Navin Fluorine International LTD 532504 March 2006

NAVIN FLUORINE
I N T E R N A T I O N A L L I M I T E D
th
8 ANNUAL REPORT 2005 - 2006
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NAVIN FLUORINE INTERNATIONAL LIMITED ANNUAL REPORT 2005-2006
BOARD OF DIRECTORS: REGISTERED OFFICE

SHRI H.A. MAFATLAL Chairman 1st floor, Kalpataru Point,
SHRI A.K. PURI Director Kamani Marg, Sion (East),
SHRI T.M.M. NAMBIAR Director Mumbai 400022.
SHRI P.N. KAPADIA Director
UNITS
SHRI S.S. LALBHAI Director
Navin Fluorine, Surat 395023. (Gujarat)
SHRI V.P. MAFATLAL Director
Navin Fluorine, Dewas 455022 (M.P.)
SHRI V.P. SADEKAR Managing Director
(w.e.f. 01.02.2006) REGISTRAR & SHARE TRANSFER AGENT
SHRI A.K. SRIVASTAVA Finance Director Sharepro Services (I) Pvt. Ltd.,
SHRI D.S. UMALKAR Chief Executive Officer Satam Estate, 3rd Floor, Above Bank of Baroda,
(upto 31.01.2006) Chakala, Andheri (East), Mumbai 400099.
Tel. : 022-2821 5168, 2820 2114
COMPANY SECRETARY Fax : 022-2837 5646
SHRI N. B. MANKAD
BANKERS
STATE BANK OF HYDERABAD
UTI BANK LTD 8th Annual General Meeting
HDFC BANK LTD on Thursday, the 29th of June, 2006
EXPORT IMPORT BANK OF INDIA at 3.30 p.m. at S.N.D.T. Womens' University,
PatkarHall,
AUDITORS 1, Nathibai Damodar Thackersey Road,
MESSRS C. C. CHOKSHI & CO. Churchgate, Mumbai 400020.
Chartered Accountants
SOLICITORS
VIGIL JURIS CONTENTS
Board of Directors etc 1
Notice 2
1. Shareholders intending to require information
about accounts to be explained in the Meeting Directors' Report 7
are requested to inform the Company at least seven
Auditors' Report 22
days in advance of the Annual General Meeting.
Balance Sheet 24
2. Shareholders are requested to bring their copy of
the Annual Report to the Meeting as the practice Profit and Loss Account 25
of handing out copies of the Annual Report at the Cash Flow Statement 26
Annual General Meeting has been discontinued
in view of the high cost of paper and printing. Schedules 1 to 18 28-46
Statement pursuant to Section 212 47
3. The Listing Fees for the year 2006-07 have been
Subsidiary Company
paid by the Company to Mumbai & Ahmedabad
Stock Exchanges where the Shares of the Sulakshana Securities Limited 48-56
Company are Listed. Consolidated Financial Statement 57-79
NOTICE other applicable provisions of the Companies Act, 1956,

consent of the Company be and is hereby granted to
NOTICE IS HEREBY GIVEN THAT the Eighth the appointment of Shri V. P. Sadekar as the Managing
Annual General Meeting of the Members of the Company Director of the Company for a period of 5 years with
will be held on Thursday, the 29th of JUNE, 2006 at 3.30 effect from 1st February, 2006 on the terms and
p.m. at S.N.D.T. Womens' University, Patkar Hall, 1, conditions as to remuneration as set out in the
Nathibai Damodar Thackersey Road, Churchgate, Appointment Letter dated 22nd November, 2005 issued
Mumbai 400020, to transact the following business: to Shri V. P. Sadekar subject to the approval of the
Members, and placed before this meeting, with the
1) To consider and adopt the Directors' Report, the liberty and powers to the Board of Directors to increase,
Audited Financial Statements including Profit & Loss alter and vary the salary, commission and perquisites
Account for the year ended 31st March, 2006 and the and other terms in such manner as the Board in its
Balance Sheet as at that date and the Auditors' Report absolute discretion deems fit and is acceptable to Shri
thereon. V. P. Sadekar, within the limits specified in Schedule
XIII of the Companies Act, 1956 or any amendments,
2) To declare dividend. modifications, re-enactments thereof from time to time
in this behalf."
3) To appoint a Director in place of Shri T.M.M. Nambiar, 8. To consider and, if thought fit, to pass the following
who retires by rotation, and being eligible offers himself Resolution, with or without modifications, as a
for re-appointment. SPECIAL RESOLUTION:
4) To appoint a Director in place of Shri S.S. Lalbhai, "RESOLVED THAT in continuation of the Special
who retires by rotation, and being eligible offers himself Resolution passed at the 5th Annual General Meeting
for re-appointment. of the Company held on 29th September, 2003 approv-
ing the appointment and terms of remuneration of Shri
5) To appoint Auditors to hold office from the conclusion A.K. Srivastava as a Whole Time Director designated
of this meeting until the conclusion of the next Annual as Finance Director, the remuneration payable to Shri
General Meeting and to fix their remuneration. A.K. Srivastava for any financial year during 1st May,
2006 to 30th April, 2008, be paid as minimum remu-
6) To appoint Shri V. P. Sadekar, who was appointed by neration in case of absence or inadequacy of profits
the Board of Directors of the Company as an Additional subject to the limits prescribed in paragraph 1(B) of
Director w.e.f. Is1 February, 2006 and who holds office Section II of Part II of Schedule XIII of the Companies
as such up to the date of the Annual General Meeting Act 1956."
under Section 260 of the Companies Act, 1956 and in
respect of whom the Company has, as required by By Order of the Board,
Section 257 of the Companies Act, 1956, received
notices in writing from some Members of the Company N. B. Mankad
signifying their intention to propose him as a candidate Company Secretary
for the office of the Director of the Company, liable to
retire by rotation. Regd. Office:
1st floor, Kalpataru Point,
7) To consider and, if thought fit, to pass the following Kamani Marg,
Resolution, with or without modifications, as a Sion (East), Mumbai 400 022.
SPECIAL RESOLUTION: Mumbai, dated, 2nd May, 2006
"RESOLVED THAT pursuant to the provisions of

Sections 198,269,310 and 311 and Schedule XIII and
NOTES: The Board recommends his appointment as a Director in the

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS interest of the Company, to utilize his expertise.
ENTITLED TO APPOINT A PROXY OR PROXIES TO None of the Directors, except Shri V. P. Sadekar, is concerned
ATTEND AND VOTE INSTEAD OF HIMSELF ON A or interested in the Resolution.
POLL AND THAT A PROXY NEED NOT BE A
MEMBER. In respect of Item No. 7
2. The relevant Explanatory Statement pursuant to Section The Board of Directors of the Company at their meeting held
173 of the Companies Act, 1956, in respect of Item Nos.6 on 12th November, 2005 appointed Shri V. P. Sadekar as the
to 8 mentioned in the above Notice is annexed hereto. Managing Director for a period of five years from 1st February,
2006, subject to the consent of the members of the Company,
3. Copies of the documents mentioned in the Explanatory
on the following terms and conditions:
Statement are open for inspection of the Members between
2.00 p.m. and 4.00 p.m. on any working day at the TERMS OF REMUNERATION
Registered Office of the Company.
I (a) Basic Salary: Rs.24,00,000/- per annum.
4. The Register of Members and the Share Transfer Books of
the Company will remain closed from Tuesday the 30th of (b) Perquisites
May, 2006 to Thursday the 1st of June, 2006 (both days - Fully furnished house or House Rent Allowance in
inclusive) for the .purpose of payment of dividend, if any. lieu thereof.
Dividend shall be payable to shareholders holding shares in
physical form at close of business hours on Thursday the 1st - Expenditure incurred on gas, electricity, water and
of June, 2006 and in respect of shares held in demat form to servants etc.
those persons who are beneficiaries of shares of the Company - Mediclaim Policy, Personal Accident Insurance,
in the Register of Depositories at the close of business hours Leave Travel Concession and Club Fees as per the
on Monday the 29th of May, 2006. Rules of the Company.
5. The dividend as recommended by the Board of Directors, - Allowances amounting to Rs. 13,20,000 per annum.
if declared at the Annual General Meeting, will be paid on
or after 1st July, 2006. Perquisites shall be valued as per Income-Tax Rules,
wherever applicable, and in the absence of any such
6. None of the Non-Executive Directors seeking election at Rules, perquisites shall be valued at actual costs.
this meeting are holding any shares in the Company.
The salary and perquisites as mentioned under I (a) and (b)
ANNEXURE TO NOTICE hereinabove shall be exclusive of :
Explanatory Statement as required by Section 173 (2) of the (i) Contribution to provident fund, superannuation fund
Companies Act, 1956. or annuity fund to the extent these either singly or put
In conformity with the provisions of Section 173 (2) of the together, are not taxable under the Income-Tax Act,
Companies Act, 1956, the following Explanatory Statement 1961.
sets out all material facts in respect of Item Nos. 6 to 8 mentioned (ii) Gratuity payable at a rate not exceeding half a month's
in the above Notice. salary for each completed year of service and
In respect of Item No. 6 (iii) Encashment of leave at the end of the tenure.
Shri V. "P. Sadekar aged 50 years is a B.E. (Chemical Engg.) II Commission, at the discretion of the Board, not exceeding
and has over 25 years experience spanning across various 1% of the profits of the Company at the end of each financial
functions viz. Plant Operations, Project Execution and year, computed in the manner laid down in Section 309(5)
Corporate Planning, Business Development, Sales and of the Companies Act, 1956, subject to the ceiling laid down
Marketing and General Management in Indian and in Sections 198 and 309 of the Companies Act, 1956 on
Multinational Companies. the total remuneration provided further that the amount of
He has specifically played leadership roles in Specialty such commission shall not exceed the amount equal to twice
Chemicals, Pharmaceutical and Agro Chemical companies of the annual basic salary.
repute.
Apart from remuneration, Shri V. P. Sadekar shall be
Shri V. P. Sadekar was appointed by the Board of Directors of entitled to :
the Company as an Additional Director of the Company w.e.f.
1st February, 2006 under Article 127 of the Articles of (a) Free use of the Company's car with driver, for the
Association of the Company and under Section 260 of the business of the Company.
Companies Act, 1956. He will hold office as an Additional (b) Free telephone facility at residence.
Director up to the date of the ensuing Annual General Meeting.
(c) Reimbursement of expenses actually and properly
As required under Section 257 of the Companies Act, 1956,
incurred by him for the business of the Company.
notices have been received from some Members of the Company
along with a deposit of Rs.500/- each, signifying their intention III In case of absence or inadequacy of profits in any financial
to propose Shri V. P. Sadekar as a candidate for the office of the year of the Company during 01.02.2006 to 31.01.2009, Shri
Director of the Company, liable to retire by rotation.
V. P. Sadekar will be entitled to the said salary, perquisites 1956. The Company does not envisage a scenario of absence
and other allowances mentioned above as the minimum or inadequacy of profits in these Financial Years, however, out
remuneration, subject to the limits prescribed in paragraph of abundant caution, an enabling resolution is proposed for the
1(B) of Section II of Part II of Schedule XIII of the approval of the Members.
Companies Act, 1956.
The present remuneration payable to Shri A.K. Srivastava is
Subject to the limits prescribed under Schedule XIII of the as under:
Companies Act, 1956, the Board may alter or vary the above I (a) Basic Salary : Rs.21,96,000/- per annum
referred terms of appointment, salary, commission and (b) Perquisites :
perquisites payable in such manner as the Board in its
absolute discretion deems fit and acceptable to Shri V. P. Fully furnished house or House Rent Allowance in lieu
Sadekar provided that, in the event of absence or inadequacy thereof.
of profits, such alterations are within the limits specified Expenditure incurred on gas, electricity, water, servants
in paragraph 1(B) of Section II of Part II of Schedule XIII etc.
of the Companies Act, 1956 or any amendments, Mediclaim Policy, Personal Accident Insurance, Leave
modifications or re-enactments made thereof from time to Travel Concession and Club Fees as per the rules of
time. the Company.
Shri V. P. Sadekar shall not be entitled to receive sitting Allowances amounting to Rs.2,00,000/- per annum
fees for attending the meetings of the Board of Directors Perquisites shall be valued as per Income-tax Rules,
or any Committee thereof. wherever applicable and in the absence of any such
A copy of the Appointment Letter issued to Shri V. P. Rules, perquisites shall be valued at actual cost.
Sadekar, subject to the approval of the Members, recording The salary and perquisites as mentioned under I (a)
the terms of his appointment for a period of five years from and (b) hereinabove shall be exclusive of :
1st February, 2006, and referred to in the said resolution, is
(i) contribution to provident fund, superannuation
available for inspection by the Members between 2.00 p.m.
fund or annuity fund to the extent these either
and 4.00 p.m. on any working day at the Registered Office
singly or put together, are not taxable under the
of the Company.
Income-Tax Act, 1961.
Other particulars, which are required to be disclosed under (ii) gratuity payable at a rate not exceeding half a
Section II of Part II of the said Schedule XIII, are given in month's salary for each completed year of service
Annexure 'A' to this Explanatory Statement. and
None of the Directors of the Company except (iii) encashment of leave at the end of the tenure.
Shri V. P. Sadekar is concerned or interested in the
Resolution. II. Apart from remuneration, Shri A.K. Srivastava is entitled
to :
The Notice convening ensuing Annual General Meeting
of the members of the Company, alongwith the above (a) free use of the Company's car for the business of the
Explanatory Statement may be treated as an abstract of the Company with reimbursement of driver's salary.
terms of the Agreement relating to the appointment of Shri (b) free telephone facility at residence.
V. P. Sadekar as Managing Director of the Company, as (c) reimbursement of expenses actually and properly
required by Section 302 of the Companies Act, 1956. incurred by him for the business of the Company.
The Board of Directors recommend passing of the Special The said remuneration is subject to revision by the Board of
Resolution at item No.7 of the Notice. Directors, as approved by the shareholders by the said Special
In respect of Item No. 8 Resolution passed in the 5th Annual General Meeting.
As the Members are aware, a Special Resolution was passed at None of the Directors of the Company except Shri A.K.
the 5th Annual General Meeting of the Company held on 29th Srivastava is concerned or interested in the Resolution.
September, 2003, approving the appointment and terms of The Board of Directors recommend passing of the Special
remuneration of Shri A.K. Srivastava as a Whole Time Director Resolution at item No.8 of the Notice.
designated as Finance Director for a period of 5 years w.e.f.
1st May, 2003. Pursuant to the provisions of Schedule XIII of By Order of the Board,
the Companies Act, 1956 in case of absence or inadequacy of N. B. Mankad
profits, the Special Resolution was valid for a period of 3 years Company Secretary
covering the Financial Years during 1st May, 2003 to 30th April, Regd. Office:
2006. It is therefore proposed to approve the payment of 1st floor, Kalpataru Point,
minimum remuneration to Shri A.K. Srivastava for the balance Kamani Marg,
period of his appointment, in case of absence or inadequacy of Sion (East),
profits in any Financial Year during 1st May, 2006 to 30th April, Mumbai 400022.
2008 subject to the limits prescribed in paragraph 1(B) of
Section II of Part II of Schedule XIII of the Companies Act, Mumbai, dated, 2nd May, 2006
Annexure 'A' to the across various functions viz. Plant Operations, Project
EXPLANATORY STATEMENT Execution and Corporate Planning, Business
Statement as required under Section II of Part II of Schedule Development, Sales and Marketing arid General
XIII of the Companies Act, 1956 giving details in respect of Management in Indian and Multinational Companies.
appointment of Shri V. P. Sadekar. 2. Past remuneration :
I GENERAL INFORMATION: Shri V. P. Sadekar had an annual basic salary of
1. Nature of Industry Rs. 16,00,000/-. He also enjoyed perquisites such as
Chemical Industry HRA, LTA, PF, Super Annuation etc. to the tune of
Rs.33,00,000/- per annum.
2. Date or expected date of commencement of
commercial production : 3. Job profile and suitability :
2002-2003 was the first year of operationalisation of Shri V. P. Sadekar is a Chemical Engineer and has
the Company. Pursuant to the Rehabilitation Scheme over 25 years of experience spanning across various
of Mafatlal Industries Limited (MIL) sanctioned by functions viz. plant operations, project execution &
/ the Hon'ble BIFR vide its Order dated 30th October, corporate planning, business development, sales &
2002, the Chemical Business of MEL vested as a going marketing and general management in Indian and
concern in the Company w.e.f. Appointed Date of multinational companies.
1st March, 2002. Shri V. P. Sadekar has specifically played leadership
3. In case of new companies, expected date of roles in specialty chemicals, pharmaceutical s and
commencement of activities as per project agrochemical companies of repute. Keeping in view
approved by financial institutions appearing in the his overall experience in the chemical and related
prospectus : industries, and the responsibilities to be shouldered
by him, he is suitable for the position of Managing
N.A. Director of the Company.
4. Financial performance based on given indicators : 4. Remuneration proposed :
Current Year Previous Year As mentioned in Explanatory Statement in respect of
Rs. in lacs Rs. in lacs Item No.7.
Turnover (Net) 23,276.09 22,579.48 5. Comparative remuneration profile with respect
Profit after tax 855.22 242.33 to industry, size of the company, profile of the
position and person (in case of expatriates the
5. Export performance and net foreign exchange relevant details would be w.r.t. the country of his
earnings : origin) :
Current Year Previous Year Considering the size of the Company, the industry
Rs. in lacs Rs. in lacs benchmarks, experience of the appointee and the
A) FOB value responsibilities to be shouldered by him, the proposed
of exports 9166.80 9155.97 remuneration is commensurate with the remuneration
paid to similar appointees in other companies.
B) Others 526.61 119.46
9693.41 9275.43 6. Pecuniary relationship directly or indirectly with
the Company, or relationship with the managerial
Current Year Previous Year personnel, if any:
Rs. in lacs Rs. in lacs
Besides his proposed remuneration, Shri V. P. Sadekar
Net Foreign does not have any pecuniary relationship with the
Exchange Earnings 1078.66 3222.48 Company and its managerial personnel.
6. Foreign investments or collaborators, if any, Ill OTHER INFORMATION :
NIL 1. Reasons of loss or inadequate profits - N.A.
II INFORMATION ABOUT THE APPOINTEE: 2. Steps taken or proposed to be taken for improvement
1. Background details : - N.A.
Shri V. P. Sadekar aged 50 years is a B.E. (Chemical 3. Expected increase in productivity and profits in
measurable terms - N.A.
Engg.) and has over 25 years experience spanning
Particulars of the Directors seeking Appointment / Re-appointment at the ensuing Annual General Meeting pursuant
to Clause 49 of the Listing Agreement at the year end.
Name Shri T.M.M. Nambiar Shri S.S. Lalbhai Shri V. P. Sadekar
Age 69 years 46 years 50 years
Date of Appointment 03.03.2003 03.03.2003 01.02.2006
Expertise in Having vast experience of over Industrialist having varied Having over 25 years of experience
functional areas 43 years and was associated as experience of more than spanning across various functions
President / Chairman / Member 23 years in Chemicals & viz. plant operations, project
of the prestigious Institutions General Management. execution & corporate planning,
like Cement Manufacturers' business development, sales and
Association, National Council marketing and general
for Cement & Building Materials management in Indian and
and Development Council for Multinational Companies. He has
Cement Industry, the Associated specifically played leadership roles in
Chambers of Commerce & Specialty Chemicals,
Industry of India, Bombay Pharmaceuticals and Agro
Chamber of Commerce etc. Chemical Companies of repute.
He was associated for more
than 26 years with
Associated Cement Company
Ltd. including 6 years as
Managing Director.
Brief resume B. Com., ACA B. Sc, B.E. (Chemical Engg.)

M. S. (Chemistry), U.S.A.,
M.S. (Economy Planning
& Policy), Boston, U.S.A.
Names of the Director in: Director in: Director in:

Companies in which Carborundum Universal Ltd. Atul Ltd. Navin Fluorine International Ltd.
he holds Directorship/ Coromandel Fertilisers Ltd. Navin Fluorine International
Committee ION Exchange Envofarms. Ltd.
Memberships. ION Exchange (India) Ltd. Wyeth Ltd.
Navin Fluorine International Ltd.
Committee Memberships: Committee Memberships: Committee Memberships:

NIL
Audit Committee: Audit Committee:
Carborundum Universal Ltd. Navin Fluorine International
Coromandel Fertilisers Ltd. Ltd.
ION Exchange (India) Ltd.
Navin Fluorine International Ltd.
Remuneration Committee: Remuneration Committee:*

Navin Fluorine International Ltd. Navin Fluorine International
Ltd.
Shareholders 7 Investors' Share Transfer and

Grievance Committee: Shareholders/ Investors
Coromandel Fertilisers Ltd. Grievance Committee:
Navin Fluorine International Ltd. Atul Limited
DIRECTORS' REPORT 2. INCREASE IN CAPITAL :

To: The First and Final Call of Rs. 30/- (including premium)
The Members, per share, with regard to 50,49,999 Equity Shares of
Navin Fluorine International Limited the Company issued on Rights Basis during 2004 - 05
Your Directors are pleased to present the Eighth Annual was made during the year. Consequently, the issued
Report together with the Audited Accounts for the Year and subscribed share capital of the Company stands
ended 31st March, 2006. increased to 1,00,99,889 at a face value of Rs.1010
1. FINANCIAL RESULTS : lacs. The Paid up Capital of the Company as on
The Financial Results of the company for the year ended 31st March, 2006 is Rs.1009 lacs.
31st March, 2006 are as under: 3. INVESTMENTS :
Current Previous
Year Year The Company's investment portfolio remained
Rupees Rupees unchanged during the year.
lacs lacs The Company holds 49.99% of the equity share capital
Sales (Net off excise duty) 23276 22579 in Mafatlal Denim Limited (MDL, formerly known as
Other Income (including interest/ Mafatlal Burlington Industries Limited). With effect
profit on sale of fixed assets) 552 2133 from 1st April, 2006, MDL ceased to be a joint venture
Profit / (Loss) before Interest, and became an associate of your Company.
Depreciation, Exceptional
Items and Tax 3483 5578 The Company and its wholly owned subsidiary SSL
Less : Depreciation 750 657 together continues to hold 49 % of the equity share
Interest 818 710 capital (71.20 lacs shares) of Molex Mafatlal Micron
Provision for Tax (P) Limited (MMMPL). The Company is actively
including Deferred
considering divestment of these shares. The results of
Tax Income/Loss 939 1788
Profit / (Loss) after Tax but MMMPL have not been consolidated and reported due
before Exceptional Items 976 2423 to their non-availability.
Less: Exceptional Items 4. BORROWINGS :
Provision / (write back of
provision) for Doubtful Advances 121 (7229) As you may have observed, the Company over the past
Diminution in Value of few years, has been using its internal cash generations
Long term Investments — 5940 to invest strongly in plant, equipment and technology
Loss on Sale of Long to get into newer products and also augment its existing
Term Investments — 2970 manufacturing capabilities such that the results of the
Stamp Duty, registration Company can be insulated from the impact of CFC
and other expenses - 500 phase-out in 2010.
2181 During the year, your Company tied up term loans
Profit / (Loss) after Tax and worth Rs.5000 lacs from Export Import Bank of India
available for appropriation 855 242 (EXIM) for various projects. Amounts aggregating to
Add: Surplus / (Deficit) Rs.2563 lacs have been drawn down to support the
brought forward from ongoing Capital Expenditures.
previous year 707 624
Amount available for With the change in the product and market profiles the
Appropriation 1562 866 need for working capital has also increased. In order to
Appropriation augment the emerging working capital needs, the
Transfer to Contingency Reserve pursuant to Company doubled its working capital facilities, both
debt-asset swap of SSL with IDBI 250 fund based and non-fund based, to Rs.4500 lacs during
Transfer to General Reserve 86 18 the year. Currently, UTI Bank Limited and State Bank
Proposed Dividend 268 124 of Hyderabad are the working capital bankers of the
Corporate Dividend Tax thereon 38 17 Company.
Surplus carried to Balance Sheet 920 707
Note: 5. DIVIDEND :
Figures have been regrouped wherever necessary to make The Board of Directors are pleased to recommend a
the information comparable
dividend of 30% for the year as under: prices however, continued to remain weak in the export
Rs.3/- per share on 5056336 fully paid equity shares markets.
of the nominal value of Rs. 10/- each. Your Company maintained a strong presence in the
For 5043553 partly paid up shares whose first and international market with several global crop and life
final call was made during the year 2005-06: science majors as its customers. The Company
A Re.0.68 per share, pro-rata from the first day continued to consolidate its position by entering into
till 12th September, 2005, (last date of receiv- medium to long-term contracts with these customers.
ing the call money) and The R&D has worked relentlessly on new value added
A Re. 1.64 per share on these shares (less 23104 molecules based on specific customer requirements.
shares where calls are in arrears) after those These molecules are currently at different stages of
becoming fully paid. commercialization and some of them are expected to
yield good commercial success in the years to come.
Aggregate amount of dividend payable on partly paid equity
The other significant effort put in by the process
shares is Rs.34.20 lacs and on fully paid equity shares is
engineers is in the area of improving manufacturing
Rs.234.22 lacs.
efficiencies thereby making the products more cost
6. YEAR IN RETROSPECT : competitive.
During the year ended 31st March, 2006 the Company During the year, the Company implemented an HF
further consolidated its position in the Specialty recovery and HCL quality improvement project. This
Fluorochemicals both in the local and international facility, when fully operational, on one hand will bring
markets. In some of the products it has clearly emerged down the cost of production by improving HF
as a global player. consumption norms in the down stream product and
During the year under review the U S Dollar continued on the other hand it will improve the price realization
to remain weak vis-a-vis the Indian Rupee putting of HCL which is sold as a byproduct. Both these will
export realizations and domestic margins under have significant positive impact on the bottom-line
pressure. In the home markets, your Company had to during the forthcoming years.
confront the cascading impact of lower import tariffs. Increase in the capacities of specialty fluorochemicals
The CFC volumes during 2005, as mandated under over the last three years resulted in increase in the
the Montreal Protocol, were brought down to fifty captive demand of sulphuric acid and Oleum. Until
percent of the baseline volumes. Despite this turndown recently the additional sulphuric acid and Oleum were
the Company maintained the export turnover at last being bought out. During the year the Company
year's levels and has grown in the domestic market by implemented a sulphuric acid modernization project and
a modest 4 %. The growth has been led by the fluoro- henceforth, the entire captive requirement of sulphuric
specialties and HCFCs. Due to change in the acid will be met internally. The savings in cost of own
Aluminium manufacturing process resulting in manufactured sulphuric acid against that of bought out
switchover to cheaper input materials, the smelter will add to the bottom-line. Higher in-heuse sulphuric
fluorides business suffered. acid production will also mean higher waste heat steam
availability, resulting in further savings in energy costs.
Due to rise in the international crude oil prices, various
The impact will be manifested in the results of the
feedstock chemicals saw steep increases during the year.
coming years.
Also your Company could not participate strongly in
the dye intermediate business during the year and lost The new SPOR 11 plant at the Surat facility got
further market share due to a very competitive market stabilized during the year. SPOR 11 being a building
situation. The prices of most of the major input block molecule will give your Company a huge
materials continued to remain at their peaks resulting competitive edge in the specialty segment in the years
in enormous pressure on the margins. The supply of to come. Today, the Company's SPOR 11 capacity is
some of the strategic raw materials continued to be one of the largest in the world.
critical. SAP, one of the world's best ERP systems continued
The only silver lining was the firming up of CFC export to provide a world class information platform to the
prices in the face of a global supply constraint. HCFC Company.
8
Your Company, as always, has been aware of its FOREIGN EXCHANGE EARNINGS AND
responsibilities as a good corporate citizen, in health, OUTGO :
safety and environment management and is in the Additional information on conservation of energy,
process of further strengthening its current resources. technology absorption, foreign exchange earnings and
7. SUBSIDIARY : outgo as required to be disclosed in terms of Section
Sulakshana Securities Limited (SSL) is a 100% 217(l)(e) of the Companies Act, 1956 read with the
subsidiary of the Company. As required under Section Companies (Disclosure of Particulars in the Report of
212 of the Companies Act, 1956, the Audited Balance Board of Directors) Rules, 1988 is annexed hereto and
Sheet as at and the Profit & Loss Account along with forms part of this Report.
the Directors' Report of SSL for the year ended 12. REPORTS ON CORPORATE GOVERNANCE
31st March, 2006 is attached herewith. AND MANAGEMENT DISCUSSION AND
As you are aware, Sulakshana Securities Limited (SSL) ANALYSIS :
was created through the Sanctioned Scheme of As required under the Listing Agreement with Stock
Rehabilitation (SS) of MIL with the objective of settling Exchanges, reports on "Corporate Governance" as well
dues worth Rs.25721 lacs of the term lenders of MIL as "Management Discussion and Analysis" are attached
by liquidating certain identified assets of equal value, and forms part of the Directors' Report.
as on the date of the 'SS'. The Company was mandated 13. DIRECTORATE :
to give guarantee to the term lenders such that any
Shri T.M.M. Nambiar and Shri S.S. Lalbhai retire by
shortfall in their settlement amounts will be made good
rotation at the ensuing Annual General Meeting and
by the Company with rights, as available to a guarantor
being eligible, offer themselves for re-appointment.
under sections 140 and 141 of the Indian Contracts
Act, over the remaining assets of SSL after completion Shri D.S. Umalkar resigned as a Director and Chief
of the settlement. SSL's outstanding to MIL's secured Executive Officer of the Company w.e.f. 1st February,
term lenders as on 1st April, 2005 stood at Rs.5276 2006. The Board places on record, its sincere
lacs. appreciation, for the valuable services rendered by Shri
D.S. Umalkar as Director and Chief Executive Officer
During the year, an amount of Rs.719 lacs (including of the Company.
interest) was paid to UTI Limited in settlement of their
Shri V. P. Sadekar was appointed as Additional Director
outstandings. Consequently, the outstanding to MIL
by the Board of Directors of the Company w.e.f
lenders in the books of SSL as on 31st March, 2006
1sl February, 2006. He will hold office upto the ensuing
stands at Rs.4678 lacs. An amount of Rs.200 lacs was
Annual General Meeting of the Company and being
also deposited with IFCI Limited as a token of
eligible, offers himself for re-appointment. Notices
acceptance of settlement of their dues aggregating to
under Section. 257 of the Companies Act, 1956 have
Rs.3023 lacs. Active consultations are underway to
been received by the Company from some members,
settle the remaining dues during the current financial
signifying their intention to propose the candidature of
year.
Shri V. P. Sadekar as a Director of the Company.
8. INDUSTRIAL RELATIONS :
Shri V. P. Sadekar has also been appointed as Managing
The relations between the employees and the Director of the Company w.e.f. 1sl February, 2006
Management have remained cordial. subject to the approval of the Members at the
9. INSURANCE : forthcoming Eighth Annual General Meeting.
The properties and insurable interest of your Company Consequently, Shri H. A. Mafatlal has been redesignated
like Building, Plant and Machinery, Stocks, etc., are as Chairman with effect from that date.
properly insured. 14. DIRECTORS' RESPONSIBILITY STATEMENT:
10. PARTICULARS OF EMPLOYEES : As required under the provisions of Section 217 (2AA)
In compliance with the provisions of Section 217(2A) of the Companies Act, 1956, your Directors report that:'
of the Companies Act, 1956, a statement giving (i) in the preparation of the annual accounts, the
requisite information is annexed hereto. applicable accounting standards have been followed
along with proper explanations relating to material
11. ENERGY, TECHNOLOGY ABSORPTION AND
departures;
(ii) the directors had selected such accounting policies consumption losses.
and applied them consistently and made judgments 3. Vacuum pumps are being progressively replaced
and estimates that are reasonable and prudent so by steam jet ejectors to improve energy efficiency
as to give a true and fair view of the state of affairs
B) ADDITIONAL INVESTMENTS AND
of the Company at the end of the financial year
PROPOSALS, IF ANY, BEING IMPLEMENTED
and of the profit of the company for the year under
FOR REDUCTION IN CONSUMPTION OF
review;
ENERGY
(iii) the directors have taken proper and sufficient care
for the maintenance of adequate accounting records The Company in its usual course of operations keeps
in accordance with the provisions of this Act for exploring process improvements and newer ways of
safeguarding the assets of the Company and for rationalizing energy costs.
preventing and detecting fraud and other C) IMPACT OF THE MEASURES AT (A) AND (B)
irregularities; t ABOVE FOR REDUCTION OF THE ENERGY
(iv) the directors have prepared the annual accounts on CONSUMPTION AND CONSEQUENT IMPACT
a going concern basis. ON THE COST OF PRODUCTION OF GOODS
15. AUDITORS As indicated in (A) and (B) above.
At the Annual General Meeting, Members are requested D) TOTAL ENERGY CONSUMPTION AND
to appoint Auditors for the current year and fix their ENERGY CONSUMPTION PER UNIT OF
remuneration. The specific notes forming part of the PRODUCTION
accounts referred to in the Auditors' Report are self- The above information is furnished in the prescribed
explanatory and give complete information. Form 'A' annexed hereto.
16. APPRECIATION 2. TECHNOLOGY ABSORBTION
The Directors wish to place on record their appreciation Efforts made in technology absorption are furnished in
of the devoted services of the workers, staff and the prescribed Form 'B' annexed hereto.
officers who have largely contributed to the efficient
3. FOREIGN EXCHANGE EARNINGS AND
management of the Company.
OUTGO
17. DONATION A) Activities relating to export initiatives taken to
During the year under review, the Company has made increase exports, developments of new export
donation of Rs.10 lacs for charitable and other markets for products and services and export plans.
purposes. With the growing importance of India as a low cost
For and on behalf of the Board, manufacturing centre with good health, safety and
environment practices, your Company sees a great
H. A. MAFATLAL export potential for many of its products.
Chairman Towards this objective, your Company participated in
Mumbai, dated, 2nd May, 2006 all major trade fairs and exhibitions such as CPHI,
Chemspec, Informex, etc to improve the Company's
visibility amongst the global customers.
Annexure to the Directors' Report 2005 - 06 Enquiries emerging out of such trade fairs are then
1. CONSERVATION OF ENERGY followed up by the Company's sales and marketing
A) Energy conservation measures taken teams through customer visits during the year.
1. During the year the Company implemented a project B) Total Foreign Exchange used and earned
to augment the capacity of the H2SO4 plant. This Total foreign exchange used and earned (in Rs. Lacs)
will make higher quantities of steam available for Current Year PreviousYear
the down stream plants thereby reducing the overall
energy consumption Total foreign exchange used 8614.75 6052.95
Total foreign exchange earned 9693.41 9275.43
2. Drives of heavy-duty motors are being
progressively rationalized to reduce the fixed power
10
FORM A
Form for Disclosure of Particulars with respect to Conservation of Energy
Current Year Previous Year
TOTAL TOTAL
( A ) POWER & FUEL CONSUMPTION :
( 1 ) Electricity
( a ) Purchased:
Units (in Kwh) 6184281 4286818
Total Cost (Rs. ) 42372871 33245982
Rate/Unit (Rs.) 6.85 7.76
( b ) Own Generation :
( i ) Through Diesel Generator :
Units (in Kwh) 37584 48456
Unit per litre of diesel oil (Kwh) 2.42 1.56
Cost/Unit (Rs.) 10.10 14.64
( i i ) Through Captive Power Plant:
Units (in Kwh) 18733860 19134400
Unit per M3 of Natural Gas (Kwh) ... 4.07 3.74
Cost/Unit (Rs.) 2.31 2.56
( 2 ) Furnance Oil:
Quantity (K.Ltrs) 551 571
Total Amount (Rs.) 9499919 6874477
Average Rate (Rs./K Ltr) .. 17249 12033
( 3 ) Others :
A. High Speed Diesel (HSD)
Quantity (K.Ltrs) 62 57
Total Cost (Rs.) 1959519 1336545
Rate/Unit (Per K.Ltr.) 31382 23485
B. Natural Gas
Quantity (Cub. Mtrs.) 8765175 9321260
Total Cost (Rs.) 82287484 81463325
Rate (Rs./Cub Mtrs.) 9.39 8.74
C. Water
Quantity (K. Ltrs.) 1344006 , 1186837
Total Cost (Rs.) 4219623 5629566
Rate (Rs./K.Ltrs) 3.14 4.74
D. Light Diesel Oil (LDO)
Quantity (K. Ltrs.) 67 62
Total Cost (Rs.) 1683089 1303299
Rate (Rs./K.Ltrs) 25061 20990
( B ) CONSUMPTION PER UNIT OF PRODUCTION:
(1) Electricity (Kwh/Mt.) 968 1406
(2) Furnace Oil (K Ltrs/Mt.) 0.02 0.03
(3) Natural Gas (Cub.Mtrs/Mt.) 346.11 558.33
(4) Others (K Ltrs/Mt.) 53.08 71.10
FormB
A) RESEARCH AND DEVELOPMENT d) Total R & D Expenditure
1. Specific areas in which R&D is carried out by the as % of total turn over 0.45 0.31
Company TECHNOLOGY ABSORPTION ADAPTATION AND
R & D efforts of the Company are directed towards the INNOVATION
following: 1. Efforts in brief made towards technology absorption,
a) Process improvements in all existing products to . adaptation and innovation:
achieve better consumption norms and reduce the
overall cost of manufacture. The R & D team develops most of the process for the
b) Development of new catalysts to improve the new products through extensive literature survey,
conversion to desired products and reduce laboratory tests and pilot plant studies after which the
generation of unwanted by-products. products are manufactured on a commercial scale.
c) Further process optimization of HFC 134a process. The R & D team constantly interacts with our customers
2. Benefits derived as a result of the above R&D to understand their changing needs and develop products
Following benefits were derived from the above R & D which meet these needs.
work: 2. Benefits derived as a result of above efforts
More products were added to the Company's growing
portfolio of specialty fluorochemicals. As stated above.
More companies were added to the list of customers 3. Information regarding technology imported during
besides increasing the product basket of existing the last 5 years.
customers both in the domestic and overseas segments.
Improve the Company's competitive position vis-a-vis A) Technology imported - LiPF6 (Lithium
competition. Hexafluorophosphate)
3. Future plan of action B) Year of Import -Technology was imported during
Your Company is committed to emerge as a global the year 2003 - 04
supplier of repute for value added fluorochemicals and
C) Has Technology been fully absorbed - Yes
all R & D efforts will be directed towards that objective.
4. Expenditure on R & D D) If not fully absorbed, not taken place, reasons
Rs. In lacs therefore and future plans of action - Though the
Current Year PreviousYear technology has been imported and absorbed, the
2005 - 06 2004 - 05 Company has decided to monitor the global
a) Capital Expenditure — 4.17 demand-supply and pricing trends before embarking
b) Recurring Expenditure 113.09 70.87 on an investment to set up a commercial scale plant.
c) Total 113.09 75.04
Statement of Particulars of Employees pursuant to the provision of Section 217(2A) of the Companies Act, 1956 and forming part of the
Directors' Report for the year ended 31st March, 2006.
Name & Age Designation/ Remuneration Qualification Date of Last Employment held
(Years) Nature of duties (Rupees) & Experience commencement Name of Employer, Post
(Years) of employment held and period (years)
(1) (2) (3) (4) (5) (6)
A. Names of Employees employed throughout the year and were in receipt of not less than Rs. 24,00,000/-
I) Shri Mafatlai H.A. Chairman Rs.44,66,113/- B.Com (Hons.) 01-05-2003 The Mafatlai Fine Spg. & Mfg. Co.
(52) (30) Ltd.- Vice-Chairman (17 years)
He is also the Vice-Chairman of
Mafatlai Industries Ltd. (11 years)
II) Shri Srivastava A.K. Finance Director Rs. 38,31,454/- B.Sc. (Hons.) FCA 01-05-2003 Mafatlai Industries Ltd.
(54) (29) Sr. V.P. - Finance (5 years)
B. Names of Employees employed for part of the year and were in receipt of remuneration of not less than Rs. 2,00,000/- per month
I) Shri Umalkar D.S. Chief Executive- Rs. 53,40,081/- M.Tech 01-05-2003 Mafatlai Industries Ltd.
(54) Officer (28) Executive Director
(Chemicals Division) (17 years)
II) Shri Sadekar V. P. Managing Director Rs. 13,53,997/- B. Chem. Engg. 01-02-2006 Cheminova India Ltd.
(50) (26) Managing Director (2 years)
NOTES:
1. Remuneration, as above, includes Salary, Dearness Allowance, Company's contribution to Provident Fund and Superannuation Scheme. Leave Encashment, Holiday Travel Benefits,
Reimbursement of Medical Expenses, Medical Insurance Premium, House Rent Allowances, Additional House Rent. Allowance, Compensatory Allowances, Personal Allowance, Voluntary
Retirement Benefit, Commission, where applicable, Personal Accident Insurance, monetary value of perquisites calculated in accordance with provision of Income Tax Act, 1961 andRules
made thereunder in respect of Housing, Company's furniture and equipments etc. but does not include Company's contribution to Gratuity Fund.
2. The nature of employment in all the above cases is contractual.
3. None of the above employees is related to any Director of the Company.
12
MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Navin Fluorine International Ltd. (NFIL) a pioneer in the The specialty organofluorine chemicals for the cropsciences,
fluorochemicals business having set up India's first hydrofluoric acid lifesciences, specialty polymers and dyes & pigment industry
(HF) and down stream fluorocarbon facility at Surat, is today a has grown significantly during the last five years to constitute
company with a global focus and is one of the few integrated approx. 31% of the total business of NFIL in 2005-06. These
fluorochemical companies with the widest range of organic and products primarily cater to the growing needs of the domestic
inorganic fluorochemicals. and global lifesciences, cropsciences and specialty polymer
NFIL products cater to the ever growing needs of the refrigerant industries.
industry, the metal processing & abrasives industry, glass & ceramic About 49% of the specialty organofluorine business comes from
industry, the polymer industry and lastly the fast growing lifescience various domestic lifescience companies and the balance 51 % is
and cropscience industries. through exports to US and Europe to some leading cropscience
NFIL has changed its focus from being a purely domestic company and polymer companies.
to one with a global focus. Today 43% of NFIL's sales come from NFIL can proudly claim to be one among the preferred global
global sales to several Fortune 500 cropscience and lifescience suppliers of five of the top ten global cisopscience companies
companies, as well as to the refrigerant gas users worldwide. and of two of the top ten global chemical companies. On the
Sales of NFIL were at Rs.233 crs in 2005-06, an increase of 3% over domestic front, NFIL enjoys the distinction of being a supplier
the previous year despite decline in CFC volmes. to six of the top ten lifescience companies.
While CFC sales declined by 10%, HCFC and HFC 134a sales B) Opportunities & Threats
grew by 3% partly making up for the CFC decline. Inorganic
Fluorocarbons for the Refrigerant Market
fluorochemicals sales remained at last year levels. However organic
NFIL is a firm believer in the old adage "In every threat there
fluorochemicals registered a year on year growth of 15%.
lies an opportunity".
A) Performance, Industry Structure and Developments
The target markets for NFIL can be broadly classified as : While CFC phaseout is now history, NFIL has positioned itself
Fluorocarbons as refrigerant gases for the refrigeration & appropriately to take advantage of the consequent growth
airconditioning industry and as propellants for the pharma expected in the HCFC segment now and the HFC 134a segment
industry. in future.
With a competitive manufacturing structure in the HCFC
Inorganic fluorochemicals for the metals, glass & ceramic
segment, NFIL has been steadily increasing its HCFC sales
industry and
which has been growing at 8% each year.
Organic fluorine compounds for the cropsciences, lifesciences,
It is expected that the HCFC business of the company catering
speciality polymers and dyes & pigments industry.
mainly to the air-conditioning industry will continue to grow as
The refrigerant and airconditioning gas business is undergoing
producers from developed countries progressively reduce their
a metamorphosis both in India as well as globally. The older
presence in various markets in accordance with the Montreal
generation CFCs are being gradually phased out in accordance
Protocol.
with the Montreal Protocol guidelines. This process which began
In the new generation HFC 134a, India is currently importing
in 1999 will be complete by 2010. While the decline will be
all its requirements from various companies in the developed
primarily in the refrigeration segment, pharma demand for
world. This being a patented process, management has two
metered dose inhalers is expected to remain at the current levels
options - either to go ahead with an existing locally developed
until 2010.
technology which is yet to be tested on a commercial scale or to
With Indian pharma companies continuing to be major producers
explore putting up a world scale joint venture with one of the
of these products, the demand in this segment is likely to continue
world leaders in HFC 134a. The developments in this market
into the future as well although it will move from CFCs to HFC
are being closely monitored by the company which is currently
134a or such other alternate products.
undertaking a detailed evaluation of the domestic and
While CFCs are under a phase-out process, the HCFCs
international markets for this new generation products. At an
(hydrochlorofluorocarbons) the second generation of
appropriate time your company will decide to commit greater
fluorocarbons which are primarily used for airconditioning and
resources to participate in this growing business. Your company
industrial refrigeration, have grown and are expected to grow
has created a good equity for the "Mafron" brand in the trade
with the growth of the national economy and the increase in
and OEMs through its well established trade channels and is
purchasing power of the people. HCFCs also have a significant
ideally positioned to take advantage of the future HFC 134a
export potential.
business growth.
HCFCs have a phase-out period in India until 2040 . Hence
HCFCs will continue to be sold in the refrigeration and Organo-fluorines for the Lifescience and Cropscience
airconditioning industry for quite sometime. business
The third and current generation of fluorocarbons are HFC 134a Your company has emerged as a competitive supplier of quality
and blends thereof. These fluorocarbons are currently not being specialty fluoro products to the lifescience and cropscience
manufactured in the country and are more expensive than the companies in India and abroad. This business is highly customer
CFCs and HCFCs. NFIL is currently supplying these products focused and it is imperative that the exacting and stringent quality
to the domestic consumers by importing the same from one of and HSE standards of demanding overseas customers are met
its global partners. all the time. This is a big challenge in this business and requires
Of the total fluorocarbons sold by NFIL in the refrigeration and significant investments to be made in ensuring that quality and
airconditioning segment, 36% comes from CFCs, 52% from health & safety requirements are met. Also the success of this
HCFCs and 12 % from HFC 134a. business lies in continuous introduction of new products which
The Inorganic fluorochemicals which constitute 14% of NFIL's in turn calls for a high degree of innovation. This would entail '
total revenues are primarily going into the metals and metal a higher thrust to be given to Research & Development calling
processing industry, glass & ceramic industry and abrasives for higher investments in this area. Your company is working
industry. These market segments have shown slow to moderate out its future plans to set up a state-of-the-art Research &
growth during the last year and NFIL continued to enjoy a Development and Quality Centre. Therefore, while this could
respectable position amongst its customers in this segment. be a threat if nothing is done, your company having recognized
13
the need is gearing itself up to meet this future challenge and is lifescience companies for their requirements of specialty organo-
confident of achieving its objectives. fluorine compounds .
Within the specialty organo-fluorine segment, the company also Likewise the domestic and global cropscience business as well
has non-fluoro compounds being produced for the dyes and as specialty polymers business are growing at a good rate and
pigment markets. This business has become fiercely competitive with six of the top 10 global cropscience companies already our
with continuous pressure on margins. Your company is customers, management expects this part of the business to grow
continuously focusing on reducing costs in this business to meet rapidly in the next few years. Your company is taking adequate
the growing competition from Chinese suppliers as well as small steps to increase the capacities of various products to meet the
scale Indian producers. However, since this constitutes a very ever-growing demand for the same in the medium term. The
small percentage (2%) of its overall business it will not make any company's performance is expected to be healthy with increase
negative impact on both revenue and bottomline. in the utilization of various capacities installed during the last
three years and with the introduction of newer value added
General
products.
During the year under review, the company continued to face
price escalations in most major raw materials as a result of The management recognizes that in order to meet its stated
objectives of "being a world class customer focused and
unprecedented rfse in global crude oil price. To overcome this,
innovative organization and being a preferred partner of choice
the company has embarked on a cost cutting drive and in future
for the global refrigerant, lifescience and cropscience companies,"
plans to introduce Total Quality Management (TQM) and Total
it needs to make investments in continuously enhancing the
Productivity Management (TPM) programmes which will help company's Research & Development facilities, Quality
it to continuously remain focused on reducing costs. Management systems and other business processes. Towards
Over the last three years, your company has invested significant this end, the management has committed itself to make the
capital to fund its growth in various businesses. This will result necessary investments in the Research & Development and also
in higher per unit depreciation and interest costs until all plants bring in TQM and TPM initiatives in the company.
start running at full capacity. These efforts will be ongoing depending upon the need of the
C) Segment-wise Product-wise performance company.
Although the products of the company find applications in varied
industries as discussed, the company is primarily engaged in E) Human Resources
the manufacture and sale of fluorochemicals and is therefore The relations between the management and the employees
operating in a single business segment., consequently the remained cordial during the year. Old disputes concerning some
company has no segment-wise reporting. contract workmen and ex-gratia payment to workmen at one of
its units were amicably settled during the year. The consequent
D) Business Outlook costs have been booked in the current year's Profit & Loss
Refrigerant business Account. Negotiation for long term settlement of Workmen's
As discussed in the performance above, CFC phaseout is in its wages at one of the units is underway.
last lap and the residual demand for the older CFCs is expected F) Internal Control Systems
to be over by 2010. However, the current generation of HCFCs All the major business processes of the company are currently
continues to see a bullish trend and with the national economy run on SAP, the latest in ERP. The company has an adequate
continuing its growth rate at close to 8%, the CFC decline will Internal Audit System commensurate with its size and nature of
be more than offset by the HCFC growth. Since the HCFCs are operations. An independent firm of Chartered Accountants carries
also used in airconditioners and industrial refrigeration, the out the internal audit at one of its manufacturing sites. A team
HCFC is directly related to the general health and the national from the in-house internal audit resources of the group covers
economy and purchasing power of the people. Management the other locations.
expects the demand for HCFCs to grow at close to 10% level in
The internal auditors periodically interact with the Audit
the coming years.
Committee of the Board of Directors to discuss the terms of
Management expects the long term future of the HCFCs to be
reference and frequency of the audits, significant audit
quite bright since HCFC phaseout in India is still a few decades
observations and their disposals and remedies, if any.
away. The export market for HCFCs is also expected to show
moderate growth although slightly lower than the domestic G) Operating Financial Performance
growth. Your company with the strong presence in this segment The year under review has been financially a challenging year.
and a competitive manufacturing backed by years of experience The business experienced all round pressures on cost of inputs
in this product, is well poised to take advantage of future growth due to a steep increase in oil prices. This coupled with a reduction
in HCFC business. in CFC volumes put some pressure on operating margins.
As regards HFC 134a the future generation of refrigerant gas, However this was more than offset by the growth in HCFC &
your company is currently importing the same from one of its HFC 134a volumes and also by the growth in specialty organo-
trading partners and making it available to the various customers fluorine business.
in India. Going forward, your company is exploring the various The overall cashflows were stretched, due to investments and
possibilities of manufacturing this product in India and is at an increase in working capital to cover some strategic raw materials.
advance stage of evaluating various options. Management However, the company was able to manage the fund flows
expects to come to a final decision on the future plan for HFC through fresh infusion of loans.
134a during 2006-07. H) Cautionary Statement
Organo-fluorine compounds Statements in this Report on Management Discussion and
As discussed above, these organo-fluorine compounds find Analysis describing the Company's objectives, projections,
applications into the niche markets of domestic and global estimates, expectations or predictions may be forward looking
lifescience, cropscience and specialty polymer industries. statements within the meaning of applicable Securities Laws
The lifescience business in India is undergoing dramatic changes. or Regulations. These statements are based on certain
With the growing importance of India as a competitive assumptions and expectation of future events. Actual results
manufacturing base, the demand for your company's organo- could however differ materially from those expressed or implied.
fluorine intermediates is expected to keep growing in the medium The Company assume no responsibility in respect of forward
as well as long term. Your company plans to widen its already looking statements herein which may undergo changes in future
broad customer base and also proposes to tap the global on the basis of subsequent development, information or events.
14
CORPORATE GOVERNANCE REPORT
COMPANY PHILOSOPHY ON CORPORATE GOVERNANCE:

Company's philosophy of Corporate Governance is intended to bring about :
Transparency and Professionalism in activities of the organisation
Implementation of policies and procedures prescribed by the Company to ensure high ethical standards in all its
business activities and responsible and responsive management.
1. Board of Directors:
The Board of Directors of the Company consists of Directors having varied experience in different areas with some of
them acknowledged as leading professionals in their respective fields. The composition of the Board is in conformity
with the provisions of Clause 49 of the Listing Agreements. Shri Hrishikesh A. Mafatlal who is the Chairman of the
Company heads the Board. The Board consists of one Executive Promoter Director, one Non-Executive Promoter
Director, two Executive Directors and four Independent Non-Executive Directors.
Sr Names of the Directors Category No. of Whether Other $ No. of
No. (Executive/ Non- Board Last AGM Directorships Committee
Executive) Meetings held on held Memberships/
attended 27th July, (Including Chairmanships
2005 Private in other
attended Companies) Domestic
at the year end Companies
at the year end
1 Shri H.A. MAFATLAL PROMOTER 8 YES 15* 4
EXECUTIVE
2 Shri A.K. PURI INDEPENDENT
NON-EXECUTIVE 7 NO 2 3
3 Shri T.M.M. NAMBIAR INDEPENDENT
NON-EXECUTIVE 6 YES 4 4
4 Shri P.N. KAPADIA INDEPENDENT
NON-EXECUTIVE 8 YES 2**
5 Shri S.S. LALBHAI INDEPENDENT
NON-EXECUTIVE 7 YES 2 1
6 Shri V.P. MAFATLAL PROMOTER
NON-EXECUTIVE 8 YES 15***
7 Shri D.S. UMALKAR EXECUTIVE 5 NO — N.A.
(upto 31.01.2006)
8 Shri V P. SADEKAR EXECUTIVE 1 N.A. — —
(w.e.f. 01.02.2006)
9 Shri A.K. SRIVASTAVA EXECUTIVE 5 NO 1 —
* including in 5 Private Limited Companies
** both Private Limited Companies.
***including in 11 Private Limited Companies
$ Under this column, memberships/chairmanships of Audit Committees and Shareholders' / Investors' Grievance
Committees, are only considered as per revised provisions of Clause 49 of the Listing Agreement(s).
All the relevant information such as Production, Sales, Exports, Financial Result, Capital Expenditure proposals,
Statutory Dues position etc., are, as a matter of routine, placed before the Board for their approval.
During the year under review, total eight meetings of the Board of Directors were held on 27.05.2005, 06.07.2005,
28.07.2005, 08.10.2005, 27.10.2005, 12.11.2005, 25.01.2006 and 28.03.2006. The Company has thus, observed the
Corporate Governance provisions of the Listing Agreements allowing not more than four months gap between the two
meetings.
_ _
NAVIN FLUORINE INTERNATIONAL LIMITED , ANNUAL REPORT 2005-2006
Personal Shareholding of Non-Executive Directors is as follows:

Name of the Director No. of Equity shares as at the year end.
Shri A.K. Puri NIL
Shri T.M.M. Nambiar NIL
Shri P.N. Kapadia 385
Shri S.S. Lalbhai NIL
Shri V.P. Mafatlal 102314
2. Audit Committee:
As required under Section 292 A of the Companies Act, 1956 read with the provisions of Clause 49 of the Listing
Agreements with the Stock Exchanges, the Board has constituted Audit Committee. Shri T.M.M. Nambiar is the
Chairman of the Committee and the other Members are Shri A.K. Puri, Shri P.N. Kapadia and Shri S.S. Lalbhai.
The terms of reference of the Audit Committee are as outlined in the Companies Act, 1956 and the Listing Agreements.
During the year under review, total five Meetings of the Audit Committee were held on 27.05.2005, 28.07.2005,
27.10.2005, 25.01.2006 and 28.03.2006. The attendance of the Members of the Audit Committee is as follows:
Sr Date of Audit Attendance of Directors
No. Committee Meeting Shri T.M.M. Nambiar Shri A.K. Puri Shri P.N. Kapadia Shri S.S.Lalbhai
1 27.05.2005 No Yes Yes Yes
2 28.07.2005 Yes No Yes Yes
3 27.10.2005 Yes Yes Yes Yes
Yes - Attended, No - Not Attended
The Statutory Auditors, Internal Auditors, Cost Auditors, Finance Head and Chief Executive Officer/ Managing
Director usually attend the meetings of the Audit Committee. The Company Secretary of the Company, Shri N. B.
Mankad acts as the Secretary to the Committee.
3. Remuneration Committee:
Shri A.K. Puri is the Chairman of the Remuneration Committee and Shri T.M.M. Nambiar and Shri S.S. Lalbhai are
the other Members of the Committee. During the year under review, two meetings of the Remuneration Committee
were held on 27.05.2005 and 12.11.2005. The Committee is authorized to decide on the remuneration package for
Executive Directors including annual increments, pension rights, compensation payments, if any. The details of
attendance of the Members of the Remuneration Committee are as follows:
Sr Date of Remuneration
No. Committee Meeting Attendance of Directors
Shri A.K. Puri Shri T.M.M. Nambiar Shri S.S. Lalbhai

1 27.05.2005 Yes No Yes
2 12.11.2005 Yes Yes Yes
Yes - Attended, No - Not Attended
4. Shareholders' / Investors' Grievance Committee:
Shri P.N. Kapadia is the Chairman of Shareholders'/ Investors' Grievance Committee of the Company. Shri T.M.M.
Nambiar and Shri A.K. Srivastava are the other members of the Committee. During the year under review, one
meeting of the Shareholders'/Investors' Grievance Committee was held on 28.07.2005, which was attended by all the
members. The Committee looks into redressing the Investors grievances/complaints viz. non-receipt of transferred
shares, non-receipt of dividends etc.
a) No. of Complaints received from Shareholders
from 01.04.2005 to 31.03.2006 : 102
b) No. of Complaints resolved during the year : 102
c) No. of Complaints pending at the end of the year : NIL
d) No. of Pending transfers as on 31.03.2006 due to certain defects : 21
Shri N. B. Mankad, Company Secretary is the Compliance Officer.
16
5. Remuneration of Directors:
A statement on the remuneration paid to the Executive and Non-Executive Directors is given below:
Sr Director Salary and Commission* Sitting Fees
No. Perquisites
(Rs. In lacs) (Rs. In lacs) (Rs. in lacs)
1 Shri H.A. Mafatlal
Chairman 12.98 31.68
2 Shri V. P. Sadekar
Managing Director - w.e.f. 1-2-2006 10.02 3.52
3 Shri A.K. Srivastava
Finance Director 38.31
4 Shri D.S. Umalkar
Chief Executive Officer - till 31-1-2006 35.81 17.60
5 Shri A.K. Puri - 2.50 0.39
6 Shri T.M.M. Nambiar — 2.50 0.34
7 Shri P.N. Kapadia — 2.50 0.41
8 Shri S.S. Lalbhai - 2.50 0.42
9 Shri V.P. Mafatlal - • 2.50 0.24
* Payable in 2006-2007
Note: Other service contracts, notice period, severance fees etc. - None
The Non-Executive Directors are paid remuneration having regard to the prevalent practice in the Industry and commensurate
with their experience. Besides the above remuneration, there is no other pecuniary relationship or transactions by the
Company with Non-Executive Directors.
6. Disclosure:
(a) Disclosure on materially significant relatedparty transactions i.e. transactions by the Company of material nature,
with its promoters, the directors or the management, their subsidiaries or relatives etc., that may have potential
conflict with the interest of the Company at large :
None of the transactions with any of the related parties were in conflict with interest of the Company. Transactions
with the related parties are disclosed in Note No. 23 in Schedule 18 "Notes on Accounts" annexed to the Financial
Statements for the year.
(b) Details of non-compliance by the Company, penalties, strictures imposed by Stock Exchange/ SEBI or any statutory
authority, on any matter related to Capital Markets, during the last three years:
None.
(c) Though there is no formal Whistle Blower Policy, the Company takes cognizance of complaints made and suggestions
given by the employees and others. Even anonymous complaints are looked into and whenever necessary, suitable
corrective steps are taken. No employee of the Company has been denied access to the Audit Committee of the
Board of Directors of the Company.
(d) The Company has periodic review and reporting to the Board of Directors of risk assessment by senior executives
with a view to minimise risk.
7. Code of Conduct for Board Members and Senior Management:
The Board of Directors have at their Meeting held on 27th October 2005, laid down the Code of Conduct for all the
Board Members and Members of the Senior Management of the Company. The said Code is also placed on the
website of the Company viz. "www.nfil.in". Certificate from the Managing Director affirming compliance of the said
Code by all the Board Members and Members of Senior Management of the Company, to whom the Code is applicable,
is annexed separately to this Report.
17
8. General Body Meetings:

Location and time where last three Annual General Meetings (AGM) were held:
AGM Year Venue Date Time No. of Special
Resolutions passed
7th 2004-05 S.N.D.T.Womens' University, Patkar Hall, 27/07/2005 3.00 PM 4
1 Nathibai Damodar Thackersey Road,
Churchgate, Mumbai 400 020
Whether Special Resolution -
(a) Were put through postal ballot last year : NO
Details of voting pattern : N.A.
Person who conducted the postal ballot exercise : N.A.
(b) Are proposed to be conducted through postal ballot
this year : NO
Procedure for postal ballot : N.A.
9. Means of communication:
The Financial Results of the Company will be reported as mentioned below :-
- Half yearly report sent to shareholders NO
- Quarterly Results proposed to be normally published In English - Free Press Journal
in which newspaper
In Marathi - Navshakti
- Any website www.nfil.in
- Whether it also displays official news release and the presentation
made to institutional investors or to the analysis NO
- whether Management Discussion & Analysis Report
is a part of Annual Report YES
10. General Shareholders Information:
A. Eighth Annual General Meeting :
Date : 29lh June, 2006.
Time : 3.30 p.m.
Venue : S.N.D.T.Womens' University, Patkar Hall,
1, Nathibai Damodar Thackersey Road,
Churchgate, Mumbai 400020.
B. Financial Calendar: 01/04/2006 To 31/03/2007 (tentative)
First Quarterly Results - End July 2006
Second Quarterly Results (Half yearly) - End October 2006
Third Quarterly Results - End January 2007
Audited Yearly Results - End July 2007
18
C. Date of Book Closure 30th May 2006 to 1st June 2006

D. Dividend Payment date on or after 1st July 2006, if declared at the AGM
E. Listing Bombay Stock Exchange Ltd. [BSE] -
Ahmedabad Stock Exchange Ltd. [ASE] -
F. Stock Code BSE 532504
ASE 45433
G. ISIN Number INE 048 G 01018
H. Monthly high & low:
Month Highest Lowest No. of Highest Lowest No. of BSE BSE
Fully Paid Fully Paid Share Partly Partly Share Sensex Sensex
Traded Paid* Paid* Traded Highest Lowest
April 2005 193.00 146.25 148447 144.00 102.20 72096 6649.42 6118.42
May 2005 366.95 170.00 642506 292.70 130.00 447676 6772.74 6141.37
June 2005 379.95 280.05 364505 328.90 237.00 192336 7228.21 6647.36
July 2005 433.05 294.00 735927 422.00 235.00 240612 7708.59 7123.11
August 2005 468.90 353.00 483478 - - - 7921.39 7537.5
September 2005 588.45 402.00 752985 - - - 8722.17 7818.9
October 2005 454.00 296.25 786139 - - - 8821.84 7656.15
November 2005 326.00 250.10 828413 — — — 9033.99 7891.23
December 2005 354.00 251.65 1352099 - - - 9442.98 8769.56
January 2006 315.90 259.00 543647 - - 9945.19 9158.44
February 2006 267.40 206.65 573984 - - - 10196.00 9713.51
March 2006 329.80 239.00 696494 - - - 10782.30 10344.3
* Trading in Partly paid equity shares was discontinued w.e.f, 14th August 2005 and hence quotations in respect of the
same are not given from August 2005 onwards.
I. Registrar & Share Transfer Agents:

Sharepro Services (I) Pvt. Ltd.
Satam Estate, 3rd floor,
Above Bank of Baroda,
Chakala, Andheri (E),
Mumbai 400099.
Tel. : 022-2821 5168, 2820 2114
Fax : 022-28375646
J. Share Transfer System:
All the shares related work is being undertaken by our R& T Agent, Sharepro Services (I) Pvt. Ltd., Mumbai. A
Share Transfer Committee of three Directors has been constituted to approve Share Transfer, Transmission, Split,
Consolidation, etc. of shares. The Share transfers are registered and returned within 30 days from the date of
receipt if relevant documents are complete in all respects. The investors/shareholders grievances are also taken-up
by our R & T Agent.
19
K. Distribution of shareholding as on 31.03.2006

Slab Total No of % No of % to total
Shareholders Shares Share Capital
Less than 500 122835 99.39 1388829 13.75
501-1000 385 0.31 296532 2.93
1001-2000 139 0.11 220053 2.18
2001-3000 52 0.04 131113 1.30
3001-4000 49 0.04 176390 1.75
4001-5000 26 0.02 123739 1.22
5001-10000 45 0.04 339135 3.36
10001-above 63 0.05 7424098 73.51
TOTAL 123594 100.00 10099889 100.00
L. Shareholding pattern as on 31.03.2006

Sr No Category No of Shares held % of Holding
1 Promoters Holding. 3747100 37.10
2 Mutual Funds & UTI. 1402664 13.89
3 Banks, Financial Institutions, Insurance
Companies, Central / State Govt Institutions. 784906 7.77
4 FIIS (Foreign Institutional Investors). 649187 6.43
5 Private Corporate Bodies. 791314 7.83
6 Indian Public 2709239 26.82
7 NRIs / OCBs 15479 0.16
8 Any Other (please specify) GDR — —
TOTAL 10099889 100.00
M. Dematerialisation details:
As on 31st March, 2006, 25288 Shareholders were holding 8695043 Equity Shares in Demat form, which
constitutes 86.09% of the total share capital of the Company. ,
N. Out Standing GDR/ADR: N.A.

0 . Plants/factories:
1. Navin Fluorine Industries, Bhestan, Surat - 395023 (Gujarat)
2. Navin Fluorine Industries, Dewas 455002 (Madhya Pradesh)
P. Address for correspondence:
Navin Fluorine International Limited:
a) Registered Office : 1st floor , Kalpataru Point,
Kamani Marg, Sion (East),
Mumbai 400022.
Tel. : 022 - 24040404
Fax : 022 - 24014077
20
b) Corporate Office : Mafatlal House,

Backbay Reclamation,
Mumbai 400020.
Tel. : 022 - 56357611
Fax : 022 - 56357633
The Company has complied with all the mandatory requirements of Clause 49 and has also complied with one of the
non-mandatory requirement viz. setting up of Remuneration Committee.
ANNEXURE TO CORPORATE GOVERNANCE REPORT
Declaration regarding affirmation of Code of Conduct
In terms of the requirements of the amended Clause 49 of the Listing Agreement, this is to confirm that all the members of
the Board and the senior management personnel have affirmed compliance with the Code of Conduct for the year ended
31st March, 2006.
V.P. Sadekar
Mumbai, dated, 2nd May, 2006 Managing Director
Corporate Governance Certificate

To, the members of Navin Fluorine International Limited
We have examined the compliance of conditions of Corporate Governance by Navin Fluorine International Limited for the year
ended on 31 st March, 2006, as stipulated in clause 49 of the Listing Agreement(s) of the said Company with the Stock Exchange(s).
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion, and to the best of our information, and according to the explanations given to us, subject to the fact that
the Board of Directors have identified persons who constitute 'senior management' at their meeting held on 2nd May, 2006, we
certify that the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing
Agreement(s).
On the basis of our verification, and as certified by the Compliance Officer (Company Secretary), we have to state that no
investor grievances were remaining unattended / pending for more than thirty days.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
for C.C.Chokshi & Co.,
(A. Siddharth)
Partner
Membership no. 31467
Mumbai, dated, 2nd May, 2006
21
Auditors' report note 15. c. and other notes thereon, give the
To, the members of Navin Fluorine International Limited information required by the Companies Act, 1956, in
the manner so required and give a true and fair view
1. We have audited the attached Balance sheet of Navin in conformity with the accounting principles generally
Fluorine International Limited as at 31 st March, 2006, accepted in India:
the Profit and Loss account and also the Cash-flow
a) in the case of the Balance sheet, of the state of
statement for the year ended on that date, annexed thereto.
affairs of the Company as at 31 st March, 2006;
These financial statements are the responsibility of the
Company's management. Our responsibility is to express b) in the case of the Profit and Loss account, of the
an opinion on these financial statements based on our profit for the year ended on that date; and
audit. c) in the case of the Cash-flow statement, of the
2. We conducted our audit in accordance with the auditing cash-flows for the year ended on that date.
standards generally accepted in India. Those Standards for C.C.Chokshi & Co.,
require that we plan and perform the audit to obtain Chartered Accountants'
reasonable assurance about whether the financial
statements are free of material misstatement. An audit (A. Siddharth)
includes examining, on a test basis, evidence supporting Partner
the amounts and disclosures in the financial statements. Membership no. 31467
An audit also includes assessing the accounting principles Mumbai, dated, 2nd May, 2006
used and significant estimates made by management, as
well as evaluating the overall financial statement Annexure to the Auditors' report
presentation. We believe that our audit provides a Re: Navin Fluorine International Limited
reasonable basis for our opinion. (referred to in paragraph 3 of our report of even date)
3. As required by the Companies (Auditor's Report) Order, 1. The requirement of clauses (xiii) and (xiv) of paragraph
2003, issued by the Central Government in terms of 4 of the Order are not applicable for the year.
section 227 (4A) of the Companies Act, 1956, we enclose
2. (a) The Company has maintained proper records showing
in the Annexure a statement on the matters specified in
full particulars, including quantitative details and
paragraphs 4 and 5 of the said Order.
situation of fixed assets;
4. Further to our comments in the Annexure referred to (b) some of the fixed assets were physically verified
above, we report that: during the year by the management in accordance with
i. we have obtained all the information and explana- a programme of verification, which in our opinion
tions, which to the best of our knowledge and belief provides for physical verification of all the fixed assets
were necessary for the purposes of our audit; at reasonable intervals. According to the information
ii. in our opinion, proper books of account as required and explanations given to us no material discrepancies
by law have been kept by the Company so far as were noticed on such verification;
appears from our examination of those books; (c) there has not been any substantial disposal of fixed
iii. the Balance sheet, Profit and Loss account and Cash- assets during the year.
flow statement dealt with by this report are in
agreement with the books of account; 3. (a) The inventories have been physically verified during
the year by the management. In our opinion, the
iv. in our opinion, subject to note 15.c. of schedule 18,
frequency of verification is reasonable;
regarding non-disclosure of information required
under Accounting Standard 27 in respect of one of (b) the procedures of physical verification of inventories
the joint ventures of the Company, the Balance sheet, followed by the management are reasonable and
Profit and Loss account and Cash-flow statement dealt adequate in relation to the size of the Company and
with by this report comply with the accounting the nature of its business;
standards referred to in sub-section (3C) of section (c) the Company is maintaining proper records of
211 of the Companies Act, 1956; inventories. The discrepancies noticed on verification
v. on the basis of written representations received from between the physical stocks and book records were
the directors, as on 31 st March, 2006 and taken on not material.
record by the Board of Directors, we report that none 4. (a) The Company has not granted loans to any companies,
of the directors is disqualified as on 31 st March, 2006 firms or other parties covered in the Register
from being appointed as a director in terms of clause maintained under section 301 of the Companies Act,
(g) of sub-section (1) of section 274 of the Companies 1956. Consequently, requirements of clauses (iii.a)
Act, 1956; to (iii.d) of paragraph 4 of the Order are not
vi. in our opinion and to the best of our information and applicable;
according to the explanations given to us, the said (b) the Company had taken loan from one party covered
accounts, read with the significant accounting policies, in the Register maintained under section 301 of the
22
Companies Act, 1956, aggregating to Rs. 125.00 lacs. of excise duty ofRs. 96.65 lacs (pending before the
The maximum amount involved was Rs. 125.00 lacs; High Court (Rs. 90.33 lacs)/CESTAT(Rs. 4.34 lacs)/
(c) in our opinion, the rates of interest and other terms Director General of Central Excise (Rs. 1.00 lac)/
and conditions of this loan taken were not prima facie Assistant Commissioner of Central Excise (Rs. 0.98
prejudicial to the interests of the Company; lac)), sales-tax of Rs. 159.16 lacs (pending before
the High Court (Rs. 88.94 lacs)/Sales-tax Appellate
(d) This loan has been repaid during the year, inclusive
Tribunal (Rs. 59.87 lacs)/Appellate Board (Rs. 6.04
of interest.
lacs)/ Deputy Commissioner (Rs. 1.20 lacs)/
5. In our opinion, and according to the information and Assistant Commissioner (Rs. 3.11 lacs)) and income-
explanations given to us, there is an adequate internal tax, Rs. 417.26 lacs (pending before Commissioner
control system commensurate with the size of the of Income-tax (Appeals)). Except for these, there are
Company and the nature of its business for the purchase no other cases of non-deposit with the appropriate
of inventory and fixed assets and for the sale of goods authorities of disputed dues in respect of income-tax,
and services. During the course of audit, we have not excise duty, customs duty, wealth-tax, sales-tax,
observed any continuing failure to correct major service tax and cess.
weaknesses in the internal control system.
11. The Company has no accumulated losses at the end of the
6. (a) In our opinion, and according to the information and year and it has not incurred cash losses in the year under
explanations given to us, the particulars of contracts report and in the immediately preceding year.
or arrangements referred to in section 301 of the
12. In our opinion and according to the information and
Companies Act, 1956, have been entered in the explanations given to us, the Company has not defaulted
Register required to be maintained under that section; in the repayment of dues to banks. The Company has had
(b) in our opinion and according to the information and no dues to financial institutions and debentureholders.
explanations given to us, there are no transactions
made in pursuance of contracts or arrangements 13. The Company has not granted any loans and advances on
entered in the Register maintained under section 301 the basis of security by way of pledge of shares, debentures
of the Companies Act, 1956, and exceeding Rs. Five and other securities.
lacs in respect of any party during the year. 14. According to the information and explanations given to
7. The Company has not accepted deposits from the public us, the Company has not given any guarantee for loans
within the meaning of sections 5 8A, 58AA or any other taken by Others from banks or financial institutions.
relevant provisions of the Companies Act, 1956, where 15. In our opinion, the term loans taken during the year have
applicable and the Rules framed thereunder. We are been applied for the purposes for which they were raised.
informed that no Ordef has been passed by the Company 16. According to the information and explanations given to
Law Board, Reserve Bank of India or any Court or any us, and on an overall examination of the Balance sheet of
other Tribunal. the Company, we report that no funds raised on short-
8. In our opinion, the Company has an internal audit system term basis have been used for long-term investment.
commensurate with the size and nature of its business. 17. The Company has not made any preferential allotment of
9. We have broadly reviewed the books of account relating shares to parties and companies covered in the Register
to materials, labour and other items of cost maintained maintained under section 301 of the Companies Act, 1956.
by the Company pursuant to the Rules made by the Central 18. No debentures have been issued by the Company and
Government for the maintenance of cost records under hence the question of creating securities or charge in
section 209(1 )(d) of the Companies Act, 1956, and we respect thereof does not arise.
are of the opinion that prima facie the prescribed accounts
and records have been made and maintained. We have 19. We have verified the end use of monies raised by rights
not, however, made a detailed examination of the records. issue as disclosed in note 22 of schedule 18 to the financial
statements.
10. (a) In our opinion, and according to the information and
explanations given to us, the Company has generally 20. To the best of our knowledge and belief and according to
been regular in depositing undisputed statutory dues the information and explanations given to us, no fraud on
including provident fund, investor education and or by the Company, was noticed or reported during the
protection fund, employees state insurance, income- year.
tax, sales-tax, wealth-tax, service-tax, customs duty, for C.C.Chokshi & Co.,
excise duty, cess and other material statutory dues Chartered Accountants
(where applicable) with the appropriate authorities.
There are no arrears of outstanding statutory dues as (A. Siddharth)
at the last date of the year for a period of six months Partner
from the date they became payable;
Membership no. 31467
(b) according to the information and explanations given Mumbai, dated, 2nd May, 2006
to us, there are cases of non-deposit of disputed dues
23
Balance sheet as at 31st March, 2006

As at
31st March, 2005
Schedule Rupees Rupees
No. in lacs in lacs
SOURCES OF FUNDS
Shareholders' funds
Share capital 1 1,008.83 757.81
Reserves and surplus 2 16,417.51 14,179.60
17,426.34 14,937.41
Loan funds
Secured loans 3 8,806.60 6,934.43
Unsecured loans 4 74.49
8,806.60 7,008.92
Deferred tax liabilities (net) 158.00 —
Total 26,390.94 21,946.33
APPLICATION OF FUNDS
Fixed assets 5
Gross block 16,390.85 14,189.84
less, depreciation 5,425.97 4,686.35
Net block 10,964.88 9,503.49
Capital work-in-progress 3,200.66 2,297.24
14,165.54 11,800.73
Investments 6 2,262.31 2,262.34
Deferred tax assets (net) 264.00
Current assets, loans and advances
Inventories 7 5,720.68 4,035.05
Sundry debtors . . 8 4,149.82 4,388.45
Cash and bank balances 9 6,075.90 5,437.98
Loans and advances 10 5,829.92 4,169.81
21,776.32 18,031.29
less, Current liabilities and provisions
Current liabilities 11 9,876.27 9,119.75
Provisions 12 1,936.96 1,292.28
11,813.23 10,412.03
Net current assets 9,963.09 7,619.26

Total 26,390.94 21,946.33
17
cMgniiicant accounting policies
18
Notes on accounts
As per our attached Report of even date
for C.C. CHOKSHI & CO., H. A. MAFATLAL
Chartered Accountants Chairman VISHAD P. MAFATLAL '
T. M. M. NAMBIAR
VINESH P. SADEKAR ATUL SRIVASTAVA Directors
Managing Director SUNIL LALBHAI
A.K. PURI
A. SIDDHARTH N. B. MANKAD P.N. KAPADIA
Partner Company Secretary
Mumbai, dated, 2nd May, 2006 , Mumbai, dated, 2nd May, 2006
24
Profit and Loss account for the year ended 31st March, 2006
Previous year
No. in lacs in lacs
INCOME
Turnover (gross) 25,331.24 24,541.38
less, excise duty 2,055.15 1,961.90
Turnover (net) 23,276.09 22,579.48
Other income 13 552.45 2,132.85
Increase in stocks of finished goods and process stocks 14 299.02 187.91
Total 24,127.56 24,900.24
EXPENDITURE
Purchase of trading goods 662.38 331.39
Manufacturing and Other expenses 15 19,816.39 18,900.53
Excise duty 166.07 90.15
Depreciation 750.30 656.65
Depreciation on immovable properties 0.03 0.03
Interest'. 16 817.78 710.67
Total 22,212.95 20,689.42
Profit before exceptional items and tax 1,914.61 4,210.82
Exceptional items
(refer note 3.c of schedule 18)
Provision for doubtful advances (120.57)
Provision for doubtful advances written back..., 7,229.30
Provision for diminution in value of long-term investments (non-trade) (5,940.00)
Loss on sale of long-term investments (non-trade) (2,970.08)
Stamp duty, registration and other expenses on transfer of property (500.00)
Profit before tax 1,794.04 2,030.04
Provision for tax
Current tax (including wealth-tax, Rs.0.82 lac, previous year, Rs. 1.71 lacs) (473.82) (441.71)
Deferred tax (422.00) (1,346.00)
Fringe benefit tax (43.00)
(938.82) (1,787.71)
Profit after tax 855.22 242.33
Surplus brought forward from previous year 706.74 623.50
Amount available for appropriation 1,561.96 865.83
Appropriations
Transferred to general reserve 85.52 18.17
Transferred to Contingency reserve (refer note 2.h of schedule 18) 250.00
Proposed dividend 268.42 123.58
Corporate dividend tax thereon 37.66 17.34
641.60 159.09
Surplus carried to Balance sheet 920.36 706.74
Earnings per share (refer note 17 of schedule 18):
basic - Rs 9.54 3.59
diluted - Rs 8.47 3.08
Significant accounting policies 17
Notes on accounts 18
Chartered Accountants Chairman VISHAD P. MAFATLAL
T. M. M. NAMBIAR
VINESH P. SADEKAR ATUL SRIVASTAVA
Directors
A.K. PURI
Mumbai, dated, 2nd May, 2006 Mumbai, dated, 2nd May, 2006
25
Cash flow statement for the year ended 31st March, 2006
Previous year
Rupees in lacs Rupees in lacs
A. Cash flow from operating activities
adjustments for,
Profit on sale of fixed assets (net) (52.22) (1,553.39)
Provision for doubtful debts/advances written back.. (15.72) (7,298.67)
Provision for diminution in value of long-term investments (non-trade) — 5,955.00
Loss on sale of long-term investments (non-trade).... — 2,970.08
Interest expense 817.78 710.67
Interest income (161.62) (124.01)
Share of loss in the partnership firm where the Company is a partner 0.06 0.13
Dividend on long-term investments (non-trade) (39.20) (96.88)
Bad debts written off — 28.61
Sundry credit balances written back (22.36) (63.54)
Excess provision of earlier years written back (13.02) (9.44)
Provision for doubtful debts/ advances 228.51 23.49
Operating profit before working capital changes 3,286.58 3,228.77
Decrease/(increase) in trade receivables 145.41 (1,094.72)
(Increase) in inventories (1,685.63) (300.93)
(Increase) in loans and advances (1,222.70) (82.66)
Increase in trade and-other payables 789.58 1,325.42
(1,973.34) (152.89)
Cash generated from Operations 1,313.24 3,075.88
Direct taxes paid (594.06) (724.77)
Net cash generated from operating activities 719.18 2,351.11
B. Cash flow from investing activities

Purchase of fixed assets L3.56) (4,039.25)
Purchase of investments in the subsidiary company .. — (5.00)
Capital contribution in a partnership firm — (0.80)
Capital contribution in the partnership firm where the Company
is a partner (current) (0.06) (1,524,87)
Share of loss in the partnership firm where the Company is a partner (0.06) (0.13)
Sale of investments — 30.00
Advances against promoters' contribution (494.94)
Sale of fixed assets 72.57 1,731.44
Dividend income : 39.20 96.88
Interest income 38.95 131.62
Net cash (used in) investing activities (2,962.96) (4,075.05)
C. Cash flow from financing activities

Proceeds from issue of equity share capital including share premium 1,506.13 1,183.03
Expenses on issue of shares written off against share premium (2.68) (148.19)
Proceeds from long term borrowings 2,563.00 1,000.00
Repayments of long-term borrowings (1,163.91) (742.55)
Proceeds/from other borrowings (net) 398.59 369.92
Compensation received pursuant to Montreal Protocol for
phasing out production of Ozone Depleting Substances - Capital reserve no. 2 436.34 449.62
Dividend paid (including Corporate dividend tax thereon) (136.55) (109.96)
Interest expense .' (841.73) (723.99)
Net cash generated from financing activities 2,759.19 1,211.1
26
Cashflowstatement for the year ended 31st March, 2006 (Contd.)

Previous year
Net increase/ (decrease) in cash and cash equivalents. 515.41 (446.06)

Cash and cash equivalents at the beginning of the year... 5,406.44 5,852.50
Cash and cash equivalents at the end of the year 5,921.85 5,406.44
Notes,
1 Reconciliation of cash and cash equivalents
As per Balance sheet - schedule 9 6,075.90 5,437.98
less, interest accrued on bank deposits 154.05 31.54
As per Cash-flow statement 5,921.85 5,406.44
2 The following are treated as non-cash transactions:

a. Allotment of preference shares by Mafatlal Industries Limited against advances against promoters' contribution
amounting to Rs. Nil (previous year, Rs. 9,000.00 lacs).
b. Issue of equity shares against advance against share application monies to Sulakshana Securities Limited amounting to
Rs. Nil (previous year, Rs. 10.00 lacs)
c. Adjustment of unsecured loans received against application (and allotment) of shares (including share premium)
amounting to Rs. Nil (previous year, Rs. 333.84 lacs)
d. Interest aggregating to Rs. 21.90 lacs (previous year, Rs. Nil) capitalised during the year.

Chartered Accountants Chairman VISHAO P. MAFATLAL
T. ML M. NAMBIAR
Directors
A.K. PURI
27
Schedules forming part of the accounts As at

31 March, 2005
Schedule 1
SHARE CAPITAL
Authorised
3,50,00,000 equity shares of Rs.10/- each 3,500.00 3,500.00
Issued and subscribed
1,00,99,889 (as at 31st March, 2005, 50,56,336) equity shares of Rs.10/-
each, fully paid-up (refer note below) 1,009.99 505.63
Nil (as at 31s1 March, 2005, 50,43,553) equity shares of Rs. 10/- each,
Rs. 5/- each called up and paid-up — 252.18
1,009.99 757.81
less, Calls in arrears 1.16 —
Total 1,008.83 757.81
= = = = = = =
Note. ^^= .
Includes 49,99,999 equity shares of Rs. 10/- each allotted as fully paid up to the shareholders of Mafatlal Industries Limited (MIL) pursuant to its scheme of
demerger, without payment being received in cash.
Schedule 2
RESERVES AND SURPLUS
Capital reserve no. 1
Balance of excess of assets over liabilities and reserves taken over
pursuant to the scheme of demerger of MIL
As per last Balance sheet 8,035.17 8,035.17
Compensation received pursuant to the Montreal Protocol for phasing
out production of Ozone Depleting Substances
add, received during the year 436.34 449.62
4,739.99 4,303.65
Share premium account
As per last Balance sheet 1,115.87 —
add, additions during the year .-. 1,260.89 1,264.06
2,376.76 1,264.06
less, amount in arrears 5.78 —
2,370.98 1,264.06
less, expenses on issue of shares written off 2.68 148.19
2^68.30 1,115.87
Contingency reserve
Reserve created in terms of a corporate guarantee given
As per last Balance sheet — —
add, transferred from Profit and Loss account during the year 250.00 =
250.00 —
General reserve
As per last Balance sheet 18.17 —
add, transferred from Profit and Loss account during the year 85.52 18.17
103.69 18.17
Surplus in Profit and Loss account 920.36 706.74
Total 16,417.51 14,179.60
======== = =
Schedule 3 ^ ^ ^ = = = ^ =
SECURED LOANS Notes
Loans and advances from Banks
Cash credit accounts 1 1,329.29 856.23
Term loan accounts 2 6,977.31 5,578.20
8,306.60 6,434.43
Other loans and advances
From Others 3 500.00 500.00
Total 8,806.60 6,934.43
• Notes.
1. Secured by hypothecation of certain stocks and book debts of the Company, both present and future.
2. Secured by 9,00,00,000 preference shares held by the Company/ another company in MIL pledged/ to be pledged in favour of the banks. Pending creation
of the pledge on 4,00,00,000 preference shares, the Company has given a negative lien there-against. Further secured by charges created on all the fixed assets,
both present and future, at Bhestan and certain fixed assets at Dewas, both present and future (excluding land under development at Bhestan).
3. Secured by pledge of certain investments held by another company.
Schedule 4
UNSECURED LOANS
Short-term loans and advances
From Others — 74.49
Total — 74.49
28
Schedules forming part of the accounts
FIXED ASSETS (Rupees in lacs)
Asset category Gross block Depreciation Net Block
As at 1st Additions Deductions/ ' As at 31st Vpto 31st / For the 'Deductions/ 1 Vpto 31st As at 31st As at 31st
April, 2005 adjustments March, 2006 March, 2005 year adjustments March, 2006 March, 2006 March, 2005
Land 11.82 0.26 11.56 11.56 11.82

Buildings 1,004.38 331.77 1,336.15 172.51 24.33 196.84 1,139.31 831.87
Plant and machinery 12,671.51 1,844.89 9.75 14,506.65 4,312.60 693.78 2.00 5,004.38 9,502.27 8,358.91
Furniture, fittings and office equipment 318.24 23.10 11.96 329.38 140.64 16.46 4.19 152.91 176.47 177.60
Vehicles 180.81 32.28 9.06 204.03 59.56 15.44 4.49 70.51 133.52 121.25
14,186.76 2,232.04 31.03 16,387.77 4,685.31 750.01 10.68 5,424.64 10,963.13 9,501.45
Vehicles acquired on lease 3.08 3.08 1.04 0.29 1.33 1.75 2.04
Total 14,189.84 2,232.04 31.03 16,390.85 4,686.35 750.30 10.68 5,425.97 10,964.88 9,503.49
As at and for the year ended

31st March, 2005 10,805.71 3,440.16 56.03 14,189.84 4,064.80 656.65 35.10 4,686.35 9,503.49
Capital work-in-progress
(including capital advances) 3,200.66 2,297.24
As at
31st March, 2005
Schedule 6
INVESTMENTS (long term)
(a) Non-trade investments (unquoted)
(i) Subsidiaries
1,50,000 equity shares of Sulakshana Securities Limited of Rs. 10/- each, fully paid-up 15.00 15.00
less, provision for diminution in value 15.00 15.00
— —
(ii) Other investments
5,60,000 equity shares of Cebon Apparel Private Limited
of Rs. 10/- each, fully paid-up 10.50 10.50
2,36,62,762 equity snares of Mafatlal Burlington Industries Limited (now known as
Mafatlal Denim Limited) of Rs. 10/- each, fully paid-up 2,070.30 2,070.30
13,71,162 * equity shares of Molex Mafatlal Micron Private Limited
150 * 11% Corporate bonds - series IV of Housing Development
Finance Corporation Limited of Rs. 1,000/- each, fully paid-up 1.50 1.50
6,00,00,000 ** Optionally Convertible Fully Redeemable Non-Cumulative preference
snares of Rs. 10/- each, fully paid-up of MIL (a company under the same management) 6,000.00 6,000.00
8,200.89 8,200.89
less, provision for diminution in value 5,940.00 5,940.00
2,260.89 2,260.89
(iii) Capital contribution in Urvija Associates, a Partnership Firm 0.80 0.80
(refer note 21 of schedule 18)
2,261.69 2,261.69
(b) Immovable properties
As per last Balance sheet 2.58 2.58
less, depreciation
(i) As per last Balance sheet 1.93 1.90
(ii) for the year 0.03 0.03
1.96 1.93
0.62 0.65
Total 2,262.31 2,262.34
Notes.
(1) Immovable properties are charged in connection with loans taken by another company.
Previous year
(2) Investments made and sold during the year:
Nil (previous year, 3,00,00,000) Optionally Convertible Fully Redeemable Rupees in lacs Rupees in lacs
Non-Cumulative preference shares of MIL (a company under the same management) 3,000.00
* pending transfer in the Company' s name
** 2,00,00,000 Optionally Convertible Fully Redeemable Non-Cumulative preference shares
of MIL have been pledged as additional securities for loans taken by the Company. For the
balance 4,00,00,000 shares, the Company has given a negative lien pending creation of pledge.
29

As at 31st
March, 2005
Schedule 7 Rupees in lacs Rupees in lacs
INVENTORIES
Stores and spares 436.38 354.95
Stock-in-trade
Raw materials 2,801.74 1,496.56
Process stocks 222.42 180.68
Finished goods ., 2,246.85 1,997.90
Trading goods 13.29 4^96
5,284.30 3,680.10
Total 5,720.68 4,O35.o"5
Schedule 8
SUNDRY DEBTORS
(unsecured)
Debts outstanding for a period exceeding six months 799.46 815.85

Other debts . 4,062.64 4,191.66
4,862.10 5,007.51
less, provision 712.28 619.06
Total 4,149.82 4,388.45
Note.
Considered good 4,149.82 4,388.45
Considered doubtful 712.28 619.06
4,862.10 5,007.51
Due from MIL (a company under the same management) 4.95 4.95
Schedule 9
CASH AND BANK BALANCES
Cash in hand (including cheques in hand Rs. Nil;
as at 31SI March, 2005, Rs. 20.31 lacs) 5.68 25.14
Balances with scheduled banks
- in current accounts (refer note 2 below) 1,185.93 2,050.92
- in fixed deposit accounts (including interest accrued Rs. 154.05
lacs; as at 31st March, 2005, Rs. 31.54 lacs) 4,884.23 3,361.86
(on fixed deposit receipts of Rs. 2,039.44 lacs, banks have
lien; as at 31st March, 2005, Rs. 1,377.86 lacs) .
6,070.16 5,412.78
Post Office savings bank account (security deposit) 0.06 0.06
(maximum amount Rs. 0.06 lac; as at 31s1 March, 2005,
Rs. 0.06 lac)
Total . 6,075.9() 5,437.98
Note.
1. Certain current and fixed deposit accounts with banks, which have been transferred from MIL pursuant to its scheme of
demerger, are in the process of being transferred in the Company's name.
2. Out of the above, unutilised monies out of the first and final call on equity shares made by the Company during the year
aggregate to Rs. 29.33 lacs.
30

As at 31st
March, 2005
LOANS AND ADVANCES
(unsecured)
Loan to subsidiary company 918.57
Advances recoverable in cash or in kind or for value to be received 1,478.12 1,171.71
Capital contribution in the partnership firm where the Company
is a partner (current) ". 1,524.81 1,524.87
Balances with Central Excise 2.51 4.51
Iraq Project work-in-progress 162.70 162.70
Advance tax t 1,924.41 1,367.65
6,011.12 4,231.44
Total 5,829.92 4,169.81
Notes.
(1) Considered good 5,829.92 4,169.81
6,011.12 4,231.44
(2) Advances to MIL (a company under the same management)
Maximum amount outstanding during the year 9,000.00
(3) Loans and advances in the nature of loans, due from:
Subsidiary Company:
Sulakshana Securities Limited 918.57
Maximum amount outstanding during the year 918.57 —
' Others:
Staff 48.65 49.63
(interest bearing with repayment schedules beyond seven years)
Maximum amount outstanding during the year 49.63 56.41
Schedule 11
CURRENT LIABILITIES
Sundry creditors
- total outstanding dues to small scale industrial undertakings 68.88
- total outstanding dues to creditors other than small scale
industrial undertakings 9,336.91 8,459.32
9,336.91 8,528.20
Other liabilities 96.76 127.31
Advances from customers 77.15 96.08
Due under a hire purchase agreement 0.31 0.97
Advance against project contracts 303.24 303.24
Interest accrued but not due on loans 61.90 63.95
Total 9,876.27 9,119.75
Schedule 12
PROVISIONS
For tax 1,625.18 1,151.36
5.70 —
For fringe benefit tax (net)
268.42 123.58
Proposed dividend
37.66 17.34
Corporate dividend tax
Total 1,936.96 1,292.28
31
Previous Year
OTHER INCOME
Interest
- on Bonds 0.17 0.17
- on bank deposits, etc. (TDS, Rs. 20.91 lacs; previous year, Rs. 25.94 lacs) 161.45 123.84
161.62 124.01
Dividend on long-term investments (non-trade) 39.20 96.88

Processing charges 193.32 145.32
Profit on sale of fixed assets (net) 52.22 1,553.39
Insurance claims 7.82 14.34
Provision for doubtful debts/ advances written back 15.72 69.37
Sundry credit balances written back 22.36 63.54
Excess provision of earlier years written back (net) 13.02 9.44
Miscellaneous income 47.17 56.56
Total 552.45 2,132.85
Schedule 14
INCREASE IN STOCKS OF FINISHED GOODS AND PROCESS STOCKS
Stocks as at 31s' March. 2006

Finished goods 2,246.85 1,997.90
Trading goods 13.29 4.96
2,482.56 2,183.54
less,
Stocks as at Is' April. 2005

2,183.54 1,995.63
Increase 299.02 187.91
32
Previous Year
MANUFACTURING AND OTHER EXPENSES
Raw materials consumed 11,961.71 11,690.75
Payments to and provisions for employees
Salaries, wages and bonus 1,240.58 982.44
Contribution to provident fund and other funds 158.14 172.95
Welfare expenses 115.56 111.20
1,514.28 1,266.59
Operating and Other expenses
Stores, spares and packing materials consumed 1,631.78 1,666.93
Power and fuel (net) 1,386.07 1,249.32
Rent (net) 31.93 32.57
Rates and taxes 158.86 146.09
Repairs to buildings 6.83 18.93
Repairs to machinery 92.45 77.33
Insurance 81.05 68.21
Communication expenses 68.65 55.58
Commission and discount 365.93 355.89
Transport and freight charges (net) 834.79 900.88
Loss of raw material in transit 308.88 —
Provision for diminution in value of long-term investments (non-trade) — 15.00
Donations , 10.00 10.00
Directors sitting fees 1.80 1.65
Share of loss in the partnership firm where the Company is a partner 0.06 0.13
Miscellaneous expenses 1,251.29 1,268.76
6,340.40 5,943.19
Total 19,816.39 18,900.53
Schedule 16
INTEREST
On fixed loans 689.17 676.32
On cash credit accounts 87.85 18.70
On Others 40.76 15.65
Total 817.78 710.67
33
NAVIN FLUORINE INTERNATIONAL LIMITED . ANNUAL REPORT 2005-2006

Schedule 17
SIGNIFICANT ACCOUNTING POLICIES
1. Fixed assets
Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation
and impairment loss.
2. Depreciation
Depreciation on fixed assets is provided for on straight-line basis in accordance with the Companies Act, 1956. (refer note 4 of
schedule 18)
3. Impairment loss
Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable
amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future
cash-flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling
price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties,
less the costs of disposal.
4. Investments
Long-term investments are carried at cost. Provision is made to recognize a decline, other than temporary, in the carrying
amount of long-term investments.
5. Inventories
Items of inventory are valued at cost or net realizable value, which ever is lower. Cost is determined on the following basis:
Raw materials, stores and spares
Weighted average
Process stocks and finished goods
At material cost plus appropriate value of overheads
Trading goods
FIFO
6. Doubtful debts/ advances
Provision is made in the accounts for debts/ advances that in the opinion of the management are considered doubtful of
recovery.
7. Retirement benefits
Provident fund
Liability is determined on the basis of contribution as required under the statute/ rules.
Superannuation fund
Liability is determined on the basis of contribution as required under the rules.
Gratuity and leave encashment
Liability is determined on the basis of actuarial valuation made at the year end.
8. Foreign currency transactions
Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected.
At the year end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange
differences arising thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or
expense except in the case of liabilities incurred for acquiring fixed assets from outside India, in which case, these are adjusted
in the carrying amounts of such assets.
9. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part
of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended
use. All other borrowing costs are charged to revenue.
10. Government grants
Grants related to specific fixed assets are disclosed as deductions from the value of the concerned assets. Grants related to
revenue are credited to the Profit and Loss account. Grants in the nature of promoter's contribution are treated as capital
reserve.
11. Revenue recognition
Revenue (income) is recognized when no significant uncertainty as to its determination or realization exists.
12. Taxes on income
Tax expense comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents
the amount of income-tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax
represents the effect of timing differences between taxable income and accounting income for the reporting period that originate
in one period and are capable of reversal in one or more subsequent periods.
13. Provisions and contingencies
A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is
probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent
liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of
resources will be required to settle it. Contingent assets are neither recognized nor disclosed.
34

Schedule 18
NOTES ON ACCOUNTS
As at
31s1 March, 2005
1. Estimated amount of contracts remaining to be executed on capital account

and not provided for 331.17 912.56
2. Contingent liabilities in respect of:
a. Excise matters disputed in appeal
These relate to MOD VAT on capital purchases (pending before the Assistant
Commissioner) and permit fee on purchase of alcohol (pending before the
High Court) 96.65 91.16
b. Property tax matters disputed in appeal
These relate to the demand raised by the Municipal Corporation of Dewas
challenged by the Association of Industries of Dewas (pending before the
High Court) 9.06 7.49
c. Sales-tax matters disputed in appeal
These relate to classification of goods and consequent dispute on the rates of
sales-tax (pending at various stages from Assistant Commissioner to High Court) 159.16 152.81
d. Claims against the Company not acknowledged as debts
Labour matters involving issues like regularization of employment, termination
of employment, compensation against severance, etc. 282.27 295.05
Penal demands raised relating to non-submission of proofs of import of
materials (pending at various stages, from Special Director (Appeals) to Appellate
Tribunal for Foreign Exchange (these proofs have been subsequently submitted) 1,348.94 1,348.94
e. Income tax matters disputed in appeal
This mainly relates to the issue of treating the compensation received
pursuant to the Montreal Protocol as taxable income and disallowance of certain
expenses (pending before Commissioner of Income-tax (Appeals)) 417.26
f. Bills of exchange discounted 52.39
In all the above matters (2a. to 2e.), the Company is hopeful of succeeding and
as such does not expect any significant liability to crystallize.
g. Demands of employees not admitted by the management:
- in respect of revision of wages at the Bhestan and Dewas Units Amount not Amount not
- for miscellaneous matters at the Bhestan and Dewas Units ascertainable ascertainable
Pursuant to the scheme for rehabilitation ['the sanctioned scheme' (SS)] of Mafatlal Industries Limited (MIL), Sulakshana
Securities Limited (SSL), the wholly-owned subsidiary of the Company, took over certain identified assets and term loan
liabilities of MIL with the objective of repaying them by disposing off the assets thus transferred. As mandated in the SS, the
Company has executed corporate guarantees during the year in favour of the secured term lenders (of MIL)/ their trustees. In
the event that any of these are invoked or that the Company is called upon to repay any of such term loan liabilities of MIL
transferred to SSL, the Company will have the rights as available to a guarantor under sections 140 and 141 of the Indian
Contracts Act on the remaining assets of SSL. The total amount of corporate guarantees given and outstanding as at the year
end aggregate to Rs. 2,698.00 lacs. In terms of one such guarantee, given to the Industrial Development Bank of India
(IDBI) for Rs. 1,000.00 lacs, under a 'debt-asset swap' agreement for settlement of its dues, the Company is required to
create a reserve of Rs. 1,000.00 lacs equitably over four years beginning current year. Accordingly, an amount of Rs. 250.00
lacs has been credited to Contingency reserve.
35

Schedule 18 (Contd.)
(b) Major components of deferred tax (liabilities) and assets and are as under:
As at 31S|
March, 2005
Difference between books and tax written down values of fixed assets (1,794.73) (1,632.66)
Provision for diminution in value of investments 1,332.94 1,332.94
Capital loss carried forward 323.43
Deferred revenue expenditure 7.61
Others 3.04 3.56
Total (158.00) 264.00
Note,
The Company's cash surplus operations would be leveraged to realign its business portfolio, as a part of which it is reasonably
certain that the carried forward deferred tax assets would be utilized.
10. During the period from 27th August, 1997 to 15th December, 1997, the workers of Navin Fluorine, Bhestan had been on an
illegal and unjustified strike in contravention of the Industrial Disputes Act. The Labour Commissioner of Gujarat, in his
report to the Ministry of Labour, has concurred with the decision of declaring the strike illegal and unjustified. In view thereof,
no provision has been made in the accounts for wages, etc. for the said period. The workers' reference to the Conciliation
Officer on the justification of the strike is pending with the Industrial Tribunal, Gujarat.
11. The net amount of exchange loss included in the Profit and Loss account for the year is Rs. 15.40 lacs (previous year, Rs. 26.87
lacs).
12. Research and development expenditure debited to the Profit and Loss account by charge to relevant heads of account amount to
Rs. 113.09 lacs (previous year, Rs. 70.87 lacs).
13. There are no dues outstanding to small scale industrial undertakings as at the year end.
14. Certain encumbered assets of the Company offered as securities by MIL for loans taken by it are in the process of being
reorganized on restructuring of those loans as per the SS of the BIFR.
15 a. The Company is a venturer in the following companies, both incorporated in India:
• Mafatlal Burlington Industries Limited (now known as Mafatlal Denim Limited) (MBIL) (till 31 s ' March, 2006)
• Molex Mafatlal Micron Private Limited (MMMPL)
b. The percentage holding and proportionate share in assets, liabilities income, expenditure contingent liabilities and capital
commitments of MBIL as at and for the years ended 31st March, 2006 and 31SI March, 2005, are as under:
As at and for the As at and for the
year ended year ended
31s' March, 2006 31sl March, 2005
Percentage equity shareholding as at the year end 49.99% 49.99 %
As at the vear end (Rs. in lacs):
Assets 4,353.44 4,789.56
Liabilities 1,001.66 1,842.84
Contingent liabilities 2.92 1.90
Capital commitments — 56.68
For the year (Rs. in laps);
Income 4,635.75 4,997.19
Expenditure (including provision for tax) 4,225.66 4,860.02
c. The Company is also a venturer in Molex Mafatlal Micron Private Limited (MMMPL), a company incorporated in India.
However, similar information (as given for MBIL in 15.b above) is not given due to non-availability of its audited accounts.

Schedule 18 (Coned/
6. Payment to auditors:
Previous year
Audit fees 4.00 4.00

Tax audit fees 2.00 2.00
In any other manner (certification work, etc.) 3.90 5.65
Service-tax 1.09 0.10
Expenses 0.25 0.12
Total 11.24 11.87
7. (a) The Company has acquired a fixed asset on hire purchase basis (for a period of 60 months) which has been treated as asset
acquired on finance lease as per Accounting Standard on Leases (AS-19). Minimum lease rentals outstanding as at the
year end, are as under:
(Rupees in lacs)
As at 31 st March, 2005
Due Total Minimum Interest Present Total Minimum Interest Present
Lease Payments not due value of the Lease Payments not due value of the
outstanding minimum Outstanding minimum
as at the year lease as at the year lease
end payments end payments
Not later than one year 0.32 0.01 0.31 0.76 0.10 0.66
Later than one year and 0.32 0.01 0.31
not later than five years
Total 0.32 0.01 0.31 1.08 0.11 0.97
(b) The Company has taken certain fixed assets on non-cancellable operating lease. The tenure of such agreements ranges
from 11 months to 72 months. There are no purchase option and escalation clause in these agreements.
(Rupees in lacs)
Due Total minimum lease payments outstanding
As at 31 st March, 2006 As at 31s1 March, 2005
Not later than one year 28.80 16.30
Later than one year and not later than five years 33.17 13.82
Total 61.97 30.12
Operating lease rentals debited to the Profit and Loss account 31.93 32.57
8. MIL was executing a project in Iraq when hostilities broke out between Iraq and Kuwait in 1990-91, resulting in suspension of
project work. In view of the post war conditions and the sanctions imposed by the United Nations and the Government of India,
suspended operations could not be resumed. The customer's bankers have asked for extension of bank guarantees for advance
payment and performance and the State Bank of India in turn has claimed that the funds deposited with them in respect of the
aforesaid project are subject to lien. In view of the prevailing uncertain circumstances, the receipts and payments under the
contracts, transferred to the Company pursuant to the SS of MIL, continue to be carried forward and necessary adjustments
would be made on the status of the project becoming clearer.
9. (a) Pursuant to MIL's SS, 'Income-tax Department to grant exemption from compliance of conditions contained in section
2(19AA) of the Income-tax Act, 1961, with regard to de-merger of Chemical Division'. Accordingly, as per the provisions
of section 72A of the Income-tax Act, 1961, unabsorbed depreciation, aggregating to Rs. 4,112.68 lacs, relatable to the
Chemical Division of MIL was set off against taxable income in the preceding years and provision for tax calculated
accordingly.
37

(b) Major components of deferred tax (liabilities) and assets and are as under:
Asat31 SI
March, 2005
Difference between books and tax written down values of fixed assets (1,794.73) (1,632.66)
Deferred revenue expenditure 7.61
Others 3.04 3.56
Total (158.00) 264.00
Note.
The Company's cash surplus operations would be leveraged to realign its business portfolio, as a part of which it is reasonably
certain that the carried forward deferred tax assets would be utilized.
10. During the period from 27th August, 1997 to 15th December, 1997, the workers of Navin Fluorine, Bhestan had been on an
illegal and unjustified strike in contravention of the Industrial Disputes Act. The Labour Commissioner of Gujarat, in his
report to the Ministry of Labour, has concurred with the decision of declaring the strike illegal and unjustified. In view thereof,
no provision has been made in the accounts for wages, etc. for the said period. The workers' reference to the Conciliation
Officer on the justification of the strike is pending with the Industrial Tribunal, Gujarat.
11. The net amount of exchange loss included in the Profit and Loss account for the year is Rs. 15.40 lacs (previous year, Rs. 26.87
lacs).
12. Research and development expenditure debited to the Profit and Loss account by charge to relevant heads of account amount to
Rs. 113.09 lacs (previous year, Rs. 70.87 lacs).
13. There are no dues outstanding to small scale industrial undertakings as at the year end.
14. Certain encumbered assets of the Company offered as securities by MIL for loans taken by it are in the process of being
reorganized on restructuring of those loans as per the SS of the BIFR.
15 a. The Company is a venturer in the following companies, both incorporated in India:
• Mafatlal Burlington Industries Limited (now known as Mafatlal Denim Limited) (MBIL) (till 31s1 March, 2006)
• Molex Mafatlal Micron Private Limited (MMMPL)
b. The percentage holding and proportionate share in assets, liabilities income, expenditure contingent liabilities and capital
commitments of MBIL as at and for the years ended 31st March, 2006 and 31st March, 2005, are as under:
As at and for the As at and for the
year ended year ended
31s' March, 2006 31st March, 2005
Percentage equity shareholding as at the year end 49.99% 49.99 %
As at the vear end (Rs. in lacs):
Assets 4,353.44 4,789.56
Liabilities 1,001.66 1,842.84
For the vear (Rs. in lacs):
Income 4,635.75 4,997.19
Expenditure (including provision for tax) 4,225.66 4,860.02
c. The Company is also a venturer in Molex Mafatlal Micron Private Limited (MMMPL), a company incorporated in India.
However, similar information (as given for MBIL in 15.b above) is not given due to non-availability of its audited accounts.
38

16. Segment information
Segment information for primary segment reporting (by business segments)
Based on the Accounting Standard on 'Segment Reporting' (AS-17), issued by the Institute of Chartered Accountants of
India, business is the primary segment comprising of 'Chemicals'. As the Company operates only in a single primary business
segment, no segment information thereof is given.
Segment information for secondary segment reporting (bv £eographical segments)
(Rupees in lacs)
As at and for the year ended 31s' March, 2005
Particulars Domestic Exports Total Domestic Exports Total
Revenues 15,351.06 9,980.18 25,331.24 14,717.45 9,823.93 24,541.38
Within India Outside India Total Within India Outside India Total
Segment assets 36,730.09 1,474.08 38,204.17 30,342.00 2,016.36 32,358.36
Cost incurred on acquisition
of fixed assets 3,135.46 — 3,135.46 4,039.25 — 4,039.25
17. Earnings per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number
of equity shares outstanding during the year, as under:
Current year Previous year
Profit after tax - Rs. in lacs 855.22 242.33
Weighted average number of equity shares outstanding during the year
for basic earnings per share 8,959,908 6,745,816
add, weighted average number of partly paid-up equity shares
(uncalled amount) 1,139,981 1,126,163
Weighted average number of equity shares outstanding during the year
for diluted earnings per share 10,099,889 7,871,979
Basic earnings per share - Rs. 9.54 3.59
Diluted earnings per share - Rs. 8.47 3.08
Nominal value per share - Rs. 10.00 10.00
18. Interest capitalized during the year, Rs. 21.90 lacs (previous year, Rs. Nil)
19. The Company has not made any remittances in foreign currencies on account of dividends during the year and does not have
information as to the extent to which remittances in foreign currencies on account of dividends have been made by or on
behalf of non-resident shareholders. The particulars of dividends paid to non-resident shareholders are as follows:
Previous year
Year to which dividend relates 2004-05 2003-04
Number of non-resident shareholders 164 142
Number of shares held by them on which dividend is due 12,555 9,631
Amount remitted to bank accounts in India of non-resident shareholders - Rs. in lacs 0.25 0.19
20. Out of the rights issue made in 2004-05, 109 equity shares could not be offered on rights basis in view of the non-availability
of details of beneficial holders from depositories. The same are kept in abeyance.
39

21. Investment in Partnership Firm, Urvija Associates (formed on 7th June, 2004)
As at 31st March, 2005
Name of the Partners Capital % share of Capital % share of
(Rupees in lacs) profit/ loss (Rupees in lacs) profit/ loss
Navin Fluorine International Limited 0.80 80.00 0.80 80.00
Mayflower Textiles Private Limited 0.10 10.00 0.10 10.00
Myrtle Textiles Private Limited 0.10 10.00 0.10 10.00
22. The Company had made a rights issue of equity shares in the previous year. The first and final call of Rs. 30/- per share
(including premium of Rs. 25/-) was made during the year. The proceeds have been used to part finance infusion of funds into
MIL and for general corporate purposes. Unutilized monies as at the year end, Rs. 29.23 lacs (as at 31st March, 2005, Rs. Nil)
23. Related party transactions
Names of related parties where control exists
Sulakshana Securities Limited - wholly owned subsidiary company
Urvija Associates - a partnership firm where the Company is a majority partner (formed on 7* June, 2004)
Names of related parties and description of relationship where transactions have taken place during the year
Related parties where control exists
Sulakshana Securities Limited - wholly owned subsidiary company
Urvija Associates - a partnership firm where the Company is a majority partner
Key management personnel
Shri Hrishikesh A. Mafatlal (in the capacity of an individual/ trustee)
Shri Vishad P. Mafatlal (in the capacity of an individual/ karta)
Shri Atul K. Srivastava
Shri Dattatray S. Umalkar (till 31st January, 2006)
Shri Vinesh P. Sadekar (from Is' February, 2006)
Relatives of key management personnel
Shri Arvind N. Mafatlal (in the capacity of an individual/ karta/ trustee)
Smt. Sushilaben A. Mafatlal
Smt. Rekha H. Mafatlal
Smt. Aarti Chaddha
Ms. Anjali H. Mafatlal
Mr. Priyavrata H. Mafatlal
Ms. Padmaja Mafatlal
Smt. Madhuvanti N. Baswan (till 31st January, 2006)
Joint venture
Mafatlal Burlington Industries Limited (now Mafatlal Denim Limited) (till 31st March, 2006)
Enterprises over which key management personnel and their relatives are able to exercise significant influence
Mafatlal Industries Limited
Mafatlal Fabrics Private Limited
National Organic Chemical Industries Limited
Mafatlal Impex Private Limited
Vibhadeep Investments and Trading Limited
Sushripada Investments Private Limited
Shamir Texchem Private Limited
Marigold International Private Limited
Pamil Investments Private Limited
Navlekh Investments Limited
Milap Texchem Private Limited
Surekha Holdings Private Limited
Krishnadeep Housing Development Private Limited
40

Details of transactions with related parties during the year

(Rupees in lacs)
Nature of transactions 1 2 3 4 5 Total
Sale of finished goods
National Organic Chemical Industries Limited 6.70 6.70
8.61 8.61
2.31 2.31
Mafatlal Burlington Industries Limited 0.73 0.73
0.89 0.89
Lease rentals paid
Mafatlal Fabrics Private Limited 0.10 0.10
0.18 0.18
Interest expense on short-term deposits
Mafatlal Impex Private Limited 0.34 0.34
19.88 19.88
Krishnadeep Housing Development Private Limited 2.53 2.53
Surekha Holdings Private Limited 1.68 1.68
Managerial remuneration
Shri Hrishikesh A. Mafatlal 44.66 44.66
55.85 55.85
Shri Vishad P. Mafatlal 2.50 2.50
'2.50 2.50
Shri Dattatray S. Umalkar 53.41 53.41
67.52 67.52
Shri Atul K. Srivastava 38.31 38.31
30.48 30.48
Shri Vinesh P. Sadekar 13.54 13.54
Remuneration paid
Smt. Madhuvanti N. Baswan 1.19 1.19
7.05 7.05
Sitting fees
0.21 0.21
Share of loss in a partnership firm
Urvija Associates 0.06 0.06
0.13 0.13
Allotment of equity shares ("including premium)
Shri Arvind N. Mafatlal
65.29 65.29
Shri Hrishikesh A. Mafatlal
64.57 64.57 "
Shri Vishad P. Mafatlal
62.41 62.41
Others
81.82 0.01 1.71 83.54
41

(Rupees in lacs)
Nature of transactions Total

Call Money received (including premium)
Shri Arvind N. Mafatlal 65.29 65.29
Others 81.83 0.01 1.71 83.55
Investment in preference shares'

9,000.00 9,000.00
Investment in equity shares
Sulakshana Securities Limited
70.00 10.00
Purchase of equity shares
Vibhadeep Investment and Trading Limited
5.00 5.00
Capital contribution in a partnership firm
(Urvija Associates)
- fixed
0.80 0.80
- current 0.06 0.06
1,525.00 1,525.00
Advances given to
494.94 494.94
Sulakshana securities limited 918.57 918.57
Marigold International Private limited 220.00 220.00
Short-term loan taken from

Krishnadeep Housing Development Private Limited 125.00 125.00
Short-term loan repaid to

206.98 206.98
Krishnadeep Housing Development Private Limited 125.00 125.00.
L

Details of transactions with related parties during the year (Rupees in lacs)
Nature of transactions 1 2 3 4 5 Total
Conversion of short-term loan into equitv shares
(including premium)
Mafatlal Impex Private Limited -
234.29 234.29
Dividend paid
6.08 6.08
11.33 11.33
3.19 3.19
Others 3.14 1.25 1.39 5.78
2.26 1.30 1.05 4.61
As at the vear end
Amounts due to
7.50 1.50
0.97 0.97
7.76 7.76
Shri Hrishikesh A*. Mafatlal 31.68 31.68
41.68 41.68
2.50 2.50
27.79 27.79
Amounts due from

Mafatlal Industries Limited 4.95 4.95
4.95 4.95
Mafatlal Burlington Industries Limited 0.04 0.04
0.01 0.01
Urvija Associates 1,524.81 1,524.81
1,524.87 1,524.87
Marigold International Private limited 220.00 220.00
Sulakshana securities limited 918.57 918.57
Short-term loan due to

8.73 8.73
Guarantees given for refer note
2hof
schedule 18
1. Enterprises over which key management personnel and their 3. Related parties where control exists
relatives are able to exercise significant influence 4. Key management personnel
2. Joint venture 5. Relatives of key management personnel
1. There are no amounts written off or written back during the year in respect of debts due from or to related parties.
2. Figures in italics are those as at and for the year ended 31st March, 2005
43

24 Raw materials consumed
Previous year
Rupees Rupees
Unit Quantity in lacs Quantity in lacs
(a) Fluorspar tons 25,830 2,757.88 28,017 2,677.72
(b) Chloromethanes tons 11,343 3,677.33 15,291 4,177.41
(c) Matrons tons 331 971.20 366 684.17
(d) Others 28,646 4,555.30 4,151.45
Total 11,961.71 11,690.75
Quantitative information regarding classes of goods manufactured

Previous year
Installed Installed
Unit capacity Production* capacity Production*
(a) Organic Chemicals tons 8,111 353 8,111 429
(b) Synthetic cryolite, aluminium fluoride
and fluorocarbon gases tons 28,300 8,999 28,300 11,707
(c) Hydrofluoric acid and other fluorine
chemicals tons 31,255 16,295 31,255 16,101
(d) Sulphuric acid and oleum tons 39,600 20,777 38,000 26,684
* including production internally consumed

Note. Installed capacity (on three shift basis) as certified by the management.
26 Quantitative information regarding opening and closing stocks of finished goods
Opening stock Closing stock
Rupees Rupees
Unit Quantity in lacs Quantity in lacs
(a) Organic Chemicals tons 91 369.99 166 394.50
204 448.37 91 369.99
and fluorocarbon gases tons 775 624.08 655 654.85
1,353 951.09 775 624.08
(c) Hydrofluoric acid and other fluorine chemicals tons 632 987.39 598 1,181.93
325 400.88 632 987.39
(d) Sulphuric acid and oleum tons 636 16.44 588 15.57
1,363 34.56 636 16.44
Total 1,997.90 2,246.85
1,834.90 1,997.90
Previous year figures are in italics

27 Quantitative information regarding goods traded in
Opening stock Purchases Closing stock
Unit- Rupees Unit- Rupees Unit- Rupees
tons in lacs tons in lacs tons in lacs
(a) Mafron gases 340 622.38 3 13.29
1 3.67 138 331.39
(b) Others 1 4.96
6 34.14 1 4.96
Total 4.96 622.38 13.29
37.81 331.39 4.96
Previous year figures are in italics
44

28 Quantitative information regarding sales turnover
Previous year
Unit- Rupees in lacs Unit - tons Rupees in lacs
(a) Organic Chemicals 206 944.67 379 1,051.50
and fluorocarbon gases 9,160 14,894.10 11,954 15,612.47
(c) Hydrofluoric acid and other fluorine
chemicals 7,751 9,328.44 7,035 7,659.00
(d) Others (including sulphuric acid and oleum) 164.03 218.41
Total 25,331.24 24,541.38
29 Value of imports and value of raw materials, stores, spares and packing materials consumed
Previous year
(a) CIF value of imports
Raw materials 7,144.65 5,275.48
Stores, spares and packing materials 120.24 183.81
Capital goods 510.82 47.93
(b) Consumption of raw materials and stores, spares and packing materials
Previous year
Percentage of Percentage of
Rupees in lacs consumption Rupees in lacs consumption
Raw materials
Imported 6,880.16 57.52 6,116.41 52.32
Indigenous 5,081.55 42.48 5,574.34 47.68
11,961.71 100.00 11,690.75 100.00
Stores, spares and packing materials
Imported 105.48 6.46 183.34 11.00
Indigenous 1,526.30 93.54 1,483.59 89.00
1,631.78 100.00 1,666.93 100.00
30 Expenditure in foreign currency Previous year
(a) Travelling expenses 20.39 17.27
(b) Commission 138.39 157.84
(c) Legal and professional fees 125.12 157.88
(d) Others 555.14 212.74
31 Earnings in foreign exchange Previous year
(a) FOB value of direct exports 9,166.80 -9,155.97
(b) Others 526.61 119.46
32 Previous year figures have been regrouped, wherever necessary, to correspond with those of the current year.
Signatures to Schedule 1 to 18
for C.C. CHOKSHI & CO., H. A. MAFATLAL VISHAD P. MAFATLAL
Chartered Accountants Chairman T. M. M. NAMBIAR
ATUL SRIVASTAVA
VINESH P. SADEKAR Directors
SUNIL LALBHAI
Managing Director A.K. PURI
45
Balance sheet abstract and Company's general business profile

I. Registration details
Registration No. 115499 State Code 11
Balance Sheet Date 31 03 2006
II. Capital raised during the year
(amount in Rupees thousands)
Public issue NIL Rights Issue 25102
Bonus issue NIL Private Placement NIL
III. Position of mobilisation and deployment of funds
Total liabilities 3820417 Total Assets 3820417
Sources of funds
Paid-up capital 100883 Reserves & Surplus 1641751
Secured loans 880660 Unsecured Loans NIL
Deferred tax liabilities (net) [ 15800
Application of funds
Net fixed assets 1416554 Investments 226231
Net current assets 996309 Misc. Expenditure NIL
Accumulated losses NIL
FV. Performance of the Company
Turnover 2533124 Total Expenditure 2233352
+(-)Profit/(loss)before tax [ 179404 +(-)Profit/(loss)after tax 85522
Earning per share (Rupees) (Refer note 17 of Schedule 18) Dividend % 30
V. Generic names of two principal products/ services of the Company (as per monetary terms)
Item Code No.(/TC Code) 290342
Product Description CHLOROFLUOROCARBONS
Item Code No. (ITC Code) 281111
Product Description HYDROFLUORIC ACID
H. A. MAFATLAL
Chairman VISHAO P. MAFATLAL
T. M. M. NAMBIAR
Directors
A.K. PURI
N. B. MANKAD P.N. KAPADIA
Company Secretary
46
Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies for the year ended
31st March, 2006.
(Rupees in lacs)
Extent of Interest in the Subsidiary at the Net Agregate amount of the Subsidiary's profits after
end of Financial Year of the Subsidiary deducting it's losses or vice-versa
(so far as it concerns members of the Company)
Sr. Name of the Subsidiary Profit/ (Losses) not dealt with (Losses) provided for in the
No. Company in the Company's Accounts Company's Accounts
Subsidiary's No. of Equity % of total For the For the For the For the
Financial Shares held paid-up Financial Previous Financial Previous
year ended by the capital year of the Financial year of the Financial
on Company Subsidiary years Subsidiary years since
and its since it it became
nominees became the the Company's
Company's Subsidiary
Subsidiary
1 Sulakshana Securities 31-Mar-06 1,50,000 100% 210.42 (204.65) NIL NIL
Ltd.
H. A. MAFATLAL
Chairman VISHAD P. MAFATLAL
T. M. M. NAMBIAR
Directors
A.K. PURI
N. B. MANKAD P.N. KAPADIA
Company Secretary
Mumbai, Dated, 2nd May, 2006
47
SULAKSHANA SECURITIES LTD. ANNUAL REPORT 2005-2006
DIRECTORS' REPORT accepted by the Company and therefore the particulars

To: stipulated in respect thereof are NIL.
The Members, 6. PARTICULARS OF EMPLOYEES:
SULAKSHANA SECURITIES LTD. Your company has not employed any persons, and therefore,
Your Directors have pleasure in presenting their Eleventh Annual statement pursuant to Section 217 (2A) of the Companies
Report of the Company together with the audited statements of Act, 1956 has not been annexed.
accounts for the year ended 31st March, 2006.
7. CONSERVATION OF ENERGY, TECHNOLOGY
1. FINANCIAL RESULTS :
ABSORPTION FOREIGN EARNINGS AND OUTGO:
Current Previous The Company is not engaged in manufacturing activities.
Year Year Therefore, there is no information to submit in respect of
Rupees Rupees conservation of energy and technology absorption.
Gross Income 58,232,987 6,97,38,610 The Company has no foreign exchange earnings and outgo
(including excess provision during the year.
of interest in earlier 8. APPOINTMENT OF A VDJTORS:
years written back) It is proposed to appoint M/s. C. C.Chokshi & Co., Chartered
Profit/(Loss) before taxes 21,042,141 (2,04,64,541) Accountants, Mumbai as the auditors of the Company at
Provisions for taxes NIL NIL the ensuing Annual General Meeting to hold office from
the conclusion of this meeting until the conclusion of the
Profit/(Loss) after taxes 21,042,141 (2,04,64,541)
next Annual General Meeting, and to fix their remuneration.
Balance brought forward from
previous year (140,310,799) (11,98,46,258) 9. DIRECTORS' RESPONSIBILITY STATEMENT:
As required under the provisions of Section 217 (2AA)
Deficit carried to ___ inserted by the Companies (Amendment) Act, 2000 in the
Balance Sheet (119,268,658) (14,03,10,799) Companies Act, 1956, your Directors report as under:
(i) that in the preparation of the annual accounts, the
2. SETTLEMENT OF DEBT: applicable accounting standards had been followed
During the year under review, out of the balance settled along with proper explanation relating to material
values of secured term liabilities as at Is1 April, 2005 departures;
aggregating to Rs.526635100/-, the following were settled (ii) that the directors had selected such accounting policies
/ settlement reached: and applied them consistently and made judgments and
i) Rs.73531872/- to certain debenture holders of Mafatlal estimates that are reasonable and prudent so as to give
Industries Limited (out of this Rs.71856908/- paid by a true and fair view of the state of affairs of the company
Navin Fluorine International Limited [NFIL]). at the end of the financial year and of the profit of the
ii) Rs.302300000/- settlement with IFCI Limited. Out of company for that year;
this, Rs.20000000/- has been paid till 31st March, 2006, (iii) that the directors had taken proper and sufficient care
by NFIL and disclosed under Unsecured Loans. The for the maintenance of adequate accounting records in
balance is to be paid in cash / discharged by issue of accordance with the provisions of this Act for
debentures of NFIL. safeguarding the assets of the company and for
3. HOLDING COMPANY: preventing and detecting fraud and other irregularities;
The Company continues to be a wholly owned subsidiary (iv) that the directors had prepared the annual accounts on
of Navin Fluorine International Limited. a going concern basis.
4. DIRECTORATE: For and on behalf of the Board,
Pursuant to the provisions of Section 256 of the Companies S. U. Thakkar
Act, 1956, Shri P.V. Thombre, Director of the Company Director
will retire by rotation at the ensuing Annual General Meeting, Mumbai, dated, 28th April, 2006.
but being eligible, offers himself for re-appointment.
5.. RESERVE BANK OF INDIA DIRECTIONS:
As on 31st March, 2006, there were no public deposits
48
AUDITORS' REPORT ANNEXURE TO THE AUDITOR'S REPORT

To, the members of Sulakshana Securities Limited Re: SULAKSHANA SECURITIES LIMITED
1. We have audited the attached Balance sheet of Sulakshana Securities Limited as
at 31 st March, 2006, the Profit and Loss account and also the Cash-flow statement (referred to in paragraph 3 of our report of even date)
for the year ended on that date, annexed thereto. These financial statements are 1 The requirements of clauses (ii), (viii), (xiii) and (xiv) of paragraph 4 of the
the responsibility of the Company's management. Our responsibility is to express Order are not applicable for the year.
an opinion on these financial statements based on our audit.
2 a. The Company has maintained proper records showing full particulars,
2. We conducted our audit in accordance with auditing standards generally accepted including quantitative details and situation of fixed assets;
in India. Those Standards require that we plan and perform the audit to obtain
b. the fixed assets were physically verified during the year by the management.
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting According to the information and explanations given to us the discrepancies
the amounts and disclosures in the financial statements. An audit also includes noticed on such verification were not material;
assessing the accounting principles used and significant estimates made by c. there has not been any substantial disposal of fixed assets during the year.
management, as well as evaluating the overall financial statement presentation. 3 The Company has not granted or taken any loans to/ from companies, firms or
We believe that our audit provides a reasonable basis for our opinion. other parties covered in the Register maintained under section 301 of the
3. As required by the Companies (Auditors' Report) Order, 2003, issued by the Companies Act, 1956. Consequently, requirements of clauses (iii.a) to (iii.g) of
Central Government in terms of section 227 (4A) of the Companies Act, 1956, paragraph 4 of the Order are not applicable.
we give in the Annexure a statement on the matters specified in paragraphs 4
4 In our opinion, and according to the information and explanations given to us,
and 5 of the said Order.
there is an adequate internal control system commensurate with the size of the
4. Further to our comments in the Annexure referred to in paragraph 1 above, we Company and the nature of its business for sale of services. There were no
report that: purchase of inventory and fixed assets or sale of goods during the year. During
a) we have obtained all the information and explanations which to the best of
the course of audit, we have not observed any continuing failure to correct major
our knowledge and belief were necessary for the purposes of our audit;
weaknesses in internal control system.
b) in our opinion, subject to note 6 of schedule 8, regarding non-accounting of
rent/ recovery of expenses, proper books of account as required by law have 5 In our opinion, and according to the information and explanations given to us,
been kept by the Company so far as appears from our examination of those there are no transactions that need to be entered in a Register in pursuance of
books; section 301 of the Companies Act, 1956.
c) the Balance sheet, the Profit and Loss account and Cash-flow statement dealt 6 The Company has not accepted deposits from the public within the meaning of
with by this report are in agreement with the books of account;
sections 58A, 58AA or any other relevant provisions of the Companies Act,
d) in our opinion, subject to note 5, regarding non-disclosure of information
1956, where applicable, and the Rules framed thereunder. We are informed that
required under Accounting Standard 27, and note 6, regarding non-
no Order has been passed by the Company Law Board, Reserve Bank of India or
accounting of rent/ recovery of expenses, of schedule 8, the Balance sheet,
Profit and Loss account and the Cash-flow statement dealt with by this report any Court or any other Tribunal.
comply with the accounting standards referred to in sub-section (3C) of 7 The Company does not have an internal audit system
section 211 of the Companies Act, 1956; 8 a.In our opinion and according to the information and explanations given to us,
e) on the basis of the written representations received from the directors, as on provisions of the The Employees' Provident Fund and Miscellaneous Provisions
31" March, 2006, and taken on record by the Board of Directors, we report Act, 1952 and the Employees State Insurance Act, 1948 are not applicable during
that none of the directors is disqualified as on 31 st March, 2006, from being the year. In respect of other undisputed statutory dues, including investor
appointed as a director in terms of clause (g) of sub-section (1) of section
education & protection fund, income-tax, sales-tax, wealth-tax, customs duty,
274 of the Companies Act, 1956;
excise duty, service tax, cess and other material statutory dues, the Company
f) attention is invited to the following in schedule 8, all of which were also
has generally been regular in depositing them with the appropriate authorities,
the subject matter of our report similarly modified in the previous year:
where applicable. There are no arrears of outstanding statutory dues as at the
i. note 4, regarding accounts of the Company prepared on going concern
last date of the year for a period of more than six months from the date they
basis;
became payable;
ii. note 5, regarding non-disclosure of information required under
Accounting Standard 27, issuedby the Institute of Chartered Accountants b. according to the information and explanations given to us, there are no
of India, on 'Financial Reporting of Interests in Joint Ventures'; dues of sales-tax, income-tax, customs duty, wealth-tax, service-tax, excise duty
Hi. note 6, regarding non-accounting of rent/ recovery of expenses, Rs. Nil and cess which have not been deposited on account of any dispute.
(aggregate to date, Rs. 10,882,974/-), previous year, Rs. 6,006,239/- 9 The accumulated losses of the Company as at the end of the year are more than
(aggregate to date as at 31" March, 2005, Rs. 10,882,974/-). fifty percent of its net worth. The Company has incurred cash losses during the
We further report that without considering items mentioned in paras 4(f)(i) and (ii) year as also in the immediately preceding year.
above, the effect of which on the financial statements for the year ended 31" March
10 The Company has no dues to banks, financial institutions or debenture holders.
2006 and on the corresponding figures in the previous year ended 31" March, 2005,
could not be determined, had the observation made by us in item 4(f)(iii) above 11 The Company has not granted loans and advances on the basis of security by
been considered, the profit for the year would have been Rs. 31,925,115/-, as against way of pledge of shares, debentures and other securities.
the reported figure of Rs. 21,042,141/- (loss for the previous year would have been 12 The Company has not given any guarantee for loans taken by another company
Rs. 9,581,567/-, as against the reported figure of Rs. 20,464,541/-), accumulated from a bank or financial institution.
losses would have been Rs. 108,385,684/-, as against the reported figure of Rs.
13 In our opinion, and according to the information and explanation given to us, on
119,268,658/- (as at 31" March, 2005, Rs. 129,427,825/-, as against the reported
figure ofRs. 140,310,799/-) and loans and advances would have been Rs. 10,882,974/ an overall basis, term loans obtained by the Company were, prima facie, applied
-, as against the reported figure ofRs. Nil (as on 31" March, 2005, Rs. 10,882,974/ during the year for the purpose for which the loans were obtained.
, as against the reported figure ofRs. Nil). 14 According to the information and explanations .given to us, and on an overall
Subject to the foregoing, in our opinion and to the best of our information and examination of the Balance sheet of the Company, we report that no funds raised
according to the explanations given to us, the accounts, read with the significant on short-term basis have been used for long-term investment.
accounting policies and other notes thereon, give the information required by the 15 The Company has not made any preferential allotment of shares to parties and
Companies Act, 1956, in the manner so required, and give a true and fair view in
companies covered in the Register maintained under section 301 of the
conformity with the accounting principles generally accepted in India:
Companies Act, 1956.
i. in the case of the Balance sheet, of the state of affairs of the Company as at
16 No debentures have been issued by the Company and hence the question of
31st March, 2006;
creating securities in respect thereof does not arise.
ii. in the case of the Profit and Loss account, of the profit for the year ended on,
17 During the year, the Company has not raised money by public issue(s).
that date; and
18 To the best of our knowledge and belief, and according to the information and
iii. in the case of the Cash-flow statement, of the cash-flows for the year ended explanations given to us, no fraud on or by the Company was noticed or reported •
on that date. during the year.
forCC. Chokshi&Co.,
Chartered Accountants forC.C. Chokshi&Co.,
(A. Siddharth) Chartered Accountants
Partner (A. Siddharth)
Membership no. 31467 Partner
Mumbai, dated,28th April, 2006. Membership no. 31467
Mumbai, dated,28th April, 2006.
49
BALANCE SHEET AS AT 31ST MARCH, 2006

As at
Schedule 31st March, 2005
Rupees Rupees
I. SOURCES OF FUNDS
1. Shareholders' funds
Share capital 1,500,000 1,500,000
2. Loan funds
Secured loans 184,256,314
Unsecured loans 108,531,872
292,788,186
Total 294,288,186 1,500,000
II. APPLICATION OF FUNDS

1. Fixed assets
(a) Gross Block 447,603,450 447,603,450
(b) Less: Depreciation 29,183,744 21,887,808
(c) Net Block 418,419,706 425,715,642
2. Investments 5 57,775,802 57,775,802

3. Current Assets, Loans and Advances :
Cash and bank balances 6 788,325 837,504
Less : Current Liabilities and Provisions
Current Liabilities 7 301,964,305 623,139,747
Net Current Assets (301,175,980) (622,302,243)

4. Profit and Loss Account 119,268,658 140,310,799
Total 294,288,186 1,500,000

Significant Accounting Policies and
Notes on accounts

Far C.C. Chokshi & Co.,
S. U. THAKKAR Directors
P. V. THOMBRE
A. SIDDHARTH
Partner
Mumbai, dated, 28th April, 2006. Mumbai, dated, 28th April, 2006.
50
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006
Previous year
Rupees Rupees
INCOME
Rent from property 1,328,434 2,740,012
Air-conditioning charges and other receipts 1,284,239 1,702,807
Profit on sale of fixed assets — 44,506,453
Excess provision of interest in earlier years written back 55,620,314 20,789,338
Total 58,232,987 69,738,610
EXPENDITURE
Payment to auditors 56,120 58,100
Property maintenance expenses 3,427,687 8,919,411
Depreciation 7,295,936 19,343,271
Asset Sale Committee meeting fees 3,000 16,500
Miscellaneous expenses 42,616 15,981
Interest on secured term liabilities of
Mafatlal Industries Limited 26,365,487 61,849,888
Total 37,190,846 90,203,151
Profit / (Loss) for the year 21,042,141 (20,464,541)

Deficit brought forward from previous year (140,310,799) (119,846,258)
Deficit carried to Balance sheet (119,268,658) (140,310,799)

Earnings per share (Rs.)
(refer note 7 of schedule 8)
Basic/ Diluted - Rs. 140.28 (244.18)
Significant accounting policies and
Notes on accounts - Schedule 8

For C.C. Chokshi & Co.,
P. V. THOMBRE
A. SIDDHARTH
Partner
51
Cash flow statement for the year ended 31st March, 2006
Previous Year
Rupees Rupees

Profit / (Loss) before tax 21,042,141 (20,464,541)
adjustments for,
Depreciation 7,295,936 19,343,271
(Profit) on sale of fixed assets (net) (44,506,453)
Excess provision of interest in earlier years written back (55,620,314) (20,789,338)
Interest expense 26,365,487 61,849,888
Operating loss before working capital changes (916,750) (4,567,173)

(80,563,693) 4,481,812
(Decrease) / increase in trade and other payables
(81,480,443) (85,361)
Net cash (used in) operating activities
— —

Interest paid (12,100,608) (46,135)
Proceeds from other borrowings 93,531,872
Net cash generated / (used in) from financing activities 81,431,264 (46,135)
Net (decrease) in cash and cash equivalents (49,179) (131,496)

Cash and cash equivalents at the beginning of the year 837,504 969,000
Cash and cash equivalents at the end of the year 788,325 837,504
Notes,
1 Transfer of settled values of secured term liabilities of MIL from current liabilities to secured loans have been treated as non-
cash transactions.
2 Settlement of liabilities under debt-asset swap arrangement with Industrial Development Bank of India, aggregating to
Rs. 962,902,580/-, was treated as non-cash transaction in the previous year.

P. V. THOMBRE
(A. Siddharth)
Partner
A. SIDDHARTH
Partner
52
SCHEDULES FORMING PART OF THE ACCOUNTS

Rupees Rupees
SCHEDULE - 1
SHARE CAPITAL
Authorised :
150,000 equity shares of Rs. 10/- each 1,500,000 1,500,000
Issued and subscribed:
150,000 equity shares of Rs. 10/- each, fully paid-up 1,500,000 1,500,000
Total 1,500,000 1,500,000
Note: =
All the above shares are held by Navin Fluorine International Limited and its nominees.
SCHEDULE - 2
SECURED LOANS
Other loans and advances - from Others 184,256,314
184,256,314 Total
Note: =
Secured against first floor in Mafatlal Centre and by pledge of the investments held by the Company and other Companies.
SCHEDULE - 3
UNSECURED LOANS
Other loans and advances - from Others 108,531,872
(refer note 3 c of schedule 8)
Total 108,531,872
==
SCHEDULE-4
FIXED ASSETS (Rupees)
Gross block Depreciation Net Block
Asset category As at 1st April, Additions Deductions/ As at 31st March, Upto 31st March, For the year Deductions/ Upto 31st March, As at 31st March, As at 31st March,
2005 adjustments 2006 2005 adjustments 2006 2006 2005
Buildings 447,603,450 447,603,450 21,887,808 7,295,936 29,183,744 418,419,706 425,715,642

Total 447,603,450 — — 447,603,450 21,887,808 7,295,936 - 29,183,744 418,419,706 425,715,642
As at and for the
year ended
31st March, 2005 1,433,070,560 985,467,110 447,603,450 46,718,100 19,343,271 44,173,563 21,887,808 425,715,642

Rupees Rupees
SCHEDULE - 5
INVESTMENTS (long term, unquoted and non-trade)
2 equity shares of Soushreyas Investments India Limited of Rs.10/- each, fully paid-up 20 20
2 equity shares of Samatva Investments Limited of Rs.10/- each, fully paid-up 20 20
5,748,832 equity shares of Molex Mafatlal Micron Private Limited
of Rs. 10/- each, fully paid-up (pending transfer in the Company's name) 57,775,762 57,775,762
Total 57,775,802 57,775,802
Note:
The following investments are pledged with Western India Trusteee & Executor Company Limited for and on behalf of certain secured term
lender's liabilities of Mafatlal Industries Limited (MIL) transferred to the Company:
3,478,832 (as at 31st March, 2005, Nil) equity shares of Molex Mafatlal Micron Private Limited.
SCHEDULE - 6
Cash on hand 4,953 5,703
Balances with scheduled banks in current account 783,372 831,801
Total 788,325 837,504
= =
SCHEDULE - 7
CURRENT LIABILITIES
Sundry creditors:
(i) Total outstanding dues of small scale industrial undertakings —
(ii) Total outstanding dues of creditors other then small scale industrial undertakings 13,464,305 96,504,647
13,464,305 96,504,647
Settled values of secured term liabilities of MIL 288,500,000 526,635,100
(refer note 3d of schedule 8)
Total 301,964,305 623,139,747
53
SULAKSHANA SECURITIES LTD. ' ANNUAL REPORT 2005-2006
SCHEDULE - 8
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACOUNTS
A. SIGNIFICANT ACCOUNTING POLICIES
1. Fixed assets
Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation and impairment loss.
2. Depreciation
Depreciation on fixed assets is provided on the straight-line basis in accordance with provisions of the Companies Act, 1956, at the rates and in the manner
provided in schedule XIV of this Act.
3. Impairment loss
Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset's net
selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the continuing use of the asset and from
its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable,
willing parties, less the costs of disposal.
4. Investments
Current Investments are carried at lower of cost and fair value. Long-term investments are carried at cost. Provision is made to recognize a decline, other than
temporary, in the carrying amount of long-term investments.
5. Revenue recognition ,
Revenue (income) is recognized when no significant uncertainty as to determination or realization exists.
6. Taxes on income
Tax expense comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income-tax
payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the effect of timing differences between taxable
income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.
A provision is recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will
be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when the Company has a possible or present
obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.
B. NOTES ON ACCOUNTS
Rupees Rupees
Income-tax matters disputed in appeal
Demand of income-tax authorities disputed in appeals (mainly relate to disallowance of expenses)
(pending before the Commissioner of Income-tax).
The Company is hopeful of succeeding and as such does not expect any significant liability crystallize.
7,432,410 —
7,432,410 —
Previous Years
Rupees Rupees
Payment to auditors:
Audit fees 50,000 50,000
In any other manner (certification work, etc.) 3,000
Service-tax 6,120 5,100
Total 56,120 58,100
3. a. The Board for Industrial & Financial Reconstruction (BIFR) had declared Mafatlal Industries Limited (MIL), a sick industrial undertaking, within the
meaning of section 3(l)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act') on 19th September, 2000, and sanctioned a
scheme for its rehabilitation (SS) on 30* October, 2002, issued on 15th November, 2002.
b. In this SS, the Company was identified as a 'special purpose vehicle' into which the Real Estate and Investment Business of MIL was demerged for
settlement of MIL'S secured term lenders at the values determined in the SS. Against this demerger, the shareholders of MIL were to be issued one equity
share of Rs. 10/- each fully paid-up in the Company for every 500 shares of Rs. 100/- each fully paid-up held in MIL as consideration for the demerger,
aggregating to Rs. 100,000/-. Accordingly, assets valued as per SS of Rs. 1,490,558,880/- along with settled values of secured term liabilities of the like
amount had been transferred to the Company on the Appointed Date (1" April, 2002) and effect given in the accounts in the relevant year.
c. During the year, out of the balance settled values of secured term liabilities as at 1st April, 2005, aggregating to Rs. 526,635,100/-, the following were
settled/ settlement reached:
i. Rs. 73,531,872/- to certain debentureholders of MIL (out of this 71,856,908/- paid of by NFIL);
ii. Rs. 302,200,000/- settlement with IFCI Limited. Out of this, Rs. 20,000,000/- has been paid till 31a March, 2006, by NFTL, and disclosed under Unsecured
Loans. The balance is to be paid in cash/discharged by issue of debentures of NHL. As in terms of the settlement, only principal amount is payable, interest
provided in earlier years on them have been written back to the Profit and Loss account. All amounts paid by NFIL have been shown under Unsecured
Loans. In terms of the SS, NFIL has residuary rights on the assets of SSL as available to a guarantor under section 140 and 141 of Indian Contract
Act, for all payments made by it towards such repayment of dues.
d. In respect of certain settled values of secured term liabilities transferred to the Company, security has been created during the year and thus been
disclosed under Secured Loans. For the balance, where such security(s) is pending creation and are at present secured against certain assets of MIL,
pending reorganization of charges by MIL, continue to be shown under Current Liabilities.
e. Assets Sale Committee has been constituted for settling the liabilities transferred from MIL.
4. As mentioned in note 3b above, the Company has been identified as a 'special purpose vehicle' in the process of implementation of the SS of MIL. Therefore,
though the accumulated losses have exceeded its shareholders' funds as at 31st March, 2006, the accounts of the Company have been prepared on going
:
. ' ' 54
SCHEDULE 8 (Contd.)
concern basis. '
5. Pursuant to the SS of MIL, 5,748,832 equity shares of Rs. 10/- each, at an aggregate value of Rs. 57,488,320/- (determined in the SS) in Molex Mafatlal
Micron Private Limited (a joint venture between MIL and Molex, USA) has been transferred to the Company. However, pending completion of formalities,
including those required in the joint venture agreement, the share certificates are not in the Company's name and consequently, information required under
Accounting Standard 27, issued by the Institute of Chartered Accountants of India on 'Financial Reporting of Interests in Joint Ventures' is not given.
6. Before transfer of assets to the Company by MIL pursuant to its SS, MIL had issued notices to its tenants/ (now) ex-tenants in its building at Nariman Point,
Mumbai (now transferred to the Company) for revision in rent/ recovery of expenses. Pending settlement with them, rent, of Rs. Nil, previous year, Rs.
5,218,984/-, (aggregate to date Rs. 6,642,902/-, as at 31s1 March, 2005, Rs. 6,642,902/-) and recovery of expenses, of Rs. Nil, previous year, Rs. 787,255/-
(aggregate to date, Rs. 4,240,072/-, as at 31" March, 2005, Rs. 4,240,072/-), have not been accounted for the year, on legal advice.
7. Earnings per share
Earnings per share is calculated by dividing the profit/ (loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding
during the year, as under:
Profit/(loss) after tax attributable to equity shares holders (in Rupees) 21,042,141 (20,464,541)
Weighted average number of equity shares outstanding during the year (in numbers) 150,000 83,808
Basic/ diluted earnings per share - Rs. 140.28 (244.18)
8. Segment information
The Company, being a special purpose vehicle, for the purpose as aforementioned in note 3, it does not have any business and/ or geographical segments.
9. Related party transactions
i. Name of related party where control exists
Navin Fluorine International Limited - the holding company (with effect from 15th November, 2004)
ii. Names of related parties and description of relationship where transactions have taken place during the year besides the holding company
Fellow subsidiary
Urvija Associates
Enterprise over which key management personnel are able to exercise significant influence
iii. Details of transactions with related parties during the year
Nature of transactions Holding Fellow Subsidiary Enterprise over which key Total
company management personnel
are able to exercise
significant influence
Advances given to — 2,612,673 2,612,673

4,442,819 4,442,819
Receiving of services — — 3,427,687 3,427,687
8,919,411 8,919,411
Loan received from 91,856,908 — — 91,856,908
Advance received from — 1,674,964 — 1,674,964
Allotment of shares — —
1,000,000 1,000,000
Amount due to as at the year end 91,856,908 16,674,964 11,557,226 120,089,098
10,742,527 10,742,527
Notes,
a) There is no amount written off or written back in respect of debts due from or to related parties.
b) Figures in italics are of those as at and for the year ended 31s'March, 2005
10. There are no small scale industrial undertaking to which the Company owed any sums for more then thirty days, as on 31 !t March, 2006.
11. No provision has been made for tax as there is no taxable income under the provisions of the Income-tax Act, 1961.
12. Figures of previous year have been regrouped, wherever nessecary, to correspond with those of the current year.
Signatures to schedule 1 to 8
P. V. THOMBRE
A. SIDDHARTH
Partner
55
SULAKSHANA SECURITIES LTD. " ANNUAL REPORT 2005-2006
Balance sheet abstract and Company's general business profile

I. Registration details
Registration no. 69464 State code 1 1
Balance sheet date 31-03-2006
II. Capital raised during the year (amount in Rupees thousands)
Public issue Rights issue
NIL NIL
Bonus issue Private placement
NIL NIL
III. Position of mobilisation and deployment of funds (amount in Rupees thousands)
Total liabilities Total assets
596252 596252
Sources of funds
Paid-up capital Reserves and surplus
1500 NIL
Secured loans Unsecured loans
184256 108532
Application of funds
Net fixed assets Investments
418419 57776
Net current assets Miscellaneous expenditure
(301176) NIL
Accumulated losses
119269
IV. Performance of the Company (amount in Rupees thousands)
Turnover (income) Total expenditure
58233 37191
Profit before tax Profit after tax
21042 21042
Earnings per share (Rupees) Dividend %
( Refer note 7of schedule 8) NIL
V. Generic names of two principal products/ services of the Company (as per monetary terms)
Item code no. (ITC code) NA
Product description NA
S.U.THAKKAR} Directors
P. V. THOMBRE
Mumbai, dated, 28th April, 2006.
56
Auditor's report
To, the Board of Directors of
Navin Fluorine International Limited
i. note 3.a, regarding accounts of one of the joint
1. We have audited the attached Consolidated B alance sheet
venture companies not having been consolidated;
of Navin Fluorine International Limited Group, as at 31st
ii. note 16, regarding non-accounting of rent/
March, 2006 and also the Consolidated Profit and Loss
recovery of expenses ofRs. Nil; aggregate to date
account and the Consolidated Cash-flow statement for
as at the year end, Rs. 108.83 lacs (previous year,
the year ended on that date, annexed thereto. These financial
Rs. 60.06 lacs; aggregate to date as at the previous
statements are the responsibility of Navin Fluorine
year end, Rs. 108.83 lacs).
International Limited's management and have been
prepared by the management on the basis of separate
We further report that without considering item 5(i) above,
financial statements and other financial information
the effect of which on the financial statements for the year
regarding components. Our responsibility is to express an
could not be determined, had the observation made by us in
opinion on these financial statements based on our audit.
item 5(ii) been considered, the profit for the year would have
been Rs. 1,700.09 lacs, as against the reported figure ofRs.
2. We conducted our audit in accordance with auditing
1,591.26 lacs (previous year, Rs. 591.22 lacs, as against the
standards generally accepted in India. Those Standards
reported figure of Rs. 482.39 lacs), reserves and surplus
require that we plan and perform the audit to obtain
would have been Rs. 17,665.32 lacs, as against the reported
reasonable assurance about whether the financial
figure ofRs. 17,556.49 lacs (as at 31s' March, 2005, Rs.
statements are free of material misstatement. An audit
14,691.37 lacs, as against the reportedfigureofRs. 14,582.54
includes, examining on a test basis, evidence supporting
lacs) and loans and advances would have been Rs. 5,674.70
the amounts and disclosures in the financial statements.
lacs, as against the reportedfigureofRs. 5,565.87 lacs (as
An audit also includes assessing the accounting principles
at 3 Is'March, 2005, Rs. 4,458.07 lacs, as against the reported
used and significant estimates made by the management,
figure ofRs. 4,349.24 lacs).
as well as evaluating the overall financial statement
presentation. We believe that our audit provides a
Subject to the above, based on our audit and on consideration
reasonable basis for our opinion.
of reports of other auditors on separate financial statements
and on the other financial information of the components, and
3. We did not audit the financial statements of one of the
to the best of our information, and according to the explanations
subsidiaries and the joint venture, whose financial
given to us, we are of the opinion that the attached Consolidated
statements reflect total assets of Rs. 10,232.91 lacs as at
Financial Statements give a true and fair .view in conformity
31st March, 2006 (Rs. 10,806.64 lacs as at 31st March,
with the accounting principles generally accepted in India:
2005), total revenues of Rs. 9,271.51 lacs and net cash
outflows of Rs. 220.08 lacs for the year ended on that date a) in the case of the Consolidated Balance sheet, of the state
(previous year, Rs. 9,994.40 lacs and Rs. 318.09 lacs of affairs of the Navin Fluorine International Limited Group
respectively). These financial statements and other as at 31st March, 2006;
financial information of the subsidiary and joint venture
b) in case of the Consolidated Profit and Loss account, of the
have been audited by other auditors whose reports have
profit for the year ended on that date; and
been furnished to us and our opinion is based solely on the
report of the other auditors. c) in the case of the Consolidated Cash-flow statement, of
the cash-flows for the year ended on that date.
4. We report that the consolidated financial statements have
been prepared by the Navin Fluorine International
Limited's managementin accordance with the requirements for C.C. Chokshi & Co.,
of Accounting Standard (AS) 21, 'Consolidated Financial
Statements' andAS27on 'Financial Reporting of Interests
in Joint Ventures' issued by the Institute of Chartered
Accountants of India.
(A. Siddharth)
5. Attention is invited to the following in schedule 18, both Partner
of which were also the subject matter of our report Membership no. 31467
similarly modified in the previous year:
57
¥IA3OR1NE INTERNATIONA.!. LIMITED ANN\3A1L REPORT 2005-2006
Consolidated Balance Sheet as at 31st March, 2006

Previous Year
No. in lacs in lacs
SOURCES OF FUNDS
Shareholders' funds
Share capital 1 1,008.83 757.81
Resen is and surplus 2 17,556.49 14,582.54
18,565.32 15,340.35
Loan funds
Secured loans 3 11.095.37 7,890.44
Unsecured loans 4 — 74.49
11,095.37 7,964.93
Minority interest 0.16 0.17
Deferred tax liabilities (net) 325.63 34.10
Total. 29,986.48 23,339.55
APPLICATION OF FUNDS
Fixed assets 5
Gross block 27,737.31 25,409.76
less, depreciation 10,051.67 8,697.73
Net block 17,685.64 .16,712.03
Capital work-in-progress 3,201.07 2,297.24
20,886.71 19,009.27
Investments 6 768.97 769.00
Current assets, loans and advances
Inventories 7 7,209.82 5,308.36
Sundry debtors 8 5,044.73 5,259.31
Cash and bank balances 9 6,244.90 5,726.54
Loans and advances 10 5,565.87 4,349.24
24,065.32 20,643.45
/es5,Current liabilities and provisions
Current liabilities 11 13,177.22 15,510.36
Provisions 12 2,557.30 1,571.81
15,734.52 17,082.17
Net current assets 8,330.80 3,561.28
Total.. 29,986.48 23,339.55


T. M. M. NAMBIAR
Directors
A.K. PURI
58
Consolidated Profit and Loss Account for the year ended 31st March, 2006
Previous Year
No. in lacs in lacs
INCOME
Turnover (gross) 29,844.97 29,468.72
less, excise duty 2,092.98 2,105.46
Turnover (net) 27,751.99 27,363.26
Other income 13 1,293.46 2,621.96
Increase/ (decrease) in stocks of finished goods and process stocks 14 490.56 (54.50)
Total 29,536.01 29,930.72
EXPENDITURE
Purchase of trading goods 662.38 331.39
Manufacturing and Other expenses 15 23,472.48 22,893.95
Excise duty 159.76 54.18
Depreciation 1,367.80 1,226.70
Depreciation on immovable properties 0.03 0.03
Interest 16 1,128.44 914.50
Total 26,790.89 25,420.75
Profit before exceptional items and tax 2,745,12 4,509.97
Exceptional items
(refer note 5.c of schedule 18)
Provision for doubtful advances written back 7,229.30
Provision for diminution in value of long-term investments (non-trade) — (5,940.00)
Loss on sale of long-term investments (non-trade) — (2,970.08)
Stamp duty, registration and other expenses on transfer of property. — (500.00)
Provision for tax
Current tax (including wealth-tax, Rs.0.82 lac, previous year, Rs.1.79 lacs) (814.32) (566.31)
Deferred tax (291.53) (1,280.52)
Fringe benefit tax (48.02) —
Profit after tax 1,591.25 482.36
Profit after minority interest 1,591.26 482.39
Surplus brought forward from previous year 1,109.68 786.38
Amount available for appropriation 2,700.94 1,268.77
Appropriations
Transferred to General reserve 85.52 18.17
Transferred to Contingency reserve (refer note 2.h of schedule 18).. 250.00
Corporate dividend tax thereon 37.66 17.34
641.60 159.09
Surplus carried to Balance sheet 2,059.34 1,109.68
Earnings per share (refer note 12 of schedule 18):
basic - Rs 17.76 7.15
diluted - Rs 15.76 6.13

T. M. M. NAMBIAR
SUNIL LALBHAI Directors
Managing Director
A.K. PURI
59
Consolidated Cash Flow Statement for the year ended 31st March, 2006
Previous Year
Rupees Rupees
in lacs in lacs
adjustments for,
Depreciation 1,367.83 1,226.73
Profit on sale of fixed assets (net) (51.06) (1,819.04)
Provision for doubtful debts/ advances written back (15.72) (7,298.67)
Provision for diminution in value of long-term investments (non-trade) — 5,940.00
Loss on sale of long-term investments (non-trade) — 2,970.08
Interest expense 1,128.44 914.50
Interest income (191.38) (142.70)
Dividend on long-term investments (non-trade) (39.20) (96.88)
Sundry credit balances written back (22.36) (63.54)
Excess provision of earlier years written back (13.02) (9.44)
Excess provision of interest written back (556.20) —
Provision for doubtful debts/advances 107.94 23.49
Operating profit before working capital changes 4,460.39 4,002.33
Decrease/(increase) in trade receivables 121.36 (1,030.27)
(Increase) in inventories (1,901.46) (220.02)
(Increase) in loans and advances (294.15) (1,546.21)
Decrease/ (increase) in trade and other payables (41.21) 1,193.44
(2,115.46) (1,603.06)
Cash generated from Operations 2,344.93 2,399.27
Direct taxes paid (963.33) (852.67)
Net cash generated from operating activities 1,381.60 1,546.60
Purchase of fixed assets (3,247.59) (4,158.81)
Purchase of investments in the subsidiary company — (5.00)
Sale of investments — 30.00
Advances against promoters' contribution — (494.94)
Sale of fixed assets 75.32 1,732.82
Dividend income 39.20 96.88
Net cash (used in) investing activities (3,063.78) (2,647.44)
Proceeds from issue of equity share capital including share premium 1,506.13 1,183.03
Expenses on issue of shares written off against share premium (2.68) (148.19)
Proceeds from long term borrowings 2,571.70 1,000.00
Repayments of long-term borrowings (1,682.42) (1,432.05)
Proceeds from other borrowings (net) 398.59 371.72
Compensation received pursuant to Montreal Protocol for
phasing out production of Ozone Depleting Substances - Capital reserve no. 2 436.34 449.62
Dividend paid (including Corporate dividend tax thereon) (136.55) (109.96)
Interest expense (1,012.49) (794.32)
Net cash generated from financing activities 2,078.62 519.85
60
Consolidated Cash Flow Statement for the year ended 31st March, 2006 (Contd.)
Previous Year
Rupees Rupees
in lacs in lacs
Net increase/ (decrease) in cash and cash equivalents. 396.44 (580.99)

5,694.36 6,275.35
Cash and cash equivalents at the beginning of the year ....
6,090.80 5,694.36
Cash and cash equivalents at the end of the year
Notes.
1 Reconciliation of cash and cash equivalents
6,244.90 5,726.54
As per Balance sheet - schedule 9
154.10 32.18
less, interest accrued on bank deposits
As per Cash-flow statement 6,090.80 5,694.36
The following are treated as non-cash transactions:

a. Allotment of preference shares by Mafatlal Industries Limited against advances against promoters' contribution amounting to Rs.
Nil (previous year, Rs. 9,000.00 lacs).
b. Adjustment of unsecured loans received against application (and allotment) of shares (including share premium) amounting to Rs.
Nil (previous year, Rs. 333.84 lacs).
c. Interest aggregating to Rs. 21.90 lacs (previous year, Rs. Nil) capitalised during the year.
d. Transfer of settled values of secured term liabilities of Mafatlal Industries Limited from current liabilities to secured loans have been
treated as non-cash transactions.
e. Settlement of liablites under debt-asset swap arrangement with Industrial Development Bank of India, aggregating to Rs. 9629.03
lacs, was treated as non-cash transaction in the previous year.

T. M. M. NAMBIAR
Directors
A.K. PURI
61
Schedules forming part of the Consolidated Accounts

Previous Year
Rupees Rupees
in lacs in lacs
Schedule 1
SHARE CAPITAL
Authorised
3,50,00,000 equity shares of Rs.10/- each 3,500.00 3,500.00
Issued and subscribed
1,00,99,889 (as at 31st March, 2005, 50,56,336) equity shares of Rs.10/- 1,009.99 505.63
each, fully paid-up (refer note below)
Nil (as at 31st March, 2005, 50,43,553) equity shares of Rs. 10/- each,
Rs. 5/- each called up and paid-up —_ 252.18
1,009.99 757.81
less, Calls in Arrears 1.16 —
Total 1,008.83 757.81
Note.
Includes 49,99,999 equity shares of Rs. 10/- each allotted as fully paid up to the shareholders of Mafatlal Industries Limited (MIL) pursuant
to its scheme of demerger, without payment being received in cash.
Schedule 2
RESERVES AND SURPLUS
Balance of excess of assets over liabilities and reserves taken over
by the parent company pursuant to the scheme of demerger of MIL
Compensation received by the parent company pursuant to the Montreal
Protocol for phasing out production of Ozone Depleting Substances
add, received during the year 436.34 449.62
4,739.99 4,303.65
Share premium account
As per last Balance sheet 1,115.87 —
add, additions during the year , 1,260.89 1,264.06
2,376.76 1,264.06
less, amounts in arrears , 5.78 —
2,370.98 1,264.06
less, expenses on issue of shares written off 2.68 148.19
2,368.30 1,115.87
Contingency reserve
Reserve created in terms of a corporate guarantee given
As per last Balance sheet — —
add, transferred from profit and loss account during the year 250.00 —
250.00 —
Capital reserve on consolidation
On consolidation of joint venture 576.36 576.36
less, goodwill deducted per contra 576.36 576.36
General reserve
As per last Balance sheet 18.17 —
add, transferred from Profit and Loss account during the year 85.52 18.17
103.69 18.17
Surplus in Profit and Loss account 2,059.34 1,109.68
Total 17,556.49 14,582.54

Previous Year
Rupees Rupees
Schedule 3 Notes in lacs in lacs
SECURED LOANS
Loans and advances from Banks
Cash credit accounts ] 1,329.29 856.23
Working capital loan 2 446.20 437.50
Rupee term loan accounts 3 6,977.31 5,578.20
Foreign currency term loans 4 518.51
8,752.80 7,390.44
Other loans and advances
From Others 5/ 6 2,342.57 500.00
Total 11,095.37 7,890.44
Notes.
!. Secured by hypothecation of certain stocks and book debts of the parent company, both present and future.
2. Secured by first pari-passu charge on the current assets of Mafatlal Burlington Industries Limited (MBIL).
3. Secured by 9,00,00,000 preference shares held by the Company/ another company in MIL pledged/ to be pledged in favour of the banks. Pending creation of the pledge
on 4,00,00,000 preference shares, the Company has given a negative lien there-against. Further secured by charges created on all thefixedassets, both present and future,
at tihestan and certain fixed assets at Dewas, both present and future (excluding land under development at Bhestan).
4. Secured by first mortgage charge on MBIL's immovable properties situated at Navsad and hypothecation of all its movable assets (save and except book d^bts).
5. Loan in parent company is secured by pledge of certain investments held oy another company.
6. Loan in Sulakshana Securities Limited is secured agianst first floor in Mafatlal cenireaod by pledge of the investment held by the company and other companies.
Schedule 4
UNSECURED LOANS
Short-term loans and advances
From Others — 74.49
Total 74.49
Schedule 5 .
FIXED ASSETS (Rupees in lacs)
Gross block Depreciation Net Btock

Asset category As at Additions Additions Deduc- As at Upto Additions For the Deduc- Upto As at As at
1st on tions/ 31st 31st on year tions/ 31st 31st 31st
April, consoli- adjust- March, March, consoli- adjust- March, March, March,
2005 dation ments 2006 2005 dation ments 2006 2006 2005
Goodwill on consolidation 914.63 _ _ 914.63 914.63 914.63

(refer note 2 below)
Land 11.82 _ _ 0.26 11.56 _ _ _ — — 11.56 11.82
Buildings 6,352.86 — 332.30 — 6,685.16 596.14 — 125.22 — 721.36 5,963.80 5,756.72
Plant and machinery 17,553.47 — 1,971.08 11.74 19,512.81 7,856.59 — 1,204.96 2.99 9,058.56 10,454.25 9,696.88
Furniture, fittings and
office equipment 366.26 — 24.15 12.35 378.06 179.50 — 19.33 4.50 194.33 183.73 186.76
Vehicles 207.64 - 38.13 13.76 232.01 64.46 - 17.99 6.36 76.09 155.92 143.18
25,406.68 — 2,365.66 38.11 27,734.23 8,696.69 - 1,367.50 13.85 10,050.34 17,683.89 16,709.99
Vehicles acquired on lease 3.08 - - - 3.08 1.04 - 0.29 - 1.33 1.75 2.04
Total 25,409.76 - 2,365.66 38.11 27,737.31 8,697.73 - 1,367.79 13.85 10,051.67 17,685.64 16,712.03
As at and for the year
ended 31st March, 2005 16,513.70 15,24533 3,570.11 9,919.38 25,409.76 7^22.00 631.75 1,226.70 482.72 8,697.73 16,712.03
'Capital work-in-progress (including capital advances) 3,201.07 2297.24
Notes. 1. Deductions to plant and machinery includes Rs. 0.03 lac (as at 31 st March, 2005, Rs. 16.71 lacs) on account of foreign exchange fluctuation on conversion of foreign
currency liabilities incurred for acquisition of fixed assets.
2. Goodwill is net of capital reserve of Rs. 576.36 lacs on consolidation of a joint venture, per contra.
3. Buildings include Rs. 12.86 lacs (as at 31 st March, 2005, Rs. 12.86 lacs) being the cost of ownnership premises in a co-operative society, including cost of shares
of the face value of Rs. 0.03 lac, received under the bye-laws of the society.
63

Previous Year
Rupees Rupees
in lacs in lacs
Schedule 6
INVESTMENTS (long term)
(a) Non-trade investments (unquoted)
5,60,000 equity shares of Cebon Apparel Private Limited
71,19,994 * equity shares of Molex Mafatlal Micron Private Limited
150 ** 11% Corporate bonds - series IV of Housing Development
Finance Corporation Limited of Rs. 1,000/- each, fully paid-up 1.50 1.50
2 equity shares of Soushreyas Investments India Limited of Rs. 10/- each, fully paid-up - Rs. 20/-
2 equity shares of Samatva Investments Limited of Rs. 10/- each, fully paid-up - Rs. 20/-
6,00,00,000 *** Optionally Convertible Fully Redeemable Non-Cumulative
preference shares of Rs. 10/- each, fully paid-up of MIL
(a company under the same management) 6,000.00 6,000.00
6,708.35 6,708.35
less, provision for diminution in value 5,940.00 5,940.00
768.35 768.35
(b) Immovable properties
As per last Balance sheet 2.58 2.58
less, depreciation
(i) As per last Balance sheet 1.93 1.90
(ii) for the year 0.03 0.03
1.96 1.93
0.62 0.65
Total 768.97 769.00
(1) Immovable properties are charged in connection with loans taken by another company.
(2) Investments made and sold during the year :
Nil (previous year, 3,00,00,000) Optionally Convertible Fully Redeemable
Non-Cumulative preference shares of MIL (a company under the same management) 3000.00
* pending transfer in the parent company's/ Sulakshana Securities Limited's name
** pending transfer in the parent company's name
*** 2,00,00,000 Optionally Convertible Fully Redeemable Non-Cumulative preference shares of MIL
have been pledged as additional securities for loans taken by the parent company. For the balance
4,00,00,000 shares, the parent company has given a negative lien pending creation of pledge.
Schedule 7
INVENTORIES
Stores and spares 504.28 395.50
Stock-in-trade
Raw materials 3,639.76 2337.64
Finished goods 2,696.68 2214.53
Trading goods : 13.29 4.96
6,705.54 4912.86
Total. 7,209.82 5308.36
64

Previous Year
Rupees Rupees
in lacs in lacs
Schedule 8
SUNDRY DEBTORS
(unsecured)
Debts outstanding for a period exceeding six months 800.51 822.93
Other debts 4,956.50 5055.44
5,757.01 5878.37
Total 5,044.73 5259.31
Note,
Considered good 5,044.73 5259.31
5,757.01 5878.37
Schedule 9
Cash in hand (including cheques in hand Rs. Nil; as at 31 st March
2005 Rs. 20.31 lacs) 6.66 25.74
Balances with scheduled banks
- in current accounts (refer note 2 below) 1,303.92 2163.24
- in fixed deposit accounts (including interest accrued Rs 154.10 lacs;
as at 31st March, 2005, Rs. 32.18 lacs) 4,934.26 3537.50
(on fixed deposit receipts of Rs. 2,039.44 lacs, banks have lien; as at
31st March, 2005, Rs. 1,377.86 lacs)
6,238.18 5,700.74
Post Office savings bank account (security deposit) 0.06 0.06
(maximum amount Rs. 0.06 lac; as at 31st March, 2005, Rs. 0.06 lac)
Total 6,244.90 5,726.54
Note,
1. Certain current and fixed deposit accounts with banks, which have been transferred from MIL pursuant to its scheme of demerger, are in
the process of being transferred in the Company's name.
2. Out of the above, unutilised monies out of the first and final call on equity shares made by the parent company during the year aggregate
to Rs. 29.33 lacs.
Schedule 10
LOANS AND ADVANCES
(unsecured)
Advances recoverable in cash or in kind or for value to be received. 3,018.73 2708.96
Balances with Central Excise... 6.84 22.30
Iraq Project work-in-progress 162.70 162.70
Advance tax 2,438.23 1516.91
5,626.50 4,410.87
Total 5,565.87 4,349.24
Note.
Considered good 5,565.87 4,349.24
5,626.50 4,410.87
65

Previous Year
Rupees Rupees
in lacs in lacs
Schedule 11
CURRENT LIABILITIES
Sundry creditors
- total outstanding dues to small scale industrial undertakings 1.73 69.61
- total outstanding dues to creditors other than small scale
industrial undertakings 9,587.97 9565.72
9,589.70 9,635.33
Other liabilities 255.87 282.59
Settled values of secured term liabilities of MIL 2,885.00 5116.35
Advances from customers 78.46 102.45
Due under a hire purchase agreement 0.31 0.97
Advance against project contracts 303.24 303.24
Interest accrued but not due on loans 64.64 69.43
Total. 13,177.22 15,510.36
Schedule 12
PROVISIONS
For tax 2,245.22 1430.89
For Fringe benefit tax (net) 6.00 —
Corporate dividend tax 37.66 17.34
Total 2,557.30 1,571.81
Schedule 13
OTHER INCOME
Interest
- on Bonds 0.17 0.17
- on bank deposits, etc 191.21 142.53
191.38 142.70
Rent from property 13.28 6.20
Air-conditioning charges and other receipts 12.84 3.85
Profit on sale of fixed assets (net) 51.06 1,819.04
Insurance claims 7.82 14.34
Provision for doubtful debts/ advances written back 15.72 69.37
Sundry credit balances written back 22.36 63.54
Excess provision of earfier years written back (net).. 13.02 9.44
Excess provision of interest written back 556.20 —
Export incentives 63.16 108.65
Miscellaneous income 114.10 142;63
Total. 1,293.46 2,621 96
66
NA VIN FLUORINE INTERNATIONAL LIMITED ANNUAL REPORT 2005-2006

Previous Year
Rupees Rupees
in lacs in lacs
Schedule 14
INCREASE/ (DECREASE) IN STOCKS OF FINISHED GOODS AND PROCESS STOCKS
Stocks as at 31st March. 2006
Finished goods ; 2,696.68 2,214.53
3,065.78 2,575.22
less,
Stocks as at 1st April. 2005
2,575.22 2,629.71
Increase/ (Decrease) 490.56 (54.50)
Schedule 15
MANUFACTURING AND OTHER EXPENSES
Raw materials consumed 14,018.50 14,008.99
Payments to and provisions for employees
Salaries, wages and bonus 1,468.57 1,202.36
Contribution to provident fund and other funds 198.14 209.17
Welfare expenses 125.95 121.89
1,792.66 1,533.42
Operating and Other expenses
Stores, spares and packing materials consumed 1,797.32 1,821.53
Power and fuel (net) 1,962.78 1,871.25
Rent (net) 59.20 58.69
Rates and taxes 168.31 156.82
Repairs to buildings 7.44 19.73
Repairs to machinery 103.22 87.76
Property maintenance expenses 34.28 20.18
Insurance 98.08 87.42
Communication expenses 73.97 65.03
Commission and discount 478.66 490.78
Transport and freight charges (net) 899.66 1,000.09
Loss of raw material in transit 308.88 —
Bad debts written off 28.61
Licence and technology fees 191.61 188.65
Donations 10.00 10.00
Directors sitting fees 1.80 1.65
Miscellaneous expenses 1,356.08 1,396.04
7,661.32 7,351.54
Total 23,472.48 22,893.95
Schedule 16
INTEREST
On fixed loans : 705.31 719.71
On cash credit accounts 118.72 39.17
On secured term liabilities of MIL 263.65 139.97
On Others 40.76 15.65
Total 1,128.44 914.50
67
Schedule forming part of the Consolidated Accounts

Schedule 17
SIGNIFICANT ACCOUNTING POLICIES
1. Fixed assets
Fixed assets are recorded at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation and impairment
loss.
2. Depreciation
Depreciation on fixed assets is provided on the straight-line basis in accordance with the Companies Act, 1956. (refer note 4 of schedule 18)
3. Impairment loss
Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher
of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash-flows expected to arise from the
continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset
in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.
4. Investments
Long-term investments are carried at cost. Provision is made to recognize a decline, other than temporary, in the carrying amount of long-
term investments.
5. Inventories
Items of inventory are valued at cost or net realizable value, which ever is lower. Cost is determined on the following basis:
Raw materials, stores and spares
Weighted average
Mafatlal Burlington Industries Limited (MBIL)
FIFO
Process stocks and finished goods
At material cost plus appropriate value of overheads
Trading goods
FIFO
6. Doubtful debts/ advances
Provision is made in the accounts for debts/ advances that in the opinion of the management are considered doubtful of recovery.
7. Retirement benefits
Provident fund
Liability is determined on the basis of contribution as required under the statute/ rules.
Superannuation fund
Liability is determined on the basis of contribution as required under the rules.
Gratuity and leave encashment
Liability is determined on the basis of actuarial valuation made at the year end.
MBIL
The liability for gratuity, a defined benefit plan, is covered by Life Insurance Corporation of India (LIC) and the annual contributions to the
fund, as assessed by the LIC, are expensed in the year of contribution.
A provision is made for encashment of leave on the assumption that all discretional leave outstanding at the year end will be encashed.
Provision for sick leave is made for unutiifzed ieave at the end of the year.
8. Foreign currency transactions
Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the
year end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising
thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or expense except in the case
of liabilities incurred for acquiring fixed assets from outside India, in which case, these are adjusted in the carrying amounts of such
assets.
9. Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of
such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing
costs are charged to revenue.
10. Government grants
Grants related to specific fixed assets are disclosed as a deduction from the value of the concerned assets. Grants related to revenue are
credited to the Profit and Loss account. Grants in the nature of promoter's contribution are treated as capital reserve.
11. Revenue recognition
Revenue (income) is recognized when no significant uncertainty as to its determination or realization exists.
12. Taxes on income
Tax expense comprise both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the
amount of income-tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the
effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are
capable of reversal in one or more subsequent periods.
A provision is recognized when the Company has a legal and constructive obligation as a result of past event, for which it is probable
that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed
when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognized nor disclosed.
68

Schedule 18
NOTES ON ACCOUNTS
Previous Year
Rupees Rupees
in lacs in lacs
1. Estimated amount of contracts remaining to be executed on capital
account and not provided for 331.17 969.24

a. Excise matters disputed in appeal
These relate to MODVAT on capital purchases (pending before
the Assistant Commissioner) and permit fee on purchase of alcohol
(pending before the High Court) 96.65 91.16
b. Property tax matters disputed in appeal

These relate to the demand raised by the Municipal Corporation
of Dewas challenged by the Association of Industries of Dewas
(pending before the High Court) 9.06 7.49
c. Sales-tax matters disputed in appeal

These relate to classification of goods and consequent dispute
on the rates of sales-tax (pending at various stages from
Assistant Commissioner to High Court) 159.16 152.81
d. Claims against the Group not acknowledged as debts

Labour matters involving issues like regularization of employment,
termination of employment, compensation against severance, etc. 285.19 296.95
Penal demands raised relating to non-submission of proofs of import

of materials (pending at various stages, from Special Director (Appeals)
to Appellate Tribunal for Foreign Exchange
(these proofs have been subsequently submitted)) 1,348.94 1,348.94
e. Income tax matters disputed in appeal

This mainly relates to the issue of treating the compensation received
pursuant to the Montreal Protocol as taxable income and disallowance
of certain expenses (pending before Commissioner of Income-tax (Appeals)) 491.58
f. Bills of exchange discounted — 52.39

In all the above matters (2a. to 2e.), the Group is hopeful of succeeding
and as such does not expect any significant liability to crystallize.
g- Demands of employees not admitted by the management of the parent company:

- in respect of revision of wages at the Bhestan and Dewas Units Amount not Amount not
- for miscellaneous matters at the Bhestan and Dewas Units . ascertainable ascertainable
h. Pursuant to the scheme for rehabilitation ['the sanctioned scheme' (SS)] of Mafatlal Industries Limited (MIL), Sulakshana Securities
Limited (SSL), the wholly-owned subsidiary of the parent company, took over certain identified assets and term loan liabilities of MIL
with the objective of repaying them by disposing off the assets thus transferred. As mandated in the SS, the parent company has executed
corporate guarantees during the year in favour of the secured term lenders (of MIL)/ their trustees. In the event that any of these are invoked
or that the parent company is called upon to repay any of such term loan liabilities of MIL transferred to SSL, the Company will have the
rights as available to a guarantor under sections 140 and 141 of the Indian Contracts Act on the remaining assets of SSL. The total amount.
of corporate guarantees given and outstanding as at the year end aggregate to Rs. 2,698.00 lacs. In terms of one such guarantee, given to
the Industrial Development Bank of India (IDBI) for Rs. 1,000.00 lacs, under a 'debt-asset swap' agreement for settlement of its dues,
the parent company is required to create a reserve of Rs. 1,000.00 lacs equitably over four years beginning current year. Accordingly, an
amount of Rs. 250.00 lacs has been credited to Contingency reserve.
69

NOTES ON ACCOUNTS
3. a The consolidated financial statements of Navin Fluorine International Limited (the parent company - NFIL) and its subsidiaries and joint
ventures have been prepared in accordance with Accounting Standard 21 (AS-21) on 'Consolidated Financial Statements' and Account-
ing Standard 27 (AS-27) on 'Financial Reporting of Interests in Joint Ventures' issued by the Institute of Chartered Accountants of India.
The details of such enterprises are as under:
Subsidiaries % holding Date of financial

ofNBTL statements
SSL (a company incorporated in India; became a subsidiary on 15th November, 2004) 100.00 31st March, 2006"
Urvija Associates 80.00 31st March, 2006
(a partnership firm in India, formed on 7th June, 2004)
Joint ventures - both companies incorporated in India
Mafatlal Burlington Industries Limited 49.99 31st March, 2006
(now known as Mafatlal Denim Limited) (MBIL) (till 31* March, 2006)
Molex Mafatlal Micron Private Limited (together with SSL) 49.00 Refer note 3 below
Notes.
1. There has been no change in the percentage holding of NFIL in any of the above
2. Previous year financial statements are for the year ended 31 st March, 2005 in case of all the above entities
3. Accounts not available for consolidation
The proportionate share of assets, liabilities, income, expenditure, capital commitments and contingent liabilities of MBIL included in
these consolidated financial statements and notes thereon are as under:
Previous Year
Assets
Fixed assets (net) 1,622.35 2,036.75
Inventories 1,489.15 1,273.31
Sundry debtors 894.91 870.86
Cash and bank balances 127.06 229.33 .
Loans and advances 219.97 379.31
Liabilities
Reserves and surplus 985.51 580.43
Secured loans 446.20 956.0!
Deferred tax liability (net) 167.63 298.10
Current liabilities 240.31 309.20
Provisions 147.52 279.53
Income
Sales 4,605.46 4,783.78
Other income 30.29 213.41
Expenditure
(Increase)/ decrease in stock of finished goods and process stocks (191.54) 242.41
Manufacturing and Other expenses 3,615.62 3,953.42
Interest 47.00 63.86
Tax - current 340.50 124.62
deferred (130.48) (65.48)
fringe benefit tax 5.03 -
70
NAVIN FLUORINE INTERNATIONAL LIMITED ' ANNUAL REPORT 2005-2006

4. Depreciation has been provided for on all fixed assets on straight-line basis in accordance with the Companies Act, 1956, at the rates
and in the manner specified in schedule XIV of this Act. In respect of Dimethyl Aniline, Diethyl/ Monoethyl Aniline, Speciality
Chemicals, Cryolite, Aluminium Fluoride, Refrigerant Gases, Mafron - 113, ABF Plants, Fluoroaniline Plants and Captive Power Plant,
depreciation has been provided for at the rate applicable to continuous process plants.
MBIL
Depreciation is provided on straight-line method, pro-rata to the period of use, at rates based on the estimated useful life of the assets
and those stipulated in schedule XIV to the Companies Act, 1956, whichever is higher, as follows:
Non-factory buildings 1.63% Plant and machinery 10.34% Factory building 3.34%
Computers 25.00% Furniture and fixtures 12.50% Office equipment 12.50%
Vehicles 9.50%
5. a The Board for Industrial & Financial Reconstruction (BIFR) declared MIL a sick industrial undertaking and sanctioned a scheme for
its rehabilitation (SS). Pursuant to this, the Chemical Division of MIL was demerged and vested in the parent company with effect from
the appointed date (1 st March, 2002), as a going concern, and effect given to in the accounts in the relevant financial year.
b. Pursuant to the aforementioned BIFR Order, approving the SS of MIL, the parent company, contributed Rs. 9,000.00 lacs as part of the
promoters' contribution for the rehabilitation of MIL by way of fresh infusion of funds. Against this, MIL issued 9,00,00,000 Optionally
Convertible Fully Redeemable Non-Cumulative preference shares of Rs. 10/- each in the previous year.
c. Exceptional items in the previous year represent entries passed for accounting loss on sale/ provision for diminution in the value of
investments in preference share of MIL referred to in 5.b. above and stamp duty, registration and other expenses incurred in connection
with the 'debt-asset' swap transaction between MIL/ SSL and IDBI.
d. During the year, MIL/ SSL have also reached settlement for term loan liabilities with IFCI Limited. In terms of this settlement, 423,000
Secured Zero Coupon Debentures of Rs. 100/- each, aggregating to Rs. 423.00 lacs are to be issued by the parent company redeemable
in three equal annual instalments at the end of third, fourth and fifth year from the date(s) of allotment. Subscription agreement in relation
thereto is pending execution.
e. In the SS, SSL was identified as a 'special purpose vehicle' into which the Real Estate and Investment Business of MIL was to be
demerged for settlement of MIL's secured term lenders at the values determined in the SS. Against this demerger, the shareholders of
MIL would be issued one equity share of Rs. 10/- each fully paid-up in SSL for every 500 shares of Rs. 100/- each fully paid-up held
in MIL as consideration for the demerger, aggregating to Rs. 1.00 lac. Accordingly, assets valued as per SS of Rs. 14,905.59 lacs along
with settled values of secured term liabilities of the like amount had been transferred to SSL on the Appointed Date (I s ' April, 2002)
and effect given in its accounts in the relevant year.
f. During the year, out of the balance settled values of secured term liabilities in SSL as at 1st April, 2005, aggregating to Rs. 5,266.35 lacs,
the following were settled/ settlement reached:
i. Rs. 735.32 lacs to certain debentureholders of MIL (out of this 718.57 lacs paid of by the parent company);
ii. Rs. 3,022.00 lacs settlement with IFCI Limited. Out of this, Rs. 200.00 lacs has been paid till 31st March, 2006, by the parent
company. The balance is to be paid in cash/ discharged by issue of debentures of the parent company. As in terms of the settlement,
only principal amount is payable, interest provided in earlier years on them have been written back to the Profit and Loss account.
In terms of the SS, the parent company has residuary rights on the assets of SSL as available to a guarantor under section 140 and
141 of Indian Contract Act, for all payments made by it towards such repayment of dues.
g. In respect of certain settled values of secured term liabilities transferred to SSL, security has been created during the year and thus been,
disclosed under Secured loans. For the balance, where such security(s) is pending creation and are at present secured against certain
assets of MIL, pending reorganization of charges by MIL, continue to be shown under Current liabilities.
h. Asset Sale Committee in SSL has been constituted for settling the liabilities transferred from MIL.
71

6. As mentioned in note 5.d above, SSL has been identified as a 'special purpose vehicle' in the process of implementation of the SS of MIL.
Therefore, though its accumulated losses had exceeded its shareholders' funds as at 31st March, 2006, its accounts have been prepared on
going concern basis.
7. (a) The parent company has acquired a fixed asset on hire purchase basis (for a period of 60 months) which has been treated as asset acquired
on finance lease as per Accounting Standard on Leases (AS-19). Minimum lease rentals outstanding as at the year end, are as under:
(Rupees in lacs)
st
As at 31 March, 2005
Due Total Interest Present Total Interest Present
Minimum not value Minimum not value
Lease due of the Lease due of the
Payments minimum Payments minimum
outstanding lease outstanding lease
as at the payments as at the payments
year end year end
Not later than one year 0.32 0.01 0.31 0.76 0.10 0.66
Later than one year and
not later than five years 0.32 0.01 0.31
Total 0.32 0.01 0.31 1.08 0.11 0.97
(b) The parent company has taken certain fixed assets on operating lease. The tenure of such agreements ranges from 11 months to 72 months.
There are no purchase option and escalation clause in these agreements. Operating lease rentals debited to the Profit and Loss account
during the year is Rs. 31.92 lacs (previous year, Rs.32.57 lacs). Total minimum lease payments outstanding as at the year end is:
(Rupees in lacs)
Due Total minimum lease payments outstanding

As at 31s1 March, 2006 As at 31 st March, 2005
Not later than one year 28.80 16.30
Later than one year and not later than five years 33.17 13.82
Total 61.97 30.12
8. MIL was executing a project in Iraq when hostilities broke out between Iraq and Kuwait in 1990-91, resulting in suspension of project work.
In view of the post war conditions and the sanctions imposed by the United Nations and the Government of India, suspended operations could
not be resumed. The customer's bankers have asked for extension of bank guarantees for advance payment and performance and the State
Bank of India in turn has claimed that the funds deposited with them in respect of the aforesaid project are subject to lien. In view of the
prevailing uncertain circumstances, the receipts and payments under the contracts, transferred to the parent company pursuant to the SS of
MIL, continue to be carried forward and necessary adjustments would be made on the status of the project becoming clearer.
9. (a) Pursuant to MIL's SS, 'Income-tax Department to grant exemption from compliance of conditions contained in section 2(19AA) of
the Income-tax Act, 1961, with regard to de-merger of Chemical Division'. Accordingly, as per the provisions of section 72A of the
Income-tax Act, 1961, unabsorbed depreciation, aggregating to Rs. 4,112.68 lacs, relatable to the Chemical Division of MIL was
set off against the parent company's taxable income in the preceding years and provision for tax calculated accordingly.
72

(b) Major components of deferred tax assets and (liabilities) are as under:
As at 31st March,2006 Asat31 st March,2005
Difference between book and tax written down values of fixed assets (1,975.84) (1,933.37)
Deferred revenue expenditure 0.30 7.61
Others 16.23 6.17
Total (325.63) (34.10)
Note.
The parent company's cash surplus operations would be leveraged to realign its business portfolio, as a part of which it is reasonably certain
that the carried forward deferred tax assets (which are significantly all of the parent company) would be utilized.
/<?, ZPatragtibe(KX7<sa'&?Sff<??"•'A&g&sSt JJVPA' JJ'l'Z>dzr<ivz>2%3!; JMP7, <4fe" ^iacfc^y £>/"/}&'/22K?J?/fav$naz>y'sJV&VJJ? J^uarjne UnitatBhestan
been on an illegal and unjustified strike in contravention of the Industrial Disputes Act. The Labour Commissioner of Gujarat, in his report
to the Ministry of Labour, has concurred with the decision of declaring the strike illegal and unjustified. In view thereof, no provision has
been made in the accounts for wages, etc. for the said period. The workers' reference to the Conciliation Officer on the justification of the
strike is pending with the Industrial Tribunal, Gujarat.
11. Certain encumbered assets of the parent company offered as securities by MIL for loans taken by it are in the process of being reorganized
on restructuring of those loans as per the SS of the BIFR.
12. Earnings per share is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares
outstanding during the year, as under:

Profit after minority interest - Rs. in lacs 1,591.26 482.39
Weighted average number of equity shares outstanding
during the year for basic earnings per share 8,959,908 6,745,816
odd, weighted average number of partly paid-up equity shares
(uncalled amount) 1,139,981 1,126,163
Weighted average -number of equity shares outstanding
during the year for diluted earnings per share 10,099,889 7,871,979
Basic earnings per share - Rs. 17.76 7.15
Diluted earnings per share - Rs. 15.76 6.13
13. Interest capitalized during the year, Rs. 21.90 lacs (previous year, Rs. Nil)
14. Out of the rights issue made by the parent company during 2004-05, 109 equity shares could not be offered on rights basis in view of the non-
availability of details of beneficial holders from depositories. The same are kept in abeyance.
15. The parent company had made a rights issue of equity shares in the previous year. The first and final call of Rs. 30/- per share (including
premium of Rs. 25/-) was made during the year. The proceeds have been used to part finance infusion of funds into MIL and for general
corporate purposes. Unutilized monies as at the year end, Rs. 29.23 lacs (as at 31st March, 2005, Rs. Nil)
16. Before transfer of assets to SSL by MIL pursuant to its SS, MIL had issued notices to its tenants/ (now) ex-tenants in its building at Nariman
Point, Mumbai (now transferred to SSL) for revision in rent/ recovery of expenses. Pending settlement with them, rent, of Rs. Nil, previous
year, Rs. 52.19 lacs, (aggregate to date Rs. 66.43 lacs, as at 31st March, 2005, Rs. 66.43 lacs) and recovery of expenses, of Rs. Nil, previous
year, Rs. 7.87 lacs (aggregate to date, Rs. 42.40 lacs, as at 31st March, 2005, Rs. 42.40 lacs), have not been accounted for the year, on legal
advice.
73
NAVIN FLUORINE INTERNATIONAL LIMITED . ANNUAL REPORT 2005-2006
17. Related party transactions:
Names of related parties and description of relationship where transactions have taken place during the year
Key management personnel

Shri Hrishikesh A. Mafatlal (in the capacity of an individual/ trustee)
Shri Vishad P. Mafatlal (in the capacity of an individual/ karta)
Shri Atul K. Srivastava
Shri Dattatray S. Umalkar (till 31 s ' January, 2006)
Shri Vinesh P. Sadekar (from 1st February, 2006)
Relatives of key management personnel

Shri Arvind N. Mafatlal (in the capacity of an individual/ karta/ trustee)
Smt. Sushilaben A. Mafatlal
Smt. Rekha H. Mafatlal
Smt. Aarti Chaddha
Ms. Anjali H. Mafatlal
Mr. Priyavrata H. Mafatlal
Ms. Padmaja Mafatlal
Smt. Madhuvanti N. Baswan (till 31st January, 2006)
Joint venture
Mafatlal Burlington Industries Limited (now Mafatlal Denim Limited) (till 31st March, 2006, a joint venture)
Enterprises over which key management personnel and their relatives are able to exercise significant influence
Mafatlal Fabrics Private Limited
National Organic Chemical Industries Limited
Vibhadeep Investments and Trading Limited
Sushripada Investments Private Limited
Shamir Texchem Private Limited
Marigold International Private Limited
Pamil Investments Private Limited
Navlekh Investments Limited
Milap Texchem Private Limited
Surekha Holdings Private Limited
Krishnadeep Housing Development Private Limited
74


(Rupees in lacs)
Nature of transactions 1 2 3 4 Total
Sale of finished goods

8.61 8.61
2.31 2.31
Others 0.36 0.36
0.45 0.45
Purchase of stores.spares and packing materials
1.55 1.55
Lease rentals paid
0.18 0.18
Interest expense on short-term deposits
19.88 19.88
Krishnadeep Housing Development Pvt.Ltd. 2.53 2.53
Managerial remuneration
55.85 55.85
2.50 2.50
61.52 61.52
Shri Atul K. Srivastava 38.31 38.31
30.48 30.48
Shri Vinesh Sadekar 13.54 13.54
Remuneration paid
Smt. Madhuvanti N. Baswan 1.19 1.19
1.05 1.05
Sitting fees
0.21 0.27
Sales commission expenses
2.27 2.27
Licence and technology fees
129.65 129.65
Purchase of Utilities
59.40 59.40
75


(Rupees in lacs)
Lease rent for land

8.90 8.90
Property maintenance expenses
89 J 9 89. J 9
Transfer of Emplovee's Loan Balances
Allotmrnt of equitv shares ( including premium)

Shri Arvind N. Mafatlal
65.29 65.29
Shri Hrishikesh A. Mafatlal
64.57 64.57
Shri Vishad P. Mafatlal
62.41 62.41
Others
81.82 0.01 1.71 83.54
Call Monev received C including premium)
Shri Arvind N. Mafatlal 65.29 65.29
Others 81.83 0.01 1.71 83.55
Investment in preferenpe shares

9,000.00 9,000.00
Purchase of equity shares
Vibhadeep Investment and Trading Limited
5.00 5.00
Advances given to
Mafatlal Industries Limited 1,351.13 1,351.13
1,864.37 1,864.37
Marigold International Limited 220.00 220.00
Short-term loan taken from

Krishnadeep Housing Development Pvt.Ltd. 125.00 -. 125.00
Short-term loan repaid to

206.98 206.98
76


(Rupees in lacs)

Krishnadeep Housing Development Pvt.Ltd. 125.00 125.00
Conversion of short-term loan into equitv shares

(including premium)
234.29 234.29
Dividend paid
6.08 6.08
11.33 11.33
3.19 3.19
Others 3.14 1.39 1.25 5.78
2.26 1.30 1.05 4.61
As at the vear end

Amounts due to
1.50 7.50
0.97 0.97
7.76 7.76
41.68 41.68
2.50 2.50
27.79 27.79
Amounts due from

Mafatlal Industries Limited 1,149.58 1,149.58
1,135.77 1,135.77
Marigold International Limited 220.00 220.00
Others 0.02 0.02

0.01 0.07
Short-term loan due to
8.73 8.73
1. Enterprises over which key management personnel and their relatives are able to exercise significant influence
2. Joint venture
3. Key management personnel
4. Relatives of key management personnel
Notes.
1. There are no amounts written off or written back during the year in respect of debts due from or to related parties.
2. Figures in italics are those as at and for the year ended 31st March, 2005.
77
18. Segment information:

(a) Primary segments
Based on guiding principles in Accounting Standard on 'Segment Reporting' (AS-17) issued by the Institute of Chartered Accountants
of India, classification by business segment are the primary reportable segments, comprising of:
i. Chemicals (fluorochemicals, etc.)
ii. Textiles (denim fabrics)
(Rupees in iacs)
Current Year Previous Year

Chemicals Textiles Total Chemicals Textiles Total
Revenue
From external customers 25,331.24 4,513.73 29,844.97 24,541.38 4,927.34 29,468.72
Result-Profit 2,531.57 637.37 3,168.94 4,715.60 241.46 4,957.06
Unallocated income
Other income 582.32 277.09
Unallocated expenses
Interest expense (1,128.44) (914.50)
Other expenses (108.28) (49.26)
Profit before exceptional items and tax 2,745.12 4,509.97
Exceptional items
Provision for doubtful advances written back •. 7,229.30
Provision for diminution in value of long term
investments (non-trade) (5,940.00)
Loss on sale of long term investments (non-trade) (2,970.08)
Stamp duty, registration and other expenses on transfer of property (500.00)
Taxes (including deferred tax and fringe benefit tax) (1,153.87) (1,846.83)
Profit after tax 1,591.25 482.36
Profit after minority interest and tax 1,591.26 482.39
Segment assets 34,388.05 4,353.44 38,741.49 26,939.50 4,640.30 31,579.80

Unallocated corporate assets 6,979.52 8,841.92
Total assets 45,721.01 40,421.72
Segment liabilities 10,117.05 281.30 10,398.35 9,119.77 309.20 9,428.97.

Unallocated corporate liabilities 16,757.34 15,652.40
Total liabilities 27,155.69 25,081.37
Cost incurred on acquisition of fixed assets 3,135.46 134.03 4,039.25 119.96

Depreciation (including on immovable properties) 750.33 544.54 656.68 541.19
Significant non-cash expenditure other than depreciation
Bad debts written off — — 28.61 -
Note.
There are no inter-segment transactions during the year.
(b) Secondary segments (by geographical segments)

(Rupees in lacs)
Particulars Domestic Exports Total Domestic Exports Total
Revenues from external customers 18,527.55 11,317.42 29,844.97 17,816.50 11,652.22 29,468.72
Within India Outside India Total Within India Outside India Total
Segment assets 43,933.61 1,787.40 45,721.01 38,011.00 2,410.72 40,421.72
Cost incurred on acquisition of fixed assets 3,269.49 3,269.49 4,159.21 4,159.21
78
Schedule forming part of consolidated accounts
19. SSL and Urvija Associates became subsidiaries of the parent company during the previous year. The financial position and results of these
subsidiaries are given below:
(Rupees in lacs)
Sulakshana Securities Ltd. Urvija Associates
As at and for As at and for As at and for As at and for
the year ended the year ended the year ended the year ended
31st March, 31s'March, 31st March, 31st March,
2006 2005 2006 2005
Liabilities
Secured loans 1,842.56 — — —
Unsecured loans 1,085.32 — — —
Current liabilities 3,019.64 6231.40 0.02 0.02
Assets
Fixed assets 4,184.19 4257.16 — —
Investments 577.76 577.76 — —
Cash and bank balances 7.88 8.37 34.04 50.86
Loans and advances — — 1,491.75 1475.00
Accumulated losses 1,192.69 1403.11 0.24 0.16
Profit/ (loss) for the year 210.42 (204.65) (0.07) (0.16)
20. Previous year figures have been regrouped, wherever necessary, to correspond with those of the current year.
Signatures to Schedules 1 to 18
T. M. M. NAMBIAR
Directors
A.K. PURI
79
Your
Idea!
Partner...
NAVIN FLUORINE
INTERNATIONAL
N LIMITED
Regd. & Head Office: Kalpataru Point, 1st Floor,
Kamani Marg, Sion (E), Mumbai - 400 022,
India. Tel: 91 (22) 2404 0404, 2404 3300
Fax: 91 (221 2 4 0 1 4077
e-mail: [email protected] • website: www.nfil.in
Y O U R I D E A L P A R T N E R

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NAVIN FLUORINE

BOARD OF DIRECTORS: REGISTERED OFFICE

NOTICE other applicable provisions of the Companies Act, 1956,

"RESOLVED THAT pursuant to the provisions of

NOTES: The Board recommends his appointment as a Director in the

Name Shri T.M.M. Nambiar Shri S.S. Lalbhai Shri V. P. Sadekar

Age 69 years 46 years 50 years

Date of Appointment 03.03.2003 03.03.2003 01.02.2006

Brief resume B. Com., ACA B. Sc, B.E. (Chemical Engg.)

Names of the Director in: Director in: Director in:

Committee Memberships: Committee Memberships: Committee Memberships:

Remuneration Committee: Remuneration Committee:*

Shareholders 7 Investors' Share Transfer and

DIRECTORS' REPORT 2. INCREASE IN CAPITAL :

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

CORPORATE GOVERNANCE REPORT

COMPANY PHILOSOPHY ON CORPORATE GOVERNANCE:

Personal Shareholding of Non-Executive Directors is as follows:

Shri A.K. Puri Shri T.M.M. Nambiar Shri S.S. Lalbhai

8. General Body Meetings:

C. Date of Book Closure 30th May 2006 to 1st June 2006

I. Registrar & Share Transfer Agents:

K. Distribution of shareholding as on 31.03.2006

L. Shareholding pattern as on 31.03.2006

N. Out Standing GDR/ADR: N.A.

b) Corporate Office : Mafatlal House,

ANNEXURE TO CORPORATE GOVERNANCE REPORT

Declaration regarding affirmation of Code of Conduct

Corporate Governance Certificate

Balance sheet as at 31st March, 2006

Net current assets 9,963.09 7,619.26

B. Cash flow from investing activities

C. Cash flow from financing activities

Cashflowstatement for the year ended 31st March, 2006 (Contd.)

Net increase/ (decrease) in cash and cash equivalents. 515.41 (446.06)

2 The following are treated as non-cash transactions:

As per our attached Report of even date

Schedules forming part of the accounts As at

Schedules forming part of the accounts

FIXED ASSETS (Rupees in lacs)

Asset category Gross block Depreciation Net Block

Land 11.82 0.26 11.56 11.56 11.82

As at and for the year ended

Schedules forming part of the accounts

Debts outstanding for a period exceeding six months 799.46 815.85

Schedules forming part of the accounts

Schedules forming part of the accounts

Dividend on long-term investments (non-trade) 39.20 96.88

INCREASE IN STOCKS OF FINISHED GOODS AND PROCESS STOCKS

Stocks as at 31s' March. 2006

Stocks as at Is' April. 2005

Increase 299.02 187.91

Schedules forming part of the accounts

Total 817.78 710.67

Schedules forming part of the accounts

Schedules forming part of the accounts

1. Estimated amount of contracts remaining to be executed on capital account

Schedules forming part of the accounts