PART I INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2, & Q3) HALF YEAR AND FULL YEAR RESULTS

Transcription

1 MEGHMANI ORGANICS LIMITED Third Quarter Financial Statements And Dividend Announcement The Board of Directors of Meghmani Organics Limited ( MOL or the Company or the Issuer ) wishes to make the following announcement of the un-audited results for the Third Quarter ended on December 31, 2008 as follows:-. PART I INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2, & Q3) HALF YEAR AND FULL YEAR RESULTS 1(a)(i) An income statement (for the Group) together with a comparative statement for the corresponding period of the immediately preceding financial year. 3 months ended % 9 months ended % Increase (Decrease) Increase (Decrease) Rs. 000 Rs. 000 Rs. 000 Rs. 000 Revenue 1,666,597 1,364, ,283,557 4,203, Cost of sales (1,252,883) (1,146,929) 9.2 (4,977,446) (3,419,624) 45.6 Gross Profit 413, , ,306, , Other operating income 55,746 70, , , Distribution expenses (137,744) (116,287) 18.5 (482,924) (356,720) 35.4 Administrative expenses (34,383) (38,205) (176,131) (90,901) 93.8 Other operating expenses (118,805) (6,909) (143,997) (35,984) Profit from operations 178, , , , Finance cost (71,787) (35,065) (203,215) (111,590) 82.1 Income from investments 28 8, , Share of Profit/(Loss) in Associate - 6,736 n.m. - 12,205 n.m. Profit before tax 106, , , , Income tax (22,024) (16,149) 36.4 (129,413) (64,608) Profit after income tax 84,745 90, , , Minority Interest 3,239 - n.m. 7,861 - n.m. Profit after Minority Interest 87,984 90, , , (a) (ii) The net profit attributable to the shareholders includes the following charges/ (credits): Bad trade receivables written off / (recovered) Foreign currency exchange adjustment loss (gain) Research and development expenditure Loss / (Profit) on sale of property, plant and equipment Note: n.m. means not meaningful. Group Group 3 months ended % 9 months ended % Increase Increase (Decrease) (Decrease) Rs. 000 Rs. 000 Rs. 000 Rs. 000 (390) (231) (394) ,999 5, ,745 34, ,037 4, ,997 10, , ,846 1,

2 [2] 1(b) (i) A balance sheet of the Group and Company, together with a comparative statement as at the end of the immediately preceding financial year. Group Company As at As at As at As at Rs. 000 Rs. 000 Rs. 000 Rs. 000 ASSETS Current assets Cash & bank balances 342, , ,866 65,623 Available for sale investments 550,000 40, Trade receivables 2,916,629 2,646,897 3,046,321 2,661,751 Other receivables and prepayments 1,695,805 1,417, , ,069 Inventories 1,293, ,303 1,183, ,445 Income tax recoverable 16,746 53,155 17,849 53,336 Total current assets 6,815,313 5,473,632 5,351,675 4,488,224 Non current assets Property, plant and equipments 5,290,880 2,119,747 1,432,994 1,375,063 Interest in subsidiaries - - 1,084,786 1,084,486 Interest in associate Available for sale investments 5,583 5,578 5,573 5,568 Total non current assets 5,296,463 2,125,325 2,523,353 2,465,117 Total assets 12,111,776 7,598,957 7,875,028 6,953,341 LIABILITIES AND EQUITY Current liabilities Bank borrowings 2,351,849 1,854,119 2,222,994 1,721,971 Other borrowings 30,392 22, Trade payables 839, , , ,181 Other payables 278, , , ,008 Total current liabilities 3,500,232 2,762,798 3,129,082 2,538,160 Non current liabilities Long Term Loan 3,572, , , ,360 Deferred tax liabilities 129, , , ,951 Total non current liabilities 3,701, , , ,311 Capital & reserves Issued capital 254, , , ,314 Share premium 1,565,048 1,565,048 1,565,048 1,565,048 General reserve 434, , , ,270 Capital Reserve 3,122 3,122 3,122 3,122 Capital redemption reserve 18,433 18,433 18,433 18,433 Dividend reserve , ,260 Currency translation reserve (854) (1,061) - - Accumulated profits 2,083,031 1,728,887 2,194,195 1,799,423 Minority interest 551, , Total equity 4,909,774 4,493,169 4,470,157 4,163,870 Total liabilities and equity 12,111,776 7,598,957 7,875,028 6,953,341

3 [3] 1(b) (ii) Aggregate amount of Group s borrowings and debt securities. Amount repayable in one year or less, or on demand As at 31 December 2008 As at 31 March 2008 Secured Unsecured Secured Unsecured Rs '000 Rs 000 Rs 000 Rs '000 1,255,334 1,096,515 1,253, ,600 Amount repayable after one year As at 31 December 2008 As at 31 March 2008 Secured Unsecured Secured Unsecured Rs '000 Rs 000 Rs 000 Rs '000 3,572, ,302 - The details of bank borrowing from various banks and securities are shown below: Bank borrowings from a consortium of banks (Group & Company) (SBI, HDFC and ICICI) As at December, 31, 2008 bank borrowing amounting to Rs. 882,930,000 are secured by: (a) (b) first ranking pari passu charge in favour of a consortium of banks by way of hypothecation on the Company s trade receivables and inventories ; and First ranking pari passu charge in favour of a consortium of banks by way of hypothecation and/or legal mortgage over certain of Group s present and future properties, plant and equipment. Bank borrowings from a consortium of banks (Group & Company) (SBI, HDFC and ICICI) As at March 31, 2008, bank borrowings amounting to Rs. 1,121,371,000 are secured by: (a) (b) first ranking pari passu charge in favour of a consortium of banks by way of hypothecation on the Company s trade receivables and inventories ; and first ranking pari passu charge in favour of a consortium of banks by way of hypothecation and/or legal mortgage over certain of Company s present and future properties, plant and equipment. Bank borrowings from other banks (Group and Company) Bank A (ICICI Bank Limited - ECB) As at December, 31, 2008, bank borrowings amounting to Rs. 146,130,000 (repayable after one year) are secured by. (a) first ranking pari passu charge by way of hypothecation on the Company s current assets; and As at March 31, 2008, bank borrowings are amounting to Rs. 120,360,000. (a) first ranking pari passu charge by way of hypothecation on the Company s current assets; and

4 [4] Bank B (ICICI Bank Limited - Bahrain) As at December, 31, 2008, bank borrowings amounting to Rs. 91,331,000 (repayable after one year) and Rs. 1,722,000 (repayable within one year) are secured by. (a) first ranking pari passu charge by way of hypothecation on the Company s current assets; As at March 31, 2008, bank borrowings are amounting to Rs. 91,942,000 (repayable after one year) and Rs. 8,358,000 (repayable within one year) are secured by. Bank C (HDFC Bank Limited) As at, December, 31, 2008, bank borrowings amounting to Rs. 900,000,000 are unsecured. As at March 31, 2008, bank borrowings amounting to Rs. 400,000,000 are unsecured. Bank D (ICICI Bank Limited PCFC in USD) As at December 31, 2008, bank borrowings amounting to Rs. 243,550,000 are secured to the extent of its share in consortium. As at March 31, 2008, bank borrowings amounting to Rs. Nil. Bank E (Standard Chartered Bank) As at December 31, 2008, bank borrowings amounting to Rs. 196,515,000 are unsecured. As at March 31, 2008, bank borrowings amounting to Rs. 200,600,000 are unsecured. Bank F (ABN Amro Bank Meghmani Europe BVBA) As at December 31, 2008, bank borrowings amounting to Rs. 95,354,000 are secured by Corporate Guarantee of MOL. As at March 31, 2008, bank borrowings amounting to Rs. 123,790,000 are secured by Corporate Guarantee of MOL. Bank G (KBC Bank Limited Meghmani Europe BVBA) As at December 31, 2008, bank borrowings amounting to Rs. 76,000 are secured by Vehicle. As at March 31, 2008, bank borrowings amounting to Rs. Nil. Bank H (KBC Bank Limited Meghmani Europe BVBA) As at December 31, 2008, bank borrowings amounting to Rs. 31,702,000 are secured by the assets purchased at Europe. As at March 31, 2008, bank borrowings amounting to Rs. Nil.

5 [5] Bank H (Consortium of banks Meghmani Finechem Limited (MFL) As at December 31, 2008, bank borrowings amounting to Rs. 2,500,000,000 (repayable after one year) are secured by Mortgage/hypothecation of assets. As at March 31, 2008, bank borrowings amounting to Rs. Nil. Bank I (International Financial Corporation (IFC) MFL) As at December 30, 2008, bank borrowings amounting to Rs. 834,987,000 (repayable after one year) are secured by Mortgage/hypothecation of assets. As at March 31, 2008, bank borrowings amounting to Rs. Nil.

6 [6] 1(c) A cash flow statement of the Group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Particulars Cash flows from operating activities Group 9 months ended Company 9 months ended Rs. 000 Rs. 000 Rs. 000 Rs. 000 Profit from operations 678, , , ,057 Adjustments for : Depreciation of property, plant and equipment 128, , , ,918 Unrealised Foreign Exchange Gain 163,998 34, ,998 34,705 Interest Received (4,979) - (4,979) - Balance of subsidiary eliminated - 8, Loss on disposal of property, plant and equipment 1,846 1,673 1,846 1,673 Operating cash flows before movements in 968, , , ,353 working capital Trade receivables (269,732) (519,569) (384,571) (527,407) Other receivables and prepayments (442,614) (864,661) (230,291) (855,346) Inventories (340,441) 44,530 (328,831) 54,279 Trade payables 124, ,570 10, ,275 Bills payables (35,683) 176,723 (35,683) 176,723 Other payables 107,641 (13227) 79,075 4,822 Net cash generated / (used) in operations 112,122 (270,706) 90,730 (256,301) Income taxes paid (94,370) (51,948) (94,067) (51,948) Interest and finance charges paid (203,215) (111,590) (182,037) (111,535) Net cash (used) in operating activities (185,463) (434,244) (185,374) (419,784) Cash flows from investing activities: Purchase of property, plant & equipments (3,307,063) (311,264) (179,147) (233,531) Sale/Purchase of investments available for sale (5) 235 (305) 200 Proceeds on disposal of property, plant & equipments 5,062 1,779 5,062 1,779 Income from investment 37 22, ,525 Interest Received 4,979 4,979 Minority Interest 158,600 Net cash used in investing activities (3,138,390) (286,725) (169,374) (209,027) Cash flows from financing activities: Dividend and Dividend tax paid (88,486) (84,502) (88,486) (84,502) Proceeds from bank borrowings, net of repayments 3,893,559 (211,685) 562,477 (310,585) Proceeds from other borrowings, net of repayments 7,642 5, Proceeds from issue of share capital - 955, ,887 Net cash from financing activities 3,812, , , ,800 Net effect of exchange rate difference on 2,532 (1,782) - - consolidation Net increase / (Decrease) in cash and cash 491,394 (57,351) 119,243 (68,011) equivalents Cash and cash equivalents at beginning of period 401, ,531 65, ,116 Cash and cash equivalents at end of period 892, , , ,105

7 [7] 1 (d)(i) A statement ( for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalization issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Rs 000 Group Issued capital Share premium General reserve Capital reserve Capital redemptio n reserve Dividend reserve Currency Translati on Reserve Accumul ated Profits Minori ty Interes t Balance as at 30 September, ,314 1,629, ,526 3,122 18,433 - (1,820) 1,724,181 12,004 4,032,335 IPO Expenses (64,113) (64,113) Net profit for the period ,141-90,141 Currency Translation Reserve (6) - - (6) Balance as at 31 December, , , ,526 3,122 18,433 - (1,826) 1,814,322 12,004 4,058,357 Balance as at 30 September, ,314 1,565, ,270 3,122 18, (1,710) 1,995, ,274 4,757,725 Addition during the year ,361 63,361 Dividend Paid (152) (152) Net profit for the period ,984-87,984 Currency Translation Reserve Balance as at 31 December, ,314 1,565, ,270 3,122 18, (854) 2,083, ,635 4,909,774 Balance as at 30 September, ,314 1,629, ,526 3,122 18, ,724,822-4,022,792 IPO Expenses (64,113) (64,113) Net profit for the period ,330-94,330 Balance as at 31 December, ,314 1,565, ,526 3,122 18, ,819,152-4,053,009 Balance as at 30 September, ,314 1,565, ,270 3,122 18, ,094,739-4,370,853 IPO Expenses Dividend Paid (152) (152) Net profit for the period ,456-99,456 Currency Translation Reserve Balance as at 31 December, ,314 1,565, ,270 3,122 18, ,194,195-4,470,157 Total

8 [8] 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. There is no change in the Company s share capital during the reporting period since the end of the previous reported period. 2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. These figures have not been audited or reviewed. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual Financial Statements have been applied. The Group s financial statements have been prepared from those accounting records maintained under General Accepted Accounting Practices in India ( Indian GAAP ) The Group has adopted the same accounting policies and methods of computation in the financial statements for the current reporting period compared with the audited financial statements for the year ended 31 March If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for and the effect of the change. There is no change in accounting policy. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting and provision for preference dividends. There is no dilution as no share options were granted during the financial period. Group Company Earnings per Ordinary shares 9 months ended 9 months ended Based on weighted average number of ordinary shares in issue (Rs.) Earning per SDS (Rs) On a fully diluted basis (detailing any adjustments made to the earnings) (Rs.) Earning per SDS (Rs.) Weighted average number of ordinary shares (Nos.) 254,314, ,696, ,314, ,696,986

9 [9] Calculation weighted average:- Equity shares at the beginning of the year 200,630,000 New equity shares issued on 20 th June ,684,211 Equity shares at the end of the period 254,314,211 Weighted equity shares 238,696,986 For comparative purposes, the basic and diluted earnings per ordinary share for the period ended December 31, 2007 have been computed based on the profit after tax of Rs 265,852,551 divided by 200,630,000 ordinary shares of Rs 1 each and 238,696,986 ordinary shares of Rs 1 each after Indian Initial Public Offer. (Calculation of weighted equity shares: 200,630,000 *80 / ,314,211 * 195/275) 7. Net asset value ( for the issuer and group ) per ordinary share based on issued share capital of the issuer at the end of the :- (a) current financial period reported on; and (b) immediately preceding financial year. Net assets value per ordinary share based on issued share capital at the end of the year reported in Rs. As at 31/12/2008 Group As at As at 31/12/2008 Company As at A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following :- (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Review of Results The Group manufactures and sells Pigments and Agrochemicals and carries out trading in dyes, pigments, dyes intermediates, Agrochemicals technical, intermediates products which are not manufactured by the Group. Review of results for the third quarter ended December 31, 2008 (Q3 FY 2009) Revenue:- Group Group revenue for Q3 FY 2009 rose by 22.1 % to Rs million, from Rs million in Q3 FY Breakdown of Revenue by Products Products Q3 FY 2009 Q3 FY 2008 Increase/ (Decrease) % Pigments Agrochemicals Trading Total

10 [10] Breakdown of Revenue activity wise:- Activity Q3 Q3 Increase/ % FY 2009 FY 2008 (Decrease) Domestic Sales Exports Sales Total Breakdown of Domestic Sales by Products Domestic Sales Q3 Q3 Increase/ % FY 2009 FY 2008 (Decrease) Pigments Agrochemicals Total Breakdown of Exports Sales by Products Export Sales Q3 Q3 Increase/ % FY 2009 FY 2008 (Decrease) Pigments Agrochemicals Trading Total Reasons for Increase / Decrease in Sales (a) Export sales of Pigments Division decreased y 34%. This was due to less quantity sold of Pigment Green 7 & Beta Blue. (b) Export sales of Agrochemicals Division increased significantly by 193.5%. This was due to better realisation of agro products. (c) Domestic Sales of Pigments Division increased by 24.2%. This was due to more quantities sold of CPC Blue and better realisation. (d) Domestic sales of Agrochemicals Division decreased by 22.2% on account of less quantity sold of MPB/MPBA and Chlorpyriphos Gross profit Group gross profit increased by Rs million (i.e. 89.9%) from Rs million in Q3 FY 2008 to Rs million in Q3 FY The gross profit margin in Q3 FY 2009 increased to 24.8% compared to 16.0% in Q3 FY Breakdown of Gross Profit by Division Division Q3 FY 2009 GP Margin (%) Q3 FY 2008 GP Margin (%) Increase/ % (Decrease) Pigments Agrochemicals Trading Total

11 GP of Pigments [11] The gross profit of Pigments division increased by Rs million (i.e. 51.8%) from Rs million in Q3 FY 2008 to Rs million in Q3 FY GP Margins of Pigments division increased from 20.0 % to 43.3 %. This was due to increase in quantities sold of CPC Blue and better realisation of all pigment products. GP of Agrochemicals The gross profit of Agrochemicals division increased by Rs million (i.e.193.4%) from Rs million in Q3 FY 2008 to Rs million in Q3 FY GP Margins of Agrochemicals division increased from 15.1 % to 23.1 %. This was due to increase in quantity sold of CMAC, Cypermethrin and Permethrin and better realisation of all agro chemical products. Other Operating Income Other operating income of the Group consists mainly of export benefits such as duty entitlement passbook benefit (DEPB), Duty Draw Back, etc, which decreased by Rs million in Q3 FY 2009 to Rs 55.7 million in Q3 FY The increase in other income is the resultant of higher exports. Distribution, Administrative and Other Operating Expenses:- (Quarter to Quarter) Distribution expenses In Q3 FY 2009 the Distribution expenses increased by Rs million (i.e.18.5%). The main drivers of increase in expenses were freight (marine) and cost of packing materials. Administrative expenses Administrative expenses decreased by Rs. 3.8 million (i.e. 10.0%) in Q3 FY 2009 Other Operating Expenses Other operating expenses for Q3 FY 2009 increased by Rs million in comparison to Q3 FY This was mainly due to foreign currency exchange adjustment loss. Finance costs During Q3 FY 2009 Finance costs increased by Rs million (i.e %). The increase in finance cost is due to higher utilisation of working capital on account of higher operating activities, investment in property, plant and equipment and increase in receivables. Taxation Income tax increased by Rs. 5.9 million in Q3 FY 2009 from Rs million in Q3 FY 2008 to Rs million in Q3 FY This is due to increase in profitability of Agrochemical income.

12 [12] Review of results - Nine months ended December 31, 2008 Revenue Group revenue for 9 Months FY 2008 rose by Rs million (i.e. 49.5%) from Rs million in 9 Months FY 2008 to Rs million in 9 Months FY Breakdown of Revenue by Product Products 9 Months FY Months FY 2008 Increase/ (Decrease) % Pigments Agrochemicals Trading Total Bifurcation of Revenue activity wise Activity 9 Months 9 Months Increase/ % FY 2009 FY 2008 (Decrease) Domestic Sales Exports Sales Total Breakdown of Domestic Sales by Product Domestic Sales 9 Months 9 Months Increase/ % FY 2009 FY 2008 (Decrease) Pigments Agrochemicals Total Breakdown of Exports Sales by Product Export Sales 9 Months 9 Months Increase/ % FY 2009 FY 2008 (Decrease) Pigments Agrochemicals Trading Total Reasons for Increase / Decrease of Sales (a) Export sales of Pigments Division increased by 11.2% due to higher sales of CPC Blue. (b) Export sales of Agrochemicals Division increased significantly by 105.9%. The main contributory is higher quantity sale of CMAC, Cypermethrin and Permethrin. (c) Domestic Sales of Pigments Division increased by 12.0%. (d) Domestic sales of Agrochemicals Division increased by 29.8% due to good monsoon and higher quantities sold of CMAC, Cypermethrin and Permethrin.

13 Gross profit [13] The gross profit increased by Rs million i.e. 66.7% from Rs million in 9 Months FY 2008 to Rs million in 9 Months FY The gross profit margin increased to 20.8% in 9 Months FY 2009, compared to 18.6% in 9 Months FY Breakdown of Gross Profit by Division Division 9 Months FY 2009 GP Margin (%) 9 Months FY 2008 GP Margin (%) Increase/ % (Decrease) Pigments Agrochemicals Trading Total GP margin of Pigments The gross profit percentage of Pigments division increased by 19.9% while GP margin increased from 22.2% in 9 Months FY 2008 to 23.9% in 9 Months FY This is due to increase in better realisation of all pigment products. GP margin of Agrochemicals The gross profit percentage of Agrochemicals division increased by 120.6% while GP margin increased from 17.3% in 9 Months FY 2008 to 23.1 % in 9 Months FY This was due to increase in better realisation of all agro chemical products. Other operating income Other Operating Income of the Group which consists mainly of export benefits such as Duty Entitlement Passbook Benefit (DEPB), duty drawback, Gain on Derivatives, dividend income etc. has increased by 66.9% to Rs million in 9 Months FY 2009 mainly due to increase in DEPB rate. Distribution, Administrative and Other Operating Expenses :- (Nine months to Nine months) Distribution expenses Distribution expenses for 9 Months FY 2009 increased by Rs million i.e. by 35.4%. The main drivers of increase in expenses were freight (marine), clearing, forwarding, sales commission and packing material cost. Administrative expenses Administrative expenses for 9 Months FY 2009 increased by Rs million i.e. by 93.8% which is mainly due to increase in provision of excise duty expenses on closing stock of finished goods, rent, rate & taxes, travelling expenses, legal & professional fees and donation at etc. Other Operating Expenses Other operating expenses for 9 Months FY 2009 were mainly affected due to unpredictable movements in the exchange rate of Indian Rupee against US dollar as well US Dollar against Euro.

14 Finance costs [14] Finance costs during 9 Months FY 2009 increased by Rs million i.e. 82.1%. The increase in finance cost is due to higher utilisation of working capital on account of increase in Operation Share of associate s profit / loss Meghmani Europe BVBA, Belgium ( Meghmani BVBA ) has become the subsidiary of the company and hence no profit or loss is shown as share of profit / loss of the Group. Taxation Income tax expense during 9 Months of FY 2009 increased by Rs million i.e % to Rs million from Rs million in 9 Months FY Interest in Subsidiaries Meghmani Organics USA Inc., a wholly owned subsidiary of the Company, has commenced its commercial transactions. Accordingly, profit / loss of Meghmani Organics USA Inc. for the period ended on 30 September, 2008 has been included in the profit / loss of the Group. Meghmani Europe has become subsidiary of the Company. Income statement prepared for the quarter ended 30 September 2009 considered Meghmani Europe BVBA as Subsidiary. Meghmani Energy Limited (MEL) a Special Purpose Vehicle (SPV) has set up a Captive Power Plant near its Agrochemical Unit at Chharodi and has subscribed to 70% of its share capital, making MEL subsidiary of the Company. Meghmani Finechem Limited (MFL) has been formed as a Special Purpose Vehicle (SPV) company to implement Rs. 555 Crore Caustic Chlorine project. The Project is at advanced stage of implementation and is expected o be commissioned by February/March Meghmani Chemtech Limited has been formed to set up the project in Special Economic Zone. Balance sheet Trade receivables Trade receivables as at the end of 9 Months FY 2009 increased by Rs million i.e. from Rs million in FY 2008 to Rs million FY This is the resultant of increase in revenue. Other receivables and Prepayments Other receivables and Prepayments as at the end of 9 Months FY 2009 increased by Rs million i.e. from Rs million in FY 2008 to Rs million FY The main reason for increase in payment made to Dahej project and advance payments to supplier for Merchant export. Inventories Inventories as at the end of 9 Months FY 2009 increased by Rs millions i.e. by 35.4 % to Rs million

15 [15] Property, plant and equipment Property, plant and equipment as at the end of 9 Months FY 2009 increased by Rs million, mainly due to expansion of Chlorpyriphos at Ankleshwar plant, and setting up of Caustic Chlorine complex by Meghmani Finechem Limited at Dahej. Bank Borrowings Bank borrowings (current and non-current) increased by Rs million i.e. by 186.7% to Rs million due to increase in operations. Trade payables Trade payables as at the end of 9 Months FY 2009 increased by Rs millions due to Purchase of raw materials from domestic market. Other payables Other payables as at the end of 9 Months FY 2009 increased by Rs millions due to increase in accrued expenses. Cash flow statement During the 9 Months FY 2009, the Group has reported negative net cash flows of Rs million from operating activities because of increase in trade receivables and other receivables and prepayments. Financial Analysis Group Key financial highlights 9 months ended months ended Rs. in millions Variance Variance (%) Profitability Sales 6,284 4,203 2, Gross Profit 1, Gross Profit Margin (%) n.m. Profit before tax Profit before tax Margin (%) n.m. Net profit Net profit Margin (%) n.m. Earning per Share (EPS in Rs.) Annualised return on equity (ROE) Financial position Net tangible assets 4,910 4, Debt (short term +long term) 5,924 1,684 4, Capital Gearing ratio Net tangible assets per share Stock turnover (days) Trade debts turnover (days)

16 [16] 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. Industry Prospects Chemical Industry is an important constituent of the Indian economy. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP. The total investment in Indian Chemical Sector is approx. US$ 60 billion The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. Pigments The pigments market continued to deal with the challenges of volatile prices for key raw materials, fuel and slowing down of major world Economies. Year 2009 will remain a challenge for Pigment producers. To meet current set of challenges, the group is in process to introduce new range of High Performance Pigments and have introduced large product basket to customers to maintain the growth. Agrochemicals Indian exports of agrochemicals have shown an impressive growth over the last five years. The key export destination markets are USA, U.K., France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore. India is the 4 th largest producer of agrochemicals after USA, Japan and China. The agrochemicals market in India is Rs Crores. To meet the growing demand for Organ phosphorous and Synthetic Pyrethroid, the Group has installed multifaceted production capacities at the Ankleshwar Plants. Last year, the Agrochemicals market remained very depressed. The market has started improving this year. The Group performed well on the domestic front last year and expect to continue the same this year on the domestic branded formulations sale. Global meltdown will impact our sales on export front in coming years. Outlook for FY 2009 Raw Material Price The recent meltdown coupled with volatility in foreign exchange market the raw material prices are going to be reduced and this will have impact on finished goods prices, as a result, our profitability is likely to be affected in 4Q FY 2009.

17 Market Price [17] The global markets for pigment products have shown signs of stagnation in the sales price of some products. During two quarters of FY 2009, agro products prices were increased. But the recessionary trend in this quarter and the coming quarters would witness pressure on pricing. Profitability The Group achieved revenue of FY Gross profit and Net Profit after tax has been maintained despite global meltdown. Market Dynamics are changing rapidly. To insulate from external threats, we are adding more products to our portfolio. Registrations The Group continued to make its concentrated efforts to obtain overseas registrations. The Group has received total 135 registrations. The registration efforts of the Group are in countries such as Australia, Brazil, Bangladesh, China, Indonesia, Malaysia, Nigeria, Paraguay, Thailand, Turkey and Vietnam. The group has 395 new registrations in pipeline in 55 countries at various stages which will further strengthen the growth plan of the Group. 11. Dividend (a) Current financial period reported on Any dividend for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year : Nil (c) Date payable: Not applicable (d) Books closure date: Not applicable 12. If no dividend has been declared/recommended, a statement to that effect. No dividend for the period ended 31 December, 2008 is recommended or declared. 13 Confirmation by Directors pursuant to Rule 705(4) of the Listing Manual of the SGX-ST On behalf of the Board of Directors of the Company, I the undersigned, hereby confirm that, to the best of our knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the financial statements for the third quarter ended 31 December, 2008 to be false or misleading. 14 The Company has been granted waiver by SGX ST in compliance with Rule 220 (1) of the listing manual and the Company is allowed to release its periodical finance report as well as annual report under the Indian GAAP. Provided it is accompanied by a reconciliation statement. The Board is of the view that the variance of the profit reported under the quarter ended 31 December, 2008 is not material. BY ORDER OF THE BOARD Kamlesh Dinkerray Mehta Company Secretary Date :