the Company, constitution of a separate
Remuneration Committee at the Board level is not required.
12. No Director should be a member in more than 10 committees or act as chairman of more than five
committees across all companies in which he/she is a Director. Furthermore, it should be a mandatory
requirement for every Director to inform the company about the committee positions he occupies in other
companies and changes on an annual basis.
None of the Directors of your Company is a member of more than 10 committees or Chairman of more than 5
committees across all companies in which he/she is a Director. The details of outside committee positions held by them
are set out in para 1 of this Report.
13. The Company should provide a brief resume, expertise in specific functional areas and names of companies,
in which he/she holds Directorship and the membership of Committees of the Board, while appointing a
new Director or re-appointing an existing Director. These should form part of notice to shareholders.
Relevant details form part of the explanatory statement of the Notice of the Annual General Meeting.
14. Disclosures to be made to the Board by the management relating to all material, financial and commercial
transactions, where they have personal interest, that may have a potential conflict with the interest of the
company at large. These include dealing in company shares, commercial dealings with bodies, which have
shareholding of management and their relatives, etc.
No transaction of material nature has been entered into by the Company with the Promoters, Directors or the
Management, their subsidiaries or relatives etc., that may have a potential conflict with interests of the Company.
15. The half-yearly declaration of financial performance including summary of the significant events in last six-
months, should be sent to each household of shareholders.
The Company follows the practice of sending “Performance Update” consisting of financial and operational performance
to the shareholders after announcement of half yearly results.
16. The financial institutions should, under normal circumstances, have no direct role in the decision making of
the Board of the Company. They should not have nominees on the Board, merely by virtue of their
financial exposure in the company. There is however a ground for the term lending financial institutions to
have nominees on the Boards of the borrower companies, to protect their interests as creditors. In such
cases, the nominee directors should take an active interest in the activities of the Board and assume equal
responsibility, as any other director on the Board.
Not a Company level issue. However, at present the Board has one Director, Mr. S. C. Bhargava, who is
representing Life Insurance Corporation of India – an Investor.
Other disclosures recommended by the SEBI Committee
1. Details of Annual General Meetings
1.1 Location and time, where last General Meetings held:
Year AGM Location Date Time
st
2002-2003 AGM Regd. Office, Veraval, Gujarat 1 August, 2003 12.00 noon
2002-2003 CCM* Regd. Office, Veraval, Gujarat 28th October, 2002 11.00 a.m.
th
2001-2002 AGM Regd. Office, Veraval, Gujarat 27 July, 2002 12.00 noon
2000-2001 AGM Regd. Office, Veraval, Gujarat 23rd June, 2001 11.00 a.m.
* Court Convened Meeting for approval of the demerger of Insulator Business.
1.2 Whether special resolutions were put through postal ballot last year? No.
1.3 Are votes proposed to be conducted through postal ballot this year? Will be done as per Law.
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2. Disclosures on materially significant related party transactions of material nature, with its Promoters, the
Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the
interests of company at large.
There is no material transaction with related party, which requires a separate disclosure. Schedule 19 of the Annual
Accounts as at 31st March, 2004 contains the list of related party relationships and the transactions as required by the
Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India.
3. Details of non-compliance by the Company, penalties, strictures imposed on the company by Stock Exchange
or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.
None
4. Means of communication
4.1 Half-yearly report sent to each household of shareholders Yes
4.2 Quarterly results
4.2.1 Which newspapers normally published in
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SOCIAL REPORT
BEYOND BUSINESS - REACHING OUT TO COMMUNITIES : MAKING A DIFFERENCE
Wherever one looks, challenges abound. Liberalisation, globalisation, the technological leap and geopolitical
issues have had a phenomenal impact on people, regardless of geographies. They have an upside and a downside
as well. While these have by and large resulted in bringing prosperity to a segment, many sections of society
have felt its unsettling effect too.
There are many nagging questions. On the one hand, we see reportage on the economy’s abundance. On the
other hand, we are acutely aware of the deep chasm between the urban and the rural societies. Within the urban
populace too – the plight of the weaker sections of society, stares us in the eye. India ranks low in any human
development or quality of life index.
The Government is trying its best to battle against these major socio-economic paradoxes, and is committed to
actualize the goal of human development. However, the Government can in no way single handedly over come
the various issues that we face in this regard.
For over 50 years now, we in the Aditya Birla Group, have been working to improve the quality of life of people
in under-privileged communities, largely within the periphery of our plants.
Our Social Projects are carried out under the aegis of the “Aditya Birla Centre for Community Initiatives and
Rural Development”, which is spearheaded by Mrs. Rajashree Birla, your Director. The Centre is the apex body
that sets the strategic direction for the Group’s community work and ensures performance management as well.
At Indian Rayon, the focus for our community investments is on healthcare, inclusive of mother and child care;
education, self-reliance through the engine of sustainable livelihood, also encompassing agricultural and water-
shed development activities and women empowerment process, infrastructure support and espousing social
causes.
Healthcare :
• Conducted over 200 medical camps. 12,099 villagers treated for various ailments.
• 3076 villagers were examined for eye ailments at 115 Eye Camps. 681 senior citizens were provided with
intra ocular lens.
• Artificial limbs helped 486 physically challenged to gain mobility
• 329 patients treated for skin ailments.
• 3 blood group testing camps held in which 1092 patients were tested.
• AIDS Awareness Camps built greater awareness among 7015 people
• 1148 people examined at Cardiology Camps where 110 patients were treated.
• Homeopathy centres at Rishra and Barasat serve over 4000 of the underprivileged community.
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Education :
• Merit Scholarships earned by 99 students
• One formal school, Ankur Vidyalaya, provides basic education to 72 students.
• Support to Kamakhya Balak Ashram which shelters 43 orphan children and runs a school for 650 students.
• Infrastructure support given to schools, benefiting 2540 students.
Sustainable livelihood :
• Agriculture – Through farm-based programmes, farmer training, nursery raising, setting up of vermi-compost
units, seed multiplication and intercropping, over 715 farmers prosper.
• Immunized 6119 animals in vetinerary camps.
• Water harvesting structures, such as hand-pumps installation, erecting check-dams, ponds, roof-water
harvesting and digging wells support 3416 people.
• Crop loans to 689 farmers will go a long way to yield a good harvest.
Social Welfare :
• Mass marriages organized, aiding 27 couples.
• Solar cookers provided to 18 families.
Infrastructure :
• 1100 people provided shelter.
• Safe drinking water extended to two villages
Our programmes are measurable, sustainable and replicable. We work very closely with our partners – the
communities, the District authorities, Panchayets and selectively with NGOs. Together we try and make a
difference to the weaker sections of society and vulnerable groups. Our Board and all of our employees are fully
committed to our Corporate Social Responsibility programmes. We believe that in contributing significantly to
the quality of life of an under-served people who are outside of our business, there is much value.
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● Educate a girl and you have educated a family - Rishra, Kolkatta
● A Veterinary Camp at Veraval, Gujarat
● A couple at the dowryless marriage at Veraval
● Pulse polio immunization at Barasat, Kolkatta
● Patients being treated at our homeopathy center at Rishra
● A Balwadi in progress in Halol, Gujarat
● Awakening the love for learning among village women at Veraval
● A women self-help group in action, Veraval
● A mother and child care initiative at Rishra
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ENVIRONMENT REPORT
Consistent with our Group’s commitment to sustainable
development, your Company has a well-drawn out
environmental management strategy in place.
Environment concerns are textured into all
manufacturing processes and business decisions. We
subscribe to the United Nations Global Compact.
All of your Company’s Plants – the Rayon Plant at
Veraval, the Insulator Plants at Halol and Rishra (now
part of our joint venture with NGK Insulators Ltd.,
Japan), Jaya Shree Textiles also at Rishra and the Carbon
Black Plants at Renukoot and Gummidipoondi are all
ISO 1400 EMS Certified. Additionally, Jaya Shree
Insulators’ Environment Management Systems are
attested by the American Bureau of Shipping, a renowned
certification agency, based in the USA.
We track our performance against detailed environmental
metrics, engaging professional environmental Audit
consultants. The Central Salt and Marine Chemical
Institute (Bhavnagar), which is a Gujarat Pollution
Control Board recognized Institute, GITCO –
Ahmedabad, KPMG and the Bureau of Indian Standards
conduct periodic audits at our Units. Alongside, trained
environmental systems auditors also run regular checks.
Many accolades have been conferred on your Company
for its singular contribution to environment conservation.
A selective list is given below :
Our Textiles Division has been the recipient of :
• The 1st Prize in the Textile Category – Energy
Conservation Award 2003, from the Bureau of Energy
Efficiency, Ministry of Power, Government of India.
• The Energy Conservation Award 2003 (Small Project
Category) from PCRA, Ministry of Oil & Natural
Gas, Government of India.
• The Bronze Award for Environment Management
from The Greentech Foundation.
Your Company’s Viscose Filament Yarn Plant was
named :
• The Best Plant and awarded the 1 st Prize for lowest
cell power consumption in chlor alkali sector from
the Bureau of Energy.
• The Greentech Silver Award Winner for
Environmental excellence pursued by the Caustic
Soda Plant at Veraval.
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We have state-of-the-art automated industrial effluent treatment plants across our manufacturing units. The
treated effluent, including treated sewage generated by the plants, is recycled for use in gardening and for
irrigation. New ways to ensure energy conservation and productively use waste generated have been devised in
the recent past.
At Veraval, we generate wealth from waste. For example, scrubbing H2S with caustic soda has helped us produce
liquid sodium sulphide, which we market. Likewise, the waste chlorine gas emanating from the caustic soda
manufacturing process is converted into sodium hypo chlorite which is then used as a bleaching agent in rayon
manufacturing. For producing caustic flakes, we have recoursed to hydrogen gas, which is one of the cleanest
fuels, for the flaker furnace.
At Jaya Shree Textiles in Rishra, we have upgraded the Effluent Treatment Plant. Consequently, methane rich
biogas will be generated from wool scouring effluent through Upflow Anaerobic Sludge Blanket (UASB)
technology. This biogas will be used to generate power. This is the first of its kind of waste to energy conservation
project in the Indian Wool Industry.
Our Insulator and Carbon Black Plants barely produce effluents. At the Insulator Plant, more than adequate
measures have been taken to abate noise pollution. The minimal effluent waste generated is reused for low
tension insulators and unused waste is sold to the cottage industries as scrap.
At our Carbon Black Plants in Renukoot and Gummidipoondi, innovative vent scrubbers seal the venting of
carbon black. Excess steam generated through gases is converted into power. Most of the power so generated is
used for our captive consumption and the additional power is wheeled to the State Grid System.
Given the water problems faced in many parts of the country, where our plants are located, we have initiated
unique rainwater harvesting projects. This is a boon not only for our plants but for the local populace as well.
Our Board and all of our employees are fully committed to environmental conservation. An attachment to the
natural life of the planet remains fixed in our system. Tens of thousands of trees which form an awesome ring
round our plants are a testimony to this attachment.
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SHAREHOLDER INFORMATION
1. Annual General Meeting
Date and Time : 30th June, 2004 at 12.00 noon 12:00
Venue : Registered Office
Junagadh – Veraval Road
Veraval 362 266
Gujarat, India.
2. Financial Calendar
Financial reporting for the quarter ending June 30, 2004 : End July, 2004
Financial reporting for the half year ending September 30, 2004: End October, 2004
Financial reporting for the quarter ending December 31, 2004 : End January, 2005
Financial reporting for the year ending March 31, 2005 : End April, 2005
Annual General Meeting for the year ended March 31, 2005 : June/July, 2005
3. Dates of Book Closure : 19th June, 2004 to 30th June, 2004
(both days inclusive)
Note: Listing Fees for the year 2004-05 has been paid to all the Stock Exchanges, except for Calcutta Stock
Exchange. The Company had applied for delisting from The Stock Exchange - Ahmedabad (ASE), The
Delhi Stock Exchange Association Ltd. (DSE) and The Calcutta Stock Exchange Association Ltd. (CSE).
Though, ASE & DSE have already approved the delisting, CSE is yet to approve the delisting though all
necessary requirements have been complied with by the Company. In view of this, listing fees for 2004-05
has not been paid to CSE. Listing fees for GDRs pertaining to the calendar year 2004 has been paid to
Societie De la Bourse de Luxembourg.
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6 b. Overseas Depository for GDRs Citibank N.A
Depository Receipts
111, Wall Street, 21st Floor
NEW YORK, NY – 10043
Phone: 212/657-8782
Fax: 212/825-5398
7. Stock Code
Reuters Bloomberg
The Stock Exchange, Mumbai IRYN.BO INRY IN
National Stock Exchange of
India Limited IRYN.NS NINRY IN
Global Depository Receipts (GDRs) IRYNq.L sIRDS LI
Apr-03 85.0 74.5 79.7 27,741 83.4 75.3 79.6 83,637 1.6 1.6 1.6
May-03 98.5 78.8 97.9 68,882 98.5 78.8 96.2 196,442 2.0 1.6 2.0
Jun-03 136.0 91.8 129.0 183,410 136.9 97.5 130.7 362,389 2.4 1.4 2.4
Jul-03 168.4 128.0 147.6 234,508 168.4 128.1 149.6 416,238 3.4 3.0 3.3
Aug-03 198.8 148.3 181.2 250,332 199.0 148.3 181.7 356,586 4.1 3.8 4.0
Sep-03 191.3 170.0 179.9 79,112 191.5 170.0 180.5 133,642 3.9 3.7 3.9
Oct-03 219.5 179.4 194.6 124,779 219.0 171.0 194.5 216,496 4.4 4.2 4.2
Nov-03 240.4 196.0 233.4 108,735 241.5 193.6 233.3 180,312 5.0 4.3 4.8
Dec-03 279.9 228.8 270.0 74,295 278.7 227.5 269.9 110,975 5.9 5.4 5.9
Jan-04 274.8 197.0 210.1 33,269 273.7 195.0 210.0 56,409 5.5 5.0 5.0
Feb-04 245.0 184.0 191.5 50,762 238.0 182.0 191.0 34,148 4.8 4.4 4.4
Mar-04 205.9 176.1 189.0 46,877 207.0 176.3 188.5 26,187 4.3 4.3 4.3
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9. Stock Performance
300
200
100
0
Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04
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12. Share Transfer System : Share transfers in the physical form are registered normally within 5
days from the date of receipt, provided that the documents are clear
in all respects.
Number of pending Share Transfers as on : 8 Transfer Deeds covering 1,049 shares were pending for
31st March, 2004 transfer on 31.03.2004, which have since been transferred
in the name of Transferee(s).
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14. Distribution of Shareholding as on 31st March:
2004 2003
No. of equity No. of share % of No. of shares % of share No. of share % of No. of shares % of share
shares held holders share held holding holders share held holding
holders holders
201 – 500 12,067 11.77 37,35,805 6.24 13,789 11.70 42,63,576 7.12
10001 & above 141 0.14 4,45,30,770 74.36 135 0.11 4,24,60,786 70.91
UTI and
other Mutual Funds 49 0.05 70,62,360 11.80 29 0.02 41,41,948 6.91
Banks, Financial
Institutions and
Insurance Companies 54 0.05 1,00,88,441 16.85 60 0.05 125,49,724 20.96
NRIs / OCBs 2,694 2.62 9,39,094 1.57 2,881 2.44 10,04,345 1.68
Other Corporates 1,099 1.07 17,87,034 2.98 1,220 1.04 46,66,870 7.79
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Shareholding Pattern
Individuals Promoters/PACs
24.39% 28.57%
UTI & MF
Other Corporates
11.80%
2.98%
GDRs NRIs/OCBs
5.56% 1.57%
FIIs Banks & FIs
8.28% 16.85%
16. Dematerialisation of Shares and : Over 71% of outstanding equity has been dematerialised up
Liquidity to 31st March, 2004. Trading in Equity Shares of the Company is
permitted only in the dematerialised form with effect from 5th April,
1999 as per notifications issued by SEBI.
17. Details on use of public funds : No funds have been raised from the public in last 3 years.
obtained in the last three years
18. Outstanding GDR/Warrants and : Outstanding GDRs as on 31st March, 2004 is 33,30,281. Each GDR
Convertible Bonds, Conversion represents one underlying Equity Share.
date and likely impact on Equity.
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K-16, Phase II, SIPCOT Industrial Complex
Gummidipoondi – 601 201
Dist. Tiruvallur – Tamil Nadu
Tel: (04119) 223233 to 36
Fax: (04119) 223129 / 223116
E-mail: [email protected]
[email protected]
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21. Per Share Data:
2003-2004 2002-2003 2001-2002 2000-01 1999-2000
Net Earnings (Rs Crores) 131.28 105.33 43.46 68.52 57.59**
EPS (Before exceptional items) (Rs) 18.59 20.71 7.04 11.44 9.62
Dividend Payout (on Net Profit) (%) 20.58 24.05 45.47 28.88 (2.76)
Book Value Per Share (Rs) 212 196 182 191 183
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onwards which remain unclaimed and unpaid as aforesaid shall be transferred to the IEPF and no claims
shall lie against the IEPF or the Company in respect of such amounts. Though a reminder has been sent
to the shareholders for claiming unpaid / unclaimed dividends, it is noted that quite a number of
shareholders have still not come forward to claim the unpaid / unclaimed dividends. We, therefore
request the members who have not encashed their dividend warrants to write to the Company immediately
claiming dividends declared by the Company for the said Financial Years.
ECS Facility
Shareholders holding shares in physical form and desirous of availing the facility of Electronic Credit of
Dividend or recording change in their existing mandate registered with the Company may write to the
Company at its Share Department at Veraval – 362 266, Gujarat or download the ECS Mandate
Registration Form available at the website of the Company (www.indianrayon.com / www.adityabirla.com)
and thereafter forward the same to the Company for registration.
In respect of electronic share accounts, members are requested to notify/update their ECS details to/
with their respective Depository Participants.
Change of Address
(a) Members are requested to notify immediately any change of address (with pin code) to:
• their Depository Participants (DPs) in respect of their electronic share accounts; and
• the Company in respect of their physical share folios, if any, under the signature(s) of all the registered
holder(s) quoting reference of their folio number.
(b) In case mailing address mentioned in this Annual Report is without PIN CODE, members are requested to
kindly inform their PIN CODE immediately to :
• their DPs in respect of their electronic share accounts; and
• the Company in respect of their physical share folios, if any, quoting reference of their folio numbers.
Communication to the Company
For expeditious disposal of the matters concerning shares and debentures etc., members are requested to address
all letters directly to the Share Department of the Company situated at the Registered Office of the Company at
Veraval, quoting reference of their folio numbers and/or Client ID and DP ID number. Other queries may be
sent at [email protected] or faxed at 02876 – 243220.
Share Transfer / Dematerialisation
a) Share transfers in physical form / dematerialisation of shares are normally effected within 5 days from the
date of their receipt at Registered Office, provided that the documents are clear and complete in all respects.
In case no response is received from the Company within 15 days of lodgment of transfer request, the lodger
may write or send an e-mail to the Company with full details so that necessary action could be taken to
safeguard interest of the concerned against any possible loss/interception during postal transit.
b) At times, members are, while forwarding requests for dematerialisation of shares, also requesting for
simultaneous transposition / deletion of name of shareholder(s) in respect of part holding. Members may
kindly note that transposition / deletion of name has to be effected in respect of entire holding and not part
holding as aforesaid and hence all such requests for part transposition / deletion of name are liable to be
rejected.
c) Members holding Shares in identical order / names in physical form in more than one folio are requested to
send to the Company the details of such folios together with the Share Certificates for consolidating their
holdings in one folio. The Share Certificates will be returned to the Members after making requisite changes
thereon.
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For Non Resident Shareholders
Non-resident Indian Shareholders are requested to inform the Company immediately:
(a) An address, in India, for sending all communications from the Company.
(b) E-mail address, phone no(s) / fax no(s), if any.
(c) Change in their residential status on return to India for permanent settlement.
(d) The particulars of NRE Bank Account maintained in India with complete name and address of the Bank, if
not furnished earlier.
Bank Details for Dividend payment
To avoid the incidence of fraudulent encashment of the warrants, Members are requested to intimate to:
• the Company their bank account details under the signature of the Sole/First Joint holder for shares
held in physical form; and
• their DP for shares held in respect of electronic share accounts form, as the case may be, for printing of
the same on their dividend warrants, the following information:-
1) Name of Sole / First Joint holder and Folio No.
2) Particulars of Bank Account, viz.
i) Name of the Bank
ii) Name of the Branch
iii) Complete address of the Bank with Pincode Number
iv) Account Type, whether Savings (SB) or Current Account (CA)
v) Bank Account Number allotted by the bank.
Depository System (DS)
Trading in shares of the Company is permitted only in dematerialised form. As such, we wish to advice members
to arrange to dematerilise their shareholding in the Company as DS weeds out several problems which are
otherwise associated with the scrip-based system such as bad deliveries, fraudulent transfers, fake certificates,
thefts in postal transit, delay in transfers, long settlement cycles, mutilation of share certificates, etc. At the same
time, DS offers several advantages like exemption from stamp duty, elimination of concept of market lot,
elimination of bad deliveries, reduction in transaction costs, improved liquidity, etc.
For further information on matters relating to dematerialisation of shares, members may write to the Share
Department of the Company at Veraval, Gujarat.
Nomination of Shares
In terms of the provisions of the Companies Act, 1956, facility for making nominations is now available to
INDIVIDUALS holding shares in the Company. The Nomination Form-2B prescribed by the Government may
be obtained from the Share Department of the Company or can be downloaded from the web site of the
Company (www.indianrayon.com)
Members are requested to register nomination requests in respect of shares:
• In physical form to the Share Department of the Company at Veraval; and
• In respect of electronic share accounts, with their Depository Participants.
Share Certificates
Members are requested to ensure that they possess the respective share certificate(s) in respect of shares held by
them in physical form. In case, the same are not available, members are requested to write to the Share
Department of the Company [quoting reference of their folio number(s)] for further course of action in the
matter.
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DIRECTORS’ REPORT TO THE SHAREHOLDERS
Dear Shareholders,
Your Directors are pleased to present the 47th Annual Report together with the Audited Accounts of the
Company for the year ended 31st March, 2004.
MAJOR ACTIVITIES
Your Directors would like to highlight some of the value adding initiatives taken during the year, before focusing
on your Company’s financial performance. Given the potential of the BPO sector and your Company’s increasing
focus on the knowledge sector, your Company acquired Transworks Information Services Limited (TransWorks),
a leading Indian ITES / BPO company, for a total consideration of Rs.59.9 crore. TransWorks is the world’s first
COPC (Release 3.2) certified company. It has off shoring contracts with well known clients in North America
and UK, including several Fortune 100 clients. Its current revenue run rate is about US $ 1.7 Million per month
and it employs approximately 1700 persons.
This acquisition gives your Company a running start into the BPO sector, where our aspiration is to become a
leading BPO player.
The acquisition synergises, supports and leverages your Company’s existing thrust in the IT services sector in
particular and the services sector in general. Trading upon the platform and process capabilities which come
with TransWorks, your Company aspires to propel TransWorks into a higher growth trajectory amongst the best
Indian BPO players.
To capitalize on a growing demand for Carbon Black, spurred by the automobile and tyre sector, the capacity of
your Company’s plant at Gummidipoondi has been expanded from 40,000 tonnes per annum to 84,000 tonnes
per annum. Your Directors are delighted to inform you that this brown field expansion has been successfully
commissioned and commercial production was flagged off in February, 2004. Your Company’s Carbon Black
manufacturing capacity stands raised to 1,60,000 tonnes.
In yet another strategic move, your Company has acquired the trademarks / brand rights of Louis Phillipe, Allen
Solly and Peter England – the very popular brands from its wholly owned subsidiary – Aditya Vikram Global
Trading House Limited. Alongside it has acquired the technology rights as well. Consequently no royalty or
commission will be payable to its subsidiary any longer.
As your Company divested its entire stake of 8.68% in Indo Gulf Fertilisers Limited, during the year, it realized
a capital gain of Rs.19.95 crores.
FINANCIAL PERFORMANCE
Your Company has posted a superior performance during the year 2003-04.The revenue has grown to 1573.9
crores against 1442.5 crores in the previous year. The Garment and Carbon Black have been the key growth
drivers whereas VFY has been key contributor.
Continuous focus on the quality improvement, enhancing the operating efficiency and cost cutting exercise
across all the businesses have contributed significantly to your Company’s excellent performance.
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OPERATIONAL REVIEW
VOLUMES
Products Unit FY 2004 FY 2003 Variation (%)
Production :-
Viscose Filament Yarn MT 16060 15873 1.18
Carbon Black MT 118707 112563 5.46
Insulator MT - 7673* -
Sales :-
Garments Lac Pcs. 75.5 61.7 22.37
Viscose Filament Yarn MT 15694 15422 1.76
Carbon Black MT 118182 114232 3.46
Insulator MT 6813 7596* -
Textiles MT 16019 15262 4.96
* From 1st April, 2002 to 31st July, 2002
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Exceptional Items
Gain/(Loss) on sale of Long Term Strategic Investment 19.95 (57.08)
Gain on transfer of Insulator Business — 38.42
Total 19.95 (18.66)
The operational performance of each of your Company’s division has been explained in depth in the chapter on
Management’s Discussion and Analysis.
DIVIDEND
Your Directors recommend for your consideration a dividend of Rs. 4/- per Equity Share of Rs.10/- each for the
year ended 31st March, 2004.
Current Year Previous Year
(Rs. in Crores) (Rs. in Crores)
On 5,98,81,902 fully paid-up Equity Shares of
Rs.10/- each, @ Rs. 4/- per share. 23.95 22.45
(Previous year - On 5,98,76,742 fully paid-up
Equity Shares of Rs.10/- each @ Rs.3.75
per share)
Corporate Dividend Tax 3.07 2.88
FINANCE
Your Company has secured Rs.81.9 crores by way of External Commercial Borrowings and other foreign currency
loan. Further, a sum of Rs.35 crores was raised as Term Loan under Textile Upgradation Fund Scheme of the
Government of India.
Debentures aggregating to Rs.106.7 crores were redeemed and Term Loans of Rs.3.7 crores have been repaid.
Your Company has a comfortable financial position with a Debt Equity Ratio of 0.13 : 1.00.
HUMAN RESOURCES
We recognise the value of people as our most valuable asset and believe that your Company's employees are central
to its sustainable success.
Consequently, our people strategies are fully aligned with business strategies. Business goals are communicated
down the line regularly so that our people have a complete understanding of the Company's strategic direction and
can identify with it. Importantly employee goals are linked to organisational goals.
Developing, motivating, rewarding and retaining talent at all levels is a business priority and a key responsibility of
your Company's Senior Management. Performance accountability is textured into the reward systems and recognition
of achievements forms a critical part of our HR processes. Delegation, empowerment, learning from failures that
emanate from calculated risks is being institutionalised as well. Talent that is sync with the Company's values,
bubbles to the top.
Your management has met with considerable success in creating a work place environment that nurtures innovation
and encourages people to constantly learn and grow.
At Gyanodaya, the Aditya Birla Institute of Management Learning, focused training programmes are conducted for
management staff, so that they are in tune with the innovations in technology, in strategic business thinking, in
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leadership philosophy and in other soft skills.
While fostering a bottom-line oriented culture that is people-oriented, your management's clear message is that
while it recognizes individual stars, it prizes collective team-work.
As a result of this human resources focus, your Company boasts of a highly engaged and committed workforce.
CORPORATE GOVERNANCE
Your Company accords high importance to good corporate governance practices and adheres to all the major
stipulations laid down by the SEBI Corporate Governance Practices.
Your Company’s Statutory Auditors’ Certificate dated 29th April, 2004 confirming the above compliance is
annexed to (Annexure A) and forms part of the Directors’ Report.
As required under Section 217(2AA) of Companies Act, 1956, your Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith
proper explanation relating to material departures;
ii) the Directors have selected such accounting policies and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit or loss of the Company for that period;
iii) the Directors have taken proper and sufficient care of the maintenance of adequate accounting records in
accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
iv) the Directors have prepared the annual accounts on a going concern basis.
SUBSIDIARY COMPANIES
Pursuant to the approval of the Scheme of Amalgamation between Laxminarayan Investment Limited (LIL) and
Rajnidhi Finance Limited (RFL) by the Hon’ble High Court of Gujarat at Ahmedabad, RFL has been amalgamated
with LIL with effect from 7th January, 2004. Accordingly, RFL has ceased to be a subsidiary of LIL and, in turn,
of your Company as well.
Consequent to the acquisition of Transworks Information Services Limited (TransWorks) by your Company,
TransWorks alongwith its two subsidiary companies, namely, Transworks IT Services (India) Limited and
Transworks Inc. have become subsidiaries of your Company.
Transworks IT Services (India) Limited is being merged with TransWorks through a Scheme of Amalgamation.
Petitions for sanctioning the Scheme have been filed by both the companies in the High Court of Bangalore and
Mumbai respectively.
In terms of approval granted by the Central Government under Section 212(8) of the Companies Act, 1956,
copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the
Auditors of the subsidiary companies have not been attached to the Balance Sheet of the Company as at 31 st
March, 2004.
The Annual Accounts of the subsidiary companies and the related detailed information will be made available
to the investors of the Company and the subsidiary companies seeking such information at any point of time.
The Annual Accounts of the subsidiary companies are available for inspection by any investor at the Registered
Office of the Company and of the concerned subsidiary company.
Any shareholder of the Company, who desires to obtain a copy of the said documents of any of the subsidiary
companies, may send a request in writing to the Company Secretary at the Registered Office of the Company,
and he shall be provided with the same.
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PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and
Outgo required under Section 217(1)(e) of the Companies Act, 1956, is set out in a separate statement attached
to this Report (Annexure B) and forms part of it.
The particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, are given in a
separate statement attached to this Report (Annexure C) and forms part of it.
DIRECTORS
During the year, your Board has been further strengthened with the induction of Mr. H. V. Lodha and Mr. S. C.
Bhargava as Additional Directors.
Mr. H. V. Lodha is a partner of Lodha & Co., one of the leading accounting and consulting firms in India. He is
a member / chairman of various committees set up by the Government, Regulatory and Professional bodies.
Mr. S. C. Bhargava is a Chartered Accountant and is presently working as Executive Director (Investment) of
Life Insurance Corporation of India (LIC). He represents LIC, an Investor, on the Board of your Company in
place of Mr. B. R. Gupta. Notwithstanding such change in representation by LIC, Mr. B. R. Gupta will continue
to act as an independent Director of your Company.
Mr. H. V. Lodha and Mr. S. C. Bhargava, being Additional Directors, are liable to retire at the Annual General
Meeting and being eligible offer themselves for reappointment.
Mr. B. L. Shah, Mr. H. J. Vaidya and Ms. Tarjani Vakil retire from office by rotation, and being eligible, offer
themselves for reappointment.
AWARDS AND RECOGNITION
• Your Company’s Rayon Division has bagged “Gold Trophy” for highest export from Synthetic & Rayon
Textile Export Promotion Council.
The “Certificate of Merit – 2003” of National Energy Conservation for VFY, the “First Prize” of National
Energy Conservation Award – 2003 for Chlor-Alkali Sector both from Ministry of Power, New Delhi and
the prestigious “Greentech Environment Excellence Silver Award 2002-03” in Chlor-Alkali Sector for
outstanding achievement in the field of Environment from Greentech Foundation, New Delhi recognize
your Company’s commitment to being environment friendly.
The Gujarat Safety Council has conferred upon the “Certificate of Honour-2002” upon the Division based
on its safety record and performance.
• Jayashree Textiles Division was awarded the “First Prize” by the Government of India for best Energy
Conservation Measures taken in Textiles Sector.
The Division received a “Special Award” from the Synthetic & Rayon Textile Export Promotion Council
for the highest export of Polyester Spun Yarn, for the fourth consecutive year.
• Madura Garments Division was adjudged “The Best Apparel Company of the Year”. ‘Allen Solly’ Brand of
the Company bagged the “Best Trouser Brand of the Year” and the “Best Womens Wear Brand of the Year”
awards. Further, ‘SF Jeans’ was selected as the “Best Brand Launch of the Year” - all of these accolades were
conferred upon the Division by Images.
• Hi-Tech Carbon Division, Gummidipoondi received the “TPM Excellence Award (II Category)” from
JIPM, Japan.
DELISTING OF SHARES
In line with the resolution passed at the Annual General Meeting of the Company held on 1st August, 2003,
applications for delisting of shares were made to The Stock Exchange – Ahmedabad, The Calcutta Stock
Exchange Association Limited and The Delhi Stock Exchange Association Limited. Delisting was considered
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after taking into account various factors, including the impact of listing fee and the volume of trading on the
Stock Exchanges.
After complying with the requirements of the Stock Exchanges, equity shares of your Company have been
delisted from the The Stock Exchange – Ahmedabad and The Delhi Stock Exchange Association Limited.
However, approval from The Calcutta Stock Exchange Association Limited is still awaited.
AUDITORS
The observations made in the Auditors’ Report are self-explanatory and therefore, do not call for any further
comments under Section 217(3) of the Companies Act, 1956.
Your Directors request you to appoint Auditors for the current year and fix their remuneration.
APPRECIATION
Your Directors place on record their deep appreciation of the continued support and guidance provided by
Central and State Governments and all Regulatory bodies.
Your Directors thank you - our esteemed shareholders, customers, business associates, Financial/Investment
Institutions and Commercial Banks for the faith reposed by them in your Company and its management.
Your Directors place on record their deep appreciation of the dedication and commitment of your Company’s
employees at all levels and look forward to their continued support in the future as well.
Mumbai
29th April, 2004 Chairman
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ANNEXURE ‘B’ TO DIRECTORS’ REPORT
Information under section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31 st March, 2004.
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken :
The Company is engaged in the continuous process of energy conservation through improved operational and
maintenance practices. Steps taken by various divisions of the Company in the direction are as under :-
i) Rayon Division
• Installation of Vapour Absorption Machine for replacing high power consuming, power driven Centrifugal
Refrigeration Machine.
ii) Carbon Black Division
• Heating DM water in Turbine System Condenser.
• Replacement of MBF – 1 vent valve by zero leakage Butterfly valve.
• Installation of Variable Frequency Drive for FD Fan.
iii) Textile Division
• Installation of Variable Speed Drive for AC and Humidification Plant for seasonal variation.
• Structural modification of Humidification Tower.
• Replacing LTG Fan blades with energy efficient FRP blades.
b) Additional Investments & Proposals, if any, being implemented for reduction of consumption of Energy.
i) Carbon Black Division
• Installation of High Efficiency Turbine.
ii) Textile Division
• Power generation through Bio Methanation from effluent.
• Installation of solar evacuated tube water heating system in Dye House.
c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the
cost of production of goods :
The above measures have resulted / will result in energy saving and consequent decrease in the cost of production.
d) Total Energy Consumption and Energy Consumption per Unit of Production as per prescribed Form – A :
As per annexure attached.
B. TECHNOLOGY ABSORPTION
e) Efforts made in Technology Absorption – Form B.
RESEARCH AND DEVELOPMENT
1. Specific areas in which R & D carried out by the Company
i) Rayon Division
• Developing new shades of Spun Dyed Yarn.
• Enhancement of Sodium Sulphate recovery.
• Development of new profile of Spinnerets.
• Development of new products, i.e. Flat Yarn, etc.
• Development of Spinnerets Hole Image Projection System.
ii) Carbon Black Division
• Pilot scale development of ADIT-310 grade Carbon Black for Ink applications.
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iii) Textile Division
• Strength improvement of Flax Bleached Yarn with single bleaching and application of new chemicals.
• Use of Siro-Lycra worsted yarn for apparel weaving.
2. Benefits derived as a result of the above R & D
Improvement of process and productive capacity, better quality and marketability of products, development of new range
of products, value addition in the existing products, enhancement of product range, reduced effluent load, improved
process control, improved customer satisfaction, development of eco friendly products and reduction of cost of production,
improved Company’s image and higher realization.
3. Future Plan of action
i) Rayon Division
• Development of speciality yarn.
• Eco and Energy Auditing.
• Improvement in intrinsic quality of yarn.
ii) Carbon Black Division—
• Development of new applications of Carbon Black in ink, plastic & paints.
iii) Textile Division –
• Development of Super Soft Knitting worsted yarn.
• Development of SIROFIL.
• Bleaching and dyeing of Cellulosic Yarn in same bath.
4. Expenditure on Research and Development
i) Capital Expenditure Rs. 56.49 lac
ii) Recurring Expenditure Rs. 69.07 lac
iii) Total Rs. 125.56 lac
iv) Total R&D Expenditure as a percentage of total turnover – 0.08%
5. Technology absorption, adaptation and innovation
i) Efforts in brief, made towards technology absorption, adaptation and innovation
i) Rayon Division
• Developing new shades of Spun Dyed Yarn.
• Development of new products.
ii) Benefits derived as a result of the above efforts
Quality improvement in existing range, development of new market segments, improvement in process,
productivity and cost control, improvement in energy efficiency, reduction in input material consumption.
iii) Information regarding Technology imported during the last years
a) Technology imported during last five years:
Nil.
b) Has technology been fully absorbed:
Not Applicable.
C. FOREIGN EXCHANGE EARNING AND OUTGO
The information on foreign exchange earnings and outgo is contained in Note No. 17(a) of Schedule 19 and the annexure
thereto.
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Form-A
Form for disclosure of particulars with respect to conservation of energy.
(A) Power and Fuel Consumption:-
Current Previous
Units Year Year
1. Electricity
(A) Purchased - Units KWH in Lacs 1021.28 1,106.69
Total Amount Rs. in Lacs 4073.89 3923.56
Rate per Unit Rs. 3.99 3.55
(B) Own Generation
(i) Through Diesel Generator - Units KWH in Lacs 642.26 532.43
Unit per Ltr. of Diesel Oil — 3.57 3.46
Cost Per Unit Rs. 4.60 4.21
(ii) Through Steam Turbine/Generator - Units KWH in Lacs 2355.21 2251.41
Unit per ton of steam coal — 381.25 391.55
Cost Per Unit Rs. 2.26 2.32
2. Coal (Grade B, C and D)
Quantity ‘000 Tonnes 148.64 153.28
Total Cost Rs.in Lacs 2978.01 2855.11
Average Rate Rs.per Tonne 2003.48 1862.71
3. Furnace Oil
Quantity K.Ltrs. 5415.98 2971.90
Total Amount Rs.in Lacs 550.84 301.54
Average Rate Rs.per K.Ltr 10170.64 10146.39
4. Others/Internal generation (LDO)
Quantity K.Ltrs 11524.61 14009.29
Total Amount Rs. in Lacs 1694.17 1610.46
Average Rate Rs. per K. Ltr 14700.46 11495.66
1. Electricity (KWH)
Viscose Filament Rayon Yarn MT — 5558.00 5917.00
Other Yarns (Average) MT — 5006.65 4987.53
Caustic Soda MT — 2344.00 2319.00
Fabrics ‘000 Mtr 936.00 910.00 1118.70
Carbon Black MT — 456.34 453.84
Liquid Argon SM3 3.80 4.10 4.11
Insulator MT — — 1002.07
2. Furnace Oil (Kilo Ltr.)
Viscose Filament Rayon Yarn MT — 0.30 —
Other Yarns MT — 8.60 11.80
Insulator MT — 0.00 0.50
3. Coal (Grade B, C and D)
Viscose Filament Rayon Yarn MT — 2.54 2.71
Other Yarns MT — 128.10 182.60
Fabrics ‘000 Mtr — 37.50 36.70
4. Others/Internal generation (LDO)
Viscose Filament Rayon Yarn MT — 0.48 0.84
Other Yarns MT — 0.02 0.02
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ANNEXURE ‘C’ TO DIRECTORS’ REPORT
Particulars of Employees pursuant to the provisions of Section 217(2A) of the Companies Act,1956 and forming part of the
Directors’ Report dated 29th April, 2004 for the year ended 31st March, 2004.
A) Employees who were employed throughout the Financial Year and were in receipt of remuneration in aggregate of not
less than Rs.24,00,000/- per annum.
Name Designation and Nature Remuneration Qualifications Age Exper- Date of Previous Employment,
of Duties (Rs.) ience Joining Designation,
(Years) Name of Employer,
Period of Service (Years)
Bagrodia M.C. Group Executive 17,989,020 B.Chem., AMIE., 67 46 01.09.99 Group Executive President,
President (Carbon Black) AMICH.E Grasim Industries Ltd. (29)
Dutt S.R. President (Global Exports) 3,644,363 B.A. (Hons.) 59 38 01.06.92 Vice President (Exports),
Lipton India Ltd. (11)
Gupta Adesh President & CFO 5,397,434 B.Com., F.C.A., 48 25 01.04.99 Jt. President, Birla
(Corporate Finance) F.C.S. Global Finance Ltd. (5)
Maheshwari K.K. Group Executive 8,404,350 M. Com., F.C.A. 49 27 01.04.01 President, Thai
President (Rayon) Polyphosphate &
Chemical Co. Ltd., Thailand. (12)
Rathi S. S. Executive President 2,916,973 B. Com., F.C.A. 46 22 15.06.91 Finance Manager, Grasim
(Carbon Black) Industries Limited (10)
V. Srikrishnan Vice President-Finance 2,764,417 B.Com, A.C.A. 42 19 17.04.02 Commercial Controller, Reckitt
(Madura Garments) Benckiser India Ltd. (9)
B) Employees who were employed for a part of the Financial Year and were in receipt of remuneration in aggregate of not less than
Rs.2,00,000/- per month.
Choudhary A.N. President (Textile) 4,814,687 B.Com., LL.B., 60 39 01.10.67 Qualified Assistant, S.R.
F.C.A., F.C.S. Batliboi & Co., (1)
Javeri Hemchandra G. President (Madura Garments) 1,837,167 PGDBM-IIM, 42 19 07.01.04 Country Manager-South Asia,
Kolkata Nike Inc. (2)
Jhanwar K. C. Executive President (Rayon) 2,383,250 B.Com, F.C.A., 47 24 01.09.03 Executive President, Grasim
C.S.(Inter) Industries Ltd. (6)
Kumar Anil President (Carbon Black) 7,197,619 B.Tech. (Chem) 53 33 05.09.97 Jt.President, Thai Carbon Black
Public Co.Ltd., Thailand (18)
Nedungadi Prakash President (Madura Garments) 5,325,269 PGDM-IIM, 44 22 01.06.00 Regional Business Director,
Kolkata, B.A. Indian Shaving Products Ltd. (2)
(Eco. Hons)
Singh H.N. Executive President (Rayon) 2,089,152 B.E.(Mech.) 57 35 01.08.00 Joint President, Grasim Industries
Limited (3)
Notes:
1. Remuneration includes salary, allowances, medical benefits, Company’s contribution to Provident Fund and Superannuation Fund, wherever applicable, leave encashment,
leave travel assistance and monetary value of taxable perquisites and also includes Gratuity/Retirement Benefit.
2. None of these Executives are related to any Directors or Manager of the Company.
3. All appointments are contractual, other terms and conditions are as per rules of the Company.
(57)
AUDITORS’ REPORT TO THE MEMBERS
1. We have audited the attached Balance Sheet of Indian Rayon And Industries Limited as at March 31, 2004,
the Profit and Loss account and also the Cash Flow statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the 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 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 issued by the Central Government of India
in terms of Section 227 (4A) of the Companies Act, 1956, (hereinafter referred to as ‘the Act’) we enclose
in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
i. 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;
ii. In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of those books. The Branch Auditors’ reports have been forwarded to us
and have been appropriately dealt with;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in
agreement with the books of account and with the audited returns from the branches;
iv. 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 section 211 (3C) of the Companies Act,
1956.
v. On the basis of the written representations received from the directors as on March 31, 2004 and taken
on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,
2004 from being appointed as a director in terms of section 274 (1)(g).
vi. Without qualifying our opinion, we draw attention to Note No. 16(b) of Schedule 19 to the financial
statements regarding remuneration payable to directors amounting to Rs 75 lakhs which is subject to
approval of the shareholders at the ensuing Annual General Meeting.
vii. In our opinion and to the best of our information and according to the explanations given to us, the
said accounts read together with Significant Accounting Policies and Notes on Accounts in Schedule
‘19’ and those appearing elsewhere in the accounts give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles generally
accepted in India;
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2004;
b) in the case of the Profit and Loss account, of the profit for the year ended on that date; and
c) in the case of Cash Flow statement, of the cash flows for the year ended on that date.
Mumbai Mumbai
April 29, 2004 April 29, 2004
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Annexure referred to in paragraph 3 of our report of even date
i) (a) The Company has maintained proper records showing full particulars, including quantitative details
and situation of fixed assets.
(b) All the Fixed assets have not been physically verified by management during the year but there is
regular programme of verification which, in our opinion, is reasonable having regard to the size of the
company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) During the year the company has not disposed off a substantial part of its fixed assets.
ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the
frequency of verification is reasonable.
(b) The procedures of physical verification of inventories followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. No material discrepancies have been noticed
on physical verification of stocks as compared to book records.
iii) (a) As informed to us, 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.
During the year the Company has repaid eight unsecured Fixed Deposits of Rs.4,62,000 taken from
parties covered under aforesaid section.
(b) The rate of interest and other terms and conditions of the aforesaid fixed deposits were prima facie not
prejudicial to the interest of the company.
(c) The payment of principal amount and interest on the aforesaid fixed deposit were regular.
iv) In our opinion and according to the information and explanations given to us, there are adequate internal
control procedures commensurate with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods. During the course of audit, no major
weakness has been noticed in these internal controls.
v) Based on the audit procedures applied by us and according to the information and explanations provided by
the management, there are no transactions that need to be entered into the register maintained under
section 301 of the Act.
vi) In our opinion and according to the information and explanations given to us, the company has complied
with the provisions of sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits)
Rules, 1975 with regard to the deposits accepted from the public.
vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its
business.
viii)We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules
made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act.
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We are of the opinion that prima facie the prescribed accounts and records have been made and maintained.
ix) (a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory
dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance,
Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material Statutory Dues
applicable to it. There were no arrears as at 31st March 2004 for a period of more than six months from
the date they became payable.
(b) According to the information & explanations given to us, the dues in respect of sales tax, income tax,
customs duty, excise duty, cess that have not been deposited with the appropriate authorities on
account of dispute and the forum where the disputes are pending are given below:-
Name of the Statute Nature of the dues Amount Forum where dispute is
(Rs.in Crores) pending
Sales Tax Act Sales Tax / Purchase Tax 0.27 Tribunal(s)
1.85 Commissioner (Appeals)
4.10 Assessing Authorities
Income Tax Act Income Tax 0.89 Commissioner (Appeals)
0.01 Assessing Authorities
Customs Act Customs Duty 1.08 High Court(s)
0.07 Assessing Authorities
Central Excise Act Excise Duty 0.02 High Court(s)
5.00 Tribunal(s)
9.93 Commissioner (Appeals)
17.71 Assessing Authorities
Textile Cess Act Cess 1.33 Tribunal(s)
Water Cess Act Cess 0.02 Assessing Authorities
Education Cess Act Cess 0.20 Assessing Authorities
Mines & Minerals
(Regulations &
Development Act, 1957) Cess 0.02 Assessing Authorities
x) The Company has no accumulated losses at the end of the financial year and it has not incurred any
cash losses in the current or in the immediately preceding financial year.
xi) According to the information and explanations given to us, the Company has not defaulted in repayment
of dues to a financial institution, bank or debenture holders.
xii) According to the information and explanations given to us, the company has not granted any loans
and advances on the basis of security by way of pledge of shares, debentures and other securities.
xiii) The company is not a chit fund or a nidhi mutual benefit fund/ society. Therefore, the provisions of
clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 are not applicable to the company.
xiv) According to the information and explanations given to us, the Company is not dealing or trading in
shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the
Companies (Auditor’s Report) Order 2003 is not applicable to the company.
xv) In our opinion, the terms and conditions on which the company has given guarantees for loans taken
by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the
company.
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xvi) According to the information and explanations given to us, the term loans have been applied for the
purpose for which they were raised.
xvii) According to the information and explanations given to us and on an overall examination of the
balance sheet of the company, we report that no funds raised on short-term basis have been used for
long-term investment. No long-term funds have been used to finance short-term assets except working
capital.
xviii)The Company has not made preferential allotment of shares to parties and companies covered in the
register maintained under section 301 of the Act.
xix) According to the information and explanations given to us, the company has created security in
respect of debentures issued in earlier years. No debentures have been issued during the year.
xx) The Company has not raised any money through a public issue during the year.
xxi) Based upon the audit procedures performed and information and explanations given to us, we report
that no fraud on or by the Company has been noticed or reported during the course of our audit.
(61)
BALANCE SHEET AS AT 31ST MARCH, 2004
As at As at
31st March, 2004 31st March, 2003
Schedule Rs. Crores Rs. Crores
SOURCES OF FUNDS
Shareholders’ Funds:
Share Capital 1 59.88 59.88
Reserves & Surplus 2 1,207.80 1,110.91
1267.68 1170.79
Loan Funds:
Secured Loans 3 405.81 266.32
Unsecured Loans 4 ß 1.58
405.81 267.90
Deferred Tax Liabilities 127.51 126.42
Total Funds Employed 1801.00 1565.11
APPLICATION OF FUNDS
Fixed Assets:
Gross Block 5 1,301.31 1,177.54
Less: Depreciation 588.53 501.55
Net Block 712.78 675.99
Capital Work-in-Progress 24.69 8.09
737.47 684.08
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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2004
2003-04 2002-03
Schedule Rs. Crores Rs. Crores
INCOME
Income from Operations 12 1,714.06 1,593.35
Less: Excise Duty 140.22 150.93
Net Sales 1,573.84 1,442.42
Other Income 13 14.27 10.00
1,588.11 1,452.42
EXPENDITURE
(Increase)/Decrease in Stocks 14 (21.01) (3.87)
Cost of Materials 15 812.50 686.81
Salaries,Wages and Employee Benefits 16 117.81 122.83
Manufacturing, Selling and Other Expenses 17 420.99 406.46
Interest and Other Finance Expenses (Net) 18 14.82 21.72
1,345.11 1,233.95
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SCHEDULES
SCHEDULE ‘1’ As at As at
SHARE CAPITAL 31st March, 2004 31st March, 2003
Numbers Rs. Crores Rs. Crores
Authorised:
Equity Shares of Rs. 10 each 85,000,000 85.00 85.00
Redeemable Preference Shares of Rs. 100 each 1,500,000 15.00 15.00
Total 100.00 100.00
1. * Includes:
— 13,75,500 shares allotted as fully paid-up pursuant to contracts for consideration other than cash
— 2,33,71,517 shares (Previous Year 2,33,69,797 shares) issued as Bonus Shares by capitalisation of Securites Premium,
General Reserve, Capital Redemption Reserve and Capital Reserve
— 33,30,106 shares (Previous Year 34,42,201) shares represented by Global Depository Receipts
2. Issue of 21,015 (Previous Year 36,581) equity shares and bonus shares thereon is in abeyance pursuant to the provisions
of Section 206A of the Companies Act, 1956.
SCHEDULE ‘2’
RESERVES & SURPLUS Rs. in Crores
Deductions/
Balance as at Additions Adjustments Balance as at
31st March,2003 during the year during the year 31st March, 2004
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SCHEDULES
SCHEDULE ‘3’ As at As at
SECURED LOANS 31st March, 2004 31st March, 2003
Rs. Crores Rs. Crores
Debentures 50.00 156.66
Loan from Banks 276.07 70.07
Other Loans :
Deferred Sales Tax Loan 31.47 22.59
Others 48.27 17.00
405.81 266.32
SCHEDULE ‘4’
UNSECURED LOANS
Fixed Deposits ß 1.54
Other loans :
Deferred Sales Tax Loan — 0.04
ß 1.58
SCHEDULE ‘5’
FIXED ASSETS Rs. in Crores
Gross Block Depreciation/Amortisation Net Block
As at 31st Additions Deduction/ As at 31st Upto 31st For the Deduction/ Upto 31st As at 31st As at 31st
March-03 for the year Adjustments March-04 March-03 year Adjustments March-04 March-04 March-03
Tangible Assets
Land
Freehold 1.01 — — 1.01 — — — — 1.01 1.01
Leasehold 5.13 — — 5.13 0.52 0.08 ß 0.60 4.53 4.61
Buildings 112.71 5.92 0.02 118.61 22.48 2.87 0.00 25.35 93.26 90.23
Plant & Machinery 868.81 75.78 5.80 938.79 433.35 49.43 3.19 479.59 459.20 435.46
Furniture, Fixtures &
Equipment 26.01 5.95 0.37 31.59 14.10 5.77 0.27 19.60 11.99 11.91
Vehicles and Aircraft 12.35 1.22 1.05 12.52 2.53 2.53 0.63 4.43 8.09 9.82
Livestock 0.02 — — 0.02 0.02 — — 0.02 — —
Intangible Assets
Goodwill on Acquistion 20.35 — — 20.35 — — — — 20.35 20.35
Trade mark/Brands 123.61 42.14 165.75 26.77 14.48 *(13.40) 54.65 111.10 96.84
Specialised Software 7.54 — — 7.54 1.78 2.51 — 4.29 3.25 5.76
Total 1177.54 131.01 7.24 1301.31 501.55 77.67 (9.31) 588.53 712.78 675.99
Previous year 1,242.14 35.85 100.45 1,177.54 491.30 67.81 57.56 501.55 675.99
Notes:
1. Execution/renewal/registration of documents pending in respect of Freehold land Rs.0.06 crores (Previous year Rs. 0.06
crores) and Buildings of Rs. 0.30 crores (Previous Year Rs.0.30 crores).
2. Assets held under co-ownership - Leasehold Land Rs. 0.25 Crore (Previous Year 0.25 Crore), Buildings Rs. 1.07 Crore
(Previous Year Rs. 1.08 Crore) , Vehicles Rs. 0.04 Crore (Previous Year Rs. Nil Crore), Furniture, Fixture & Equipment
Rs. 0.51 Crore (Previous Year Rs. 0.50 Crore) and Aircraft pending Registration Rs.4.84 Crores (Previous year
Rs.4.84 Crores)
3. The Company has made an application for exemption under section 20 of the Urban Land (Ceiling & Regulation)
Act, 1976 for excess land of 4.25 acres (Previous Year 4.25 acres) at Rishra
4. Buildings include Rs.8.12 Crores (Previous Year 8.12 Crores) being cost of Debentures of and Shares in a Company
entitling to the right of exclusive occupancy and use of certain premises.
5. Plant & Machinery include Rs.1.07 Crores (Previous year Rs. 1.07 Crores) being assets not owned by the Company.
6. * Refer note no.4a of Schedule 19 B
(65)
SCHEDULES
SCHEDULE ‘6’ As at As at
INVESTMENTS Face Value 31st March, 2004 31st March, 2003
Rupees Number Rs Crore Number Rs Crore
A. LONG TERM INVESTMENTS
Government Securties (Unquoted)
6 & 7 Years National Saving Certificates 33000 ß ß
Other Investments (Fully Paid up) : Non Trade
QUOTED
Equity Shares:
HGI Industries Ltd. 10 432,322 3.46 432,322 3.46
Industrial Development Bank of India 10 — — 538,593 3.69
UNQUOTED
16% NCD of Mangalore Refinery and
Petrochemicals Ltd. 40 — — 250,000 0.98
Equity Shares :
Gwalior Properties and Estates Ltd. 10 346,850 1.45 346,850 1.45
Seshashayee Properties Ltd. 10 365,750 1.64 365,750 1.64
Trapti Trading & Investments Ltd. 10 351,700 3.77 351,700 3.77
Turquoise Investments & Finance Ltd. 10 341,600 3.66 341,600 3.66
Trade Investments
QUOTED
Equity Shares :
Indo-Gulf Fertiliser Ltd. 10 — — 3,915,871 9.40
Hindalco Industries Limited (Hindalco) 10 1,631,613 36.45 1,631,613 36.45
Century Enka Ltd. 10 62,500 1.25 62,500 1.25
UNQUOTED
Equity Shares :
Birla NGK Insulators Private Limited (Birla NGK) 10 12,490,000 12.49 12,490,000 12.49
IDEA Cellular Ltd (IDEA) 10 96,816,400 96.82 88,816,400 88.82
Preference Shares
UNQUOTED
7% Redeemable, Cumulative Pref. Shares of
Crafted Clothing P. Ltd. 100 570,000 5.70 — —
Investment in Subsidiary Companies:
Equity Shares
QUOTED
PSI Data Systems Ltd. 10 5,311,669 100.28 5,311,669 100.28
UNQUOTED
Aditya Vikram Global Trading House Ltd.,
Mauritius US$ 1 850,000 3.70 850,000 3.70
Birla Sun Life Insurance Company Ltd.
(Birla Sunlife) 10 214,600,000 216.10 133,200,000 134.70
Laxminarayan Investment Ltd. 10 11,093,000 11.09 11,093,000 11.09
Rajnidhi Finance Ltd. 10 — — 40,000 0.04
Transworks Information Services Ltd 1 15,738,378 68.78 — —
Preference Shares
UNQUOTED
7% Cumulative Redeemable Pref. Shares of
PSI Data Systems Ltd. 100 1,500,000 15.00 — —
Total A 581.64 416.87
(66)
SCHEDULES
SCHEDULE ‘6’ (Contd) As at As at
INVESTMENTS Face Value 31st March, 2004 31st March, 2003
Rupees Number Rs Crores Number Rs Crores
B. CURRENT INVESTMENTS
(Unquoted, Non Trade and Fully paid up)
Units of Debt Schemes of various Mutual Funds 138,279,761 159.99 62,828,471 97.43
SCHEDULE ‘7’
INVENTORIES
SCHEDULE 8
SUNDRY DEBTORS *
(67)
SCHEDULES
SCHEDULE 9 As at As at
CASH & BANK BALANCES 31st March, 2004 31st March, 2003
Rs. Crores Rs. Crores
Cash & Cheques in hand and remittances in transit 2.45 3.20
Balances with Scheduled Banks:
Current Accounts 9.47 6.48
Deposit Accounts 1.31 31.61
Balances with Non-Scheduled Bank: #
On Current Account- 0.04 0.01
Standard Chartered Bank (SCB), London
13.27 41.30
# Maximum amount due at any time during the year
SCB 0.11 0.07
CHEDULE 10
LOANS AND ADVANCES
(Unsecured, considered good except otherwise stated)
Advances recoverable in cash or in kind 57.23 56.83
or for value to be received +
(Net of Doubtful, fully provided Rs.3.44 Crores
-Previous Year Rs.3.57 Crores)
Deposits 26.57 83.92
(Net of Doubtful, fully provided Rs.1.96 Crores
-Previous Year Rs.2.00 Crores)
Balances with Central Excise,Customs & Port Trust etc. 9.70 5.10
(Net of provision Rs.3.01 Crores-Previous Year
Rs.3.01 Crores)
93.50 145.85
+ Includes
1. Amount due from Officers 0.02 0.04
2. Maximum amount due from Officers at any time during the year 0.04 0.06
3. Due from subsidiary companies 0.05 17.76
SCHEDULE 11
CURRENT LIABILITIES & PROVISIONS
Current Liabilities:
Acceptances 14.21 14.35
Sundry Creditors 133.73 121.72
Advances from Customers 3.91 5.54
Interest accrued but not due on loans 1.01 6.25
Investors Education & Protection Fund shall be credited (when due) for the following:
Unpaid Dividend 1.54 1.52
Unpaid application money 0.04 0.04
Unpaid matured deposits - -
Unpaid matured debentures 0.17 0.20
Interest accrued on above 0.22 0.14
Other Liabilities 57.91 40.16
212.74 189.92
Provisions:
For taxation (Net of Advance Payment) 3.70 2.83
Proposed Dividend 23.95 22.45
Provision for Corporate Tax on Dividend 3.07 2.88
Provision for Retirement Benefits 7.68 5.86
38.40 34.02
251.14 223.94
(68)
SCHEDULES
2003-2004 2002-2003
Rs. Crores Rs. Crores
SCHEDULE 12
INCOME FROM OPERATIONS
Income from Sale of Products 1,666.08 1,554.24
Income from Services 12.68 2.26
Export Benefits 34.35 36.13
Others 0.95 0.72
1,714.06 1,593.35
SCHEDULE 13
OTHER INCOME
Dividends on Long Term Investments :
Trade 3.26 5.13
Others 0.06 0.08
3.32 5.21
SCHEDULE 14
(INCREASE)/DECREASE IN STOCKS
Closing Stocks:
Finished Goods 104.00 91.06
Work-in-Progress 23.57 16.02
Waste / Scrap 0.42 0.17
127.99 107.25
Less:
Opening Stocks:
Finished Goods 91.06 109.81
Work-in-Progress 16.02 19.31
Waste / Scrap 0.17 0.24
107.25 129.36
Add: (Increase)/Decrease in Excise duty on Stocks (0.27) 2.33
Less: Stock transferred to Birla NGK Insulators Pvt. Ltd. — 28.31
(Increase)/Decrease (21.01) (3.87)
(69)
SCHEDULES
SCHEDULE 15
COST OF MATERIALS
2003-2004 2002-2003
Rs. Crores Rs. Crores
Raw Material Consumption 712.74 637.26
Packing Material Consumption 22.02 24.15
Purchase of Finished Goods 74.34 25.40
Finished goods produced in trial run 3.40 -
812.50 686.81
SCHEDULE 16
SALARIES,WAGES AND EMPLOYEE BENEFITS
Payments to & Provisions for Employees:
Salaries, Wages and Bonus 97.11 100.93
Contribution to Provident & Other Funds 13.84 15.72
Welfare Expenses 6.86 6.18
117.81 122.83
SCHEDULE 17
MANUFACTURING, SELLING AND OTHER EXPENSES
Consumption of Stores & Spares 45.01 45.44
Power & Fuel 100.62 96.44
Processing Charges 51.95 43.98
Commission to Selling Agents 49.21 44.09
Brokerage & Discounts 6.78 7.47
Export Expenses 4.78 5.51
Advertisement 42.42 41.70
Transportation & Handling Charges (Net) 28.66 25.25
Other Selling Expenses 17.38 20.14
Auditors’ Remuneration :
Payments to Statutory Auditors:
Audit Fees 0.10 0.07
For Taxation Matters - 0.02
For Tax Audit 0.04 0.03
For Certification Work 0.03 0.02
For Management Services - 0.04
Reimbursement of Expenses 0.03 0.02
Payments to Branch Auditors:
Audit Fees 0.08 0.06
For Taxation Matter 0.01 ß
For Certification Work 0.03 0.06
For Management Services 0.01 0.02
Reimbursement of Expenses 0.03 0.02
Payment to Cost Audidors:
Audit Fees 0.01 0.01
Reimbursement of Expenses ß ß
Bad debts & Provisions for doubtful debts & advances 3.21 7.37
(70)
SCHEDULES
SCHEDULE 17 (Contd.) 2003-2004 2002-2003
Rs. Crores Rs. Crores
Repairs & Maintenance of:
Buildings 3.77 3.26
Plant & Machinery 14.15 14.88
Others 1.83 1.63
Rent 8.70 6.23
Rates & Taxes 5.49 2.43
Insurance 4.02 4.22
Donations 1.30 0.60
Directors’ Fees & Travelling Expenses 0.12 0.05
Research & Development Expenses 0.69 0.65
(Profit) /Loss on sale / discard of Fixed Assets (Net) 0.16 0.65
Miscellaneous Expenses (Refer Note No. 10 of schedule 19B) 36.33 37.76
426.95 410.12
Less:
Insurance Claims 1.30 1.54
Unspent Liabilities, Excess provisions and unclaimed balances in
respect of earlier years written back (net of short provisions and
sundry balances written off) 4.66 2.12
5.96 3.66
420.99 406.46
SCHEDULE 18
INTEREST AND OTHER FINANCE EXPENSES
Interest
On Debentures and Fixed Loans 14.86 28.50
Others 5.49 11.14
Other Finance Expenses 3.64 4.06
23.99 43.70
Less: Interest Income
Interest on long term Investments 0.06 5.26
(Tax deducted at source Rs.0.01 Crores
- Previous Year Rs.1.11 Crores)
(71)
SCHEDULES
SCHEDULE ‘19’
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
A. SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention, on an accrual basis and in accordance with
the applicable accounting standards.
FIXED ASSETS
Fixed assets are stated at cost, less accumulated depreciation. Cost comprises the purchase price and any attributable cost
of bringing the asset to its working condition for its intended use.
DEPRECIATION / AMORTIZATION
a) Depreciation on Fixed Assets is provided on Straight Line Method at the rates and in the manner specified in the
Schedule XIV of the Companies Act, 1956 except stated hereunder.
Estimated useful life
Capital Expenditure on assets not owned — 5 Years
Office Computers — 4 Years
Vehicles — 5 years
Furniture’s and fixtures (excluding equipments) — 6 years
Leasehold Land/Improvements — Over the period of the lease
b) INTANGIBLE ASSETS ARE AMORTIZED AS UNDER:
Trademarks/ Brands — 10 years
Specialized Software — 3 years
Goodwill — Not being amortized.
c) Depreciation on the Fixed Assets added/disposed off /discarded during the year has been provided on pro-rata basis
with reference to the month of addition/disposal/discarding.
“Continuous process plants” have been classified on technical assessment and depreciation provided accordingly
Depreciation on the amounts capitalized on account of foreign exchange fluctuation is provided prospectively over
residual life of the assets.
BORROWING COST
Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of
such asset up to the date when such assets is ready for its intended use.
Other borrowing costs are charged to the Profit & Loss Account.
TRANSLATION OF FOREIGN CURRENCY ITEMS
Transaction in foreign currency is recorded at the rate of exchange prevailing on the date of transaction. Current assets
and liabilities are translated at the year-end closing rates. The resulting exchange gain/loss is reflected in the profit and
loss account. Exchange differences attributable to the acquisition of the fixed assets are adjusted to the cost of the
respective assets. Premium in respect of forward foreign exchange contract is recognized over the life of the contracts.
INVESTMENTS
Long Term Investments are stated at cost after deducting provision, if any, made for permanent diminution in the
values.
Current Investments are stated at lower of cost and market/fair value.
INVENTORIES
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials
and other items held for use in the production of inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above cost.
Work in progress and finished goods are valued at lower of cost and net realizable value. Finished goods and work-in-
progress include costs of conversion and other costs incurred in bringing the inventories to their present location and
condition.
Cost of inventories is computed on a weighted average / FIFO basis.
(72)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Proceeds in respect of sale of raw materials/stores are credited to the respective heads. Obsolete, defective and unserviceable
stocks are duly provided for.
GOVERNMENT GRANTS
Government Grants are recognized when there is reasonable assurance that the same will be received. Revenue grants
are recognized in the Profit & Loss account. Capital grants relating to specific fixed assets are reduced from the gross
value of the respective fixed assets. Other capital grants are credited to capital reserve.
REVENUE RECOGNITION
Sales are recorded net of trade discounts, rebates and include excise duty.
Income from service rendered is recognised based on agreements/arrangements with the concerned parties.
Dividend income on investments is accounted for when the right to receive the payment is established.
RETIREMENT BENEFITS
Retirement benefits in the form of Provident Fund and Superannuation Schemes are charged to the Profit & Loss
Account of the year when the contributions to the respective funds are accrued.
Gratuity liability under the Payment of Gratuity Act is provided and funded on the basis of an actuarial valuation made
at the end of each financial year.
Provision for leave encashment is provided on the basis of actuarial valuation made at the end of each financial year.
TAXATION
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance
with the Income Tax Act, 1961.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates
and laws that have been substantively enacted as of the balance sheet date.
Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these
would be realized in future.
Deferred tax assets are recognized on unabsorbed losses only if there is virtual certainty that such deferred tax asset can
be realized against future taxable profits.
MISCELLANEOUS EXPENDITURE
Marketing / Technical know-how expenses are deferred and are written-off over a period of five years.
CONTINGENT LIABILITIES
Contingent Liabilities in respect of show cause notices received are considered only when they are converted into
demands.
Contingent Liabilities under various fiscal laws include those in respect of which the Company/Department is in appeal.
Contingent Liabilities are disclosed by way of notes.
B NOTES ON ACCOUNTS Current Year Previous Year
Rs. in Crores Rs. in Crores
1 Estimated amount of contracts remaining to be executed
on capital account and not provided for (Net of advances) 15.18 5.15
2 Contingent Liabilities not provided for:
a) Claims against the Company not acknowledged as debts
i) Income-tax 39.22 0.67
ii) Custom Duty 1.38 1.46
iii) Excise Duty 42.87 39.97
iv) Others 27.69 23.69
b) Bills discounted with Banks 56.27 37.57
c) Corporate Guarantees given to Banks/Financial Institutions
for loans taken/Preference shares issued by subsidiary/other companies. 112.42 110.42
d) Customs duty on capital goods and raw materials imported under
advance licensing / EPCG scheme, against which export obligation
is to be fulfilled. 10.49 4.63
(73)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
(74)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Current Year Previous Year
Had this change not been made, the profit for the year (Net of Rs. in Crores Rs. in Crores
Taxes) would have been higher by Rs.2.64 Crores and Reserves
would have been higher by Rs.11.24 Crores.
b) The Company has revised its estimated useful lives from the life/
rates as per the schedule XIV of the Companies Act 1956 to
useful life as stated in accounting policy of Depreciation and
Amortization on the fast depreciating items like Office
Computers, Vehicles and Furniture & Fixtures w.e.f. 1st April
2003. Consequently, additional depreciation of Rs.6.16 crores
has been charged to profit and loss account for the year ended
31st March 2004.
c) Capital Work-in-Progress includes advances against Capital
Expenditure. 2.36 2.81
d) Pre-operative expenses:
Sales during trial run 3.75 —
Stock of Finished goods produced in trial run 3.40 —
Less: 7.15 —
Excise duty 0.68 —
Raw Material Consumed 5.77 —
Salary, wages and Bonus 0.11 —
Contribution to Provident and other funds 0.01 —
Other Benefits to staffs 0.04 —
Consumption of packing materials 0.18 —
Interest capitalized 0.37 —
7.16 —
(75)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Current Year Previous Year
6 Loans & Advances include: Rs. in Crores Rs. in Crores
a) Advances towards equity of the following companies, to be
allotted by them on substantial progress in implementation of
their respective projects after procuring all regulatory approval
etc.
Rosa Power Supply Co. Ltd. 0.62 0.62
Bina Power Supply Co. Ltd. 8.14 8.14
b) Interest bearing deposits given to Birla Project Development
Company Limited (BPDCL), a project development company in
respect of which the Company has also been given a right of first
refusal to participate in equity of the projects being developed by
BPDCL. 2.23 1.72
c) Interest bearing deposits given to Birla Management Corporation
Limited (BMCL) a company limited by guarantee formed to
provide a common pool of facilities and resources to its members,
with a view to optimize the benefits of specialization and minimize
cost to each member. The Company’s share of expenses under
the common pool has been accounted for under the appropriate
heads. 3.93 2.68
(76)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Current Year Previous Year
Rs. in Crores Rs. in Crores
7 Based on the information / documents available with the Company
Sundry creditors include:
a) Amounts due to small scale undertakings (total Amount) 2.00 1.52
b) Amount overdue on account of principal and / or interest — 0.52
c) Name of the parties to whom the company owe any sum
outstanding for more than thirty days but not overdue:
Cardboard & Packaging Co (Mys) P. Ltd., S.V. Polymers, Anu
Print Pack, Mangal Plastic Udyog, Dhruv Globals Ltd., Sel-Jegat
Printers, Himalaya Containers & Cartons, Lakshmi Polymers,
Mandhana Industries Ltd.
8 Deferred Tax Liability / (Asset) at the year end comprise timing
differences on account of:
Depreciation 136.67 137.62
Expenditure / Provisions allowable (9.16) (8.98)
MAT credit available for set-off in future years — (2.22)
127.51 126.42
9 Earnings per Share (EPS) is calculated as under:
a) Numerator -
— Net Profit after exceptional items as disclosed in Profit &
Loss account 131.28 105.33
b) Denominator - Weighted average number of Equity Shares
outstanding
— Basic 59,881,902 59,876,742
— Diluted 59,913,424 59,931,614
c) Nominal value of Shares (in Rs.) 10.00 10.00
10 Amount of exchange difference (net)
— included in additions to the fixed assets (0.41) —
— debited / (credited) in Misc. Expenses to the Profit and Loss
account (4.13) 0.99
— to be debited/(credited) in Misc. Expenses in the Profit and Loss
account of the subsequent year in respect of forward contracts (0.69) 0.13
11 a) The Company has taken some assets on Finance Lease basis.
Future Lease Rental obligations in respect of these assets 0.07 0.21
b) During the year, the Company has given certain assets on non-
cancelable operating lease.
The Gross carrying amount of the above referred assets 0.66 0.66
The accumulated depreciation for the above assets 0.03 ß
The depreciation for the above assets for the year 0.03 ß
The future minimum lease rental in respect of aforesaid lease is as follows:
i) Not later than one year 0.31 0.35
ii) Later than one year and not later than five years 1.61 1.30
iii) Later than five years 0.81 1.44
12 Miscellaneous expenses include as contribution to General Electoral
Trust for political purpose for distribution to political parties/ persons,
as per the decisions of the Trustees from time to time. — 0.10
13 a) The following are included under other heads of expenses in the
Profit & Loss Account:
Raw Materials consumed — 0.08
Stores & Spares consumed 8.23 9.30
(77)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Current Year Previous Year
Rs. in Crores Rs. in Crores
Salaries and Wages 0.33 0.33
Contribution to PF & other funds 0.01 0.03
Welfare expenses 0.02 0.03
Insurance 0.03 0.12
Rent 1.58 —
Depreciation 0.08 —
Interest 0.14 —
Lease charges 1.68 0.40
b) All Insurance Claims, unless clearly identifiable with the
respective heads of expenses are reduced from Manufacturing,
Selling and Other expenses.
14 Disclosure in respect of Company’s Joint Ventures in India pursuant
to Accounting Standard 27 ‘Financial Reporting of Interest in Joint
Ventures’: Proportion of Ownership Interest
a) Name of the Venture As at 31st March, 04 As at 31st March, 03
Birla NGK Insulators Private Limited (Along with Subsidiaries). 50.00% 49.98%
IDEA Cellular Limited 4.28% 4.15%
b) The aggregate of Company’s share in the above ventures in:
Net Fixed Assets 174.20 155.63
Investments 6.72 211.61
Net Current Assets 14.24 25.61
Other Assets - 1.48
Loans/Borrowings 116.19 94.01
Income 139.10 106.70
Expenses (Including Depreciation & Taxation) 156.30 112.88
c) Pursuant to the Shareholders’ Agreement entered into with the
Joint Venture partner, the Company has in respect of Birla Sun
Life Insurance Company Limited agreed to infuse its share of
capital from time to time to meet the solvency requirement
prescribed by the regulatory authority.
15 Disclosure in respect of Related Parties pursuant to Accounting
Standard 18:
a) List of Related Parties:
i) Parties where control exists - Subsidiaries: -
Aditya Vikram Global Trading House Ltd.
Laxminarayan Investment Ltd. (LIL)
PSI Data Systems Ltd. (PSI)
Birla Technologies Ltd. (Subsidiary of PSI)
Birla Sun Life Insurance Co.Ltd.
Transworks Information Services Ltd. (TW)
Transworks IT Services (India) Ltd. (Subsidiary of TW)
Transworks Inc. USA (Subsidiary of TW)
ii) Other Parties with whom the Company has entered into transactions during the year:
Joint Ventures
IDEA Cellular Limited
BIRLA-NGK Insulators Pvt.Ltd.
Associates
Crafted Clothing Pvt.Ltd.
Key Management Personnel and enterprises having common key management personnel
Key Management Personnel - Mr. K.K. Maheshwari, Manager
Enterprises having common key management personnel - Tanfac Industries Ltd.
(78)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
b) During the year following transactions were carried out with the related parties in the ordinary course of business:
Rs. in Crores
(79)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
Current Year Previous Year
Rs. in Crores Rs. in Crores
16 a) Manager’s Remuneration:
Salary 0.65 0.59
Contribution to Provident & Other Funds 0.08 0.07
Other Perquisites 0.11 0.09
0.84 0.75
In the determination of Manager’s remuneration, certain
perquisites have been valued in accordance with Income Tax
Rules, 1962.
b) Remuneration to directors (Subject to shareholder’s approval) 0.75 —
Computation of Net Profit in accordance with section 198 of the Companies Act, 1956
Profit before taxation as per P&L Account 181.43
Add: Director’s sitting fee and remuneration 0.87
Provision for Bad Debts 3.21
185.51
Less: Profit/(Loss) on sale of Investments (Net) 21.14
Bad Debts written off 4.93
Net Profit 159.44
Remuneration % to Net Profit 0.47%
(80)
SCHEDULES
SCHEDULE ‘19’ (Contd.)
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS
ANNEXURE I
INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPHS 3, 4C AND 4D OF PART II OF SCHEDULE
VI OF THE COMPANIES ACT, 1956
a) Details of Products Manufactured, Turnover, Opening stock, Closing stock etc. Rs. in Crores
Garments Nos./000 2004 1651.70 43.29 7262.98* 817.89 21.78 7551.68 413.34 2180.89 46.92
Nos./000 2003 1461.00 52.03 5609.90* 753.77 16.71 6172.97 347.56 1651.70 43.29
Viscose Filament
Rayon Yarn MT 2004 15000 745.56 10.63 16060.03 15694.14 292.32 1111.45 16.48
MT 2003 15000 293.70 4.10 15873.43 15421.57 319.82 745.56 10.63
Caustic Soda MT 2004 41975 827.44 0.61 39304.59 39344.00 38.49 788.03 0.63
MT 2003 33000 158.74 0.12 34875.23 34206.53 24.61 827.44 0.61
Chlorine MT 2004 33470 382.50 0.28 32732.00 32994.00 24.45 120.50 0.08
MT 2003 29370 95.30 0.03 28542.70 28255.50 27.55 382.50 0.28
Hydro Chloric Acid MT 2004 11155 78.41 0.01 7267.42 7061.00 0.98 284.83 0.04
MT 2003 9900 69.20 0.01 7210.93 7201.72 1.84 78.41 0.01
Spun Yarn MT 2004 83380Spdl. 888.63 15.67 14421.19 29.23 0.63 14593.78 353.13 745.28 14.56
MT 2003 83380Spdl. 909.71 12.65 13781.15 79.50 2.76 13881.73 307.43 888.63 15.67
Cloth ’000Mtr 2004 33Lm 641.27 9.14 2734.41 2797.69 55.14 577.99 10.44
’000Mtr 2003 33Lm 628.45 6.94 3626.94 3614.12 52.67 641.27 9.14
Carbon Black MT 2004 160000 4120.00 10.10 118707.00 118182.00 382.23 4645.00 12.73
MT 2003 110000 4128.00 10.60 112563.00 1661.00 3.16 114232.00 370.75 4120.00 10.10
Lightning &
Surge Arrestors NOS. 2004 6830.00 0.88 6830.00 3.80
NOS. 2003 $ 25000 2607.00 0.47 7674.00 7746.00 2.89
Liquid Argon ‘000 SM3 2004 3000 62.28 0.18 2177.34 2199.62 9.60 40.00 0.13
‘000 SM3 2003 3000 20.83 0.06 1838.73 1797.28 5.36 62.28 0.18
The Installed Capacity is as Certified by the Management and licensed capacity is not given as licencing has been abolished.
# After adjusting departmental consumption, excesses, shortages etc.
@ Turnover quantity includes captive consumption, damages, sample sales and shortages and value includes Export benefits.
* Garment production includes items produced on job work basis by outside parties and purchases.
Carbon Black production and sales is inclusive of trial run production of 2516 MT and trial run sales of 1358 MT of Rs.3.75 Crores respectively
$ Insulators business demerged to Birla NGK Insulaotrs Pvt. Ltd.
** Includes commission of Rs. 12.68 crores (P.Y. Rs. 2.26 crores).
(81)
SCHEDULES
ANNEXURE I (Contd.)
b) Raw Materials Consumed : Current Year Previous Year
MT Rs in Crores MT Rs in Crores
(82)
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2004
Rs. in Crores
Notes:
1) Cash and cash equivalents include:-
Cash, cheque in hand and remittance in transit 2.46 3.20
Balance with Banks 10.82 38.10
Total 13.27 41.30
2) The Company has undrawn working capital facilities of Rs. 106.53 Crores as on 31.3.2004 (Previous Year - Rs.229.93 Crores)
3) Previous year’s figures have been regrouped / rearranged to conform to the current year’s presentation, wherever necessary.
For KHIMJI KUNVERJI & CO. For S.R. BATLIBOI & CO. ADESH GUPTA Directors: B.L. SHAH
Chartered Accountants Chartered Accountants President & CFO B.R. GUPTA
TARJANI VAKIL
Per SHIVJI K. VIKAMSEY Per HEMAL SHAH DEVENDRA BHANDARI
Partner Partner Company Secretary
M. No. 2242 M. No. 42650
Mumbai, 29th April, 2004
(83)
Annexure II
SEGMENT DISCLOSURES FOR THE YEAR ENDED 31ST MARCH, 2004 Rs.in Crores
(I) Primary Segments - Business Garments Rayon (Includes Carbon Black Insulators (Includes Textiles (Includes Others Gross Total Inter Segment Net Total
Caustic soda Bushings, lighting Spun Yarns, Elimination
and allied & Surge Fabrics)
Chemicals) Arrestors)
Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous
Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
a. Segment Revenue #
Sales to External Customers
including Export Benefits 391.94 326.07 335.17 338.01 340.30 327.84 72.52 63.01 393.20 348.31 40.71 39.18 1,573.84 1,442.42
Inter Segment Revenue — — — — — — — 0.19 0.88 0.08 — — 0.88 0.27
Total Segment Revenue 391.94 326.07 335.17 338.01 340.30 327.84 72.52 63.20 394.08 348.40 40.71 39.18 1,574.72 1,442.69 (0.88) (0.27) 1,573.84 1,442.42
b. Segment Result (PBIT) (1.84) (14.52) 77.93 97.11 64.68 58.59 21.43 14.69 6.55 9.90 4.52 1.95 173.28 167.71 (0.00) (0.00) 173.27 167.70
Less:-Interest and Finance charges 14.82 21.72
Add:- Unallocable income net of
Unallocable expenditure 3.03 0.75
(84)
Provision for Deferred Tax 5.90 25.22
Tax Provision for earlier years
written back — (11.48)
c. Carrying amount of Segment Assets 306.41 272.43 331.86 311.66 389.85 324.48 30.04 3.89 188.93 200.30 18.08 23.26 1,265.17 1,136.02 — — 1,265.17 1,136.02
Unallocated Assets 786.98 653.04
Total Assets 2,052.15 1,789.06
d. Carrying amount of Segment Liabilities 64.17 72.11 67.44 50.76 56.87 55.68 10.06 (0.12) 35.54 25.42 1.24 1.37 235.32 205.22 — — 235.32 205.22
Unallocated liabilities 549.14 413.05
Total Liabilities 784.46 618.27
e. Cost incurred to acquire Segment 56.87 12.85 6.45 5.64 59.40 8.51 — 0.42 7.74 2.86 0.22 0.10 130.68 30.37 — — 130.68 30.37
fixed assets during the year
Unallocated cost 0.33 5.47
f. Depreciation/Amortization 24.83 15.49 21.46 20.20 14.91 13.15 — 1.91 17.20 18.81 1.88 1.72 80.28 71.28 — — 80.28 71.28
Unallocated depreciation 1.24 0.46
V Generic Names of Three Principal products/Services of Company (as per monetary terms)
Item Code No.(ITC Code) Product Description
6 2 0 0 0 0 Garments
(85)
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To
The Board of Directors
Indian Rayon And Industries Limited
1. We have audited the attached Consolidated Balance Sheet of Indian Rayon And Industries Limited and its
Subsidiaries, Joint Ventures and Associates as at 31st March 2004 and also Consolidated Profit and Loss
Account and the Consolidated Cash Flow statement for the year ended on that date annexed, thereto.
These financial statements are the responsibility of the management of Indian Rayon And Industries
Limited and have been prepared by them on the basis of separate financial statements and other financial
information regarding components. Our responsibility is to express an opinion on these financial statements
based on our audit.
2. We conducted our audit in accordance with 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. We did not jointly audit the financial statements of certain subsidiaries, one associate and one joint venture
whose financial statements reflect total assets of 1,078.94 crores as at March 31, 2004 and total revenues of
Rs. 959.83 , crores and net cash inflows of Rs. 41.95 crores for the year then ended. These financial
statements have been audited by either of us singly or jointly with others or by other auditors whose reports
have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these
entities, is based solely on the reports of those respective auditors.
4. The fmancial statements of Joint Venture IDEA Cellular Ltd whose financial statements reflect total assets
of 3,714.16 crores as at March 31, 2004 and total revenues of Rs. 1,312.89 crores and net cash inflows of Rs.
70.69 crores for the year then ended are unaudited and our opinion, in so far as it relates to the amounts
included in respect of this entity, is based solely on management certification.
5 Without qualifying our opinion we draw attention to Note 8 of Schedule 19 to the consolidated financial
statements regarding restatement of previous year’s figures on account of the following and its impact on the
consolidated financial statements as at and for the year ended 31 st March 2003:
(a) Restating unaudited standalone figures of IDEA Cellular Limited with its audited consolidated figures.
(b) Consolidating Birla Sun Life Insurance Company Limited as per Accounting Standard 21 - Consolidated
Financial Statements instead of Accounting Standard 27 - Financial Reporting of Interest in Joint
Ventures.
Due to the above restatement Net profit after minority interest for the year ended 31st March 2003
decreased by Rs. 1.82 crores.
6 We report that the consolidated financial statements have been prepared by the management of Indian
Rayon And Industries Limited in accordance with the requirements of Accounting Standard(AS) 21,
Consolidated FinancialStatements-AS 23, Accounting for Investments in Associates in Consolidated Financial
Statements and AS27, Financial Reporting of Interests in Joint Ventures issued by the Institute of Chartered
Accountants of India.
7 Based on our audit and on consideration of reports of other auditors on separate financial statements/
management certification and on the other financial information of the components and to the best of our
(86)
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
information and according to the explanations given to us, we are of the opinion that the attached
consolidated financial statements, read together with para 4 above, give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Indian Rayon And Industries
Limited and its Subsidiaries, Joint Ventures and Associates as at 31 st March 2004; Indian Rayon And
Industries Ltd Auditors Report on Consolidated Financial Statements Year ended 31" March 2004;
(b) in the case of the Consolidated Profit and Loss account, of the profit for the year ended on that date;
and
(c) in the case of the Consolidated Cash Flow statement, of the cash flows for the year ended on that date.
Mumbai Mumbai
April 29, 2004 April 29, 2004
(87)
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 200 4
Rs. in Crores
Consolidated Consolidated
IRIL & Share in 31st March 31st March
Schedule Subsidiaries Joint Ventures 2004 2003
SOURCES OF FUNDS
Shareholders’ Funds:
Equity Share Capital 1 59.88 109.32 59.88 59.88
Preference Share Capital 1 — 20.70 20.70 16.07
Reserves & Surplus 2 1027.98 (32.47) 1,002.18 999.52
1087.86 97.55 1082.76 1075.47
Advance against Equity — — — 4.76
Minority Interest 27.79 — 27.79 19.40
Loan Funds:
Secured Loans 3 472.11 79.64 551.75 372.23
Unsecured Loans 4 — 36.56 36.56 64.47
472.11 116.20 588.31 436.70
Deferred Tax Liabilities 127.60 — 127.60 128.35
Policyholders fund 539.07 — 539.07 110.14
Fund for future appropriations 0.03 — 0.03 0.03
Total Funds Employed 2254.46 213.75 2365.56 1774.85
APPLICATION OF FUNDS
Fixed Assets:
Goodwill on Consolidation 128.00 18.58 153.27 104.85
Gross Block 5 1,437.47 197.84 1,635.31 1,513.02
Less: Depreciation 659.29 37.90 697.19 577.93
Net Block 778.18 159.94 938.12 935.09
Capital Work-in-Progress 41.09 14.26 55.35 14.02
819.27 174.20 993.47 949.11
Investments 6 978.95 6.72 876.33 342.53
Current Assets,Loans & Advances:
Inventories 7 276.94 16.77 293.71 264.06
Sundry Debtors 8 221.58 23.32 244.90 190.77
Cash & Bank Balances 9 80.52 6.37 86.89 72.86
Interest accrued on Investments 3.86 — 3.86 2.00
Loans & Advances 10 116.46 9.08 125.54 154.01
699.36 55.54 754.90 683.70
Less: Current Liabilities & Provisions:11
Current Liabilities 336.59 42.32 378.91 285.01
Provisions 37.56 (1.03) 36.53 28.70
374.15 41.29 415.44 313.71
Net Current Assets 325.21 14.25 339.46 369.99
Miscellaneous expenditure (to the extent
not written off)
Marketing / Technical know-how 3.03 — 3.03 8.37
Total Funds Utilised 2254.46 213.75 2365.56 1774.85
Significant Accounting Policies and
Notes on Accounts 19
Schedules referred to above form an
integral part of the accounts
As per our attached Report of even date
For KHIMJI KUNVERJI & CO. For S. R. BATLIBOI & CO. ADESH GUPTA Directors: B. L. SHAH
Chartered Accountants Chartered Accountants President & CFO B. R. GUPTA
TARJANI VAKIL
Per SHIVJI K.VIKAMSEY Per HEMAL SHAH DEVENDRA BHANDARI
Partner Partner Company Secretary
M. No.2242 M. No.42650
Mumbai, 29th April, 2004
(88)
CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2004
Rs. in Crores
Consolidated Consolidated
IRIL & Share in 31st March 31st March
Schedule Subsidiaries Joint Ventures 2004 2003
INCOME
Income from Operations 12 2,408.15 144.80 2,552.95 1,927.25
Less: Excise Duty 140.23 7.41 147.64 155.27
Net Sales 2,267.92 137.39 2,405.31 1,771.98
Other Income 13 15.02 1.70 16.72 10.45
2,282.94 139.09 2,422.03 1,782.43
EXPENDITURE
(Increase)/Decrease in Stocks 14 (19.60) (0.21) (19.81) 0.11
Cost of Materials 15 821.10 36.59 857.69 714.38
Salaries,Wages and Employee Benefits 16 244.62 17.54 262.16 221.26
Manufacturing, Selling and Other Expenses 17 646.88 73.51 720.39 556.95
Actuarial Liabilities 397.44 — 397.44 91.17
Interest and Other Finance Expenses (Net) 18 19.07 13.29 32.36 40.75
2,109.51 140.72 2,250.23 1,624.62
Profit before Depreciation/Amortisation
and Exceptional items 173.43 (1.63) 171.80 157.81
Depreciation/Amortisation 105.41 16.35 121.76 103.42
Marketing / Technical knowhow
expenditure written off 3.93 1.15 5.08 5.05
Profit before Exceptional items and Tax 64.09 (19.13) 44.96 49.34
Exceptional Items
Less : Loss/(Gain) due to Exceptional Items (17.26) — (17.26) 10.28
Profit after Exceptional items 81.35 (19.13) 62.22 39.06
Provision for Current Tax 45.28 — 45.28 10.72
Provision for Deferred Tax 5.99 (1.94) 4.05 27.15
Net Profit after Tax 30.08 (17.19) 12.89 1.19
Provision for Tax for Earlier Years written back — — — (11.48)
Net Profit before Minority Interest 30.08 (17.19) 12.89 12.66
Minority Shareholders Interest (20.21) 0.57 (19.64) (24.02)
Net Profit 50.29 (17.76) 32.53 36.68
Balance brought forward 110.31 (70.34) 39.97 (21.26)
Transfer from Debenture Redemption Reserve 48.34 — 48.34 32.96
Transfer from Investment Allowance Reserve — — — 37.00
Profit available for Appropriation 208.94 (88.10) 120.84 85.39
APPROPRIATIONS
Proposed Dividend 23.95 — 23.95 22.45
Corporate Tax on Proposed Dividend 3.07 — 3.07 2.88
Investment Reserve 19.95 — 19.95 —
General Reserve 75.07 — 75.07 20.00
Special Reserve 0.09 — 0.09 0.09
Surplus carried to Balance Sheet 86.81 (88.10) (1.29) 39.97
208.94 (88.10) 120.84 85.39
Basic Earnings per share - Rs. 5.05 5.83
Diluted Earnings per share - Rs. 5.05 5.83
Significant Accounting Policies and
Notes on Accounts 19
Schedules referred to above form an
integral part of the accounts
As per our attached Report of even date
For KHIMJI KUNVERJI & CO. For S. R. BATLIBOI & CO. ADESH GUPTA Directors: B. L. SHAH
Chartered Accountants Chartered Accountants President & CFO B. R. GUPTA
TARJANI VAKIL
Per SHIVJI K.VIKAMSEY Per HEMAL SHAH DEVENDRA BHANDARI
Partner Partner Company Secretary
M. No.2242 M. No.42650
Mumbai, 29th April, 2004
(89)
SCHEDULES
SCHEDULE ‘1’
SHARE CAPITAL Rs. in Crores
IRIL & Share in Consolidated Consolidated
Numbers Subsidiaries Joint Ventures 31st March 2004 31st March 2003
Authorised:
Equity Shares of Rs. 10 each 85,000,000 85.00 — 85.00 85.00
Redeemable Preference
Shares of Rs. 100 each 1,500,000 15.00 — 15.00 15.00
Total 100.00 100.00 100.00
Issued, Subscribed & Paid-up:
Equity Shares of Rs. 10 each,
fully paid-up 59,881,902 59.88 — 59.88 59.88
Previous year (59,876,742)
Equity Share Capital 59.88 — 59.88 59.88
Preference Shares — 20.70 20.70 16.07
59.88 20.70 80.58 75.95
SCHEDULE ‘2’
RESERVES & SURPLUS
Capital Reserve 2.61 - 2.61 1.45
Capital Redemption Reserve 7.63 - 7.63 7.63
Debenture Redemption Reserve 20.00 - 20.00 68.34
Investment Reserve 19.95 - 19.95 -
Securities Premium Account 373.42 53.42 426.84 426.76
General Reserve 517.00 - 517.00 450.53
Special Reserve 0.56 - 0.56 0.47
Amalgamation Reserve - 4.28 4.28 4.14
Investment Allowance Reserve
( Fully utilised ) - - - 0.23
Surplus as per Profit &
Loss Account 86.81 (90.17)# 3.31 39.97
SCHEDULE ‘3’
SECURED LOANS
Debentures 50.00 - 50.00 169.12
Loans from Banks 282.71 79.64 362.35 163.52
Other Loans:
Deferred Sales Tax Loan 31.47 - 31.47 22.59
Others 107.93 - 107.93 17.00
472.11 79.64 551.75 372.23
SCHEDULE ‘4’
UNSECURED LOANS
Fixed Deposits - - - 1.54
Short-term loans from Banks - 36.44 36.44 42.30
Other loans :
Deferred Sales Tax Loan - 0.08 0.08 1.22
Others - 0.04 0.04 19.41
- 36.56 36.56 64.47
(90)
SCHEDULE ‘5’
FIXED ASSETS Rs. in Crores
IRIL & Share in Consoli- Consoli- IRIL & Share in Consoli- Consoli- IRIL & Share in Consoli- Consoli-
Subsi- Joint dated dated Subsi- Joint dated dated Subsi- Joint dated dated
diaries Ventures 31st 31st diaries Ventures 31st 31st diaries Ventures 31st 31st
SCHEDULES
(91)
Furniture, Fixtures &
Equipment 48.27 4.37 52.64 43.28 12.80 2.15 14.95 10.09 35.47 2.22 37.69 33.19
Vehicles & Aircraft 16.61 1.11 17.72 17.00 2.86 0.43 3.29 2.07 13.75 0.68 14.43 14.93
Livestock 0.02 - 0.02 0.02 0.02 - 0.02 0.02 - - - -
Intangible Assets
Intangible Assets-Entry/
Licence fees - 40.98 40.98 42.91 - - - - - 40.98 40.98 42.91
Goodwill 25.71 - 25.71 25.71 3.40 - 3.40 2.32 22.31 - 22.31 23.39
Trade mark/Brands 165.75 - 165.75 184.71 54.65 - 54.65 39.28 111.10 - 111.10 145.43
Specialised Software 7.53 - 7.53 7.54 4.13 - 4.13 - 3.40 - 3.40 7.54
Software Products 7.50 - 7.50 7.50 7.50 - 7.50 5.00 - - - 2.50
Total 1437.47 197.84 1635.31 1513.02 659.29 37.90 697.19 577.93 778.18 159.94 938.12 935.09
Previous year 1,334.82 178.20 1,513.02 553.44 24.48 577.92 781.37 153.72 935.09
SCHEDULES
SCHEDULE ‘6’
INVESTMENTS
Rs. in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
LONG TERM INVESTMENTS
Government Securities/Bonds 324.39 - 324.39 88.47
Debentures/Bonds 86.10 - 86.10 17.22
Equity 168.60 - 59.26 83.72
Other Investments 122.05 - 122.05 15.14
SCHEDULE 7
INVENTORIES
SCHEDULE 8
SUNDRY DEBTORS
(92)
SCHEDULES
Rs. in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
SCHEDULE 9
CASH & BANK BALANCES
Cash & Cheques in hand and remittances in transit 34.95 0.43 35.38 13.70
Balances with Scheduled Banks:
Current Accounts 29.90 2.70 32.60 21.97
Deposit Accounts 10.69 3.24 13.93 33.94
Balances with Non-Scheduled Banks:
On Current Account- 3.90 - 3.90 1.76
On Deposit Account- 1.08 - 1.08 1.49
80.52 6.37 86.89 72.86
SCHEDULE 10
LOANS AND ADVANCES
SCHEDULE 11
CURRENT LIABILITIES & PROVISIONS
Current Liabilities:
Acceptances 14.22 - 14.22 14.35
Sundry Creditors 251.75 25.10 276.85 190.28
Advances from Customers 4.63 6.37 11.00 11.42
Income received in advance 1.21 - 1.21 0.59
Interest accrued but not due on loans 1.01 0.61 1.62 7.30
Investors Education & Protection Fund:
Unpaid Dividend 1.54 - 1.54 1.52
Unpaid application money 0.04 - 0.04 0.04
Unpaid matured deposits - - - -
Unpaid matured debentures 0.17 - 0.17 0.20
Interest accrued on above 0.22 - 0.22 0.14
Other Liabilities 61.80 10.24 72.04 59.17
336.59 42.32 378.91 285.01
Provisions:
For taxation (Net of Advance Payment) 2.70 (1.76) 0.94 (3.14)
Provision for retirement benefits 7.84 0.73 8.57 6.51
Proposed Dividend 23.95 - 23.95 22.45
Provision for Corporate Tax on Dividend 3.07 - 3.07 2.88
37.56 (1.03) 36.53 28.70
374.15 41.29 415.44 313.71
(93)
SCHEDULES
Rs. in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
SCHEDULE 12
INCOME FROM OPERATIONS
Income from Sale of Products 1,675.35 86.08 1,761.43 1,629.80
Income from Services 677.47 55.55 733.02 246.84
Export Benefits 34.35 3.17 37.52 38.78
Other Income 20.98 - 20.98 11.83
2,408.15 144.80 2,552.95 1,927.25
SCHEDULE 13
OTHER INCOME
Dividends on Long Term Investments :
Trade 3.25 - 3.25 5.13
Others 0.10 0.18 0.28 0.09
3.35 0.18 3.53 5.22
SCHEDULE 14
(INCREASE)/DECREASE IN STOCKS
Closing Stocks:
Finished Goods 104.00 5.69 109.69 98.67
Work-in-Process 23.57 3.73 27.30 19.12
Waste / Scrap 0.42 - 0.42 0.17
127.99 9.42 137.41 117.96
Less:
Opening Stocks:
Finished Goods 92.47 6.20 98.67 120.24
Work-in-Process 16.02 3.09 19.11 23.46
Waste / Scrap 0.17 - 0.17 0.35
108.66 9.29 117.95 144.05
(94)
SCHEDULES
Rs. in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
SCHEDULE 15
COST OF MATERIALS
Raw Material Consumption 713.37 30.97 744.34 658.72
Packing Material Consumption 22.03 3.67 25.70 24.15
Purchase of Finished Goods 82.30 1.95 84.25 31.51
Finished Goods produced in Trial Run 3.40 - 3.40 -
821.10 36.59 857.69 714.38
SCHEDULE 16
SALARIES,WAGES AND EMPLOYEE BENEFITS
Payments to & Provisions for Employees:
Salaries, Wages and Bonus 215.21 14.52 229.73 195.97
Contribution to Provident & Other Funds 15.24 2.58 17.82 17.58
Welfare Expenses 13.96 0.44 14.40 7.71
Employee Compensation under ESOP 0.21 - 0.21 -
244.62 17.54 262.16 221.26
SCHEDULE 17
MANUFACTURING, SELLING AND OTHER EXPENSES
Consumption of Stores & Spares 45.02 3.86 48.88 47.95
Power & Fuel 101.75 17.40 119.15 107.66
Processing Charges 51.95 - 51.95 43.98
Tele-Service Charges - 19.18 19.18 13.13
Connectivity Charges 10.94 - 10.94 -
Commission to Selling Agents 128.23 8.23 136.46 78.86
Brokerage & Discounts 6.78 2.74 9.52 7.46
Export Expenses 4.78 1.07 5.85 5.51
Advertisement 55.47 3.58 59.05 55.22
Transportation & Handling Charges (Net) 28.70 1.99 30.69 26.60
Other Selling Expenses 45.22 0.46 45.68 25.75
Auditors’ Remuneration 0.70 0.04 0.74 0.94
Bad debt & Provisions for doubtful debts & advances 4.20 2.38 6.58 10.52
Repair & Maintenance :
Buildings 4.09 0.41 4.50 3.61
Plant & Machinery 15.06 3.03 18.09 17.40
Others 6.84 0.16 7.00 4.65
(95)
SCHEDULES
SCHEDULE 17 (Contd.) Rs. in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
(Profit) /Loss on sale / discard of Fixed Assets (Net) 3.01 0.16 3.17 1.55
SCHEDULE 18
INTEREST AND OTHER FINANCE EXPENSES
Interest
On Debentures and Fixed Loans 16.04 10.35 26.39 40.57
Others 6.58 0.28 6.86 14.05
Other Finance Expenses 5.05 2.78 7.83 7.95
(96)
SCHEDULES
SCHEDULE 19
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS ON CONSOLIDATED FINANCIAL
STATEMENTS
1 BASIS OF PREPARATION
The consolidated financial statements are prepared in accordance with Accounting Standard 21 (AS) “Consolidated
Financial Statements” (CFS), AS-23 “Accounting for Investments in Associates in Consolidated Financial Statements”
and AS- 27 “Financial Reporting of Interests in Joint Ventures” issued by the Institute of Chartered Accountants of
India.
2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements comprise the financial statement of Indian Rayon And Industries Limited (The
Reporting Company) and its Subsidiaries, Joint Ventures and Associates . The financial statements of all the companies
are in line with generally accepted accounting principles in India.
Intercompany transactions have been eliminated on consolidation.
Birla Sun Life Insurance Company Limited (BSLI) India 74.00% 74.00%#
JOINT VENTURES
Birla NGK Insulators Private Limited (BNIPL) India 50.00% 49.98% #
IDEA Cellular Limited (IDEA) India 4.28%@ 4.15%
@ 4.28% of Income and Expenses have been consolidated since additional 0.13% equity was acquired on 31st December
2003.
# Consolidated Financial Statements includes results for 8 months of BNIPL since Joint Venture became effective from
1st August 2002
+ Consolidated Financial Statements includes results for 9 months of TW since it became subsidiary from July 2003.
ASSOCIATE
Crafted Clothing Private Limited (CCPL) (Associate of Laxminarayan India 48.00% 48.00%
Investment Ltd.)
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SCHEDULES
4 ACCOUNTING POLICIES
Most of the accounting policies of the Reporting Company and that of its Subsidiaries, Joint Ventures and Associates
are similar. However, since certain Subsidiaries / Joint Ventures / Associates are in the business which are distinct from
that of the Reporting Company and function in a different regulatory environment, certain policies in respect of
investment, depreciation /amortisation etc. differ. The accounting policies of all the Companies are in line with
generally accepted accounting principles in India .
5 FOREIGN SUBSIDIARY
In the case of AVGTHL , the financial statements have been translated into Indian rupees. The balance sheet items
have been translated at closing rate while the share capital has been translated at the transaction date. The income and
expenditure items have been translated at the transaction date with the exception of miscellaneous expenses, which
have been translated at the average rate for the year. Exchange Gain / (Loss) arising on consolidation in respect of
borrowing for fixed assets are adjusted to the cost of such fixed assets and other Exchange Gain / (Loss) are recognised in
the Profit and Loss account.
6 a) Since the Reporting Company‘s share of losses in the associate exceed it’s carrying value of Equity investments the
equity investments has been taken as nil.
b) On “Accounting Standard 26 - Intangible assets” becoming mandatory from 1st April 2003, intangible assets
namely Trade Mark/Brands are required to be amortized over 10 years as against amortization being done by the
Reporting Company for such assets over 15 years till 31st March 2003. In accordance with the transitional
provision of this Accounting Standard, Rs. 13.40 Crores being the difference of the amount amortizable over
amount already amortized pertaining to these assets has been provided, Rs.4.80 Crores being the tax impact
thereon has been reduced from the opening deferred tax liability. The net amount of Rs.8.60 Crores has been
adjusted to opening balance of General Reserve.
Had this change not been made, the profit for the year (Net of Taxes) would have been higher by Rs.2.64 Crores
and Reserves would have been higher by Rs.11.24 Crores.
c) During the year, the Reporting Company has acquired brand rights/trademark amounting to Rs. 42.14 (net) from
Aditya Vikram Global Trading House Ltd., a subsidiary company which are being amortized over a period of 10
years, as it is lower than their estimated economic useful life determined by an independent evaluation and legal
opinion. The difference between book value and the acquisition value in the books of Aditya Vikram Global
Trading House Ltd. has been shown as loss on sale of fixed assets.
d) The Reporting Company has revised its estimated useful lives from the life/rates as per the schedule XIV of the Companies
Act 1956 to useful life as stated in accounting policy of Depreciation and Amortization on the fast depreciating items like
Office Computers, Vehicles and Furniture & Fixtures w.e.f. 1st April 2003. Consequently, additional depreciation of Rs.6.16
crores has been charged to profit and loss account for the year ended 31st March 2004.
7 The Reporting Company has realized an exceptional gain of Rs. 19.95 Crores on sale of Long Term Investment. An
amount equivalent to above has been transferred to investment reserve to be used to meet permanent diminution, if any,
that may arise in the future, in the value of present and future long term strategic investments.
The CFS of the previous year included standalone unaudited financial statements of IDEA which were then available.
Subsequently, audited CFS of IDEA (IDEA Consolidated) were available. In order to facilitate better comparison,
previous year’s figures of these CFS have been restated to include IDEA Consolidated in lieu of IDEA.
During the previous year, Birla Sunlife Insurance Company Limited (Birla Sunlife) was considered as Joint Venture in
accordance with Accounting Standard (AS) 27 - Financial Reporting of Interest in Joint Ventures. In accordance with
the limited revision to AS 27, Birla Sunlife is required to be consolidated as per AS 21 – Consolidation of Financial
Statements instead of AS 27. Though the limited revision is applicable from the accounting period commencing on or
after 1st April, 2004, the Reporting Company has decided to adopt it from the current year itself. Further, in order to
facilitate better comparison, previous year’s figures have been restated consolidating Birla Sunlife in accordance
with AS 21.
(98)
SCHEDULES
The effect of the above restatements on the previous year’s figures is as under:
Restated Original
Rs. Crores Rs. Crores
Reserves & surplus 999.52 1,004.64
Policyholders funds 110.14 81.50
Loan Funds 436.70 421.38
Fixed Assets 949.11 933.98
Investments 342.53 298.53
Net Current Assets 369.99 389.04
Income 1,782.43 1,735.56
Expenses 1,624.62 1,561.06
Net Profit before minority Interest 12.66 32.50
Minority Sahreholders interest (24.02) (6.00)
Net Profit 36.68 38.50
9 Income from operations is shown net of excise duty, wherever applicable and Interest and Finance expense is shown net
of interest income.
Rupees in Crores
IRIL & Share in Consolidated Consolidated
Subsidiaries Joint Ventures 31st March 2004 31st March 2003
10 Estimated amount of Contracts remaining
to be executed on Capital Account and not
provided for (Net of advances) 17.52 11.66 29.18 9.12
11 Contingent Liabilities not provided for in
respect of :
a ) Claims against the Companies not
acknowledged as debts
i) Income-tax 40.36 0.08 40.44 0.70
ii) Custom Duty 2.01 - 2.01 1.07
iii) Excise Duty 43.04 0.13 43.17 41.98
iv) Others 28.04 1.78 29.82 32.54
b) Bills discounted with banks 56.27 4.70 60.97 41.05
c) Corporate Guarantees given to Banks/
Financial Institutions for loans taken by
subsidiary companies / other companies 112.42 6.32 118.74 97.66
d) Customs duty on capital goods and raw
materials imported under advance
licencing / EPCG scheme, against
which export obligation is to be fulfilled. 19.55 20.12 39.67 4.95
e) Dividend on cumulative preference shares 0.39 3.76 4.15 1.47
f) Others 4.44 — 4.44 0.41
306.52 36.89 343.41 221.83
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SCHEDULES
13 These consolidated financial statements (CFS) include the unaudited CFS of IDEA Cellular Limited (IDEA) as they
have not been audited as of date.
b) The following transactions were carried out with the related parties in the ordinary course of the business
Rs. in Crores
Current year Previous year
15 Managerial Remuneration to Mr. K.K. Maheswari 0.84 0.75
a Numerator -
-Net Profit after Tax and Minority Interest as disclosed in Profit & Loss account 32.53 36.68
(100)
Annexure – I
SEGMENT DISCLOSURES FOR THE YEAR ENDED 31ST MARCH, 2004
Rs. in Crores
a Segment Revenue #
Sales to External Customers 391.94 326.07 335.17 338.01 340.30 327.84 154.35 130.38 393.20 348.31 85.98 71.21 549.88 151.01 55.56 39.04 57.28 — 41.66 40.11 2,405.31 1,771.98
Inter Segment Revenue — — — — — — — 0.19 0.88 0.08 0.03 0.07 — — — — — — 6.07 9.56 6.98 9.90
Total Segment Revenue 391.94 326.07 335.17 338.01 340.30 327.84 154.35 130.57 394.08 348.40 86.01 71.28 549.88 151.01 55.56 39.04 57.28 — 47.73 49.67 2,412.29 1,781.88 (6.98) (9.90) 2,405.31 1,771.98
b Segment Result (PBIT) (1.84) (14.52) 77.93 97.12 64.68 58.59 12.87 22.94 6.55 9.90 (15.07) (28.09) (77.63) (60.01) 2.72 (1.98) (1.87) — 5.95 5.40 74.29 89.34 — — 74.29 89.34
Less:-Interest and
Finance charges 32.36 40.75
Add:- Unallocable income
net of Unallocable 3.03 0.75
expenditure
Profit before Tax and
Exceptional items 44.96 49.34
Loss/(Gain) due to
Exceptional Items (17.26) 10.28
Profit before tax 62.22 39.06
Provision for Current Tax 45.28 10.72
Provision for Deferred Tax 4.05 27.15
Tax Provision for earlier
years written back — (11.48)
Profit before Minority
Interest 12.88 12.66
(101)
Minority Interest (19.64) (24.02)
Net Profit 32.52 36.68
c Carrying amount of
Segment Assets 306.41 272.43 331.86 311.66 389.85 324.48 126.22 90.93 188.93 200.30 37.95 49.98 743.00 234.99 158.84 146.75 66.54 — 37.36 90.28 2,386.97 1,721.80 (0.12) — 2,386.85 1,721.80
Unallocated Assets 394.14 366.75
Total Assets 2,780.99 2,088.55
d Carrying amount of
Segment Liabilities 64.17 72.11 67.44 50.76 56.87 55.68 29.89 14.91 35.54 25.42 12.66 12.28 636.09 160.34 21.54 16.30 12.75 — 2.00 2.50 938.97 410.29 (0.12) — 938.85 410.29
Unallocated liabilities 731.56 578.61
Total Liabilities 1,670.41 988.90
e Cost incurred to acquire
Segment 56.87 12.85 6.45 5.64 59.40 8.51 4.62 1.68 7.74 2.86 0.95 0.92 19.00 12.01 14.71 34.73 5.69 — 0.22 0.10 175.65 79.30 — — 175.65 79.30
fixed assets during the year
Unallocated assets 0.33 5.47
f Depreciation / Amortization 24.83 15.49 21.46 20.20 14.91 13.15 3.28 3.86 17.20 18.81 8.14 8.77 12.46 9.08 14.21 12.64 4.97 — 4.14 6.01 125.60 108.00 — — 125.60 108.00
Unallocated depreciation 1.24 0.46
(Rupees in Crores)
PARTICULARS 2003-04 2002-03
(102)
C CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of Shares to Minority 27.90 15.62
Security Premium 0.08 53.40
Proceeds from / (Repayment of) Borrowings (net) 154.05 (147.51)
Dividends paid (including tax thereon) (25.33) (19.76)
Interest and Finance Charges paid (46.77) (66.95)
2) Sale proceed includes equity shares of Rs. Nil (Previous Year Rs. 12.50 crores of Birla NGK Insulator Pvt. Ltd.)
3) Previous year’s figures have been regrouped / rearranged to conform to the current year’s presentation, wherever necessary.
(103)
Aditya Vikram Birla Sun Life Birla Technologies Laxminarayan PSI Data Transworks Transworks Transworks
Global Trading Insurance Limited Investment Systems Information IT Services Inc, USA
House Limited Company Limited Limited Limited Services Limited (India) Limited
1 The period of the Subsidiary Company 1st April 2003 to 1st April 2003 to 1st April 2003 to 1st April 2003 to 1st April 2003 to 1st July 2003 to 1st July 2003 to 1st July 2003 to
31st March 2004 31st March 2004 31st March 2004 31st March 2004 31st March 2004 31st March 2004 31st March 2004 31st March 2004
2 Extent of interest in Subsidiary Company
Equity Share Capital US$ 8.5 Lacs Rs. 370.00 Lacs Rs.29000.00 Lacs Rs. 980.04 Lacs Rs. 1109.30 Lacs Rs. 755.03 Lacs Rs. 157.38 Lacs Rs. 39.00 Lacs US $ 7.00 lacs Rs. 332.96 Lacs
% Share held by Indian Rayon And
Industries Limited and its Subsidiaries 100.00% 74.00% 100.00% 100.00% 70.35% 100.00% 100.00% 100.00%
3 Net aggregate amount of the profits /(losses)
of the Subsidiary Company for the period,
so far as it concerns members of
Indian Rayon and Industries Ltd US$ in Lacs Rs. in Lacs Rs.in Lacs Rs.in Lacs Rs.in Lacs Rs.in Lacs Rs.in Lacs Rs.in Lacs US$ in Lacs Rs.in Lacs
a) not dealt with in the Accounts of
the Company
(i) For the financial year
of the subsidiary (2.22) (78.02) (5,752.90) (598.57) 44.51 (1,470.55) (307.66) 75.55 0.36 10.14
(ii) For the previous financial
years since it became the
subsidiary of the Company 4.51 176.34 (7,612.00) (807.25) 229.45 (1,740.48) - - - -
b) dealt with in the Accounts of the
subsidiary Company
(i) For the financial year of
the subsidiary Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
(ii) For the previous financial
years since it became the
subsidiary of the Company Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
4 Additional Information u/s 212 (5) Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
(104)
Notes :
1. PSI Data Systems Ltd. held 73.91% of Equity Share capital of 4600 shares of Rs.1000/- in PSI Kalinga Ltd., Bhubaneswar. As the Balance Sheet and Profit & Loss A/c of the said subsidiary for the years ended 31.03.2003 and 2004 are not available, the details pertaining to that Company are not given.
The Hon’ble High Court of Orrisa has passed orders on 18th April, 2003 for winding up of PSI Kalinga Ltd.
2. Transworks IT Services (India) Limited is in the process of amalgamation with Transworks Information Services Limited. Petitions for sanctioning the Scheme of Amalgamation have been filed by these companies with respective High Courts.
3. The Department of Company Affairs, Government of India vide its order No. 47/140/2003-CL-III dated 2nd April, 2004 issued under section 212 (8) of the Companies Act, 1956 has exempted the Company from attaching the documents of subsidaries of the Company required to be attached to the
Company’s accounts for the year ending on 31st March, 2004 under section 212(1) of the Companies Act, 1956.
However, annual accounts of the subsidiary companies and the related detailed information will be made available to the investors of the company and the subsidiaries of the Company seeking such information at any point of time. The annual accounts of the subsidiary companies are available for
inspection by any investor at the Registered Office of the Company and of the concerned subsidiary of the Company.
NOTICE is hereby given that the FORTY SEVENTH Annual General Meeting of the Members of INDIAN RAYON
AND INDUSTRIES LIMITED will be held at the Registered Office of the Company at Junagadh-Veraval Road,
VERAVAL – 362 266 (District Junagadh), Gujarat on Wednesday, the 30th June, 2004 at 12.00 noon to transact, with or
without modifications, as may be permissible, the following business: -
1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2004 and Profit and Loss Account for the year
ended 31st March, 2004 and the Reports of the Directors and Auditors of the Company.
2. To declare dividend on Equity Shares for the year ended 31st March, 2004.
3. To appoint a Director in place of Mr. B. L. Shah, who retires from office by rotation, but being eligible, offers himself for
reappointment.
4. To appoint a Director in place of Mr. H. J. Vaidya, who retires from office by rotation, but being eligible, offers himself for
reappointment.
5. To appoint a Director in place of Ms. Tarjani Vakil, who retires from office by rotation, but being eligible, offers herself for
reappointment.
6. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution, relating to the appointment of
the Auditors of the Company: -
“RESOLVED THAT M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai and M/s. S.R.Batliboi & Co., Chartered
Accountants, Mumbai, the retiring Auditors be and are hereby reappointed as the Joint Statutory Auditors of the Company
under Section 224, and other applicable provisions, if any, of the Companies Act, 1956, to hold office as such from the
conclusion of this meeting until the conclusion of the next Annual General Meeting of the Company, at such remuneration
to each of them, as may be decided by the Audit Committee of the Board of Directors of the Company, plus reimbursement
of out of pocket expenses as may be incurred in the performance of their duties (excluding service tax, if any).”
7. To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, relating to the appointment of the
Branch Auditors of the Company: -
(i) “RESOLVED THAT pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies
Act, 1956, M/s. Clark, Gardner, Wolf & Co., Chartered Accountants, Mumbai, the retiring Branch Auditors, be and
are hereby reappointed as Branch Auditors of the Company to audit the accounts in respect of the Company’s Hi-Tech
Carbon Division, Renukoot, Hi-Tech Carbon Division, Gummidipoondi, Global Exports & Marketing Division, Kolkata
and Rajashree Gases Division, Jagdishpur to hold office as such from the conclusion of this meeting until the conclusion
of the next Annual General Meeting of the Company at such remuneration for each of the aforesaid four divisions as
may be decided by the Audit Committee of the Board of Directors of the Company plus reimbursement of out of pocket
expenses as may be incurred, in the performance of their duties (excluding Service Tax, if any).”
(ii) “RESOLVED THAT pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies
Act, 1956, M/s.Khimji Kunverji & Co., Chartered Accountants, Mumbai and M/s.K.S.Aiyar & Co., Chartered
Accountants, Mumbai, the retiring Branch Auditors, be and are hereby reappointed as the Joint Branch Auditors of the
Company to audit the accounts in respect of the Company’s Rayon Division, Veraval to hold office as such from the
conclusion of this meeting until the conclusion of the next Annual General Meeting of the Company at such remuneration
to each of them as may be decided by the Audit Committee of the Board of Directors of the Company plus reimbursement
of out of pocket expenses as may be incurred, in the performance of their duties (excluding Service Tax, if any).”
(iii) “RESOLVED THAT pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies
Act, 1956, M/s.S.R.Batliboi & Co., Chartered Accountants, Kolkata, the retiring Branch Auditors, be and are hereby
reappointed as Branch Auditors of the Company to audit the accounts in respect of the Company’s Jaya Shree Textiles
Division, Rishra and Rajashree Syntex Division, Midnapur to hold office as such from the conclusion of this meeting
until the conclusion of the next Annual General Meeting of the Company at such remuneration for each of the
aforesaid two Divisions as may be decided by the Audit Committee of the Board of Directors of the Company plus
reimbursement of out of pocket expenses as may be incurred, in the performance of their duties (excluding Service Tax,
if any).”
(1)
(iv) “RESOLVED THAT pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies
Act, 1956, M/s.Khimji Kunverji & Co., Chartered Accountants, Mumbai, the retiring Branch Auditors, be and are
hereby reappointed as Branch Auditors of the Company to audit the accounts in respect of the Company’s Insulator
Division (Domestic Marketing), Halol / Rishra to hold office as such from the conclusion of this meeting until the
conclusion of next Annual General Meeting of the Company at such remuneration as may be decided by the Audit
Committee of the Board of Directors of the Company plus reimbursement of out of pocket expenses as may be incurred,
in the performance of their duties (excluding Service Tax, if any).”
(v) “RESOLVED THAT pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies
Act, 1956, M/s.Deloitte, Haskins & Sells, Chartered Accountants, Bangalore, the retiring Branch Auditors, be and are
hereby reappointed as Branch Auditors of the Company to audit the accounts in respect of the Company’s Madura
Garments Division, Bangalore to hold office as such from the conclusion of this meeting until the conclusion of the
next Annual General Meeting of the Company at such remuneration as may be decided by the Audit Committee of the
Board of Directors of the Company plus reimbursement of out of pocket expenses as may be incurred, in the performance
of their duties (excluding Service Tax, if any).”
8. To consider and, if thought fit, to pass the following Resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to Article 99A of the Company’s Articles of Association and in conformity with the
provisions of Section 260 of the Companies Act, 1956, Mr. Harsh V. Lodha (who was appointed as an Additional Director
of the Company by the Board of Directors and who holds office under the said Article and Section 260 of the Companies
Act, 1956 only upto the date of this Annual General Meeting and in respect of whom, the Company has received a notice
in writing along with a deposit of Rs. 500/- under Section 257 of the Companies Act, 1956 from a member proposing the
candidature of Mr. Harsh V. Lodha for the office of Director) be and is hereby elected and appointed a Director of the
Company, liable to retire by rotation.”
9. To consider and, if thought fit, to pass the following Resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to Article 99A of the Company’s Articles of Association and in conformity with the
provisions of Section 260 of the Companies Act, 1956, Mr. S. C. Bhargava (who was appointed as an Additional Director
of the Company by the Board of Directors and who holds office under the said Article and Section 260 of the Companies
Act, 1956 only upto the date of this Annual General Meeting and in respect of whom, the Company has received a notice
in writing along with a deposit of Rs. 500/- under Section 257 of the Companies Act, 1956 from a member proposing the
candidature of Mr. S. C. Bhargava for the office of Director) be and is hereby elected and appointed a Director of the
Company, liable to retire by rotation.”
10. To consider and, if thought fit, to pass the following Resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 198, 269, 311, 387 and other applicable provisions, if any, of the
Companies Act, 1956 (the “Act”), read with Schedule XIII thereto as amended upto date and all guidelines issued by the
Central Government from time to time and subject to such other approvals, as may be necessary, the Company hereby
approves the re-appointment of Mr. K.K.Maheshwari as the “Manager” of the Company for a further period of 3 years w.e.f.
1st April, 2004 (with liberty to either party to terminate the appointment on three months’ notice in writing to the other)
on the remuneration and upon the following terms and conditions as set out hereinafter, with further liberty to the Board,
from time to time, to alter the said terms and conditions in such manner as may be agreed to between the Board and Mr. K.
K. Maheshwari in the best interest of the Company, subject however to the restrictions, if any, contained in the Act
including Schedule XIII thereof or otherwise as may be permissible at law:-
1. (a) Basic Salary- Rs. 2,43,604/- (Rupees Two Lacs Forty Three Thousand Six Hundred Four only) per month with such
annual increment(s) as the Board may decide from time to time subject however to a ceiling Rs.4,00,000/- (Rupees
Four Lacs only) per month as Basic Salary.
(b) Special Pay- Rs. 2,19,664/- (Rupees Two Lacs Nineteen Thousand Six Hundred Sixty Four only) per month with
such annual increment(s) as the Board may decide from time to time subject however to a ceiling of Rs.6,00,000/-
(Rupees Six Lacs only) per month as Special Pay.
(c) Performance Linked Pay and/or Long Term Incentive compensation as may be approved by the Board from time to
time upto the end of his tenure subject to a maximum of Rs.30,00,000/- (Rupees Thirty Lacs only) each in each
year of his tenure.
2. Perquisites as under:-
(a) The Company shall provide free furnished accommodation and also pay all rents, rates, taxes, electricity, fuel
charges, water charges and all other expenses for the upkeep and maintenance thereof.
(b) Reimbursement of Leave Travel Expenses once in a year for self and family (which shall include spouse, dependent
children and parents), subject to a ceiling of one month’s basic salary.
(c) Reimbursement of actual medical expenses (including insurance premium for medical and hospitalization policy, if
any) for self and family as aforesaid.
(2)
(d) Club fees, subject to a maximum of two clubs.
(e) Leave and encashment of leave at the end of the tenure in accordance with the Rules of the Company.
(f) Salaries payable to Servant / Gardner – subject to a ceiling of Rs. 36,000/- (Rupees Thirty Six Thousand Only) per
annum.
(g) Personal Accident Insurance cover as per the Company’s Service Rules.
(h) Contribution to Provident Fund, Superannuation Fund or Annuity Fund as per the Rules of the Company.
(i) Car for use on Company’s business and telephone at residence.
(j) Reimbursement of entertainment, travelling and all other expenses incurred for the business of the Company.
(k) Gratuity as per Rules of the Company.
3. Subject as aforesaid, Mr. K. K. Maheshwari, as such Manager will be governed by such of the existing Service Rules of
the Company as may be in force from time to time, which will also include Stock Option Plan, if any, which may be
instituted during his tenure of office as Manager.
4. In the event of loss or inadequacy of profits in any year, the remuneration including the perquisites as aforesaid will be
paid to Mr. K. K. Maheshwari in accordance with the applicable provisions of Schedule XIII to the Act.”
11. To consider and, if thought fit, to pass, the following Resolution as a Special Resolution:
“RESOLVED THAT subject to the provisions of Sections 198, 309 and other applicable provisions, if any, of the Companies
Act, 1956, and subject to the approval of Central Government, if applicable, the Company hereby approves the payment to
non-executive Directors of the Company, in addition to the sitting fees and reimbursement of expenses for attending the
meetings of the Board and / or Committees thereof, commission on annual profits computed in the manner specified in the
said Act of an amount not exceeding Rs.75 Lacs (Rupees Seventy Five Lacs Only) in the aggregate for the financial year
2003-04, and thereafter during the remaining period of four years from the financial year commencing 1st April, 2004 an
amount not exceeding 1% of net profits or such other percentage of net profits, for each relevant financial year as may be
permissible from time to time under the provisions of the said Act.”
“RESOLVED FURTHER THAT the amount of commission payable to each of the non executive Directors for each
financial year may be decided by the Board of Directors or its committee, as the Board may deem fit.”
DEVENDRA BHANDARI
Sr. Vice President & Company Secretary
Place: Mumbai
Date: 29th April, 2004.
(4)
Accordingly, the resolution as in this item of the Notice is being proposed and is commended for your acceptance.
No Director is interested in the re-appointment of Mr. K. K. Maheshwari as Manager and as such there is no requirement to
circulate any abstract or memorandum of interest as required by Section 302 of the above Act. However, the resolution in this
item of the Notice alongwith the above Explanatory details may be treated as such.
Although not required to be stated, Mr. K. K. Maheshwari as such Manager is deemed to be interested in the resolution.
Item No. 11
Presently the non-executive directors are not paid any remuneration for their services, except sitting fees for each meeting of the
Board and Committee thereof attended by them. Some non-executive Directors are also members of the committee(s) of the
Board. It is felt that mere payment of sitting fees is inadequate compensation for the time spent and responsibilities undertaken
by the non- executive Directors.
The Committee on Corporate Governance constituted by Securities and Exchange Board of India has recommended that
compensation payable to non-executive Directors of companies should be adequate so as to encourage active participation in the
deliberations at the meetings of the Board and its Committees, and also to attract independent professionals to take up these
positions. This practice of payment of remuneration to non-executive Directors on the basis of percentage of profit has been
adopted by many leading Companies in India. It is, therefore, proposed to pass the resolution as in item no. 11 enabling the
Company to make payment of remuneration in the form of commission on profits to the non-executive Directors to the extent
and in the manner set out in the resolution.
The quantum of remuneration payable to each of the non-executive Directors is being left to the decision of the Board of
Directors or a Committee thereof, which will be a more convenient method of dealing with the same.
All the directors are, or deemed to be, interested in the resolution.
DEVENDRA BHANDARI
Sr. Vice President & Company Secretary
Place: Mumbai
Date: 29th April, 2004.
(5)
INDIAN RAYON AND INDUSTRIES LIMITED
Details of the Directors seeking appointment/reappointment in Annual General Meeting to be held on 30th June, 2004
Name of Director Mr. B. L. Shah Mr. H. J. Vaidya Ms. Tarjani Vakil Mr. Harsh Lodha Mr. S. C. Bhargava
List of Public Limited 1) Aditya Birla Health Industrial Estates Ltd 1) Asian Paints India Ltd 1) Alfred Herbert (India) Ltd Asset Care
Companies (in India) in which Services Ltd 2) Mahindra Intertrade Ltd 2) Birla Corporation Ltd Enterprise Ltd.
outside Directorship held 2) Grasim Electronics Ltd 3) Fenner (India) Ltd
3) Indian Aluminium 4) HGI Industries Ltd
Company Ltd 5) Jindal Steel & Power Ltd
4) Western India Sponge 6) OCL (India) Ltd
Iron Company Ltd 7) Optic Fibre Goa Ltd
8) Sicpa India Ltd
9) Swiss India Financial
Services Co. Ltd
10) TI Diamond Chain Ltd
11) Universal Cables Ltd
(6)
Chairman/Member of the
Committee(s) of Board of
Directors of other Public Limited
Companies in which he/she is a
Director
a) Audit Committee Member – Indian 1) Member - Asian Paints As Chairman —
Aluminium Company Ltd — India Ltd 1) Birla Corporation Ltd
2) Chairperson -Mahindra 2) OCL (India) Ltd
Intertrade Ltd 3) Sicpa India Ltd
As Member
4) TI Diamond Chain Ltd
5) Universal Cables Ltd
6) Jindal Steel & Power Ltd
7) Fenner (India) Ltd
b) Share Transfer & Investor — — — Chairman - Birla Corporation Ltd —
Grievance Committee
Prominent Aditya Birla Group of Companies / JVs in India
The Aditya Birla Group enjoys a leadership position in all the sectors in which it operates
Indian Rayon And Industries Limited : Viscose Filament Yarn, Branded Apparels,
Carbon Black, Textiles (Spun Yarn & Fabrics)
Subsidiaries
TransWorks Information Services Limited & its subsidiary : Business Process Outsourcing
- TransWorks IT Services (India) Limited
Joint Ventures
II OTHERS
Grasim Industries Limited & its subsidiary : Viscose Staple Fibre, Cement, Sponge Iron,
Textiles, Chemicals
- Shree Digvijay Cement Company Limited : Cement