Bhopal Gas Disaster and Dow Chemical: Need for CSR

Sandipa Lahiri Anand

“… All of a sudden he started coughing and in the meantime he heard screams coming from outside. As soon as my husband opened the door all we could see was smoke entering our house. Then everyone in my family started coughing and my kids started complaining of their eyes burning. Then we heard someone saying that we should all run because some gas pipe has exploded in the Union Carbide factory. We all started running and eventually I got separated from my family. I just remember not being able to locate my family and then after that I had lost consciousness.” - Victim

“There were thousands of bodies. There were bodies everywhere. And people were dying all round.” - Victim

ISSUE The Disaster at Union Carbide Corporation (UCC) plant on early morning of 3rd Dec’1984, released 40 tons of poisonous methyl isocyanate1 gas from its pesticide plant in Bhopal. The aftermath of the disaster left 15,000 dead, numerous ill, with a polluted environment that is yet to recover. Even after two decades, telltale signs of the disaster were evident. The victims of the disaster were yet to receive their compensation package and medical help from the company. This was an industrial disaster with a complexity of violations of civil, political, economic and social rights carried over a period of twenty years which necessarily demanded a humanitarian approach and called for corporate social responsibility (CSR)2.

A crystalline compound, C2H3NS, used as a pesticide. It is an extremely toxic chemical that can come in contact inhalation, ingestion and contact in quantities as low as 0.4 ppm. Damage includes coughing, chest pain, dyspnea, asthma, irritation of the eyes, nose and throat as well as skin damage.


CSR is about how companies manage the business processes to produce an overall positive impact on society.


The plant was set in 1969 and expanded in 1979 to produce carbaryl.ABOUT THE DISASTER UCC’s plant at Bhopal manufactured pesticide. The reaction triggered an exothermic3 reaction that released large volume of toxic gas. and. the vent gas scrubber had been shut off for maintenance. The gases are removed either by absorption or chemical reaction. with proper working of scrubbers4 and vents. The water used for washing the lines entered the MIC tank which was kept at ambient temperature instead of zero degree.htm 2 . The leakage of poisonous gas could have been controlled by taking adequate safety measures.The disaster happened when water entered the holding tanks of MIC through leaking valves. 4 3 5 Source: Dateline Bhopal. On the night of disaster. the flare tower had been shut off. the water sprayers were incapable of reaching the flare towers. The manufacturing process of carbaryl produced an intermediate product called methyl isocyanate (MIC) (Annexure1). On 29 November 1984. But unfortunately all the safety measures failed to work. http://www. three days before the disaster. The temperature at the MIC tank instead of being set at zero degrees centigrade (as required) was not maintained by the officials to save electricity bills.%20muralidhar. The scrubbers were off-line for repairs and the safety procedures were also not in account as a “cost cutting operations” at the Indian Plant of Union Carbide.india-seminar. the standby tank for use in case of excess already contained MIC. UCC decided to dismantle the plant and ship it to Indonesia or Brazil. the refrigeration unit installed to cool MIC and prevent chemical reactions had been shut for three months. The staffs at the MIC unit were reduced to 6 from An exothermic process is one that gives off heat. there were no effective alarm systems in place. tank number 610 for storing MIC was filled above recommended capacity. The feasibility report for this was completed on 29 November. According to the safety manuals it was advised that the refrigeration unit should be switched off and the vent gas scrubber must be shut down when the plant was not in operation. This heat is transferred to the surroundings Scrubbers are air pollution control devices that use a high-energy liquid spray to remove aerosol and gaseous pollutants from an air stream. the temperature and pressure gauges were malfunctioning.

By 1963. A report published in 2002 revealed poisons such as 1. It also released hydrogen cyanide.5 trichlorobenzene. which continued to pollute the surrounding water bodies.000 units.. had the name Union Carbide & Carbon Corporation that acquired the stocks of Linde Air Products Co. Inc.000 people suffered from "chronic and debilitating illnesses"6 and painful effects of gas leak and were yet to receive adequate compensation or medical treatment which was a major breach of human rights. UNION CARBIDE CORPORATION Union Carbide was formed in 1917 by the merger of 5 separate US companies. was a closely held company (50. a carcinogenic gas. chloroform. Trichloroethene were over 50 times higher than Environment Protection Act (EPA) safety limits which were the major cause of impaired foetal development. The Indian plant imported inferior 6 Long lasting feebleness or weakness of health 3 . A similar plant in West Virginia had better technological backup as compared to its Indian counterpart. and Union Carbide Company (formed in 1898). 25. During 1920-1930 it was the world leader on ethylene and polymers such as Poly-vinyl chloride (PVC).000 and caused serious harm to a large number of people. The Union Carbide India Ltd. In 1974 UCC announced to set up a pesticide factory in Bhopal.3. gynaecological disorders in the victims.Extent of Loss The disaster killed more than 15. Prest-O-Lite Co. Around 100.. On the other hand it contaminated the local groundwater and wells with mercury at level of 20. in India.9%) owned by the US parent company. Union Carbide. lead and mercury in nursing mothers which affected the new born from their birth. it was the world’s second largest chemical company with a diversified range of products.. (Annexure 2) It had caused blindness.000 tons of toxic waste remained in its premises. respiratory trouble and. In 1957 Union carbide and Carbon Corporation changed its name to Union Carbide Corporation. but Union Carbide denied the fact.. National Carbon Co. and third largest in the US. Inc. Till 20 years of the disaster. By 1979 UCC ranked seventh among chemical companies in the world. dichloromethane..

UCC and Dow announced that the board of directors approved an $11. On Feb 6th 2001 Union Carbide Corporation formally became a wholly owned subsidiary of The Dow Chemical Company with all assets and liabilities. At an annual general meeting of 2003 the CEO of Dow. Union Carbide to be “absconder from justice”. The gas leak on 3rd December 1984 was the result of such policies. Anabond Essex India Private Limited held by the ortell Company (50%) Dow Polymers Pvt. and with the acquisition of Union Carbide. Ltd. (Annexure 4) It bought all shares of UCC. 4 . Dow declared not to take any legal responsibility for Carbide’s past actions. After the incident. before acquiring UCC. Singapore (Annexure 5) According to Dow Chemical Management.. It failed to be present at any of the court’s hearing. it went into several tie ups with various companies. Ltd. Starvropoulos stated that the case of disaster had been resolved in court and the company was not liable for any further action. Lmt. India in 2001 and were present in the country as: Dow Chemical (India) Holdings Private Limited held by Dow Chemical Pacific Dow Chemical International Pvt. (Joint Venture) Dow Corning India P Ltd Dow Corning Singapore Pvt. Thus during the takeover. it become a major player in the petrochemical industry as well. Singapore Pvt.6 billion transaction among them which would lead UCC to become a wholly owned subsidiary of The Dow Chemical with negligible safety measures which led to the disaster. (Annexure 3) DOW CHEMICAL IN INDIA Dow Chemical was the world's largest producer of plastics. William S. The Chief Bhopal Magistrate listed Dow’s subsidiary. it thoroughly investigated the matter of disaster and did not take any liabilities. And ultimately on 4th August 1999 . Lmt DE Nocil Crop Protection Ltd.

electronics. the plant was making a loss of $4. UCC transferred all substandard and inferior technology to the Indian Plant to lower down the cost that posed hazard to the plant. (Exhibit 2) The annual sales in 2003 increased more than $5000 million and the annual income rose to 5 folds as compared to 2002. coatings. paints. the remedial measures were implemented at Union Carbide’s MIC plant in West Virginia but no actions were taken at the Indian plant as a cost cutting measure. (Exhibit3) The company during 2003 operated in 37 countries with 180 manufacturing sites. agricultural. Studies show that the parent company. Before the disaster. packaging. plastics. Dow Chemical had positioned well among its competitors. paper.FERA) reduced investment in its Bhopal plant. furniture. It ranked second in market capitalization. pharmaceutical.FINANCIAL STATUS OF DOW CHEMICAL According to the financial report of Dow it had been a very stable and profit earning company which could have done more towards social responsibility and Bhopal victims. housewares. insurance and finance. building and construction. agricultural products. chemicals.6 million. oil and gas. textile. Under FERA. agricultural and other specialized products and services. adhesives. and hydrocarbons and energy. plastic materials. processed foods. Thus the company did not take any precautionary action against the safety audit report. The results of safety audit pointed out many deficiencies in the working system of the plant and warned about the possible dangers from the plant. CORPORATE FAILURE The plant of UCC in India and West Virginia underwent safety audit in May 1982. in response to promotion of import substitution through dilution of foreign equity (The Foreign Exchage Regulatory Act. chemical processing. It manufactured and sold chemicals. Being financially sound and stable the company did not raise the amount of the compensation package. (Exhibit 1). were 5 .5 million and looking for a buyer. performance chemicals. According to the results of audit. automotive. Earlier it was $28 million that had gone down to $20. It catered to segments like: performance plastics. utilities and water treatment. The inadequate safety and disaster management measures were the cause of accident which. The major industries with which it dealt were appliance. personal care.

But according to the figures calculated as on March 2003 the death claim stood more than 15. the CEO of UCC at the time of the disaster.always overlooked and untreated. Union Carbide India Ltd. COMPENSATION AND BREACH OF HUMAN RIGHTS After the disaster both civil and criminal cases were leveled against Union Carbide and its Indian subsidiary. This amount of compensation was based on the assumption. was a fugitive from the law. But the company asserted the accident as a case of sabotage. stated their helpnessness towards the accident. It was a major failure by the management. Anderson absconded in fear of imprisonment which was for a span of 10 years.180 and injured at 5.53. Later after the takeover the CEO of Dow. that the factory were dealing with killer chemicals at the heart of the city with poor safety measures. ROLE OF GOVERNMENT The Government agencies and other statutory bodies declined to take any criminal action or charges against the industry knowing fully well. 6 . to shirk away their responsibility. Starvropoulos. which showed their reluctance and disregard towards employee and the environment.000. and decontamination of the Bhopal site. William S.00. The Supreme Court approved a settlement money of US$ 470 million for civil and criminal claims to secure immediate relief to the victims in 1989. It was an unsatisfactory amount for the victims of gas disaster of such a large scale.015 which was miscalculated to around 5 times. that the number of deaths were 3000 and the number of injured were 1. He failed to appear in the court hearing called by the Chief Judicial Magistrate of Bhopal which proved their attitude towards the incident. The Company failed to attend judicial action. The compensation money was not increased according to the actual data and thus it reduced by 5 times or more leaving back an average monetary rehabilitation of Rs 200 per person per year. The battle for justice within US and Indian courts had so far been unsuccessful for better compensation and treatment for victims. It was a complete breach of human rights with inadequate compensation package leading to a helpless situation to the victims. Warren Anderson.

It put the entire responsibility on the Government and freed itself from taking any legal obligation saying that they wanted to protect their shareholders interest. medical monitoring. stated that the case of disaster had been resolved in court and thus they are not liable for it any further. The fund for economic rehabilitation was mostly unutilized or misutilised. pregnant and lactating mothers also failed. Knowing the fact the unit manufactured dangerous chemicals in the heart of the city of Bhopal without adequate safety measures. The management of the organisation as well as the regulatory bodies failed to look into the environmental and safety aspects. Rs 23. 7 . but very few were provided livelihood opportunity. the Government was confused about the actions to be taken against the company and the measures for relief and rehabilitation. Lack of transparency and clarity between the Centre and the State Government on the issues of relief and rehabilitation made the case more complicated. It did not take any responsibility for the tragedy. the government failed to provide essential medicines and infrastructural support in government hospitals. the governmental bodies were also reluctant to react about poisonous effects of MIC. economic compensation and rehabilitation for the victims.76 crores were allocated for environmental rehabilitation of which only Rs 3 crores were budgeted for construction of 80. The Government allocated substantial fund to provide alternative livelihood for the gas affected people. NEED FOR CORPORATE SOCIAL RESPONSIBILITY Dow from the beginning of take over. The Central Government was unable to solve the case and was only in the state of discussion. At the 2003 annual shareholder meeting William S Stavropoulos. Regarding the disaster. Social rehabilitation such as construction of houses for the victims and providing milk to children.After the disaster. ensured that there were no outstanding liabilities in relation to Bhopal. which were not spent for the purpose. as well as cleaning up the site and ground water. After the disaster. resolving outstanding cases would lead to legal risks which showed there runaway motive.000 smokeless chulhas. CEO of Dow Chemicals. which failed. social and environmental. economic. the Government tried to provide support service in four areas: medical. According to Dow. Regarding medical rehabilitation.

human rights and the environment. the Government should also have had a clear cut policy regarding a proactive Disaster Management Plan in order to prevent recurrence of such incidents. further had a long history of criminal behaviour earlier. behaving socially responsible would increase the human development of stakeholders both within and outside the corporation. Corporate Social Responsibility is concerned with treating the stakeholders of the firm ethically or in a socially responsible manner. {Source: Michael Hopkins: A Planetary Bargain: Corporate Social Responsibility Comes of Age (Macmillan.mhcinternational. Gauley Bridge tunneling project in West Virginia in the 1920s caused injury to hundreds from silicosis. it was high time to take some positive action and proper CSR approach towards human rights.Having seen the impact of negligience. Bhopal Gas Leak Disaster (Processing of Claims) Act. for Dow. Consequently. 1998)} 7 Dow. Stakeholders exist both within a firm and 8 . Strong community participation along with well structured disaster management plan was essential in order to deal with such disasters. 1985 and Environmental Protection Act of 1986 were enacted. Apart from the company. UK. It was a supplier of napalm and other chemical warfare agents to the US war in Vietnem. which called for proper and structured corporate social responsibility (CSR) approach to deal with the case. 7 http://www. Dow being financially sound should have been more responsible towards socio. Though the former Act gave all powers to the Central Government to represent all claimaints in appropriate forums. According to the US Public Interest Reaserch Group (PIRG) UCC was among the top four companies for toxic waste dumps in the US. ROAD AHEAD The company should have been more responsive towards corporate accountibility. It had been involved in precipitating two of the greatest industrial disasters of the twentieth century. economic and environmental issues. appreciable result did not come out even after 20 years. Thus the motive of the Company were clear. They had no humanatarian feelings. Hence.

commondreams. Corporate Social Responsibility .com/msds/ref/exothermic. Amnesty International. Bhopal Disaster and Aftermath a Huge Violation of Human Rights: Amnesty.html 3. print. 11. Volume 22 . Dow Environmental Liability Overview. Wet Scrubbers and Gas Scrubbers.Issue www.institutionalshareowner. Frontline.htm 7.cgi?sfArticleId=3283 10. http://www. About Air Scrubbers. proxyinformation. Bhopal Gas Bhopal Disaster and Aftermath a Huge Violation of Human Rights: Amnesty. Bhopal bers 2.pdf 16. Dow Shareholder Resolutions on Bhopal Liabilities and Chemical Body Burden homepage/General/Firstfifty/Dow. www. This is also Dow. India. http://www. The Fact Finding Mission Reports SURVIVING Bhopal Impacts.Reference 1. Two Decades Later. Union Carbide Corporotion.What does it mean?.mallenbaker.amnesty. http://www.pdf 13. Clouds of Injustice Bhopal Disaster 20 years 6.php 9 .chemchannels. Methyl Isocyanate.worldrevolution. 2005 14. 12 . 15.globalspec.answers. uspirg. web. www.htm 9. http://www.html 4. The Bhopal Disaster: Still Avoiding Justice. http://en. Exothermic and Carbide 12. Corporate Information : The Dow Chemical Company.htm 8.bhopalffm. Feb.cgi?file=/headlines04/1129-01.commondreams. Dow and

including children born to gas-exposed parents. Properties 5. Decomposes on heating and produces toxic gases like hydrogen download/1/643636/0/GP_India_RR_Exhibition. bronchitis.chm. It is also used for the conversion of aldoximes to nitriles MIC is extremely toxic by suffer debilitating exposurerelated health effects. 3. pesticides and herbicide Intermediates. Side Effects Source: http://www. bronchial pneumonia and reproductive effects.htm ANNEXURE 2: The chilling statistics of a continuing tragedy: o More than 8. Short term exposures also leads to death or adverse effects like pulmonary edema (respiratory inflammation). The vapour mixes well with air and explosives mixtures are formed. May polymerize due to heating or under the influence of water and catalysts. Source : www. shortness of breath. methylester and methyl carbylamine 57.000 people killed due to exposure to the lethal gasses in the immediate aftermath of the disaster.1 Melting Point : -45 C . Boiling Point: 43-45 C Volatile liquid with a sharp pungent o At least 1. 2.ANNEXURE ANNEXURE 1 : Methyl Isocyanate (MIC) Common name Molecular mass 1. It is corrosive to the skin and eyes. 4. o Tons of poisonous pesticides and other hazardous wastes lying scattered and abandoned in the DOWCarbidefactory premises.pdf - 10 . ingestion and skin absorption. 50. MIC vapour is denser than air and will collect and stay at low areas. adhesives. sore throat and unconsciousness.bris. nitrogen oxides and carbon monoxide.greenpeace. insidiously poisoning the ground water and contaminating the land. dizziness.000 people exposed to the poison gasses left to suffer a lifetime of ill health and mental trauma. 6. Inhalation of MIC causes cough. o Nearly 30 people continue to die from exposure-related illnesses every month. o isocyanic acid.05mg/m . The Occupational Safety and Health Administration’s permissible exposure limit to MIC over a normal 3 8hr workday or a 40 hr workweek is 0. o Uses Used in the production of synthetic rubber. Reacts violently with water and is highly flammable. o More than 500.000 people.

Union Carbide establishes Carbide and Carbon Chemicals Corporation. gas-processing and energy industries. producer of latex. National Carbon Co. Far Eastern Textile Ltd. 2.9% interest in Union Carbide India Limited to McLeod Russel is completed. the first commercial ethylene plant is completed at Clendenin. opens a 660. specialty polymers and composites. Union Carbide purchases plant in Institute.. Urethane polyether polyols and propylene glycol business is sold to Arco Chemcial Co. On July 1st Union Carbide Corporation becomes a holding company.000 lbs. 23. 20. a gas leak at a plant in Bhopal. Union Carbide divests a number of businesses: films packaging. 1977 1978 1981 1983 1984 1985 1986 19. Jennat Corporation. 1st. manganese and silicon alloys. 15. First chemical products are shipped from Taft. W. Inc. Union Carbide sells portion of its metals business. Inc. Mitsubishi Corporation buys 50% stake in UCAR Carbon. which will — in a few years — begin production of several ethylene-based chemicals. Carbon products and industrial gases businesses become subsidiaries on Jan. YEAR 1917 1919 1920 1923 1939 1941 1947 1954 1957 1959 1960’S EVENT Union Carbide & Carbon Corporation is incorporated on November 1. which includes plans to make major divestitures. The Mining and Metals Division is formed by combining the Metals and Ore Divisions and part of the Nuclear Division. UNIPOL Process technology for making polyethylene is announced. are leased to set up a commercial scale plant. George Curme files the first patent for commercial preparation of ethylene. 12. UOP provides process technology. India. Chemical production begins at Texas City. major portions of metals business. Va. Leo Baekeland. begins. Union Carbide Industrial Gases is spun-off as an independent company. 1990 1991 1992 1993 1994 11 . 11. 6. selling nearly all of its European petrochemical operations to BP Chemicals Ltd.. also. home and automotive products and agricultural products business. Tex. W. Canada.ANNEXURE 3: HISTORY OF UNION CARBIDE CORPORATION S.. (25%). caused by an act of sabotage. owning these two subsidiaries plus Union Carbide Chemicals and Plastics Company. A major advance expanding the scope of the UNIPOL Process technology to include polypropylene is announced. results in tragic loss of life. UCAR Carbon later becomes a publicly traded independent company. Hydrocarbons Division is formed. 8. 1. and affiliates of Donaldson. Prest-O-Lite Co. Sale of Union Carbide's 50. W. Union Carbide and Carbon Corporation changes name to Union Carbide Corporation. Eleven acres of land in South Charleston. Ferroalloys Division is formed and takes over production and marketing of chromium. 9. 24. 4. is formed as a division. Its name changes to Praxair.P. results in tragic loss of life. per year ethylene glycol plant at Red Deer. Bakelite Corporation merges into Union Carbide and Carbon Corporation. Union Carbide Consumer Products Co. In December. India. 25. and Union Carbide Company (formed in 1898). battery products. founded by Dr. 1988 1989 21. caused by an act of sabotage. Inc. La. 3. which it had previously built and operated for the government for the production of butadiene and styrene at the start of World War II. Va. Carbon products business is renamed UCAR Carbon Company and industrial gas business is named Union Carbide Industrial Gases Inc. 7. plant in 1966. petrochemical.. Union Carbide completes major divestiture. 14. 13. 17. Alberta. UCC purchases Triton surfactant and alkylphenol business from Rohm & Haas. Union Carbide purchases Amerchol Corporation from CPC International.NO. Alberta & Orient Glycol is a joint venture between Union Carbide (50%). Chemical production at Seadrift. Lufkin & Jenrette. Tex. — the start of the petrochemical industry. In December.. 5. (25%) and Mitsui & Company Ltd. is purchased by Union Carbide. Allied-Signal and Union Carbide complete the formation of UOP joint venture. Alberta & Orient Glycol Company Ltd. Inc. catalysts and adsorbents to the petroleum refining.. 18. a gas leak at a plant in Bhopal. Bakelite. 1917 and acquires the stock of: Linde Air Products Co. 10. GAF halts takeover bid in response to Union Carbide's defense. Electronics Division is established. 22. Inc. OrganoSilicon Products business is sold to DLJ Merchant Banking Partners L. 16. was a pioneer in plastics. Va.

Union Carbide forms Asian Acetyls Company. Union Carbide and two partners (Petrochemical Industries Company and Boubyan Petrochemical. 1997 29. 30.156 Aventis $4.A. The new firm will build and operate a petrochemicals complex in Kuwait. including facilities in the United Kingdom. for the licensing of polyethylene technology and for research.676 Novartis $4.273 DuPont $3.194 Makhteshim-Agan $801 12 . a joint venture in Korea with BP Chemicals and Samsung Fine Chemicals Company to manufacture vinyl acetate monomer.thebestcontrol. Source: http://www.r. Union Carbide becomes a partner in Polimeri Europa S. from ICI. millions: BASF $1. The planned complex will include an olefins cracker and have facilities for production of ethylene oxide and its derivatives and oxo alcohols and oxo derivatives.6 billion transaction which would result in Union Carbide becoming a wholly owned subsidiary of The Dow Chemical Company. 1996 28. Univation Technologies. Ltd. both of Kuwait) form Equate Petrochemical Company. development and commercialization of metallocene and other advanced catalysts for the production of polyethylene.8-billion pound ethylene plant in Alberta. On August 4th. products include ANNEXURE 4: ANNEXURE 5:Source: Rural Advancement Foundation International . Union Carbide and Exxon Chemical Company launch a joint UCC and Petronas (the national oil company of Malaysia) form a joint venture to build a new petrochemical complex in Malaysia.897 American Home Products $2.152 Monsanto $4. On February 6th. 1998 30. www. Union Carbide will build a Unipol Process polyethylene plant to consume its half of the output. Canada are announced.htm The top 10 "AgChem Companies" by 1998 pesticide sales in U.132 Bayer $2. a 50-50 ethylene/polyethylene joint venture between Union Carbide and EniChem S.032 AstraZeneca $2. It will produce polyethylene for the European market. 1999 2001 UCC acquires ethylene oxide and derivatives businesses.26..945 Dow $2.l.p.unioncarbide. Union Carbide Corporation became a wholly owned subsidiary of The Dow Chemical Company.. S. polyethylene and ethylene glycol. Plans for Union Carbide and Nova Corporation to build a 2. Purchase of the polypropylene assets and business of Shell Oil Company is completed. 1995 27. The venture is also the licensing agent for Union Carbide's UNIPOL Process technology for polypropylene. primarily serving solvents and intermediates end-uses. Union Carbide and The Dow Chemical Company announce that their boards of directors have approved an $11.

0 149.0 202.0% 160.392.700.34 0.0 7.276.0 0.0 469.0 13 .0 929.0 11.0 0.00 0.0 Continuing Operations Discontinued Operations Total Operations Total Net Income Net Profit Margin 469.0 5.0 1.0 8.36 0.3% 614.50 0.0 1.43 0.0 127.708.0 207.568.0 502.0 1.0 759.00 1.34 Balance Sheet Assets Current Assets Cash Quarter Quarter Quarter Quarter Quarter Ending Ending Ending Ending Ending Mar 04 Dec 03 Sep 03 Jun 03 Mar 03 1.0 469.081.0 514.0 311.1% 332.0 1.8% 53.409.0 102.0 3.00 0.09 0.0 2.0 8.00 0.0 76.0 0.0 0.0 355.931.0 393.0 19.0% 592.EXHIBITS EXHIBIT 1: Financial report Income Statement Revenue Cost of Goods Sold Gross Profit Gross Profit Margin SG&A Expense Depreciation & Amortization Operating Income Operating Margin Nonoperating Income Nonoperating Expenses Income Before Taxes Income Taxes Net Income After Taxes Quarter Quarter Quarter Quarter Quarter Ending Ending Ending Ending Ending Mar 04 Dec 03 Sep 03 Jun 03 Mar 03 9.0 8.2% 130.00 1.34 0.7% 581.0 204.0 186.0 0.0 470.0 4.0 393.0 4.0 1.0 7.887.0 186.00 0.0 85.977.36 0.0 6.0 610.0 8.0 6.0 0.08 0.0 424.0 332.0 466.09 0.8% 85.0 6.0 (442.43 0.0 47.0 6.4% 182.6% 600.0) 952.242.0 2.566.0 8.0% 929.422.9% 600.00 0.2% 393.36 0.0 20.0 499.5% 165.0 1.0 6.34 0.0 482.632.926.34 1.0 703.0 929.332.0 20.0 2.0 521.0 465.0 17.722.9% Diluted EPS from Continuing Operations ($) Diluted EPS from Discontinued Operations ($) Diluted EPS from Total Operations ($) Diluted EPS from Total Net Income ($) Dividends per Share 0.0 530.373.309.0 332.43 0.0 215.0 204.50 0.0 657.00 0.0 19.50 0.0 510.520.0 6.

0 0.5 Cumulative Cash Flow Statement Quarter Quarter Quarter Quarter Quarter Ending Ending Ending Ending Ending Mar 04 Dec 03 Sep 03 Jun 03 Mar 03 95.510.0 5.163.305.175.891.045.0 9.Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets 6.0 8.0 1.0) (931.276.593.0) (1.250.0 5.232.0) (612.224.0 1.0 (792.0 4.0 8.730.305.846.0) 792.479.714.0 218.225.960.403.0 4.676.012.0) (310.526.391.304.0 11.0 3.588.346.0 13.0) 465.235.0 1.0 5.0 11.0 9.) 0.051.882.0 5.976.762.850.0 12.0 (223.0 14.780.0 180.497.0 14.175.0 (495.0 915.850.0) (1.0 5.0 2.0 0.0 11.0 (337.898.0 14.0) (1.0 4.539.0 931.820.php 14 .0 14.0 11.345.0 1.554.348.0 40.241.0 12.0 39.654.695.695.0 502.0 8.0 32.0 9.0 13.0 4.0 (759.716.0 9.0) 470.0 9. www.0 601.0 7.0 3.0) Source : Corporate Information : The Dow Chemical Company.9 0.0) (466.0 7.799.229.0) 447.328.666.0 Liabilities and Shareholders' Equity Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Shareholders' Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (mil.chemchannels.0 32.0) (306.0 1.0 466.0 927.0 9.936.0 7.0 7.0 7.763.529.110.0 40.0 13.0 3.082.380.0) (350.018.0 41.0 9.521.0 4.0 11.0 4.0) (571.0 4.0 2.5 5.0 4.4 920.0 9.0 14.662.647.479.153.5 915.0) (1.0 259.578.0 826.0 8.0 0.0 7.0 32.587.0 1.002.0 3.672.0) (163.0 13.0) (920.0 41.547.887.108.892.636.884.050.0 32.0 13.0 9.457.534.229.539.0) (53.0) (327.0 740.0 1.0 14.0 12.325.919.0 9.0 13.0 Depreciation & Amortization Capital Expenditures Cash Dividends Paid 514.960.0 (398.0 homepage/General/Firstfifty/Dow.0) Net Operating Cash Flow Net Investing Cash Flow Net Financing Cash Flow Net Change in Cash 908.

13 Industry 28.73B 0.10B 4.94 1.40% 1.10B 1.EXHIBIT 2 Top Competitors : Dow Chemical Co Market Cap: Employees: Rev.67% 16.27% 1.12B 2. Industry Leaders : Statistic Market Capitalization P/E Ratio (ttm) PEG Ratio (ttm.63B 8.33% 434.09B 8.26 11. 5 yr expected) Revenue Growth (Qtrly YoY) EPS Growth (Qtrly YoY) Long-Term Growth Rate (5 yr) Return on Equity (ttm) Long-Term Debt/Equity (mrq) Dividend Yield (annual) DD NCX MCH BYH DOW ROG HPC HPC EMN Industry Leader 43.50 Exxon Mobil Corp 282.300 20.782 3.90% 2.159 16.70% 250.53 2.36% DOW Rank 2 / 19 9 / 19 5 / 19 6 / 19 1 / 19 6 / 19 2 / 19 5 / 19 2 / 19 15 .70 0.60 1.20% 1.10% 1.70 1.86B 14.000 13.152 23.25% 6.088 39.80 171.58B 15.372 18.20% 7.382 3.26M 0.20% 33.86B 88. Du Pont De Nemours & Co (DuPont) 43.21B 81.276 17.93 2.38 26.0% 2866.33B 87.53 2.55% 40.30K 9.10% 28.75B 27.39% 19.80% DOW 37.45% 1.21B 70.10 BASF AG E. Margins (ttm): Net Income (ttm): EPS (ttm): PE (ttm): PEG (ttm): PS (ttm): 37.54M 5.35B 46.41% 20.24% 25.008 14.71 1.0% 25.60 15.35B 17.97 1.79 2.60 0. Growth (ttm): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Oper.91B 3.01B 30.20B 2.56B 28.90% 41.64 Dow Vs.I.59% 3.50B 12.71% 80.38 1.

0 1513.0 2000 23008.27% 2003 Annual Sales ($ mil.45% Return on Equity (ttm): 25.) Annual Net Income 32632.0 385.0 2002 27609.0 338.0 16 .59% Operating Margin 8.0 2001 27805.0 1730.EXHIBIT 3 FINANCIAL HIGHLIGHTS : Fiscal Year Fiscal Year Ends : 31-Dec Most Recent Quarter 31-Mar-04 (mrq): Profitability Profit Margin (ttm): 6.90% (ttm): Management Effectiveness Return on Assets (ttm): 5.

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