Vinati Organics Ltd March 2007

8/12/2019 Vinati Organics Ltd March 2007

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VINATIORG NICS

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REGISTEREDOFFICE

FINANCECONTROLLER

18THANNUAL GENERAL

lite

REGISTRAR

LOTE WORKS

CORPORATE OFFICE

1. Notice2. Directors Report3. Corporate Governance Report4. Management Discussion&Analysis5. Auditors Report6 Balance Sheet7. Profit&Loss Account8. Cash Flow Statement9. Schedules10 . Accounting Policies11. NotesonAccounts12. Balance Sheet Abstract andCompany s

General Business Profile13 . Significant graphsofVinati OrganicsLtd


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SANSCO SERVICES -AnnualReports LibraryServices - www .sansco.net.4VINATI DREANICS LIMITED

NOTICENOTICE ishereby given thatthe EIGHTEENTHANNUAL GENERALMEETINGOFVINATI ORGANICS LIMITED(the Company ) willbe held on Saturday,29thSeptember, 2007 at3.00P. M. at the Registered Office of theCompany, at B-12 &B-13/1,MIDC Industrial Area, Mahad 402 301,Dist. Raigad, Maharashtra to transact, thefollowing business:ORDINARY BUSINESS1. To receive, consider andadoptthe Audited BalanceSheetasat March 31, 2007, Profit & LossAccount fortheyear endedonthat dateand the ReportsofDirectors'andAuditors' thereon.2. To declareDividendon equity shares.3. Toappoint a Director in placeof Shri A. A. Krishnanwho retires by rotation at this meetingand being

eligible,offershimself for reappointment.4. To appoint a Director in place of Shri Girish M. Dave who retires by rotation atthis meeting and being

eligible,offershimselffor reappointment.5. To appoint Auditors to hold office from the conclusion ofthisAnnual General Meeting until the conclusion

of the next Annual GeneralMeetingand to fix their remuneration.NOTES1. Amember entitledtoattendandvoteat themeetingisentitledtoappoint anotherperson(whetherashareholder

ornot)ashis/her proxytoattendandvote insteadofhimself/herself,but aproxysoappointed shallnothaveanyrighttospeakat themeeting.Theproxiesinorderto beeffective mustbereceivedby theCompany notlessthan48hours beforethemeeting.

2. The Registerof Members andShareTransferBooksof the Companyshallremain closed from Thursday, the20thSeptember 2007 to Saturday, the 29thSeptember 2007 (both daysinclusive).

3. Members are requested to intimate to the Corporate Office situated atShiv-Ashish,2nd Floor, Andheri-KurlaRoad,Sakinaka,Mumbai400072 the changes, if any, in their registeredaddresses,quoting their Folio Numbers.

4. As per the provisionsof theCompaniesAct, 1956 facility for making nominations isavailable for theshareholders.Theprescribed nomination formcan beobtained fromtheCompany'ssharedepartment situatedat Shiv-Ashish,2ndFloor, Andheri-Kurla Road, Sakinaka,Mumbai- 400072,Maharashtra.

5. Registrarsand TransferAgents:TheCompany has appointed M/s. Sharex Dynamic (India)Pvt. Ltd.,17/B, Dena Bank Building, 2nd Floor,Horniman Circle, Fort,Mumbai- 400 001 as theRegistrarsandTransferAgents( R&TA )for all aspectsofinvestorservicing relatingto shares.

6. TheCompany's securities are listedat the Stock Exchange,Mumbai (Regional Stock Exchange) PhirozeJeejeebhoyTowers, Dalai Street,Mumbai- 400001,Maharashtra.

7. TheAnnual ListingFee asprescribedhasbeen paidto theabove stock exchange.8. Thedividendon equity sharesas recommended by the Directors for the year ended 31st March 2007, if

declared at the meeting,willbe made payable on or after 30thSeptember 2007 to those members whosenamesappear on the Registerof Members of the Company aftergivingeffectto all valid sharetransfers inphysical form lodgedwiththe Company on or before19thSeptember 2007 or those whosenamesappear asbeneficial ownersas at the end of business on 19thSeptember 2007as per lists to befurnished by thedepositoriesviz.National SecuritiesDepository Limited and Central Depository Services(India) Limited.Shareholdersare hereby informed thatafterthe amendmentofthe Act w. e. f.31.10.1998,the Companywillbe obligedtotransferanymoney lyingin theUnpaidDividendAccount, which remains unpaidorunclaimedfor a period ofsevenyearsfrom the date of suchtransferto the Unpaid Dividend Account, to the credit ofInvestor Education and Protection Fund (the Fund ) established by the Central Government. In accordancewith Section 205C of theAct,no claim shall lie against the Company or Fund in respect of Individualamountsof dividends remaining unclaimed and unpaid for a period ofsevenyearsfrom the date it becamefirstdue for payment and no paymentshallbe made in respectof anysuch claim.

9. Memberswhoareholding sharesinidentical orderofnamesinmore thanonefolioarerequestedtosendtotheCompanythedetailsofsuch folios together withtheShareCertificatesorconsolidating their holdingsinonefolio.TheShareCertificateswillbereturned to the Membersaftermaking requisite changes thereon.

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VINATI DRGANICS LIMITEDDIRECTORS REPORT

Tothe Members,YourDirectors have pleasure in presenting their Eighteenth Annual Report on thebusinessand operations of yourCompany togetherwithAudited FinancialStatementsfor the year ended 31stMarch2007.1)FINANCIAL RESULTSThe summarizedpositionofthese resultsisgiven below:

Rs. In Lacs

Salesandother incomeProfit before Interest, Depreciation &TaxesInterestProfit before Depreciation &TaxesDepreciation & Non-cash ChargesProfitbefore Taxati onProvisionforTaxation -Current

-Deferred-FringeTaxBenefit

Provision for earlier yearW/back/ProvidedNet ProfitBalancebrought forwardBalanceavailable for appropriationsAppropriationsDividendTaxonDividendTransfertoGeneral ReserveSurpluscarriedtoBalancesheet2)REVIEWOF OPERATIONS

2006-20079234.871022.39t96.57825.82273.14552.68178.0017.61

5.60

0.08351.39

1962.402313.79

79.0013.4310.00

2211.36

6598.24659.05123.94535.11239.48295.6382.0027.455.20

(14.37)195.35

1842.112037.46

65.839.23

1962.40

Memberswillbepleasedto note that the operations of your company have shown satisfactory performance. Fortheyearunderreviewsaleshave goneup by1292.87metrictonsintermsofquantityandaboutRs.2526.29Lacsintermsofvalue.Theprofitabilityhasgoneup due tomanagement's thrustonexports,whichhave goneup by ahealthyRs.2823.59Lacsduringtheyear.3)DIVIDENDConsidering resultsof the Company, your Board of Directors are pleased to recommend adividendof 12% i.e.Rs.1.20per equity share. Your Boardseeksyour approval for thesame.Thetotal outgo ondividendaccountwillbeRs.92.43 Lacs(inclusive of corporate tax ondividend).Thedividendis taxfreein thehandsof theshareholders.4) PROSPECTSTheproject work on the proposedmodernization-cum-expansionprogramme is on schedule. The projectaimsatestablishingmanufacturing facilitiestomatch International Standards. Afterfull implementation,the productioncapacityofyour companywillalsogo up.Weexpect continued growthinoperationswith growingdemandin thechemical industry.


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VINATI DRBANICS LIMITEDYourcompanyhasgone undernewexpansionanddiversification programmeandalsocontinuedto seestrongandprofitable growth in the financial year 2006-2007acrossall markets driven by good performance in existing and newareasofbusiness.(i) ExpansionofIBBPlantatMahad

Inordertocater increased export demand,theCompanyhasundertaken expansionof IBBplanttoincreasehecapacity from10000TPA to14000TPA. (Incrementof40%).

(ii) Expansionof2-Acrylamido2MethylpropaneSulfonic Acid(ATBS)PlantatLoteIn order to cater higher exports demand, the Company isplanningto increase existing capacity from3000TPAto8000TPA.(Incrementof approx. 166.66 )

Thematterof concernis the steep rise in Indianrupee vis-a-visUSDollar. However themanagement istakingjudicious decisions to safeguard the Company's interest.5)TURNOVERANDPROFIT (OPERATINGRESULTS)TheCompany achieved turnoverof Rs.9046.22LacsascomparedtoRs.6519.94Lacsin theprevious year.The netprofitincreasedtoRs .351.39 Lacsascomparedto Rs.195.35Lacsintheprevious year.6) NSURANCETheproperties and insurable interest ofyour companylikeBuilding,plant and machinery,stocksetc are properly insured.7)DIRECTO RATEAs per the statute,two-thirdof the Directors should beretiringDirectors.One-thirdof theseretiringDirectors arerequiredtoretire every yearand ifeligible,these Directors qualifyforre-appointment.Accordingly, Mr.A.A.'Krishnan,Directorand Mr.GirishM.Dave, Director retirebyrotationat theensuing AnnualGeneralMeetingandbeingeligibleoffer themselvesforre-appointment.Directors' profile(i) Mr.A.A.Krishnan,ChemicalEngineer

-Mr.A. A. Krishnan has very wide experience in Petrochemical industry. He is Director of other Public LimitedCompaniesnamely AndhraPetrochemicalsLimited and Petron Engineering Construction Limited. The Companyhasbenefitedby his 45yearsofexperience.He wasappointedas adirector long backand hasvastanddiversifiedtechnological and chemical expertise of running the manufacturing unit insuchindustries. Due to his commitmenfor technological advancement in continuously improvingthe systemsand procedures, he has substantiallycontributed to the growth of the Company. Thereforewitha view to get benefit out of hispastexperience andtechnical competence, the Board recommends his reappointment.

(ii) Mr.GirishM.Dave,MCom, L.L.B.&CAIIBMr. Girish M. Daveisaneminentadvocate andseniorpartnerofthe well-known Law FirmM/s.Dave & Girish&Company, Advocatesand hasover40yearsexperiencen thelegal field.TheCompanyhasbenefited substantiallyfromhisadviceandguidanceandalsodue to hisimmense knowledge in thesaid fieldhe hascontributedto theCompanywithawiderange of advancement in the respective fields so as to reap thefruitfulbenefit in thelongrun. He has served on the Board of your company and has given valuable advice on legal and administrativemattersto the management. Therefore with a view to hiscontribution,the Board recommends his reappointment.

8) AUDITORSMembers arerequestedtoappointAuditors for the currentyearand to authorize theBoardof Directors to fixtheirremuneration. The Statutory auditorsM/s.Karnavat & Co., Chartered Accountants retire at the ensuing Annual GeneralMeeting and being eligible under section 224(1B)of the Companies Act, 1956, offerthemselvesforre-appointment.9)AUDITORS'REPORTTheobservationsofAuditorsasreferredto in theAuditors' Reportaresuitably explainedin theNotesto theAccounts.10)COST AUDITORAs per theorderofCentral Government, Mr. P.C.Jainhasbeen appointed asCost Auditor withtheapproval ofCentralGovernment for the year ending 31.03.2007. The Company has madenecessaryapplicationfor approval ofthe same. ' .


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11)FIXEDDEPOSITDuringtheyear under reviewtheCompanydid notinviteoracceptanyFixed Deposit frompublic.12)EMPLOYEESTheCompany is notrequiredtomakeanydisclosure under section217(2A)oftheCompanies Act, 1956asnoneofitsemployeesisdrawing remuneration inexcessofRs.24 LacsperannumorRs.2Lac permonth.13)CONSERVATIONOFE N E R G Y ,TECHNOLOGY ABSORPTION&FOREIGN EXCHANGE EARNING&OUTGOInformation as per Section217(1)(e) of the CompaniesAct, 1956,readwithCompanies (Disclosures of Particulars intheReportofBoardofDirectors) Rules,1988, relatingto theabove headaregiveninAnnexure'B'formingpartofthisreport.14)LISTINGTheCompany's Equitysharescontinue to be listedatBSE.Weconfirm thattheListingfeesfor theFinancial year2006-2007 has been paid to them.15)DIRECTO RS'RESPO NSIBIL ITY STATEMENTPursuantto the requirement of Section 217 (2AA) of the Companies Act, 1956 and based on the representationsreceived from the operating management, the Directors hereby confirm that:(i) in thepreparationof theannual accounts,theapplicable accountingstandards have beenfollowedalongwith

proper explanation relating to material departures;(ii) they have selected such accounting policies andappliedthem consistently and made judgments andestimates

thatare reasonable andprudentso as to give a true and fairviewof the state ofaffairsof the Company as at31stMarch 2007and theprofitof theCompanyfor theyear ended 31stMarch2007;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewiththeprovisionsofCompanies Act, 1956forsafeguardingtheassetsof theCompany and forpreventinganddetecting fraudandother irregularities;

(iv) they have prepared annual accounts on agoingconcernbasis.16)C O R P O R A T EGOVERNANCEANDMANAGEMENT'S DISCUSSIONAND A N A L Y S I SR E P O R T SThecorporate Governance and Management's discussion and Analysis Reports,whichform an integral part of thisreport,are set out in a separate annexure to thisreport,alongwiththe certificate from the Auditors of the Companycertifying compliance of the conditions of the Corporate Governance as stipulated inClause49 of the Listing AgreementwiththeStock Exchange. (See Annexure'A''C&'D')17)APPRECIATION&ACKNOWLEDGEMENTSYourDirectors take this opportunity of placing on record their sincere gratitude for overwhelming cooperation andassistancereceived from Central &StateGovernments, banks, financial institutions, shareholders,businessassociatesand esteemed customers or their continued support andassistanceduring the year.YourDirectors also wish to place on record their appreciation for whole-heartedcommitment, contribution,sincereanddedicatedeffortsput in by the Officers,Staffand Workers for maintaining continued improvement in Company'soverall performanceandwellbeingofthem.

Forand onbehalfof theBoardof Directors

VinodSarafMumbai,31stMay 2007 Chairman&Managing Director

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-VINATI DRBANICS LIMITEDName

Mr. Vinod Saraf(Chairman &ManagingDirector)Mr.GirishM. Dave(Director)Mr.AnandkumarTibrewala(Director, up to20.05.2006)Mr. C.B.Gokhale(Director)Mr.A.A. Krishnan(Director)Mr. Sunil SarafDirector

Ms.VinatiSarafExecutiveDirector(from 20.05.2006)

Category

Promoter,Not-IndependentExecutiveIndependentNon-ExecutiveNotIndependentNon-Executive

IndependentNon-ExecutiveIndependentNon-ExecutivePromoter,Not-IndependentNon- ExecutivePromoter,Not-IndependentExecutive

No.ofBoardMeetingsAttendedduring2006-07

4

3

1

4

2

3

4

Whetherattended

AGMheldon23rd Sep.2006

Ye s

Yes

N.A.

No

No

No

Yes

No. ofDirector-shipsin

otherpubliclimitedCompanies

1

5

__

2

1

1

No. of Committeepositionsheldin

otherpubliclimitedCompaniesChairman

_

1

_

~

Member. _

5

_

~

_

-

M r. nandkumar Tibrewalaha sceasedto bedirector with effectfrom2 1st

M ay2006.Therewas nonominee directoron theBoard duringtheyear.Theinformation asrequiredinAnnexure1of theListing Agreementwasmade availableto theBoard regularly.Th e Companydid nothavean ypecuniary relationshiportransactionswiththe NonExecutive Directorsduring2006-2007.Transaction ofloan taken from Executive DirectorisdisclosednnoteNo. 6 ofschedule18 to theAccountsin Annual Report.

(c) CodeofConductThe Company haslaid down aCodeof Conduct for all itsBoard membersandSenior Managementpersonnelforavoidanceofconflictsofinterest.It hasreceived fromall ofthemthenecessary declarationsaffirming compliancewiththeCodeof Conductfor theyear 2007. There werenomaterial financialand commercialtransactionsinwhich theSeniorManagement personnelhadpersonal interest,whichcould lead potential conflict of interest of the Company during the year.The Code of Conduct isavailableonCompany s website.

3. AUDIT COMMITTEE(a) Constitution

Th eAuditCommittee,whichwasconstitutedon 31stJanuary 2001 pursuanttothe provisions containedin section 292Aof theCompanies Act, 1956wa s reconstitutedas perClause49 of Listing Agreement

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VINATI DRBANICS LIMITEDforCorporate Governanceon 24* January2002and wasreconstituted on20thMay2006.Thetermsofreferenceof theAudit Committeeasstipulatedby theBoardare inaccordancewiththe all theitemslisted inClause 49(II)(D)o f theListing AgreementandSection 292Aof theCompanies Act, 1956.

(b) CompositionTheAudit Committeeof theCompanyas on31stMarch, 2007 comprisedthefollowing3Directorsofthe Company:1. Mr.GirishM.Dave Independent Director2. Mr.C.B. Gokhale Independent Director3. Mr.A.A. Krishnan Independent Director

(c)

Witheffect from21stMay 2006 Mr. A.A. Krishnan isinductedin place of Mr. Anandkumar Tibrewala.Themembers of the committee arewellversed in matters relating to finance, accounts, company law,othereconomiclegislationand general management practices.Meetings & AttendancesTheAudit Committee met four times on thefollowingdatesduring thelast financial year.

Dateof theMeeting20thMay200629thJuly200625 thOctober 200622ndJanuary2007

TotalStrength3333

No. of Memberspresent3223

Th e necessaryquorumwas present at themeetings.Audit committeeat all itsmeetingshadreviewedthe information asmandatory requiredto beplacedbeforethe committee from time to time.Mr. G.S. Singhi being theCompany Secretary Cum Finance Controller of theCompany actsas theSecretaryto the Committee.

(d) Terms ofreferenceTheterms of reference of the Audit Committee include review of Quarterly, Half-yearlyand AnnualFinancial statements before submissionto the Boardfor itsapproval,toreview adequacyof internalcontrolsystems,toapprisetheBoardon theimpactof thescopeandcontentof theauditand toreviewtheCompany's financialand riskmanagement policies.Th eStatutory Auditors, Internal Auditorsof theCompanyand theCostAuditorsareinvited tojointheAudit Committee Meetings.Th eCommitteediscusseswiththeCostAuditor abouthisobservationsn theAnnualCostAudit Reportsandallied matters.

4. SHARE TRANSFERCOMMITTEETh eShareTransferCommitteewasconstitutedon24thJanuary2002forapprovingtransfers,transmissionofsharesetc.ItcomprisesoffollowingDirectors:(i) Mr.VinodSaraf,Chairman & Managing Director(ii) Mr. SunilSaraf, DirectorMr.G.S. SinghibeingtheCompany SecretarycumFinance Controller of theCompany actsas thesecretaryto the Committee. The Committee met 12 timesduring the year2006-2007 for approving transfers,transmissionsetc.All transfers& transmissionsetc. were approvedand sharecertificates were dispatchedwithin30 days andrequestsfordematerializationwere confirmedwithin21 days.

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6.

=VINATI DREANICS LIMITED5. SHAREHOLDERS'/ INVESTORS'GRIEVANCECOMMITTEE

(a) Termsof R eferenceTheCompany has anindependent Shareholders' Grievance Committee, whichwasconstitutedon24thJanuary2002 and reconstituted on 20thMay 2006 to look into redressalof investor's complaints andrequests like delay intransferofshares,non-receiptofdividend,annual report, etc.

(b) CompositionTh e Shareholders'/Investors' Grievance Committee of the Company comprises of the following 3Directors of the Company:

: Chairman-Independent Director (from 20.05.2006): Member- Chairman&Managing Director: Member - Director(up o20.05.2006): Member- Director(up to20.05.2006): Member - ExecutiveDirector (from 20.05.2006)

1.2.3.4.5.

Mr. GirishM.DaveMr.Vinod SarafMr.Anandkumar TibrewalaMr. SunilSarafMs.Vinati Saraf

(O Meetings & AttendancesTh eShareholders'/Investors' Grievance Committeemet asgiven below:

Date of theMeeting31stMarch 2007

Total Strength3

No. of Directorspresent3

Th eCommittee oversees thematter relatingto transfer of shares,demat of shares, issue ofduplicatesharecertificates,redressal ofgrievancesandcomplaints regardingnon-receipt of dividends, annualreports, etc.During the year2006-2007a total number of 16 complaints were received and all of which weregenerally solvedand redressedby theCompanyto thesatisfactionofcomplainantsandtherewas nopending complaint.G.S.Singhi beingtheCompanySecretaryCumFinance Controllerof theCompanyactsas heComplianceofficer.

D E T A I L S O F REMUNERATION PAID / P A Y A B L E T O T H E D I R E C T O R S F O R T H E Y E A R ENDED31 ST MARCH 2007Managerial Remuneration

Name

Mr.Vinod SarafChairman & Managing DirectorMs.Vinati SarafExecutive Director(from20.5.2006)Total

Salary&Allowances(Rs.)

13,54,125

7,18,424

20,72,549

Contributionto PF(Rs.)

1,50,000

62,3232,12,323

Other Perquisites(Rs.)

50,680

-50,680

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7.

VINATI ORGANICS LIMITEDGENERALBODY MEETINGLocation, dateandtimeofAnnual General Meetings held duringth e last3years:Year

15 thACM2004

16thAGM 20051 7thAG M2006

Location

Regd.Office:B/12&B-13/1,MIDCIndl.Area,Mahad - 402309, Dist.Raigad,Maharashtra.-do-

-do-

Date

23.09.2004

30.09.2005

23.09.2006

Day

Thursday

FridaySaturday

Time

12.30 p.m.

3.00 p.m.

3.00p.m.

No. ofSpecialresolutionspassedNil

Nil

Nil8. DISCLOSURES

(a) RelatedParty TransactionsTherehave beennomateriallys ignificantrelated partytransactionswiththeCompany'sPromoters,Directorsthe Management or relatives, which may have potential conflictwiththe interestsof the Company alarge.However, attention isdrawntonoteNo.6ofschedule18under Notesto theAccountsinAnnuareport.

(b) Statutory Compliance,PenaltiesandstricturesTherehave beennopenaltiesorstricturesimposedon theCompanyby theStockExchangesorSEBIor anStatutoryAuthorities relating to capital market andlisting.

(c) Compliance with mandatory/Non-mandatory requirementsTheCompanyhascompliedwithall theapplicable mandatoryrequirementsandmostof the non-mandatorrequirementsspecified in the revisedClause49 of the listing Agreement.

9. MEANSOFCOMMUNICATIONTh equarterlyresults,half yearly and annual financialresultsof the Company are published in leading EnglishandMarathi Newspapersas per theprescribed guidelines.Thefinancialresults,shareholding pattern&codeoconductaredisplayedonwww.sebiedifar.nic.in

10. MANAGEMENT DISCUSSIONA N D ANALYSISREPORTTh ediscussion on financial performancewith respectto the operational performance, review of operationsexportsand prospects have been covered in the Director's Report.Th eCompanyhasadequatesystemofinternal control systemwithregardtopurchaseofstores,rawmaterialsincluding components, plant &machinery, equipments,saleofgoodsandotherassets.Theinternal controsystem issupplemented by well Documented policies andguidelines and the internal audit report areperiodically put to and isrevisedby the topmanagement.Th e industrial relations during the year continued to be cordial. The Company is committed to providenecessaryhuman resource development andtraining opportunities toequipthemwiththerequiredmodernskil l and knowledge.

11. COMPLIANCE OFFICERMr. Gunvant S.Singhi, Company Secretary Cum Finance Controller acts as aCompliance Officer of thCompany.

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=VINATI ORGANICS LIMITED12. GENERALSHAREHOLDERINFORMATION

a. Annual General meetingDate 29thSeptember 2007Time 3.00P.M.VenueRegd.Office,atB/12&B-13/1, MIDC Indl.Area,Mahad-402 309,

Dist.Raigad,Maharashtra.b. Financial Calendar

Annual General MeetingUnaudited resultsfor thequarter endingJune 2007Unaudited resultsfor the quarter/half yearending September30,2007Unaudited resultsfor thequarter endingDecember31,2007

29thSeptember' 074 thweekofJuly'074thweekofOct'074 thweekofJanuary' 08

UnauditedresultsforthequarterendingMarch 31,2008Date ofbook ClosureDividend payment date

c. Listingon Stock Exchange

d. StockCode:T he Stock Exchange,Mumbai(PhysicalSegment)Demat ISIN inNSDLandCDSL forEquityShares

e. Market Price Data

4thweekofApril'0820thSeptember 2007to.29thSeptember2007.(both days inclusive)19 thOctober 2007Th eCompany's Securities are listed on thefollowingStock exchangein IndiaTh eStock Exchange,MumbaiPhirozeJeejeebhoy Towers, Dalai Street,Mumbai- 400001,Maharashtra.524200

INE410B01011

Month

Apr- 2006May- 2006Jun- 2006Ju l-2006Aug- 2006Sep- 2006Oct- 2006Nov- 2006Dec- 2006Jan- 2007Fe b- 2007Mar- 2007

Bombay Stock Exchange(inRs.)High35.3535.6031.0026.6529.1533.5033.7531.8537.5037.5036.0037.95

Low29.1026.0018.0019.652 2 . 7 5 ,26.5528.00

. 27.0026.8032.4533.1532.70

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VINATI DRGANICS LIMITEDf. Theperformanceof theCompany's sharesrelativeto theBSE Indexfor theyear 2006- 2007isgiven

below:

g-

h.

VINATI SHAREPRICE-VS-BSESENSEX-APRIL06-TO MARCH 0716000.00

MONTH

Share Registrarsand TransferAgentsSharex Dynamic (India) Pvt. Ltd.17/B,Dena BankBldg.,2ndFloor,Horniman Circle, Fort,Mumbai- 400001.Maharashtra.

Tel : 22702485/22641376Fa x : 22641349E-mail : [email protected] : www.sharexindia.comB u s i n e s s : 11.00A.M. to 1.00 P.M. &Hours 2.00P.M..to4.00 P.M.

(Monday toFriday)ShareTransferSystemTheCompanyhasappointedcommon agency, name&addressofwhichisgivenin thereportforelectronicconnectivity and to processshare transfersin physical form.Th etransfersare normally processed andsharecertificates are dispatchedwithin30 days from the date ofreceipt if the documents are complete in allrespects.Requestsfordematerializationare confirmedwithin15days.DistributionofShareholdingas on31stMarch 2007

CategoryNo. ofShares

1To 100101 To 200201To 500501To 10001001 To5000

5001 To1000010001 To 100000100001andabove

Total

No. ofShareholders6788832732215139121310

8741

%of holders77.669.528.372.461.590.140.150.11

100.00

No. ofShares6652571644162900261 7980129416884975

36735145370066583000

% ofShares10.102.504.412.73

. 4.471.295.5868.92100.00



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= V I N A T I DRBANICS LIMITED

k .

m.

n.

Shareholdingpatternas on31stMarch 2007CategoryIndividualsPromotersOther CompaniesNon-Resident IndividualsNationalized Banks,Mutualfunds andtrustsTotal

No. ofshareholders8614

1795123

8741

Votingstrength(%)

26.0468.805.080.040.04

100.00

No. ofOrdinaryshares

17139074529007335330

23562400

65,83,000Dematerialisationof sharesandliquidityTh e Company's sharesareunder demat modeandtheyareregularly tradedon the StockExchange,Mumbai as indicated in the Table containing market information. The ISIN of the Company isINE410B01011. Members who have not yet dematerialised their physicalholdingare advised to availthefacilityofDematerialisationat theearliest.As on31stMarch 2007, 25.85% (Total sharesdemated with NSDLis1104763 & CDSL is596721)otheCompany'ssharecapital have beenindematerialized mode.Address of RegisteredOffice:B/12&B-13/1, MIDC Industrial Area,Mahad-402309,Dist. Raigad, Maharashtra.AddressofPlant Locations:Mahad Works:B/12&B-13/1, MIDCIndustrial Area,Mahad - 402309,Dist. Raigad,Maharashtra.Address for Investor'scorrespondence:Forsharesheld in Physicalform&for Annual reportFor shares in Demat form

LoteWorks:A-20, MIDC,Lote-Parashuram-415722,Taluka- Khed, Dist. Ratnagiri, MaharashtraMr.Gunvants.SinghiShiv-Ashish,2ndFloor, Andheri - KurlaRoad,Sakinaka,Mumbai- 400072.Sharex Dynamic (India)Pvt.Ltd.17/B,Dena BankBldg.,2ndFloor, Horniman Circle,Fort,Mumbai - 400001.Maharashtra.

DECLARATIONI, Vinod Saraf,Managing Director of Vinati Organic Limited, hereby declare that all the members of the Board ofDirectors and the Senior management personnel have affirmed compliancewiththe code of conduct for the yearended 31stMarch 2007.I confirm that the Company has in respectof thesaidfinancialyear,received from the senior management teamand the membersofthe board of the Company a declaration of compliance with the code of conduct as applicabletothem.Forthe purpose of this declaration, Senior Management Team means the Chief Financial officer, Chief OperatingOfficer, ExecutivePresidentand theCompanySecretaryas on31stMarch 2007.

Mumbai,31stMay 200718th Annual Report2OO6-2OO7

Onbehalfof theBoardof DirectorsVinod Saraf

Chairman & Managing Director15


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VINATI ORGANICS LIMITEDANNEXURE- B -Directors report

P A R T I C U L A R S REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS INTHEREPORTOFBOARDOFDIRECTORS) R U L E S,1988

a CONSERVATIONO FE N E R G YThe Company is engaged in the continuous process of further energy conservation through improvedoperational and maintenance practices and also undertaken effective measuresto minimize energyconsumption and themeasureshave resulted/will result in the consumption of fuel and power, ultimatelyresultinginsavingsin thecostofproduction.Total energyconsumptionas per prescribed 'FormA'togetherwiththe comparative figures for the last yearis mentioned hereunder:I) Power &FuelConsumption

1) Electricitya) Purchased (MSEB)

Unit (KWH in Lacs)Total Amount (Rs.n Lacs)Costperunit(inRs.)UnitConsumed/Kg.Of IBBUnitConsumed/Kg.Of ATBS& Na -ATBS

b) OwnGenerationThrough Diesel GeneratorUnitsAmount (Diesel CostinRs.)Costperunit (inRs.)

2006-07

58.55265.69

4.540.371.87

27328390140

14.28

2005-06

50.08177.54

3.55.0.363.45

32044377945

11.79b) TECHNOLOGY ABSORPTION,ADOPTIONANDINNOVATION

(i) Efforts,in brief, made towards technology absorption, adoption and innovationThe technologies acquired by the Company in the past for the production of IBB, ATBS & Na-ATBhave been fully absorbed. The technologies have been further upgraded over the years through in-house innovation and knowledge engineering to achieve better material and energy efficiencies.

(ii) Benefitsderivedas aresultof theaboveefforts,e.g.product improvement, costreduction, productdevelopment, import substitution etcFull understanding of the technology helped the Company to identify and develop schemes for therecovery ofby-products. Better process knowledge andsimulation facilitated achievement of higherproductionvolumes, quality improvement and energy conservation.

c) RESEARCH &DEVELOPMENT(i) Specificareasin which R & D is carried out by the Company

The R&Dunitisengagedindevelopmental activities suchasdeveloping alternate productsandattainingbetter production efficiencies.To foster technical excellence and to maintain its leadership position, your Company continues toaccordhighpriority toR&D.Thedetailsof theexpenditureon R&DmadebyCompanyare asunder:Date26.05.200631.07.200630.08.2006

Paid toIICT, HyderabadOmkarTradersIICT, Hyderabad

ParticularsPaidfor BenzaldehydePilot Plant Installation workPaidfor Benzaldehyde Project.PaidforBenzaldehyde ProjectTotal

Amount(Rs.)99,000

5,0202,24,4803,28,500



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VINATI DREANICS LIMITED(ii) Benefitsderivedas aresultof theaboveefforts

TheCompanyhasbeensuccessfulin newproductsandprocessdevelopment, quality,safety, standard,environmental protection measuresandxonservationof energy improvement.AtMahadwerecover pure NBB,(C-10aromatic solvent), which isbyproduct andmake value addedproduct fromit.At Lotewemake Tertiary Butyl Acrylamide.

(iii) FutureplansofactionR&Din therelevantareasofbusinessoperationswillcontinue. Emphasiswillbe onadopting productsandprocessto improve performance, be more environments friendlywitha view to meeting customerneeds.Th eCompany isincreasing existing production capacityfor ATBS & NaATBSfrom 3000TP A to 8000TPA.

d) FOREIGNCU R R E N CY E A R N I N G SANDOUTGODuringtheyear under review, theCompanyhasearnedandspent ForeignExchangeasdetailed below:(i) Earnings on FOBvalue basis : Rs.4297.00Lacs(Previousyear Rs.1595.14 Lacs)(ii) ForeignExchangeoutgo : Rs.907.35Lacs (Previousyear Rs.446.53 Lacs)(iii) ExpenditureonImport : Rs.11.3 1 lacs(Previousyear- Nil)

of capital goods(iv) ExpenditureonTravelling, : Rs.71.67 lacs(PreviousyearRs.23.43 Lacs)commission and professional fees(v) Others : Rs.0.31lacs (PreviousyearRs.12.58 Lacs)

ANNEXURE- C - Directors reportAUDITORS'CERTIFICATEON CORPORATE GOVERNANCE

To the Members ofVINATI ORGANICS LIMITEDWehave examinedthecomplianceofconditionsofCorporate GovernancebyVINATI ORGANICS LIMITED,forthe year endedon31stMarch, 2007,asstipulatedinClause49 of the ListingAgreementof thesaidcompanywithStockExchange.Th ecomplianceofconditionsofCorporate Governanceis theresponsibilityof themanagement.Ourexaminationwa slimitedto procedures and implementations thereof, adopted by the Company for ensuring the compliance of theconditionsof theCorporate Governance.It isneitheranauditnor anexpressionofopinionon thefinancialstatemenof the Company.In ouropinionand to thebestof our information and according to the explanations given to us, we certify that theCompany hascomplied with thecondition of theCorporate Governanceasstipulated in theabove mentionedListingAgreement.We statethatsuchcompliance isneithera nassuranceas to thefuture viability of theCompanynor theefficiencyore ffectivenesswithwhich themanagementhasconductedtheaffairsof theCompany.

For and onbehalfofK A R N A V A T & CO

CharteredAccountants(SunilHirawat)

Mumbai,1stJune2007 Partner(MembershipNo.:3395118th Annual Report2OO6-2OO7 1 7


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ANNEXURE- D -Directors reportMANAGEMENT'S DISCUSSION AND A N A L Y S I S R EPOR T

1. INDUSTRYSTRUCTURE, DEVELOPM ENTSAND OUTLOOKIsobutyl Benzene(IBB)IBB is thebasicingredientofIbuprofen,ananti-inflammatoryand analgesicbulkdrug.Indiais a netexporterofboth IBB and Ibuprofen. Theworldmarket for Ibuprofen is estimated to grow at 5-6% annually.2-Acrylamido-2-MethylpropaneSulfonicAcid(ATBS), Sodium saltofATBS(Na-ATBS),N-tert-Butylacrylamide(TBA)Thesespecialty monomers havewideapplications mainly inoil-fieldrecovery, water treatment, acrylic fibermanufacturing, adhesives and personal care products. They are also used inminingindustry, coatings and asdispersingandflocculating agents.Globally,thedemandforthese productsisgrowingasnewer applicationsarebeing developed based on these monomers. There are very few manufacturers of these productsworld-wide.Withthe growthof theabove industriesinIndia,theseproductswillfindnewapplications domestically.Theworldmarketfortheseproductsisgrowing rapidly.

2. "SWOT"AnalysisSTRENGTHS & OPPORTUNITIES 15 yearsofmanufacturing experiencewithworldclass,inimitable technology Proximity toMumbaiandJNPTport provides greateaseof logistics andaccessto advanced infrastructure facilities. Stateof theArt,competitiveandcost effective manufacturing. Environment friendly operations including waste product recycling. Fully equipped laboratories with high-tech advanced instrumentsandhighlyqualifiedtechnical personnel. Commitmenttomanufacturing quality products usingCMPasperinternationally accepted norms Growingexport market India emergingasaglobalhubforpharma/agrointermediates. Superior productandcustomer satisfaction Growthbyadding valuetocustomers Long termbusinessassociations.IBB TheCompanyis theworld's largestmanufacturerandsupplierofIBB. Themanufacturingcostsaresignificantly lowerinIndiaand theCompany has employed efficient manufacturingpractices.Thusit hasbeen abletocapture market-share from domesticIBBproducersworldwide. Marketshareof IndianIbuprofen manufacturerssincreasing globally.Asaresult domestic demandandprices

for IBB are expected to rise. TheCompanyhasenteredintoalong-term supply agreementwithBASFCorporation, USA, World's largestproducer of Ibuprofen. The supply agreement warrantsBASFto buy majority of its IBB requirements from the Company up to 2011. Accordingto theagreementhemonthly selling priceof IBB isadjustedbasedonmonthlyworldpricesof keyrawmaterialsandUSD/INRexchange rate, thusminimizingtheCompany'sexposuretothesevariables.AT BS/ Na-ATBS& TBA The technology to manufacturetheseproducts isscarce.Currently there are only 2 other major producers ofthesemonomers in theworld. Assuppliersofthese productsarelimited,customersarevery keentoworkfor a newsourceofsupply. All themajor usersoftheseproductsarebased inEuropeorU.S.A.,thus they prefertoenterintoannualcontracts. Due to manufacturing and costadvantagesaswellas consistentsalesefforts,the Company has beensuccessfulin establishing long-term contractswithWorld's largest buyers based in USA and Europe. TheCompanyhasalsoundertakenanapplication development programand hassuccessfullyinitiatedbusinessin newuserindustries in the domestic market. TheCompanyisconductinganexpansion programme thereby increasing capacity from 3000TPAo8000TPA Theworlddemand forthesemonomers is growing rapidly, which is expected toincrease2 to 3 foldswiththeproductionofenhancedoilrecovery polymers.



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3. RISKCONCERNS AND RISKMITIGATION: Availabilityofskilled personnel:

TheCompany's labour turnoverhasincreased.Mitigation:The Company has undertaken expansion programme due to which efficient and skilled managementwillbe the pre-requisite. The Company isalso implementing world-class human resource developmentprogrammeandsurveysonemployee trainee, payroll/contracts.

RiskofForeignE xchange:TheCompany's revenues are largely generated fromexportsand hence denominated in foreign currency,predominantly US $.Giventhenatureofbusiness,alarge proportion of thecostsaredenominated in Indianrupees (INR)leadingtocurrency exposure.Mitigation:The Company is aiming atminimizingforeign currency exposure by entering in to forward contractsand negotiating currency risk-sharing dealswithcustomers.

ProductriskATBS, Na-ATBS A N D T BAThe Company facescompetitionfrom large and established organizations. Also, the testing and approvalprocessfor theseproductsistime-intensive.Majorityof salesofthesemonomersare inexport marketandhencethesalesare in USDcurrency.Recentappreciationof theIndian Rupeehas put themarginsforthesemonomers underpressure.IBBTheCompanyfacescompetition from domestic and Chinese players. Increase n IBB capacity worldwide canresultin lower margins.Mitigation:The Company is entering in to long-term contractswiththe buyers and constantly upgrading itstechnology to remaincostcompetitive.

BusinessportfolioriskTheCompany's businessportfolio may not be synergic; besides, an over dependence on any one segmentcould be detrimental to the Company over the long term.

IndustryriskAnydownturn in theuserindustry demandacrossanybusinessvertical could impacttheCompany's growth.Mitigation eachbusinessverticalcaterstosectorsthat enjoy moderate- to-highgrowth.

Quality riskInthe Company's specializedbusinesserraticqualitycould lead to customerattrition.Mitigation:Thequalityof product is monitored rigorously by a dedicated qualityassurancedepartment andtechnically qualified executives.Qualityassurance:ThisDepartment supervisesquality control andassurancerequirements inadditiontoprovidingtechnicalservicetocustomers, certifiesthesample (specifications) givenby theclient thatwillneedto bedevelopedbythe Company and provides certificate of approval for what has been produced, clearingitfor dispatch.

TechnologyriskAtechnology - intensive business, thekindofwhichthe Company is present in, could attract technologyobsolescenceandexpensive overhaul.Mitigation- TheCompany continuously upgrades technical supportusedin itsmanufacturing, researchanddevelopment facilities.

Client concentrationriskAn over dependence on a handful ofcustomerscould provedetrimentalin the event of their attrition.Mitigation-TheCompany's strong client listiscomprisedofbrand enhancing internationalanddomestic companies.TheCompany's product customisation capability in the specialty chemicalsbusinesshas resulted in strongcustomergrowth and satisfaction.

ReceivableriskThepoor management and selection ofcustomerscould result in bad debtswhich,in turn,affectsthe workingcapital requirementof theCompanyandprofitabilityof theCompany.MitigationtheCompany conductsathorough financialanalysistocheckthecredibilityof itscustomers.TheCompanyalsoconducts a continuous ageinganalysisto monitor probable defaults with proactive speed.

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4. MISSIONANDGOALOBJECTIVE:TheCompanyexpectstoreinforceitscultureofoperational excellence throughthefollowing initiatives: Implementationof TQMprogramme (StandardqualityassurancegivenbyISO) Extensionfrom preventiveandshut down maintenancetopredictive one. Upgradationoffacilitiesin line with thedemandingrequirementsof the globalchemical industry Maintained focusondelivering valueto itsclients using Geography, Delivery centreandCorporate functionsin a collaborative mode. TheCompanyhasundertaken expansion activitiesinboththeunits.Thebenefitsof theexpansionwillstaraccruing from the year 2007-2008.

5. IN T E R N A LCONTROLSYSTEMSA N D THEIRADEQUACY:TheCompanyhasappropriate internal controlsystemsforbusiness processes,withregardtoefficiencyofoperations,financial reporting, compliance with applicable lawsandregulationsetc.toensure thatall assetsareprotectedagainstlossesandunauthorized use.Th eCompany alsohas anadequatesystemcommensuratewithitssizeandnatureof itsoperations.All operating parameters are ministered and controlled.Regularinternal auditsandchecksensurethat responsibilitiesareexecuted efficiently.Nosignificant internalcontrol lapseswere identified.TheAudit committeeof theBoardofDirectors actively reviewstheadequacyandeffectivenessofinternalcontrolsystemsandsuggestsimprovement for strengthening them from time to time. The Audit Committee of the Boardmetfour times during the period.

6. FINANCIALP E R F OR M A N CEAND OUTLOOK:TheCompany followedthemercantilesystemofaccountingandrecognized income&expenditureon anaccrualbasis. Thisconservative approach enabledit tomaintainthequalityandcredibilityof itsfinancial statements.Th efinancial statusof theCompanyas perIndianGAAPis discussed asunder:Whie thetotalsalesincreased fromRs.6519.94Lacsfor theYearEnded31stMarch 2006toRs.9046.22Lacsfor theYeEnded31stMarch2007,the netprofitaftertaxincreased fromRs.195.35LacstoRs.351.39Lacsfor thesameperiod.Thegrowth insalesisattributedtoaggressivemanufacturingandmarketing practicein IBB and due toincreasedacceptanceof newproductATBS.ThefinancialstatementsarepreparedincompliancewiththeCompaniesact,1956 andgenerally accepted accountingprinciples and conventions.Through persistent efforts,theCompanyhasmasteredhescarcetechnologytoproducethesespecialty monomerswhile adhering to strict quality specifications. Also bybuildingcustomer relationships, the Company has beensuccessfulindevelopingasignificant market presencefortheseproducts. AlsotheCompanyisexpecting sizeablegrowth from export salesin U.S.A. and China in the coming year for IBB.Th eresultsoftheseimprovements can beseenin thefinancialfor thefinalquarterendingMarch2007,where thene tprofit roseto Rs.182.08Lacs.

7. MATERIAL DEVELOPMENTSINHUMANRESOURCES:Inaknowledge - driven business,thequalityof theCompany's human capital influences what businesstheCompanywillbepresentin ,whatitwillmanufactureand how itwilldo so.Th eCompanyhad 300employeesas on31stMarch 2007. Thiswasreinforced throughanongoing training -behaviouralandfunctional which helped upgrade employee skillsets.To meet various emerging challenges,theCompanyhasmade significantstridesin anorganizational renewalprogramme,withfocusonenhancing organizational efficiencies, employee competenciesandcommitment.8. MANAGEMENTMONITORINGAND IMPLEMENTATION OF COMPANY STRATEGIES:Th eCompany's senior management monitors performance and constantly strives to improve performance onquarter basis.TheCompany hasdeployed techniquesfor measuringandmonitoring the performanceof theCompanyand itsunits.

Onbehalfof theBoardofDirectorsVinodSarafMumbai,31stMay 2007 Chairman &ManagingDirector

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A U D I T O R S ' REPORTTOTHEMEMBERSOFVINATI ORGANICS LIMITED1. We have audited theattached BalanceSheet ofVINATI ORGANICS LIMITEDas at 31STMarch,2007 an

alsotheProfitand LossAccountfor theyear endedonthat date annexed thereto.Thesefinancial statementsarethe responsibility of the Company's management. Our responsibility is to expressanopinionon thesfinancial statements basedon ouraudit.2. We conducted our audit in accordancewithauditing standards generally accepted in India. Those standardrequire that we plan and perform the audit to obtain reasonableassurance about whether the financiastatementsarefreeofmaterial misstatement.Anaudit includes examining,on atestbasis, evidence supportingthe amountsan ddisclosuresin thefinancial statements.An audit also includes assessing the accountingprinciples used and significant estimates made by management, aswellasevaluatingthe overall presentationof the financial statements. We believe that our audit provides a reasonablebasisfor ouropinion.

3. As required by the Companies (Auditor's Report)Order,2003 as amended by the Companies (Auditor'sReportAmendment)Order,2004 issuedby the Government of India in terms of sub-section (4A) of section227 of the Companies Act, 1956, we enclose in the Annexureastatementon the matters specified inparagraphs4 and 5 of the said Order.4. Furtherto ourcommentsin theAnnexure referredtoabove,wereport that:

i) We have obtained all the information and explanations, which to the best of our knowledge and beliewere necessaryfor the purposes of ouraudit;ii) In ouropinion,proper booksofaccountasrequiredby lawhave been keptby thecompanyso far asappears fromourexamination ofthosebooks;iii) The balancesheetand the profit and lossaccount dealtwithbythisreport are in agreementwiththebooksof account;iv) In ouropinion,thebalancesheetand theprofitand lossaccount dealt withbythis report complywiththe accountingstandardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956;v) On the basisof written representations received from the directors, as on 31stMarch,2007 and takenon record by the Boardof Directors, we report that none of the directors isdisqualified as on31sMarch, 2007 from being appointed as adirector intermsofclause(g) ofsub-section(1)ofsection27of the Companies Act, 1956;vi) In our opinion andtothebestof our information and accordingtothe explanations given to us, the saidaccountsgive the information required by the Companies Act, 1956,in the manner so required andgive a true and fair view in conformitywiththe accounting principles generally accepted in India:

(a) in the caseof theBalance Sheet,of the stateofaffairsof theCompany as at31stMarch2007;an(b) in thecaseof the Profit and LossAccount, of the Profit for the year ended on that date.(c) incaseof thecashflowstatement,of thecashflowsfor theyear endedonthat date

Forand on behalf oK A R N A V A T & CO

Chartered Accountants(SunilHirawat)PartnerMumbai,31stMay, 2007 Membership No. 3395

Annexure to the Auditors' ReportReferredto in paragraph 3 of our report of even date,(i) (a) TheCompanyhasmaintained proper records showingfullparticulars including quantitative detailsand

situationoffixed assets.(b ) Th eCompany has aprogrammeofphysical verification offixedassetsoveraperiodofthreeyearswhichis,in ouropinion,reasonable having regardto thesizeof theCompanyand thenatureof itsassets.In

accordancewiththisprogramme, certain fixedassetshave been physically verifiedby themanagemenduringtheyearand nomaterial discrepancies have been noticedonsuchverification.

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(c) In ouropinionduring the year, the Company has not disposed off a substantial part of the plant andmachinery so as toaffectth egoing concern statusof the company.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, thefrequencyofverification isreasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable andadequatein relation to the sizeof the company and the nature of itsbusiness.

(c) On thebasisof our examination of the records of inventory, we are of theopinionthat the company ismaintaining proper records of inventory. The discrepancies noticed on verification between the physicalstocksand the book records were not material.(iii) Inrespectof theloans, securedorunsecured, grantedortakenby thecompany to/from companies, firmor

other parties covered in the register maintained under section 301 of the Companies Act, 1956:(a) .TheCompanyhas notgrantedany loansduringtheyear.(b) Th ecompany hasakenloansof Rs.793.50lacsduringth eyearandoutstanding amountat thebeginningof theyearand at theyearen daggregatesto Rs.290.64 lacsand Rs.415.01 lacsrespectively from eightparties.(c) In ouropinionthe rate of interest and other terms and conditions onwhichloans have been taken are

not, primafacie, prejudicial to the interestof thecompany.(d) Th ecompany isregular in repaying the principal amountsasstipulated and hasbeen regular in the

paymentofinterest.(iv) In ouropinionandaccording to the information andexplanations given to us,there isadequate internalcontrol systemcommensuratewith the sizeof thecompanyand the natureof itsbusinesswith regardtopurchasesof inventory, fixed assetsandwithregard to thesaleof goods.Duringthe course of ouraudit,nomajor weaknesshasbeen noticed in the internal controls system. Thereis nosaleof services.

(v) (a) Based on the audit procedures applied by us and according to the information and explanationsprovided by themanagement,we are of theopinionthattheparticularsofcontractsorarrangementsthat need to be entered into the register maintained under section 301 of The Companies Act, 1956havebeensoentered.

(b) In ouropinionandaccordingto theinformationandexplanations givento us, thetransactions madeinpursuanceof contracts or arrangements entered in the registersmaintained under Section 301 of TheCompanies Act, 1956and exceeding the value of five lakhs rupees in respectof any partyduringtheyearhave been made at priceswhichare reasonable having regard to prevailing market prices at therelevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepteddepositsfrom thepublictowhichprovisions ofSections58 A and 58 AA or any other relevant provisions ofthe Companies Act, 1956and the Companies (Acceptance of Deposits) Rules,1975are applicable. No orderhasbeenpassedby theCompanyLawBoardorNational CompanyLawTribunalor ReserveBankofIndiaoranyCourt or any other Tribunal.

(vii) In our opinion,the company has an internal audit systemcommensuratewith the size and natureof itsbusiness.(viii) We have broadly reviewed the books of account relating to materials, labour and other items ofcostmaintained

by the company pursuant to the Rulesmade by the Central Government for the maintenance ofcostrecordsunder Section209(1)(d) of The Companies Act, 1956and we are of theopinionthat prima facie the prescribedaccountsandrecords have been made andmaintained. However, we are not required to and have notcarried out any detailed examination of such accounts and records.(ix) (a) According to the records of the company, the company is regular in depositingwithappropriate authorities

undisputed statutory dues including provident fund, investor education protection fund,_employees'state insurance, income-tax, sales-tax,service tax, wealth tax, customduty,excised-duty, cess andother statutoryduesapplicable to it.

(b) According to the information arid explanations given to us, no undisputed amounts payable in respectofincome tax, wealth tax, service tax,salestax, customs dutyandexciseduty were outstanding, as at31-03-2007,for a period of more than six months from the date they became payable.

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(c) As on31-03-2007,accordingtothe records of the company, thefollowingare the particulars of disputeddues on account of saletax,ncometax, customs /wealth-tax /exciseduty/cess that have not beedeposited

xx i

(xii)

(xi i i)(xiv)(xv)(xvi)(xvii)

(xviii)

(xix)(xx)

x x i

NameofStatue

Central ExciseAct 1944

Central ExciseAct 1944Central ExciseAct1944

NatureofDues

Demand raisebyDeptt.alleging wrongavailmentofmodvatcreditandother issues.Demand on valuation ofby-product transferredfromoneunittootherDemand onvaluationofby-product transferredfromoneunittoother

AmountofDemand netof deposits

(Rs.)4,03,987

3,70,150

1,75,386

PeriodtowhichamountrelatesSept 1996toJune 1999

Aug2002toSept.2004Dec.2004 toNov.2005

ForumwheredisputeispendingAsst.Commissioner

CESTAT

Commissioner(Appeal)TheCompany doesnothave accumulated losses.Thecompanyhas not incurred any cash lossesduringthe financial year covered by our audit and the immediately preceding financial year.Basedon our audit procedures and on the information and explanations given by the management, weare of theopinionthat the company has not defaulted in repayment of dues to financial institution andbank.Basedon our examination of documents and records, we are of theopinionthat the company has nogranted loans and advances on the basisof security by way of pledge of shares,debentures and othersecurities.Theprovisionof anyspecial statueasspecified under paragraph4 (xiii)of thesaidorderare notapplicableto the company.During the year, company has not dealt with or traded in shares,securities, debentures and otherinvestments.Paragraph4(xiv)of theorderis notapplicable.Thecompany has not given any guarantee for loans taken byothersfrom bank or financial institution.Inour opinion and according to the information and explanations given to us, no further term loans wereraisedduring the year.Accordingto thecashflowstatementon theBalanceSheetdate,andinformationandexplanations givento us and on an overall examinationofthe balancesheetof the company, we report that there are no fundsraisedon short term basishave, prima-facie, been usedfor longterm investments.Thecompany has notmadeanypreferential allotmentof sharestopartiesandcompanies coveredin theregistermaintained under section 301ofThe Companies Act,1956and therefore paragraph 4 (xviii)ofthesaidorderis not applicable.Duringthe period covered by our audit report, the company has not issueddebentures and thereforeparagraph4(xix)of the saidorder is not applicable.Duringthe period covered by our audit report,the company has not raised money by Public Issuesandtherefore paragraph4 (xx)of thesaid orderis not applicable.Basedupon the audit procedures performed and information and explanations given by the managementwe report that no fraud on or by the company has been noticed or reported during the course of ouraudit

Forand on behalf oK AR NAV AT CO

Chartered Accountants(Sunil Hirawat)

PartnerMembership No.33951umbai, 31stMay,2007



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VINATI DRGANICS LIMITEDB A L A N C E SHEETAS AT31STMARCH, 2007

Schedule

S O U R C E S OFFUNDS:Shareholders'Funds:

ShareCapital 1Reserves&Surplus 2

LoanFunds:SecuredLoans 3UnsecuredLoans 4

Deferred Tax LiabilityT O T A L

APPLICATIONOFFUNDS:FixedAssets: 5GrossBlock

Less:DepreciationN et BlockCapitalWork in Progress

CurrentAssets,LoansandAdvances:Inventories 6SundryDebtors 7Cashan d BankBalances 8LoansandAdvances 9

Less:Current Liabilities&Provisions: 10NetCurrentAssetsT O T A L

SignificantAccounting Policies 17

Asa t31/03/2007

Rs.

65,830,000233,175,558

210,402,59746,501,47948,409,725

604,319,359

562,604,465202,726,355359,878,11016,340,196

376,218,306

82,079,974197,014,616

8,796,45957,159,465

345,050,514116,949,461228,101,053604,319,359

As at31/03/2006

Rs.

65,830,000207,279,231

190,886,68534,063,56246,648,234

544,707,712

542,756,581175,821,285366,935,296

3,864,391370,799,687

78,902,078132,626,91813,810,94830,571,852

255,911,79682,003,771

173,908,025544,707,712

Notes forming part of Accounts 18Asper our Report of even date attachedForand onbehalfofKarnavat& Co.Chartered AccountantsSunilHirawatPartnerMembership No.33951Mumbai,31stMay,2007

Vinod SarafChairman&Managing DirectorSunil SarafDirectorG. S.SinghiCompany Secretary cumFinance ControllerN. K.GoyalSenior Vice President (Finance)

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-VINATI ORGANICS LIMITEDPROFIT& LOSSACCOUNTFOR THEY E A RENDED31STMARCH, 2007

ScheduleINCOME:

Gross SalesLess:InterUnitTransferLess:Excise DutyNet SalesOther IncomeT O T A L

EXPENDITURE:RawMaterials ConsumedDecrease/dncrease) in FinishedStockManufacturing ExpensesPaymentsto andprovision foremployeesAdministrative &Other Expenses

11

1213141516

PROFIT BEFOREDEPRECIATION, NON-CASH CHARGES & TAXES:Less: DepreciationAmortisation of Leasehold land

PROFIT BEFORETAXATIONProvisionfor taxationCurrentDeferred (Refernote no. 8 )FringeBenefitTaxfor EarlierYear (W/back) provided

N ET PROFITAFTER TA XBalancebrought forward from lastyearAMOUNT AVAIL ABL E FO RAPPROPRIATIONAPPROPRIATIONSProposed DividendTaxonDividendTransfertoGeneralReserveBalanceCarriedtoBalanceSheet

SignificantAccounting Policies 1 7Notesforming partofA ccounts 18

Earningpershare (inrupees)Basic &Diluted

Yearended31/03/2007

Rs.913,615,796

8,993,552904,622,24484,136,459

820,485,78518,864,552

543,204,8798,340,846

65,879,30352,852,50486,491,075

756,768,60782,581,73027,126,091

187,62655,268,01317,800,0001,761,491

560,0008,058

35,138,464196,239,231231,377,695

7,899,6001,342,5371,000,000

221,135,558

5.34

Yearended31/03/2006

Rs.661,471,681

9,478,069651,993,612

78,471,726573,521,886

7,830,146_581,352 ,032371,951,40225,671,11540,307,26642,930,50446,980,054

527,840,34~53,511,69123,760,872

187,62629,563,1938,200,0002,745,199

520,000(1,436,513)19,534,507

184,210,997203,745,5046,583,000

923,273196,239,231

2.97Asper our Report of even date attachedForand on behalf ofKarnavat& Co.CharteredAccountantsSunilHirawatPartnerMembership No.33951Mumbai, 31stMay,2007

Vinod SarafChairman&Managing DirectorSunil SarafDirectorG. S.SinghiCompany Secretary cumFinance ControllerN. K.GoyalSeniorVice President (Finance)



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VINATI ORGANICS LIMITEDCASHFLOWSTATEMENTFOR THEY E A RENDED31.03.2007

A. Cashflowfrom operating activities:Netprofitbeforetax andextraordinary itemAdjustmentsfor:DepreciationLossonsaleoffixedassets/assetsdiscardedInterest paidNonoshchargesOperatingproftbeforeworking capitalchangesAdjustmentsfor:Trade and other receivablesInventoriesTradeandother payables ashgenerated fromoperationsIncometaxpaidincl.FringebenefitTaxDividend& TaxthereonCashflowbefore extra ordinary itemsExtraordinary itemsNetcashfrom operating activities

B. Cashflow frominvesting activitiesPurchaseoffixedassetsLess:sale offixedassetsNetcashused in investing activities

C. CashflowfromfinancingactivitiesRecieptofborrowingsInterest paidNetcashfromfinancing activitiesNetincreaseincashandcashequivalentsCashandcashequivalents(openingbalance)Cashandcashequivalents (closing balance)

YearEnded31.03.2007

Amount(Rs.)

55,268,013

27,126,091177,642

19,657,327187,626

102,416,699

(90,975,311)(3,177,896)34,945,69043,209,182

(18,368,058)(9,242,137)15,598,987

-15,598,987

(33,315,565)405,587

(32,909,978)

31,953,829(19,657,327)

12,296,502(5,014,489)13,810,9488,796,459

YearEnded31.03.2006

Amount (Rs.)

29,563,193

23,760,87269,044

12,393,526187,626

65,974,261

(39,645,610)10,303,6562,874,784

39,507,091(7,283,487)(7,506,273)24,717,331

-24,717,331

(68,294,038)145,908

(68,148,130)

64,447,051(12,393,526)

52,053,5258,622,7265,188,222

13,810,948Asper ourReportofeven date attachedForand onbehalfofKarnavat& Co.Chartered AccountantsSunil HirawatPartnerMembership No. 33951Mumbai,31stMay,2007

VinodSarafChairman& Managing DirectorSunil SarafDirectorG. S.SinghiCompany SecretarycumFinance ControllerN. K.GoyalSeniorVice President (Finance)

26 18thAnnualReport 2OO6-2OO7


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=VINATI DRBANICS LIMITEDS C H E D U L E S FORMING P ARTOF ACCOUNTS

SCHEDULE" "S H A R ECAPITAL:

Authorised:15,000,000Equity Sharesof Rs.107-each

Issued, SubscribedandPaidUp:6,583,000EquitySharesof Rs.107-eachfullyPaid.

SCHEDULE"2"RESERVES&S U R P L U S:

i) Capital Reserveii) General Reserveiii) Profit and LossAccount

SCHEDULE"3"S E C U R E DLOANS:

i) Term loan from Technology DevelopmentBoard (TDB)ii) Workingcapitaladvances from Bank

As at31/03/2007

Rs.

150,000,000150,000,000

65,830,00065,830,000

3,040,0009,000,000221,135,558233,175,558

54,000,000156,402,597210,402,597

Asa31/03/2006

Rs.

150,000,000150,000,000

65,830,00065,830,000

3,040,0008,000,000196,239,231207,279,231

75,700,000115,186,685 _190,886,685

Notes:1. Loan from TDB is secured by first charge on all the fixed assets (present and future) of Lote workssecond charge on Current Assets, saveand exceptbookdebts of the Company and also by persona

irrevocable guaranteeof theManaging Directorand OnemoreDirectorandCorporate Guaranteeothe Company.

2. WorkingCapital Advances from Bankaresecuredbyhypothecation of inventories,all thepresentandfuture book debts & other receivables, first charge on all present and future fixed assets situated aMahadworks and Residential Buildings atMahadand second charge on all fixed assetssituated at Lotworksandpersonal guaranteeof two Directors.

3. Loansfallingduewithinone year Rs.216 Lacs.(Previous Year - 218 Lacs).

SCHEDULE "4"UNSECUREDLOANS:

IC I C I-Spread LoanFrom a DirectorInter Corporate Deposits

1. Loansfallingduewithinoneyear Rs.46.00 Lacs.(PreviousYear -Rs.NIL).

5,000,000143,140

28,920,42234,063,562

18th AnnualReport2OO6-2OO7 2


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VINATI QRGANICS LIMITEDSCHEDULESFORMINGPARTOFACCOUNTS

SCHEDULED"FIXED ASSETS: (Amount in Rupees)

PARTICULARSLeasehold Land&S i t e DevelopmentBuildingsPlant & MachineryFurniture&FixturesO f f i c e EquipmentsComputersA ir ConditionersV e h i c l e sTOTALPrevious Year

GROSS BLOCK DEPRECIATION NET BLOCKA s at Additions Deduc-

31.03.06 tions16521732 - 187626

73342080 111188 17500432243187 19144360 530987

7600177 9146015810662820013 615513

2272594 304906375732 846749 255763

542756581 20839760 991876

As at31.03.07

16334106

73435768450856560

769163715810663435526

23030846966718

562604465

Up to For the Written31.03.06 year Back

- - -

13121423 2002307152066670 23369143 71440

4731007 529706576859 75101

1488361 434997

821116 1065623015849 608275 149581

175821285 27126091 221021

Up to31.03.07

-

15123730175364373

5260713651960

1923358

9276783474543

202726355

As at31.03.07

16334106

58312038275492187

2430924929106

151216813754063492175

359878110

As at31.03.06

16521732

60220657280176517

286917010042071331652

14514783359883

36693529647191R07R 71849R7R 1009070 54P75fi5S1 1R?fififi90R 23760R79 ROR49? 175821285 3fifi935296

SCHEDULE "6"I N V E N T O R I E S:

(astaken,valued& certified by the management)Raw MaterialsStock In ProcessFinishedGoodsStores, Spares&other consumables

SCHEDULE 7SUNDRY DEBTORS

Unsecured, Considered Good:Outstanding for aperiodexceeding six monthsOthers

As at31/03/2007

Rs.

30,596,77414,909,91019,268,99517,304,29582,079,974

9,344,408187,670,208197,014,616

As at31/03/2006

Rs.

24,216,04411,791,59127,609,84115,284,60278,902,078

5,520,047127,106,871132,626,918



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=VINATI DRBANICS LIMITEDS C H E D U L E S FORMING P A R TOF ACCOUNTS

SCHEDULED"CASH AND BANK BALANCES:

Cash in HandB A L A N C E WITHSCHEDULEDB A N K S :

INCURRENTACCOUNTSIN FIXEDDEPOSITACCOUNT[Includes Rs.7,065,800/- (previous year Rs.7,370,649/-)]againstmarginmoney

SCHEDULED"LOANSAND A D V A N C E S(Unsecured, ConsideredGood):

Advances recoverable incash orkindor for value to be receivedIncometaxDepositsAccrued Interest

Deposits:WithGovernment & SemiGovernment Departments.WithOthers

SCHEDULE "10"C U R R E N T LIABILIT IESANDPROVISIONS:CurrentLiabilities

SundryCreditorsDue to Small ScaleIndustriesDue toOthersOther liabilitiesInterestaccruedbut not dueSundryDepositsUnclaimed Dividend

Provisions:Provisionfor DividendTaxon DividendProvisionfortaxation(Netoftaxespaid)

As at31/03/2007

Rs.

10,312

1,230,3477,555,800

8,796,459

47,101,2547,404,839

288,208

2,304,24460,920

57,159,465

501,06568,968,28532,052,926

229,315444,339

1,699,019

7,899,6001,342,5373,812,375

116,949,461

As a31/03/2006

Rs

35,158

5,715,1418,060,649

13,810,948

20,998,0057,220,238

180,676

2,153,82819,105

30,571,852

922,83543,601,47726,623,964

321,466485,180

1,403,664

6,583,000923,273

1,138,91282,003,771



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VINATI ORGANICS LIMITEDSCHEDULESFORMINGPARTOFACCOUNTS

SCHEDULE "11"O TH ER INCOME:InterestReceived-Gross

(IDSRs.102,8727-Pr.yearRs.61,089/-)Cash Discount receivedMiscellaneousCredit BalancesWritten BackScrap SalesLiability No Longer Required Written BackMiscellaneous receiptsExportBenefits/Import Entitlements

SCHEDULE "12"R A W MATERIALSCONSUMED :OpeningStockAdd:PurchasesLess:Closing Stock

Add:Opening Stock inProcessLess:ClosingStock in Process

SCHEDULE "13"DECREASE/dNCREASE) IN FINISHEDSTOCK

Opening StockLess :ClosingStock

SCHEDULE "14"MANUFACTURING EXPENSES:

Power, Fuel&Water ChargesStores, Spares &Other consumablesRepairsto: Plant & Machinery:BuildingsContractorsWagesOther Operational Charges

YearEnded31/03/2007

Rs.627,723

207,33294,473

684,601385,647274,404

16,590,37218,864,552

24,216,044552,703,928

30,596,774546,323,198

11,791,59114,909,910

543,204,879

27,609,84119,268,9958,340,846

32,106,74123,497,8243,922,5591,257,5304,687,649

407,00065,879,303

YearEnded31/03/2006

Rs.702,134

75,811192,795799,127150,572379,810

5,529,8977,830,146

15,990,255388,927,88524,216,044

380,702,0963,040,897

11,791,591371,951,402

53,280,95627,609,84125,671,115

19,126,89814,053,8272,226,9841,152,4373,396,120

351,00040,307,266



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= V I N A T I DRBANICS LIMITED


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VINATI DRBANICS LIMITEDSCHEDULE"17"SIGNIFICANTACCOUNTING POLICIES1 BasisofpreparationofFinancial Statements:

Thefinancial statements have been prepared under the historical cost convention in accordancewith thegenerally accepted accounting principles in India and the provisions of the Companies Act,1956.

2 RecognitionofIncome&Expenditure:Revenue/IncomeandCost/Expenditurearegenerally accountedonaccrualbasisasheyareearnedorincurred.3 FixedAssets:

All FixedAssetsarestatedat.cost(netofCenvat)lessaccumulated depreciation. Leasehold land isamortisedequally overtheperiodof lease.Thecarrying amountofcashgeneratingu nit/assetsarereviewedatBalancesheetdatetodetermine whetherthereis any indication ofimpairment. If anysuchindicationexist,therecoverable amount isestimatedas thehigher of net selling price and value in use. Impairment lossis recognized wherever carrying amountexceedsrecoverable amount.

4 Depreciation:Depreciation on FixedAssets is provided on Straight LineMethodat the ratesand the manner prescribedunder Schedule XIV of the CompaniesAct,1956..

5 Expenditure during construction period:All costsincludingborrowingcostsrelatingtothe acquisition and installation of fixedassets,tillcommencementofcommercial production,arecapitalized.

6 Research& Development Expenditure:Expenditureon Research&Development ischargedasexpensein theyearinwhich it isincurred.

7 Inventories:Inventories including goods in transit are valued at the lower of costor estimated net realisable value.Finishedgoods and work-in-progress include an appropriate proportion of overheads and where applicable,excise duty.Provisionfor obsolescenceismade wherever necessary.Cost isdetermined usingfirst in firstout (FIFO) method.

8 Foreign CurrencyT ransactions:Export/Importtransactionsduringtheyearareaccountedon thebasisofprevailingexchangerate(asdeclared/assessedby Customs Department) on the date ofexport/import.Thedifference betweentheamount realized/paidand theamount already bookedisaccountedfor as Exchangefluctuation difference in the year of realization/payment.Current assetsand current liabilities aretranslatedat forward cover rate, ifapplicable, or at theyearendexchange rates. Exchange gains and lossesare fully recognised in the Profitand LossAccount andthosearisingon account of forward cover, are amortised over the life of the forward cover.

9 Retirement Benefits:Contributions to the Provident Fundaremadeat apre-determined rateandchargedto the Profitand LossAccount.Todischarge the gratuity liability,the Company is maintaining the fundwiththe Life Insurance Corporationof India (LIC) and Aviva Life Insurance Company IndiaPvt. Ltd. under the Group Gratuity Scheme. Thecontributionto thefundasdeterminedbyAvivaischargedtoProfitandLossAccount.

10 LeaveEncashment:Provisionfor Leaveencashmentismadeonaccrualbasisonestimatesas at theyearend and ischargedto theProfitand LossAccount.



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=VINATI DRBANICS LIMITED11 Provision for CurrentandDeferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of theIncome-tax Act,1961.Deferredtaxresulting from timingdifference between bookandtaxableprofitisaccountedforusingthe taxratesand laws that have been enacted or substantively enacted as on the balance sheet date. The deferred taxassetsare recognised and carried forward only to the extent that there is a reasonable certainty that theassetswillbe realisedinfuture.

SCHEDULE "18"N OT E S ON ACCOUNTS.1 Contingent Liabilities notprovidedfor inrespectof:

a) Counter Guarantees givenbythe company in respect of guaranteesissued/Letterof Credit established bybanksonbehalfof thecompany Rs.70,508,363/- (Previous Year Rs.45,770,166/-).

b) Estimatedamount of contracts remaining to be executed on Capital Account (Net of Advance)Rs.25,492,080/-(PreviousYearRs.4,511,802/-).c) Disputed Exciseduty demands of Rs.4,331,2447-(previous year Rs.2,243,499) againstwhicha sum of

Rs.251,411/- hasbeenpaid.d) Disputed Income tax demands of Rs.21,286,5237-againstwhicha sum of Rs.7,404,839/-has beenpaid(PreviousyearRs.25,137,8067-paid Rs.7,245,684/-).e) Customduty,other duties andinterestwhichmayariseifobligationforexportsis notfulfilledagainst

importof rawmaterialsRs.226,8397-(Previous yearRs.NIL).f) Claims againsttheCompany notacknowledged asdebtsRs.15,2327-(Previous YearRs.Nil).

2 Detailsofcapital workinprogress/pre-operativeexpenses:-Sr. Particulars 2006-2007 2005-2006No Rs. Rs.A . Work inprogress 15,408,919 3,864,391

[IncludingadvancesosuppliersRs.9,141,1007-](Previousyear Rs.1,833,0377-)Total 'A' 15,408,919~ 3,864,3 91

B. Pre-operativeexpenses: ';OpeningbalanceAdd: Incurredduringtheyear:Rates&TaxesInterestLegal&Prof.ChargesInsurance chargesLess:CapitalizedduringtheyearTotal 'B'Total(A+B)

-439,846597,33120,878 1,058,055

126,778931,277

16,340,196

19,6501,942,000

-74,214 2,035,864

2,035,864-

3,864,3913 Names of theSSI'sto whom the Company owes any sum togetherwithinterest if any,whichis outstanding for

more than3 0daysare asunder:



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VINATI. DRBANICS LIMITEDDeepsonValves&ControlsFuelpackBoilers&Eng.I. P.Ltd.KS DTechnologiesLibertyValveP. LtdTri- Flp EngineersP.Ltd.Swellore Engineering P. Ltd.Pluto PlasticsPvt. Ltd.SuperMechnicalSealP.Ltd.

FaingerEngineeringH KIndustriesLeakproofEngineering1.Pvt.LtdR.K.DuttaConsornsSigmaSealsArem EngineersInmarco Industrial MaintenanceP. LtdUniversalPollution ControlI. P. Ltd

TheCompany has not received any intimation from suppliers regard ing theirstatusunder theMicro,SmallandMediumEnterprisesDevelopment Act 2006 and hencedisclosures,if any relating to amounts unpaid asattheyearend togetherwithinterest paid/payable as required under the said Act have not beengiven.Segmentreporting(AS-17)ThecompanyisengagedinmanufacturingofChemicals, whichas perAS-17isconsideredtheonly reportablebusinesssegment.

Relatedparties Disclosures(AS-18)a. Information about related parties:Sr.

1Particulars NameofRelated Party.KeyManagement Personnel

Relativesof KeyManagement Personnel

Enterprisesowned orsignificantlyinfluenced by any managementpersonnelortheir relatives.

i) Mr.Vinod SarafChairman&Managing Director

ii) Mrs. Vinati SarafExecutive Director(from 20.05.2006)

i) Mr.Anandkumar Tibrewala(upto 20.05.2006)

ii) Mrs. KavitaSarafiii) Mr.Sunil Saraf1) Viral Alkalis Limited2) Vinati Wax Industries Pvt. Ltd.3) Shilpa Pharma Pvt. Ltd.4) MithaliChemicals Pvt. Ltd.5) Viral Chemicals Pvt. Ltd.6) Viral Pharma Pvt. Ltd.7) Suchir Chemicals Pvt. Ltd.8) SuchirInvestment& FinancePvt. Ltd.9) Manan Pharma Pvt. Ltd.10)MishitPharmaChemPvt. Ltd.11)Kavita Organics Pvt. Ltd.

34


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b..InformationaboutRelated Parties Transactions:i) KeyManagementPersonnel:

Managerial remunerationLoantakenLoanoutstanding at the year endii) Relativesof KeyManagementPersonnel:RentSittingfees

i i ) Enterprises ownedorsignificantlyinfluencedbyanymanagement personnel ortheirrelatives:Rentrates&taxesInterestpaidSaleof MaterialPurchase of Material - OthersSaleofMaterial -Capital itemsLoantakenOutstanding Loan at year end

7 EarningPerShare (AS-20)ProfitaftertaxationWeighted number of equityshareoutstandingBasicanddiluted earningpershare(Facevalueof R s.10/- pershare)

8 AccountingforTaxesonincome(AS-22)Thebreak up of net deferred taxliability

1 ILJKL3M.INIL

2006-2007(RsJ

2,335,552-

143,14096,00034,000

1,220,8822,976,197

75,426299,432358,087

79,350,00041,358,339

35,138,4646,583,000

5.34

asat31stMarch 2007is asunder:2006-2007

;sa o_ M It.u(w/-s\ rJs2005-2006

IRsJ

1,511,612-

143,14096,00034,000

408,7021,637,985

87,307702,326197,581

47,650,00028,920,422

19,534,5076,583,000

2.97

2005-2006Deferred Deferred Deferred DeferredTax Tax . Tax TaxAssets Liability Assets Liability

Rs. Rs. Rs. Rs.Timingdifferenceonaccountof:Difference between book depreciationand depreciation undertheIncome-tax,1961Expenditure U/s.43B of theIncome-tax Act, 1961 1,032,373

1,032,373

47,680,607

47,680,607

35


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VINATI DRDANICS LIMITED

NetDeferredTaxLiabilityLess:-NetDeferredTaxLiability at beginningNetDeferredTaxLiability(Asset)fortheyear2006-2007

rredTaxsetsRs.

2006-2007Deferred

TaxLiability

Rs.48,409,72546,648,234

1,761,491

2005-2006Deferred Deferred

Tax TaxAssets Liability

Rs. Rs.46,648,23443,903,035

2,745,199

9 In theopinionof theBoardofDirectors,theCurrentAssets, LoansandAdvances have valueonrealisationintheordinary courseofbusiness,atleastequalto theamountatwhichtheyarestatedin theforegoingBalanceSheetandadequate provisionfor all known liabilitieson theCompanyhasbeen made.

10 Managerial Remuneration:

Chairman&Managing Director:Salary&AllowancesContributionto P.P.Other Perquisites

ExecutiveDirector: (Partof theyear)Salary&AllowancesContributionto P.P.Other Perquisites

Year Ended31.03.2007

Rs.)

1 354 125150 00050 680

1 554 805

718 42462 323

780 747

YearEnded31.03.2006

Rs.)

1,012,435121,49555,628

1,189,558

268,42017,57036,064322,054

11 a) Figuresof theprevious year have been reworked/regrouped/reclassified wherever necessary,b) Figureshave been roundedoff to thenearest rupee.

36 18thAnnual Report'2OO6-2C37


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=VINATI ORGANICS LIMITED12) Additionalinformation pursuantto theprovisionsofParagraphs3,4-C& 4-D of thePartII ofScheduleVI of the

Companies Act, 1956.Sr.ParticularsNo. Qty.(M.T.)

2006-2007Value(Rs.) Qty.(M.T.)

A. LicencedandInstalled Capacity(Ascertifiedby theManagementandacceptedbytheAuditors):Isobutyl BenzeneLicencedCapacityInstalledCapacity2Acrylamido2Methylpropane SulphonicAcidLicencedCapacityInstalled Capacity

Production;Isobutyl Benzene2 Acrylamido 2Methylpropane Sulphonic Acid

C. Sales& Stocks:Opening Stock:Isobutyl Benzene2 Acrylamido 2Methylpropane Sulphonic AcidOthersSales:Isobutyl Benzene2Acrylamido2MethyI propane Sulphonic AcidOthersClosing Stock:IsobutylBenzene2 Acrylamido 2Methylpropane Sulphonic AcidOthers* Itincludesthequantity usedformanufacturing

N.A.10000.00

N . A .3000.00

6626.851808.17*

148.84 10,888,526120.59 12,189,993

4,531,322

6703.84 630,231,4951407.10 173,910,206

100,480,543

71.86 5,458,47460.88 6,644,629

7,165,892ofother products.

N.A.10000.00

N.A.2500.00

5996.38647.55

2005-2006ValueRs.)

51.13 3,555,589410.81 46,501,435

3,223,932

5898.67 484,389,40919.40 118,786,929

48,817,276

148.84 10,888,526120.59 12,189,993

4,531,322



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VINATI ORGANICS LIMITEDD. Raw materials consumed:

ToluenePropyleneOthers

Unit

Kg.Kg-

Quantity

5,750,6384,397,625

Amount(Rs.)

244,844,352153,712,160147,766,686546,323,198

Quantity

5,077,7953,874,912

Amount(Rs.)

170,494,338126,100,18784,107,571

380,702,096E Total value of RawMaterial. Stores, Spares &Other Consumables consumed:

i) Raw Materials:ImportedIndigenous

ii) Stores,Spares&Other Consumables:ImportedIndigenous

F. Value of Imports calculated on GIF basis:Raw materialsStores, Spares &OtherConsumables

Value(Rs.)

91,709,118454,614,080546,323,198

23,497,82423,497,824

Value (Rs.)

16.79 52,019,86183.21 328,682,235

100.00 380,702,096

100.00 14,053,827100.00 14,053,827

13.6686.34

100.00

100.00100.00

82,407,728

G. ExpenditureinForeign Currency:i) Travelling expenditureii) Commission on salesiii) Prof.Feesiv) Importof capital goodsiv) Others

H. EarningsinForeignExchangeExportof goods calculated on FOBbasis

346,7126,308,514

511,4531,130,610

30,345

429,699,505

41,051,253

152,8961,603,690

. 586,913

1,258,150

159,514,264



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=VINATI DRGANICS LIMITED13) BalancesheetAbstractandCompany's General Profile:

I) Registration Details:RegistrationNo. 52224 StateCode:BalanceSheet Date: 31.03.2007

I1) CapitalRaisedduringtheyear (AmountinThousands)Public Issue NIL RightIssueBonusIssue NIL Private Palcement

III) Position of Mobilisation and Deployment ofFunds(Amount inT housands):Total LiabilitiesSourceof Funds:Paid-up CapitalSecuredLoansUnsecuredLoansApplicationo fFunds:NetfixedAssets(including Capital workinprogress)

721269

6583021040346500

376218

TotalAssets

Reserves&SurplusDeferred Tax Liability

Net Current Assets 228101Accumulated Losses NIL

IV) Performance of the Company (Amount in Thousands)Turn Over 839350Profit BeforeTax 55268Earnngpershare 5.34

V) Principal product of the CompanyProduct Description:ISOBUTYLBENZENE2ACRYLAMIDO 2METHYLPROPANE SULPHONIC ACID

Total ExpenditureProfit afterTaxDividend

Item CodeNo.(ITCCode)(ITCCode)

11

NILNIL

721269

23317648410

78408235138

12%

2902.90502924.1900

Asper our Report of even date attachedFor and onbehalf ofKarnavat& Co.Chartered Accountants

Sunil HirawatPartnerMembership No.33951

Mumbai, 31stMay,2007

Vinod SarafChairman &Managing DirectorSunil SarafDirectorG. S.SinghiCompany SecretarycumFinanceControllerN. K. GoyalSenior Vice President (Finance)



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VINATI ORGANICS LIMITEDSIGNIFIC NT GRAPHSO FVINATIORG NICS LIMITED

100009 -8000-7 -6 -5 -4000-3 - -1000 -0

Sales Turnover(Rs.inLacs)

2004-05 2005-06 2006-07DExportDomestic

310030002900

2400

NetWorth(Rs.inLacs) nNetworth

2004-05 2005-06 2006-07

69

Shareholding Pattern ( )

26C 3 IndividualsHPromotersDOthers



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VINATIORGANICSLIMITEDRegisteredOffice:B-12&B-13/1MIDC Industrial Area, Mahad -402 309, Dist Raigad, Maharashtra.

TTEND NCE SLIPFullNameofShareholder(in Block Letters)Ledger FolioNo.: No. ofSharesheld:DP.ID - Client ID:NameofProxy( in BlockLetters) _Ihereby recordmypresenceat the 18thAnnual GeneralMeetingof theCompanyto beheldatB-12&B-13/1MIDCIndustrial Area,Mahad402309, Dist Raigad, Maharashtra,onSaturdaythe29thday ofSeptember, 2007at 3.00 p.m.* To besignedat thetimeofhanding over this slip Member s/Proxy s Signature

VINATI ORGANICS LIMITEDRegisteredOffice:B-12&B-13/1MIDC Industrial Area, Mahad -402 309, Dist Raigad, Maharashtra.

FORMOFPROXY(Regd.FolioNo./DPID - ClientID &Nameof theShareholderto befurnished below)

I/We ofbeingamember/membersofVINATIORG NICSLIMITEDherebyappoint

of or failing him/herof as my/our Proxy

tovoteforme/usonmy/our behalfat theEIGHTEENTH ANNUAL GENERALMEETINGof theCompanyto beheldonSaturday,the29thday ofSeptember 2007at3.00 p.m.Signed this dayof 2007.

NOTES:1. Theform shouldbesignedacrossthestampas perspecimen signature registeredwiththe company.2. Theproxy form mustbedepositedat theRegistered Officeof theCompany notlessthan48hours before

thetimeforholdingtheaforesaid meeting.3. Aproxyneednotbe amember.


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