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CHEMICALS

Tata Chemicals Limited

Sixty-seventh annual report 2005-2006

Contents
Page No. Corporate Information Notice Directors’ Report Management Discussion and Analysis Corporate Governance Report Summarised Balance Sheet and Profit and Loss Account Auditors’ Report Balance Sheet Profit and Loss Account Cash Flow Statement Schedules to Profit and Loss Account Schedules to Balance Sheet Notes to the Balance Sheet and Profit and Loss Account Balance Sheet Abstract and Company’s General Business Profile Financial Highlights — Last Decade 2 3 9 18 26 Page No. Consolidated Financial Statements - Auditors’ Report - Balance Sheet - Profit & Loss Account - Cash Flow Statement - Schedules to Profit and Loss Account - Schedules to Balance Sheet - Notes to Consolidated Balance Sheet and Profit and Loss Account Financial Statistics 77 78 79 80

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Annual General Meeting : July 17, 2006 Time Venue : 3.30 p.m. : Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai - 400 020 BOOK CLOSURE DATES JULY 1, 2006 — JULY 17, 2006

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CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

CORPORATE INFORMATION Management Team
Prasad R. Menon P. K. Ghose Kapil Mehan R. Mukundan Satish Sohoni B. Sudhakar I. L. Momin P. M. Khanderia Managing Director Chief Financial Officer Chief Operating Officer (Fertilisers) Chief Operating Officer (Chemicals) Chief Operating Officer (Food Additives) Head-Corporate HR & Administration VP-Operational Execellance V P-New Projects V P-Manufacturing V P-Manufacturing V P-Manufacturing V P-Bangladesh Project Chief Scientist Head-Corporate Audit & Risk Management Homi R. Khusrokhan Executive Director

Board of Directors
(As of March 31, 2006)

Ratan N. Tata (Chairman)

R. Gopalakrishnan (Vice-Chairman)

Keshub Mahindra (Ceased to be a director w.e.f. March 24, 2006)

Sanjiv Lal P. C. Jain Dr. Arup Basu A. Tyagi Dr. Murli Shastri T. Vinod Kumar

D. M. Ghia

Nusli N. Wadia

Company Secretary
B. Renganathan R. C. Khanna

Registrar & Share Transfer Agent
TSR Darashaw Limited (Formerly Tata Share Registry Limited) Army & Navy Building, 148, Mahatma Gandhi Road, Mumbai 400 001.

Dr. D. V. Kapur

Prasad R. Menon Managing Director

Solicitors
Dr. T. Mukherjee Mulla & Mulla and Craigie Blunt & Caroe, Mumbai.

Auditors
Homi R. Khusrokhan Executive Director Messers S. B. Billimoria & Co., Chartered Accountants Messers N. M. Raiji & Co., Chartered Accountants

Dr. Vijay L. Kelkar

Works
Inorganic Chemicals — Mithapur, Gujarat Fertilisers — Babrala, Dist. Badaun, U.P. Phosphate — Haldia, W. Bengal

Registered Office
Bombay House, 24, Homi Mody Street, Fort, Mumbai 400 001 Tel: 022-66658282 Fax: 022-66658143 Visit us at: www.tatachemicals.com

Bankers
Bank of America, Bank of Baroda, Citibank N.A., Deutsche Bank, HDFC Bank Limited, Punjab National Bank, Standard Chartered Bank, State Bank of Bikaner & Jaipur, State Bank of India, The Hongkong and Shanghai Banking Corporation Ltd., ICICI Bank Ltd.

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NOTICE
NOTICE IS HEREBY GIVEN THAT THE SIXTY-SEVENTH ANNUAL GENERAL MEETING OF TATA CHEMICALS LIMITED will be held on Monday, July 17, 2006, at 3.30 p.m. at Birla Matushri Sabhagar, 19 Sir Vithaldas Thackersey Marg, Mumbai 400 020, to transact the following business: 1. 2. 3. 4. 5. To receive, consider and adopt the Audited Profit and Loss Account for the year ended March 31, 2006 and the Balance Sheet as at that date, together with the Reports of the Board of Directors and the Auditors thereon. To declare a dividend on Ordinary Shares. To appoint a Director in place of Mr. R. N. Tata, who retires by rotation and is eligible for re-appointment. To appoint a Director in place of Mr. Nusli N. Wadia who retires by rotation and is eligible for re-appointment. To consider and, if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution: “RESOLVED that Mr. D. M. Ghia, a Director liable to retire by rotation, who does not seek re-election, is not reappointed a Director of the Company.” “RESOLVED FURTHER that the vacancy, so created on the Board of Directors of the Company, be not filled.” 6. 7. To appoint auditors and fix their remuneration. REVISION IN THE TERMS OF REMUNERATION OF MR. PRASAD R. MENON, THE MANAGING DIRECTOR To consider and, if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution: “RESOLVED THAT, in partial modification of the Resolution passed at the Annual General Meeting of the Company held on July 21, 2005 and in accordance with the provisions of Sections 198, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956 (‘the Act’) read with Schedule XIII of the Act, the Company hereby approves the revision in the perquisites and allowances payable to Mr. Prasad R. Menon, the Managing Director (including the remuneration to be paid in the event of loss or inadequacy of profit in any financial year during the tenure of his appointment) with effect from April 1, 2006, for the remainder of the tenure of his contract, as set out in the Explanatory Statement annexed to the Notice convening this meeting.” “RESOLVED FURTHER THAT the Board be and is hereby authorized to take all such steps as may be necessary, proper and expedient to give effect to this Resolution.” 8. REVISION IN THE TERMS OF REMUNERATION OF MR. HOMI R. KHUSROKHAN, THE EXECUTIVE DIRECTOR To consider and, if thought fit, to pass with or without modification, the following resolution as an Ordinary Resolution: “RESOLVED THAT, in partial modification of the Resolution passed at the Annual General Meeting of the Company held on September 20, 2004 and in accordance with the provisions of Sections 198, 309, 310 and other applicable provisions, if any, of the Companies Act, 1956 (‘the Act’) read with Schedule XIII of the Act, the Company hereby approves the revision in the perquisites and allowances payable to Mr. Homi R. Khusrokhan, the Executive Director (including the remuneration to be paid in the event of loss or inadequacy of profit in any financial year during the tenure of his appointment) with effect from April 1, 2006, for the remainder of the tenure of his contract as set out in the Explanatory Statement annexed to the Notice convening this meeting.” “RESOLVED FURTHER THAT the Board be and is hereby authorized to take all such steps as may be necessary, proper and expedient to give effect to this Resolution.” Notes: 1. The relative Explanatory Statement pursuant to Section 173 of the Companies Act, 1956, in respect of the business under item Nos. 5, 7 & 8 set out above are annexed hereto. The relevant details in respect of item Nos. 3 and 4 above, as required by Clause 49 of the Listing Agreement entered into with Stock Exchanges are also annexed. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING.

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CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

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Members/Proxies should bring the enclosed attendance slip duly filled in, for attending the Meeting, along with the Annual Report. The Register of Members and the Share Transfer Books of the Company would remain closed from July 1, 2006 to July 17, 2006, both days inclusive. The dividend, if declared at the Annual General Meeting, will be paid on or after July 18, 2006, to those persons or their mandates: (a) whose names appear as Beneficial Owners as at the end of the business hours on June 30, 2006, in the list of Beneficial Owners to be furnished by National Securities Depository Limited and Central Depository Services (India) Limited in respect of the shares held in electronic form; and (b) whose names appear as Members in the Register of Members of the Company after giving effect to valid share transfers in physical form lodged with the Registrar and Share Transfer Agent on or before June 30, 2006.

Book Closure and Dividend 4. 5.

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Nomination Facility Members holding shares in physical form may obtain the Nomination forms from the Company’s Registrar and Share Transfer Agent. Members holding shares in electronic form may obtain the Nomination forms from their respective Depository Participants.

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Electronic Clearing Services (ECS) facility To avoid loss of dividend warrants in transit and undue delay in respect of receipt thereof, the Company provides ECS facility to the members. ECS facility is available at the locations identified by the Reserve Bank of India. Members holding shares in physical form and who are desirous of availing this facility are requested to contact the Registrar & Share Transfer Agent of the Company. Members holding shares in electronic form are requested to contact their respective Depository Participants.

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Unclaimed Dividends

Transfer to General Revenue Account Pursuant to Section 205A(5) of the Companies Act, 1956, all unclaimed dividend upto the financial year ended March 31, 1995 have been transferred to the General Revenue Account of the Central Government. Members, who have not yet encashed their dividend warrant(s) for the said period, are requested to forward their claim in Form No. II prescribed under Companies Unpaid Dividend (Transfer to General Reserve Account of the Central Government) Rule, 1978, to the Registrar of Companies, Mumbai, Maharashtra.

Transfer to the Investor Education and Protection Fund Consequent to the amendment of Section 205A of the Companies Act, 1956 and introduction of Section 205C by the Companies (Amendment) Act, 1999, the amount of dividend commencing from the financial year ended March 31, 1996, onwards remaining unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account of the Company, is required to be transferred to the Investor Education and Protection Fund (the “Fund”) set up by the Government of India. Accordingly, the dividend which had remained unpaid/unclaimed for the financial years 1995-96 to 199798 in respect of the Company and that of erstwhile Hind Lever Chemicals Limited, till the financial year ended December 31, 1998 have been transferred to the “Fund.” It may be noted that the unpaid/unclaimed dividend for the financial year ended March 31, 1999 in respect of the Company is due for transfer to the Fund on, October 11, 2006 and that of the erstwhile Hind Lever Chemicals Limited, for the financial year ended December 31, 1999, is due for transfer to the Fund on May 17, 2007.

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9.

Members are requested to note that no claim shall lie against the Company or the aforesaid “Fund” in respect of any amount of dividend remaining unpaid/unclaimed for a period of seven years from the dates they became first due for payment. Any person/member who has not claimed dividend in respect of the financial year ended March 31,1999 or any year thereafter, is requested to approach the Company / Registrar and Share Transfer Agent of the Company for claiming the same.

Bank Mandates 10. In order to provide protection against fraudulent encashment of the dividend warrants, members holding shares in physical form are requested to intimate the Registrar & Share Transfer Agent under the signature of the Sole/First holder, the following information to be incorporated on the Dividend Warrants: I. II. Name of the Sole/First joint holder and the folio Number Particulars of Bank Account viz., a) b) c) d) Name of the Bank Name of the Branch Complete address of the Bank with Pin code Number Bank Account Number allotted by the Bank

In respect of the matters pertaining to Bank details, ECS mandates, nomination, power of attorney, change in name/address etc., the members are requested to approach : — — the Company’s Registrar and Share Transfer Agent, in case of shares held in physical form and the respective Depository Participants, in case of shares held in electronic form.

In all correspondence with the Company/Registrar and Share Transfer Agent, members are requested to quote their account/folio numbers or DP ID and Client ID in respect of physical or electronic holdings respectively. 11. A member desirous of getting any information in respect of the contents of the Annual Report is required to forward the queries to the Company at least seven days prior to the meeting so that the required information can be made available at the Meeting.

On behalf of the Board of Directors

R. N. TATA Chairman Mumbai May 30, 2006 Registered Office: Bombay House 24, Homi Mody Street, Fort, Mumbai 400 001.

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CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

EXPLANATORY STATEMENT
The following Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 (the Act) sets out all material facts relating to the business mentioned under item Nos. 5, 7 and 8 of the accompanying Notice dated May 30, 2006. Item No. 5: In accordance with the provisions of Section 256 of the Act and the Articles of Association of the Company, Mr. D. M. Ghia retires by rotation. Mr. D. M. Ghia has not sought re-election. It has been decided by the Board that the vacancy so created on the Board of Directors of the Company should not be filled. Mr. D. M. Ghia is a Director of the Company since January 22, 1975 and is also a member of the Audit Committee and Chairman of Shareholders’/Investors’ Grievance Committee. The Board has placed on record its appreciation of the contribution made by him to the Company. Item No. 7: Mr. Prasad R. Menon was appointed as the Managing Director of the Company for a period of 5 years with effect from October 4, 2005, on the terms and conditions and remuneration as approved by the members at the Annual General Meeting of the Company held on July 21, 2005. In order to give flexibility to the Board of Directors to decide upon the perquisites and allowances payable to the Managing Director from time to time, within the overall ceiling prescribed under the Act, it is proposed to revise the terms of remuneration relating to perquisites and allowances payable to Mr. Prasad R. Menon with effect from April 1, 2006. The Board of Directors at their meeting held on May 30, 2006, approved the aforesaid proposal, subject to the approval of the members. All the other terms and conditions of appointment and remuneration would remain unchanged. The revised terms of remuneration are as set out below: Remuneration: Salary upto a maximum of Rs. Rs. 4,50,000/- per month, with annual increment effective April 1st every year, as may be decided by the Board, based on merit and taking into account the Company’s performance; benefits, perquisites and allowances as determined by the Board from time to time and commission based on certain performance criteria to be prescribed by the Board. Minimum Remuneration: Notwithstanding anything to the contrary herein contained, where in any financial year during the currency of the tenure of Mr. Prasad R. Menon, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of salary, perquisites and allowances, as specified above. The aggregate of the remuneration as aforesaid shall be within the maximum limit specified under Sections 198, 309 and all other applicable provisions, if any, of the Act read with Schedule XIII of the Act as amended from time to time. In compliance with the provisions of Sections 309 and 310 read with Schedule XIII of the Act, the revised terms of remuneration payable to Mr. Prasad R. Menon are now being placed before the Members in the general meeting for their approval. The Board commends the Resolution for acceptance by the Members. Mr. Prasad R. Menon is concerned or interested in the resolution at Item No. 7 of the Notice. This may be treated as an abstract under Section 302 of the Companies Act, 1956. Item No. 8: Mr. Homi R. Khusrokhan was appointed as Executive Director of the Company for a period of 3 years with effect from April 1, 2004, on the terms and conditions and remuneration as approved by the members at the Annual General Meeting of the Company held on September 20, 2004. In order to give flexibility to the Board of Directors to decide upon the perquisites and allowances payable to the Executive Director from time to time, within the overall ceiling prescribed under the Act, it is proposed to revise the

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terms of remuneration relating to perquisites and allowance payable to Mr. Homi R. Khusrokhan with effect from April 1, 2006. The Board of Directors at their meeting held on May 30, 2006, approved the aforesaid proposal, subject to the approval of the members. All the other terms and conditions of appointment and remuneration would remain unchanged. The revised terms of remuneration are as set out below: Remuneration: Salary upto a maximum of Rs. Rs. 4,00,000/- per month, with annual increment effective April 1st every year, as may be decided by the Board, based on merit and taking into account the Company’s performance; benefits, perquisites and allowances as determined by the Board from time to time and commission based on certain performance criteria to be prescribed by the Board. Minimum Remuneration: Notwithstanding anything to the contrary herein contained, where in any financial year during the currency of the tenure of Mr. Homi R. Khusrokhan, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of salary, perquisites and allowances, as specified above. The aggregate of the remuneration as aforesaid shall be within the maximum limit specified under Sections 198, 309 and all other applicable provisions, if any, of the Act read with Schedule XIII of the Act as amended from time to time. In compliance with the provisions of Sections 309 and 310 read with Schedule XIII of the Act, the revised terms of remuneration payable to Mr. Homi R. Khusrokhan are now being placed before the Members in general meeting for their approval. The Board commends the Resolution for acceptance by the Members. Mr. Homi R. Khusrokhan is concerned or interested in the resolution at Item No. 8 of the Notice. This may be treated as an abstract under Section 302 of the Companies Act, 1956.

On behalf of the Board of Directors

R. N. TATA Chairman Mumbai May 30, 2006 Registered Office: Bombay House 24, Homi Mody Street, Fort, Mumbai 400 001.

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CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Details of Directors seeking appointment/reappointment at the Annual General Meeting (Pursuant to Clause 49 of the Listing Agreement) Name of the Director Date of Birth Date of Appointment Expertise in specific functional area Qualification Mr. R. N. Tata 28.12.1937 11.04.1983 Eminent industrialist with wide business experience across variety of industries B.Sc., Architecture with structure Engineering from Cornell University, Ithaca, New York. Completed the Advanced Management Program conducted by Harvard University Directorship in other Public Limited Companies Tata Sons Ltd Tata Industries Ltd Tata Steel Limited The Bombay Dyeing and Mfg Co. Ltd. Tata Motors Limited. The Indian Hotels Company Ltd. The Tata Power Company Ltd. Tata Tea Ltd. Tata Information System Ltd. Hindustan Aeronautics Ltd. Tata Autocomp Systems Ltd. Tata Consultancy Services Ltd. Tata Teleservices Ltd. Tata Teleservices (Maharashtra) Ltd. Membership of committees of other public limited companies (includes only Audit and Shareholders’/Investors’ Grievance Committee No. of shares held in the Company 28,695 NIL NIL NIL The Bombay Dyeing & Mfg. Co. Ltd Gherzi Eastern Limited The Bombay Burmah Trading Corp. Ltd. Britannia Industries Ltd. Nowrosjee Wadia & Sons Ltd. Tata Steel Ltd. Tata Motors Ltd. Atul Ltd. Wadia BSN India Ltd. Mr. Nusli N. Wadia 15.02.1944 26.06.1981 Industrialist with rich business experience Educated in U.K.

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DIRECTORS' REPORT
TO THE MEMBERS OF TATA CHEMICALS LIMITED The Directors hereby present their Sixty-seventh Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the year ended March 31,2006: Previous Year Rs. Crores Rs. Crores FINANCIAL RESULTS Total Income .............................................................................................................................. 3599.23 3109.88 Profit before Depreciation and Exceptional items ...................................................... 654.49 592.70 Less : Depreciation .................................................................................................................... 138.93 137.70 Profit before Tax and Exceptional items .......................................................................... 515.56 455.00 Less : Exceptional items • Compensation paid under Employee Separation Scheme ............. 4.69 2.06 Profit before tax ...................................................................................................................... Tax ................................................................................................................................................... Profit after tax .......................................................................................................................... Add : • Balance in Profit and Loss Account ....................................................................... Amount available for Appropriation ................................................................................. Appropriations (a) Proposed Dividend ......................................................................................................... (b) Tax on Dividend ............................................................................................................... (c) General Reserve ............................................................................................................... (d) Balance Carried forward ............................................................................................... 510.87 157.84 353.03 623.85 976.88 150.57 21.12 36.00 769.19 976.88 Dividend For the year under review, the Directors have recommended a dividend of Rs. 7/- per share (Rs. 6.50 per share for the previous year), on the Ordinary (Equity) Shares of the Company, aggregating Rs. 150.57 crores. PERFORMANCE REVIEW: MITHAPUR OPERATIONS Soda Ash Soda Ash production at 8,10,684 tonnes and sales at 7,06,907 tonnes were higher by 3.7% & 3.4% respectively over the previous year. This production was the highest in the history of the Company. The market share of the Company increased to 32.8% as against 30.8% in the previous year, and thus maintained its leadership position. Cement Production of cement at 4,90,643 tonnes increased by 5.3% and sales at 4,86,064 tonnes accounted for an increase of 3.5% as compared to the previous year. The sales recorded was the highest ever. Cement prices continued to remain firm during the year under review on account of consolidation in the industry. Salt Total production of all varieties of salt at 6,06,445 tonnes was 22% higher than the previous year and sales at 5,80,800 tonnes, were higher by 17.95%. Tata Salt recorded highest ever sales. A number of initiatives on the trade front under project 'BANDHAN' were introduced to strengthen the customer relationship. Salt under the brand name “TOPP Salt” was introduced in the international market. Export continues to be encouraging. Your Company maintained its market leadership in the branded salt category with a market share of 40.1%. Tata Salt was nominated as the “Most Trusted Food Brand” in the country for the third consecutive year. 452.94 112.39 340.55 478.03 818.58 139.82 19.91 35.00 623.85 818.58

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CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

TURNOVER
RS. IN CRORES 4000

BABRALA OPERATIONS Urea production (9,60,113 tonnes) and sales (9,53,518 tonnes) remained at the same level as last year. Energy consumption of urea at 5.058 G.Cal/MT was the lowest in the Fertiliser Industry in India. The new pricing policy on urea has not yet been finalised. Lower offtake of additional quantities by the Government had an impact on the volumes. The network of Tata Kisan Sansar (TKS), has spread extensively in the eastern parts of the country. This network is supported by effective sourcing partners and efficient supply chain management. This had resulted in an increased trading volume of fertilizer products. HALDIA OPERATIONS Sodium Tripolyphosphate (STPP) Production of STPP at 50,647 tonnes was lower by 8.1% over the previous year and sales was lower by 19.8% over the previous year. Pressure on margins continues, due to cheaper Chinese imports. Diammonium Phosphate (DAP)/NPK Production of DAP at 2,80,939 tonnes was higher by 10.1% and sales at 2,74,636 tonnes resulted in a decrease of 9.6%, as compared to the previous year. Production of NPK at 4,05,704 tonnes was higher by 53% and sales at 3,87,098 tonnes grew by 39.8%. STRATEGIC INITIATIVES During the year under review, the following initiatives were undertaken: • • • • • Preliminary steps for entering into new business fields such as Nano, Bio based products were undertaken. An Innovation Centre was set up during the year for the development of new technologies and business platforms. An initiative program titled 'UDAAN' was launched, essentially focusing on value and profit improvement, in addition to the cost reduction measures implemented through 'MANTHAN'. Acquisition of one-third stake in Indo Maroc Phosphore S.A., Morocco (IMACID). Acquisition of the entire share capital of a U.K. based Soda Ash Company, Brunner Mond Group Limited (BMGL). Thus BMGL is now a wholly owned subsidiary of the Company.

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SUBSIDIARIES During the year under review, the Company incorporated a Wholly Owned Subsidiary (WoS) in Mauritius in the name of Homefield International Pvt. Limited (HIPL) to make investments globally and acquire shares abroad as and when business opportunities arise. This WoS became a holding company of Homefield Pvt. UK Limited (Homefield - UK) by acquiring its entire share capital. Accordingly Homefield - UK became a WoS of the Company as well. During the year under review, Homefield UK acquired 100% of the paid-up capital of Brunner Mond Group Limited (BMGL)UK, a company engaged in the manufacture of soda ash, for a total consideration of Rs. 798 crores. Accordingly BMGL is now a wholly owned subsidiary of the Company. The Company has been granted exemption by the Ministry of Company Affairs, from attaching with its accounts, the individual accounts of subsidiary companies. However, the consolidated financial statements of the subsidiaries and the joint venture, in accordance with the Accounting Standards 21 & 27 issued by the Institute of Chartered Accountants of India, forms part of this Annual Report and are reflected in the consolidated accounts of the Company. Further as directed by the Ministry of Company Affairs, the financial data of the subsidiaries have been furnished under "Summary of Financial Information of Subsidiary Companies" and forms part of this Annual Report. The Annual Accounts of the subsidiaries would be made available for inspection by the members. JOINT VENTURE
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PROFIT AFTER TAX
RS. IN CRORES 400

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As mentioned in the last year's annual report, the Company acquired one-third stake in Indo Maroc Phosphore S.A, Morocco (IMACID) for a consideration of Rs. 166 crores. IMACID was a 50:50 Joint Venture company between Office Cherifien Des Phosphates (OCP) and Chambal Fertilisers & Chemicals

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PROFIT FROM OPERATIONS
RS. IN CRORES 600

Limited (CFCL) and is engaged in the business of manufacturing phosphoric acid. The Investment in IMACID would help securing the supply of phosphoric acid. FINANCIAL PERFORMANCE OF SUBSIDIARIES AND JOINT VENTURE The consolidated financial statements reflect the operations of the Homefield International Pvt. Ltd. Mauritius (HIPL) and Homefield Pvt. UK Ltd. (Homefield -UK), for the period from the date of formation upto March 31, 2006 and in case of Brunner Mond Group Limited (BMGL) from the date of acquisition upto March 31, 2006. However in case of IMACID, the results considered for the purpose of consolidation are for the period from May 2005 to March 31, 2006 to the extent of one-third share. HIPL, the WoS has recorded a total income of Rs. 33.96 crores with a Profit After Tax (PAT) of Rs. 13.13 crores. Homefield UK has reported an interest income of Rs.8.22 crores and an operating loss of Rs. 3.64 crores. BMGL's total income (from the date of acquisition upto March 31, 2006) was Rs. 370.06 crores with a PAT of Rs. 37.83 crores. IMACID reported total revenue of Rs. 239 crores with a PAT of Rs. 32 crores, for the aforesaid period to the extent of TCL’s proportionate share in the joint venture. CORPORATE AFFAIRS Finance

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During the current financial year there was no conversion of Foreign Currency Convertible Bonds (FCCB) issued in January 2005. The proceeds of FCCB were utilized partly in May 2005 for acquiring one-third stake in IMACID and the balance for partly financing Homefield U.K. (a WoS) for acquiring 100% shareholding in Brunner Mond Group Ltd, UK. Until utilization, the FCCB proceeds were deployed overseas in bank deposits, which was in line with the Reserve Bank of India guidelines. Net interest cost was lower than the previous year, despite rise in interest rates. This was primarily due to higher interest income and a judicious mix of Rupees/Foreign currency borrowings to finance working capital. Voluntary Delisiting Permission is still awaited from the Calcutta Stock Exchange with respect to the delisting application made by the Company. Industrial Relations The relationship with the recognized Unions continued to remain cordial. Rural Development and Social Welfare

NET WORKING CAPITAL
RS. IN CRORES 1800

In keeping with the Company's commitment towards rural development and social welfare, your Company continued to undertake rural development activities in the form of agricultural development, natural resource management, income generation activities, health, education and infrastructure development. "Tejaswini", a domestic management programme launched for creating better quality of life for women continued in the second year and 320 women were trained. A similar programme 'Spandan' was also launched for men during the year under review. Directors

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Mr. Keshub Mahindra stepped down from the Board of Directors of the Company with effect from March 24, 2006. The Board wishes to place on record its appreciation for the valuable guidance extended and the contribution made by him during his long association with the Company. In accordance with the requirements of the Companies Act, 1956, Mr. R. N. Tata and Mr. Nusli N. Wadia, Directors of the Company are due for retirement by rotation and are eligible for reappointment. Mr. D. M. Ghia, who is also liable to retire by rotation has conveyed his decision not to seek reappointment. Attention of the members is drawn to the corresponding resolution and the Explanatory Statement thereto, in the Notice dated May 30, 2006, convening the Annual General Meeting.

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Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

EPS
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Attention of the members is also invited to the item Nos. 7 & 8 of the Notice convening the Annual General Meeting, for a revision in the terms of remuneration payable to Mr. Prasad R. Menon, the Managing Director and Mr. Homi R. Khusrokhan, the Executive Director. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis, Corporate Governance Report together with the Auditors' Certificate on compliance of the conditions of Corporate Governance form part of this Annual Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto as Annexure 'A' and forms part of this Report. PARTICULARS OF EMPLOYEES The information as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended, is annexed hereto as Annexure 'B' and forms part of this Report.

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AUDITORS M/S. S. B. Billimoria & Co., and M/S. N. M. Raiji & Co., Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The members are requested to consider their re-appointment for the current financial year 2006-07 and authorise the Board of Directors to fix their remuneration. The retiring auditors have, under Section 224 (1B) of the Companies Act, 1956, furnished certificates of their eligibility for the appointment. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA) of the Companies Act, 1956,the Directors, based on the representations received from the Operating Management, confirm that i) ii)
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in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; they have in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year viz., March 31, 2006 and of the profit of the Company for the year ended on that date; they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS
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3

The Directors wish to place on record their appreciation for their continued support and co-operation by Financial Institutions, Banks, Government authorities and other stakeholders. Your Directors also acknowledge the support extended by the Company's Unions and all the employees for their dedicated service. On behalf of the Board of Directors

0 03 04 05 06

Mumbai May 30, 2006

R. N. TATA Chairman

12

ANNEXURE TO THE DIRECTORS’ REPORT Annexure ‘A’
(UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956) Disclosures A. CONSERVATION OF ENERGY (a) Energy conservation measures taken • • • • • • • • (b) Automation of Soda Ash Plant-Phase I Installation of pre-heater for preheating feed bittern using MST condensate Installation of expansion vessel in Klin Feed cement plant Instrumentation for controlling lime klins process parameters Installation of Advanced Control System in Ammonia plant Coro-coating on urea cooling water pump Insulation of steam condensate line from urea B/L to DM plant and Process air compressor discharge line up to ammonia plant B/L

Additional Investments and proposals, if any being implemented for reduction of energy consumption • • • • • • • • Automation of MHY plant-Phase I Automation of watersoftening plant Automation of glass tower operation at Bromine plant Modification of existing lime kline charging system Enlargement of Ammonia Still pre-heater and Stack coolers in Soda Ash plant PME de-hydrator in Ammonia plant Advanced process Controller in urea plant MP process condensate stripping system instead of LP system in ammonia plant

(c) Impact of the measures at (a) and (b) for reduction of energy consumption and consequent impact on the cost of production. • • • • • • • • • Increase in overall Soda ash plant operating efficiency Reduction in steam consumption in MUW plant Reduction in specific heat consumption of clinker Reduction in Boiler feed water consumption Decrease in power consumption in material handling system Increase in operating efficiency in water softening plant Optimization of critical process parameters leading to energy saving in the plant Saving in electrical power and enhance life Reduction of heat losses from hot pipe surface

13

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

(d) Total Energy consumption per unit of production as per Form A: Form A The captive Steam Power plant at Mithapur is based on "Total Energy" concept, co-generating steam and power and therefore the cost of steam and power is shown as a composite number in the following calculation : POWER AND FUEL CONSUMPTION 1 ELECTRICITY (a) Purchased Units (Kwh) Total Amount (Rs. Crores) Avg. Rate (Rs./Kwh) (b) Own Generation (i) Through Diesel Generation (Mwh) Unit per litre of diesel Cost per Unit (Rs.) (ii) Through Power Plant Unit (Mwh) Unit per litre of furnace oil Cost per Unit (Rs.) (iii) Through Steam Turbine/Generator Unit (Mwh) Steam produced (Tonnes) Total Value of Electricity and Steam produced (Rs. Crores) (iv) Through Gas Turbine Units produced (MWh) Steam produced (Tonnes) Total Value of Electricity and Steam produced (Rs. Crores) Coal (specify quality and where used) (Mostly imported Coal received from various sources and "A" Grade Lignite are used in Boilers) Quantity (Tonnes) Total Cost (Rs. Crores) Average Rate (Rs./Tonne) Natural Gas Purchased (SCM) Total Cost (Rs. Crores) Average Cost (Rs./SCM) Naphtha Purchased (KL) Total Cost (Rs. Crores) Average Cost (Rs./KL) Furnace Oil Purchased (KL) Total Cost (Rs. Crores) Average Cost (Rs./KL) HSD Purchased (KL) Total Cost (Rs. Crores) Average Rate (Rs./KL) Current year 2005-2006 11,72,900 1.28 10.90 — — 485.99 3074.99 6.33 4,20,412 43,07,195 158.08 1,48,789 10,40,545 84.62 Previous year 2004-2005 8,12,900 1.30 16.00 — — — 454.95 — 5.22 4,53,888 41,26,369 180.26 1,56,904 10,92,004 118.63

2

6,32,209 146.55 2206.80 19,19,83,689 87.33 4.55 16,619.16 30.14 18,135.35 7835.25 12.18 15548.04 165.18 0.46 27,717.33

6,32,313 133.12 2,105.25 15,21,45,509 61.96 4.07 95,454.96 136.60 14,310.74 8,591.35 11.10 12,922.19 182.55 0.41 22,660.90

3

4

5

6

14

CONSUMPTION PER UNIT OF PRODUCTION ELECTRICITY (Kwh/MT) Current year 2005-2006 Soda Ash Sodium Bicarbonate Caustic Soda Evaporated Vacuum Evaporated Salt Cement Urea Ammonia Sulphuric Acid Phosphoric Acid Sodium Tripolyphosphate Diammonium Phosphate NPK Complexes Single Super Phosphate Sulphonic Acid SAP (new) 157.76 59.58 2823.71 60.09 128.72 70.00 150.00 35.00 174.00 198.00 39.00 33.00 32.00 46.00 — Previous year 2004-2005 146.83 73.56 2,858.12 61.63 138.46 72.00 157.00 33.00 159.00 194.00 39.00 42.00 32.00 46.00 33.00 STEAM (MT/MT) Current year 2005-2006 3.41 0.76 2.79 2.06 — 1.00 0.14 Previous year 2004-2005 3.58 0.95 2.85 1.71 — 1.01 0.20

Furnace Oil Ltr/Tonne 2005-2006 Sodium Tripolyphosphate Diammonium Phosphate NPK Complexes B. TECHNOLOGY ABSORPTION Form B Research and Development (R&D) 1 Specific areas in which R&D is carried out by the Company • • • • • 2. Nano filtration technology Improved raw material consumption Waste materials utilization Water conservation Product quality improvement 102 4 4 2004-2005 102 4 4

HSD Ltr/Tonne 2005-2006 — — — 2004-2005 — — —

Benefits derived as a result of above R & D • • • • Improved water quality for process requirements Waste reduction Improved water conservation. Optimisation of process parameter

3.

Future plan of action • Continued R &D efforts to attain objectives of cost reduction, energy conservation, efficient inventory management, waste utilization, value addition, environmental improvement and efficient management of water.

15

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

4

Expenditure on R & D (a) Capital (b) Recurring (C) Total (d) Total R & D expenditure as a percentage of Total Turnover

2005-2006 Rs. Crores 0.40 1.84 2.24 0.06%

2004-2005 Rs. Crores — 1.43 1.43 0.05%

Technology Absorption, Adaptation & Innovation 1 2 Efforts made towards Technology Absorption, Adaptation and innovation Pilot trials were conducted for Sea Water treatment based on nano-filtration technology Benefits derived as a result of the above efforts - Reduction in soda ash consumption for water purification - Reduction in cold effluent generation by 70%. - Increase in life of Ammonia stills. 3 Imported Technology (I) (a) Technology imported (b) Year of Import : : Nano filtration technology 2005-06 No

(c) Has technology been fully absorbed? : (d) If not fully absorbed, reasons and future course of action Pilot trials were conducted and successful completion of trials have given way ahead to absorb the technology completely. (II) (a) Techology Imported (b) Year of Import (c) Has technology been fully absorbed C. FOREIGN EXCHANGE EARNINGS AND OUTGO : : :

Monohydrate Process 2005-06 600 TPD plant installed Current year 2005-06 Rs. Crores 80.61 Previous year 2004-05 Rs. Crores 85.27

1 2

Foreign exchange earned Export of goods on FOB basis Outgo of foreign exchange Value of imports (CIF) (a) Raw materials and fuels (b) Stores, components and spares (c) Capital goods 1163.57 11.37 2.18 10.58 6.11 718.17 11.20 13.66 5.68 0.60

3 4

Expenditure in foreign currencies (others) Remittance of dividends

16

Annexure ‘B‘
Statement pursuant to Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975, forming part of the Directors’ Report for the year ended 31 March, 2006. Name Gross Remuneration Rs. 2 13,366,617 Net Remuneration Rs. 3 6,626,485 Designation & Nature of Duties Qualification Experience (Years) Date of Commencement of Employment 7 04.10.2000 Age Particulars of last Employment

1 Mr. Prasad R. Menon

4 Managing Director

5 B.Tech (Chem) IIT Kharagpur MSc ( Economics) Chartered Accountant

6 36

8 60

9 Nagarjuna Fertiliser and Chemicals Ltd. Technical Director and Agri Business Sector Chief - Nagarjuna Group Tata Tea Limited- Managing Director National Fertilisers Ltd. - Asst Manager Finolex Cables - COO — Accenture - Sr Manager HLCL - General Sales Manager Reliance Infocom Ltd- GM (Corporate HR) HLL - Unit HR Manager Tata Special Steel LimitedChief Financial Officer Owens Brockway - Sr Manager - Admin IPCL - Assistant Manager HLL - Business Manager (Bulk Chemicals) Rallis India Limited- GM (Fertilisers) Grant Medical Foundation-Medical Director HLL - Sr Puchase Manager The Tata Iron and Steel Company Limited - Chief (Strategic Finance) — Suncity Engineers Pvt Ltd-Finance Executive Tata Autocomp systems LimitedGM (Corporate Planning) HLL - Chief Technologist Hind Lever Chemicals LimitedSr. Manufacturing Manager Rallis India LtdVP International Business Ambalal Sarabhai Ent. Ltd.- Tax Executive Hind Lever Chemicals LimitedWhole Time Director HLL Dilato Inc.,Marietta,GA HLL - GM Commercial Tata Sons Limited - TAS Officer

Mr. Homi R. Khusrokhan Mr. A. J. Gupta Mr. Alok Tyagi Mr. A. M. Vaidya* Dr. Arup Basu Mr. Ashvini Hiran Mr. Budaraju Sudhakar Mr. Chiranjit Sen Mr. Dipak Ghose* Mr. D. K. Sunder Mr. I. L. Momin Mr. N. K. Uppal Mr. Kapil Mehan Dr. Kishore Ghose Mr. K. R. Venktadri Mr. P K Ghose Mr. P. M. Khanderia Mr. Ranjeev Lodha Mr. R Mukundan Mr. Rohit Pal Mr. Sanjiv Lal Mr. Satish Sohoni Mr. S. C. Kalani Mr. Shankar V* Mr. Shouvik Roy Dr. Srinivas Kilambi* Mr. T. Vinod Kumar Mr. Z. N. Langrana NOTE:

9,821,188 3,208,620 2,839,023 2,664,615 3,145,307 2,789,803 3,614,814 2,794,696 2,437,513 2,510,770 3,003,005 2,689,554 4,534,236 2,497,540 3,198,549 5,399,021 3,447,073 2,963,164 4,581,882 3,092,247 5,264,695 2,987,761 3,220,383 4,753,113 2,598,393 3,985,958 3,962,278 2,638,355

4,488,605 1,500,172 1,402,825 536,232 2,067,487 1,372,307 1,995,056 1,373,463 634,468 1,583,731 1,422,263 1,362,210 3,005,173 1,333,055 1,995,349 2,988,477 1,545,053 1,805,721 2,200,689 1,899,415 2,735,028 1,560,896 2,054,194 2,304,225 1,284,305 2,269,352 2,138,287 1,327,147

Executive Director Joint Managing Director - IMACID V P - Bangladesh Project Chief Technology Officer V P - Manufacturing Head - Channel Sales Head Corporate -HR & Admin Sr Manager - HR & Administration Chief Audit & Risk Officer GM - Sales & Marketing V P - Operational Excellence National Head-Key Accounts & Exports Chief Operating Officer(Fertilisers) Head - Medical Services Sr. Manager - Strategy & Business Development, Innovation Center Chief Financial Officer V P - New Projects (Chemicals) Controller Chief Operating Officer(Chemicals) Sr Manager - Technology V P - Manufacturing (Phosphatics) Chief Operating Officer (Food Additives) G M - Legal & Taxation Chief Operating Officer (Phosphatics) Head - Commercial FAB Chief Knowledge Officer Head - Audit & Risk Management GM - Strategy & Business Development

37

01.04.2004 04.12.1990 03.02.2003 06.05.1972 01.06.2004 01.06.2004 28.02.2002 01.06.2004 09.09.2002 17.07.2001 28.07.1978 01.06.2004 05.02.1996 29.01.2005 02.06.2004 01.11.2002 07.07.1972 02.05.1991 26.10.2001 01.06.2004 01.04.2002 03.02.2003 12.11.1986 01.04.2002 01.06.2004 08.03.2004 01.06.2004 01.09.1983

62 49 53 60 38 46 42 55 60 48 59 45 47 53 40 55 56 41 39 59 45 51 54 49 45 43 46 47

B.Tech (Chem) 27 B.Tech (Chem) IIT Kharagpur, 30 PGDBA - IIM A M.S.(Chem) 34 PhD (Technology) B.E., PGDRM B.Sc,PGDBM B.Com, Dip in Social Welfare M.Com,ACA B.Sc., PGDBM, ICWA, FCS B.E. (Elec) B.Com, CFA, PGDBM, GDMM PGDM- IIMA M.D. B.E. (Mech), PDGM, (IIM L) B. Com (Hons.) , AICWA, CS B.E. (Mech) M.S.(USA) ACA, M.B.F. (IIF) B.E. (Elec), M.B.A. M.Tech(Chem)-IIT Kharagpur B.Tech(Chem) B. Com, MBA B.Com, ACA B.Com (Hons.), LLB, FCA, AICWA, ACS B.Com, ACA B. Tech,MBA,Ph.D Chartered Accountant BA, MBA, ICWA 13 23 19 30 36 20 34 26 24 20 16 33 35 18 16 35 23 27 27 26 20 20 20 24

(1) ” Gross Remuneration” includes salary, allowances and commission received during the year, Company’s contribution to Provident Fund & Superannuation Fund and taxable value of perquisites wherever applicable. However provision for gratuity and leave encashment, payments made in respect of earlier years including those pursuant to settlements during the year have been excluded. (2) “ Net remuneration” is arrived at by deduction from the gross remuneration, Income tax, Profession tax, Company’s contribution to Provident Fund, Superannuation Fund and the monetary value of non-cash perquisites. (3) All the employees have adequate experience to discharge the responsibilities assigned to them. (4) Nature of Employment of the Managing Director and the Executive Director is contractual. (5) None of the above employee is a relative of any director of the Company. (6) * Employees who were in service only for part of the year. On behalf of the Board of Directors R. N. TATA Chairman

Mumbai, May 30, 2006

Statement pursuant to Section 212 of the Companies Act, 1956
Name of Subsidiary Company Financial Year end of the subsidiary Company Extent of holding by Tata Chemicals Limited in the subsidiary as on March 31, 2006 Profit/(loss) so far as it concerns the members of the Tata Chemicals Limited and not dealt with in the accounts of Tata Chemicals Limited for the year ended March 31, 2006 (Rs. in Crores) Homefield International Pvt. Ltd. Homefield U.K. Pvt. Ltd.* Brunner Mond Group Limited* * Indirect Subsidiaries March 31, 2006 December 31, 2005 December 31, 2005 100% 100% 100% 13.13 (3.64) 37.83 Profit/(loss) so far as it concerns the members of the Tata Chemicals Limited Company and dealt with in the accounts of Tata Chemicals Limited for the year ended March 31, 2006 (Rs. in Crores) Nil Nil Nil

17

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

MANAGEMENT DISCUSSION AND ANALYSIS
Business Overview The financial year 2005-06 was a watershed year for Tata Chemicals Limited (‘Tata Chemicals’, ‘TCL’ or ‘the company’), as TCL positioned itself as an international player. Since 2001, Tata Chemicals has been implementing its long term strategic plans structured around the theme of ‘Defend, Consolidate and Grow’. The first two aspects of the theme — defend and consolidate — were of critical importance in 2001, when the Government of India began aggressively opening up the Indian economy to international competition by sharply reducing import duties. With systematic and year-on-year tariff cuts, Sales Break-up Indian manufacturers became increasingly exposed to the threat of Others Soda Ash 5.5% imports. Despite being a market leader, TCL realised the urgent need to 19.8% gear up itself to meet the challenges of a changing business environment. Consequently, the Company embarked on a programme that focused Salt on continuously improving internal manufacturing and process 8.8% efficiencies. By adopting best practices and single-mindedly focusing on improving internal efficiencies, the Company not only consolidated its position in a more open and competitive market, but also built the foundation of developing into a globally competitive organisation. Urea Till 2004-05, the Company’s focus was on building all round capabilities 20% Cement to “Defend and Consolidate” its existing markets. While doing so, the 4% Company realised that such initiatives were necessary, but not sufficient to lay the foundation for systematically increasing the long term shareholder value. These had to be supplemented by organic and inorganic growth — in India as well as abroad. The financial year 2005-06 marks the beginning of a new ‘Growth’ path that focuses on harnessing TCL’s strong internal organisational capabilities to grow in a global market. The amalgamation of Hind Lever Chemicals Limited (HLCL) with the Company, in 2003-04, brought product and market synergies in the chemicals and fertiliser segments and since then, the Company has made the following two strategic international acquisitions in 2005-06: Indo Maroc Phosphore S.A. (IMACID) The Company laid its first global footprints by becoming an equal partner in a leading Moroccan company IMACID. IMACID was promoted in 1997 as a joint venture between Office Chérifien des Phosphates, Morocco, (OCP) a state-owned company incorporated in the Kingdom of Morocco and Chambal Fertilisers and Chemicals Ltd. This alliance not only secured the availability of a key raw material — phosphoric acid for the Haldia operations — but also opened up a new vista of opportunities for future growth by having a well established front-end phosphatic chemicals company in northern Africa. Brunner Mond Group Limited In the second half of 2005-06, TCL became the world’s third largest soda ash manufacturer by acquiring the UK-based soda ash company Brunner Mond Group Limited, its Kenyan subsidiary, Magadi Soda Company Limited and Netherlands subsidiary, Brunner Mond BV. With this, TCL now has soda ash manufacturing capacities in three continents with a significant presence in the international market. The total soda ash production capacity of the combined entity would now be close to 3 million tonnes per annum. Thus, from being a highly efficient and profitable Indian company operating in the inorganic chemicals and fertilisers space, Tata Chemicals has now transformed itself to becoming a truly international corporation — one that leverages the skills of culturally diverse employees to manufacture and sell its products in different parts of the globe. This transformation is not just an incident, but an outcome of deliberate strategic design. The Company would continue to explore growth opportunities on a platform of sustainable business practices and cost leadership. The thrust being: • developing new products and production processes that optimises resource utilisation and preserves the environment. • targeting global markets that have the best growth potential.

STPP 2.1%

Phosphatics Fertilisers 39.8%

18

STPP 4% Cement 4%

Others 5%

Other Income 3% Soda Ash 19 %

Urea 19 %

Vacuum Salt 8 %

Complex Fertilizers 39%

RUPEE EARNED

TCL has now embarked on a phased process of integrating the businesses that were acquried. The success of any post-acquisition integration exercise largely hinges on aligning and realising the synergies of the organisations. A focused programme called ‘Project Fusion’ has been launched to systematically carry out the Brunner Mond integration and is executed in a manner such that the focus on meeting business objectives is constantly maintained. Integration is being carried out by setting-up cross-functional teams to explore the potential synergies between the companies. In keeping with its commitment for developing sustainable products and production processes, TCL set up an Innovation Centre during 2005-06. This centre, which is at an incubation stage, focuses on cutting edge research on developing products and production techniques based on cleaner and greener technology. The aim is to build a more sustainable future product base. Business Environment TCL’s main business comprises inorganic chemicals and fertilsers. Except for soda ash, which is exported to South Asian, Middle Eastern and South East Asian markets, other products essentially catered to the domestic market. While individual product groups under each of these businesses have their own local market dynamics, in an increasingly open trade regime, the businesses as a whole are directly or indirectly affected by global demand. The global economy performed well in 2005-06 growing by over 3 per cent per annum. China and India, two of the fastest growing economies of their size, continued to grow impressively — registering a GDP growth of 9.8 per cent and 8.1 per cent respectively. Amongst the more matured markets, the US economy grew by 3.5 per cent and Japan by 2.7 per cent. This general upsurge in global demand augured well for TCL’s product portfolio. Favorable market conditions, coupled with focused improvements in internal efficiencies, led to improvements in the Company’s financial performance. Financial Highlights for the financial year 2005-06 : On a standalone basis • Net Sales increased by 16.9% from Rs.3,008 crores in 2004-05 to Rs.3,518 crores in 2005-06. • Operating profit (PBDIT) increased by 12.9 % from Rs.516 crores in 2004-05 to Rs.582 crores in 2005-06. • Profit after tax (PAT) increased by 3.7% from Rs.340.6 crores in 2004-05 to Rs.353 crores in 2005-06. • Basic Earning per share (EPS) grew from Rs.15.83 to Rs.16.41. The reduction in profitability was due to low margin on trading activities and increase in the cost of certain manufacturing items. While margins were lower, Return on Capital Employed (13.2%) and Return on Networth (16.3%) remained almost at the same level as that of the previous year. There is very limited risk in terms of financial leveraging and with a debt equity ratio of 0.67 and a net cash flow from operations of Rs.246.30 crores in 2005-06, the Company is well positioned to make further investments and grow profitably. On • • • a consolidated basis Net Sales of Rs.4,029 crores Net Profits of Rs.428 crores Basic earnings per share of Rs.19.91

Financial 4% Taxes 8% Overheads 5%

Dividend 4%

Retention 5%

Segment-wise Performance The Company operates in two segments viz. inorganic chemicals and fertilisers. While the chemicals business contributed 40%, the fertiliser business accounted for 60%. TCL is the market leader in Soda Ash and branded salt, in India. I. Chemicals Business TCL’s primary products in this business are soda ash, salt, STPP and cement. Most of the Company’s inorganic chemical products are produced at its facility in Mithapur-Gujarat. Established in 1939, this is India’s largest and most integrated inorganic chemicals complex. Some of the phosphoric based compounds are manufactured at Haldia. The Mithapur plant is backed by closely located salt pans and limestone quarries.

Distribution 9% Employee 3%
RUPEE DEPLOYED

Materials 62 %

19

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited Soda Ash & STPP As of today, the Mithapur plant has an installed capacity of 875,000 tonnes of soda ash and 50,000 tonnes of sodium bi-carbonate. The plant also produces a slew of other chemicals like caustic soda and hydrochloric acid, which basically complement and complete the entire chemical integration loop.
TCL’s Domestic Soda Ash Sales
650 5.9 610 5.6 5.6 5.4 636.3 6.0

Having begun initiatives through Project ‘Manthan’ in 2001, the Company continues to actively stress on further improving efficiencies of the Mithapur plant. A second version of the project, called Project ‘Unnati’, has been launched to further analyse the various processes and make them even more cost effective. As stated earlier, the Company acquired Brunner Mond Group Limited and became the third largest soda ash player in the world. With this acquisition, there is a structural shift in the way TCL has positioned its soda ash business. Markets During 2005-06, revenue from the chemicals business increased by 20.7% from Rs.1135 crores in 2004-05 to Rs. 1421 crores in 2005-06. Soda ash accounted for 50% of the inorganic chemical sales and 19% of the total sales. Sales volume of soda ash grew by 3.4% over the previous year. In 2005-06, driven by higher rural spends in the lower end and progression of customers to better quality products in urban areas, the fabric wash industry witnessed a higher growth both in the lower and in the higher end of the market. In fabric wash, TCL supplies soda ash and STPP, which cater to two extreme ends of the market in terms of pricing. Soda ash is also supplied to the glass industry, which experienced 12% growth in construction in 2005-06, as well as 7% growth in the automobile sector coming on the back of a 12 per cent growth in 2004-05. The boom in construction also contributed to the revenues of the Company’s cement business. In the 1.8 million MT Indian soda ash market (sales), TCL maintained its leadership position with a share of 32.8%. Domestic sales of soda ash increased by 23% from Rs.516 crores in 2004-05 to Rs.636 crores in 2005-06. Globally, the soda ash market continued to witness an excess demand condition. Thus prices remained at high levels and TCL continued to build its presence in international markets with strategic exports to SAARC countries, the Middle East and South East Asia. In the fabric wash space, TCL also produces STPP, which became a part of the Company’s portfolio consequent to the amalgamation of Hindustan Lever Chemicals with the Company. STPP accounted for 5% of the inorganic chemical sales and 2% of the total sales. STPP is targeted at the higher end of the fabric wash market and acts as a builder in washing powder. Pressure on margins due to Chinese imports led to lower market growth, during the financial year 2005-06.

5.5

Rs. Crores

530 5.1 498.2 490.7 490 466.8

516.1 5.0

450

2001-02 2002-03 2003-04 2004-05 2005-06

4.5

Amount in Rs. Crore

Quantity in Lakh MT

Lakh MT
2.0 80.1 76.32 1.5 59.6 49.4 1.3 1.1 1.0 1.5

570

TCL’s Soda Ash Exports
90 80 70 60

TCL registered better sales of sodium bi-carbonate —driven mainly by demand from pharmaceutical companies, food processors, dye manufacturers and the sugar industry. Outlook While the domestic soda ash market today still grows by around 3 per cent per annum, with the expected rise in construction activity and increase in per capita household incomes in India, the Company expects the market to grow by over 5 per cent in the next few years.
Lakh MT

Rs. Crores

50 40 30 20 10 0 17.2

1.0

0.5

0.3 0.0

In soda ash, customised product quality, cost, delivery and service are the key factors that determine success. Glass and detergent manufacturers require soda ash with different bulk density and particle size distribution, and individual requirements of glass customers also vary with their processes. TCL is focused on meeting these challenges by improving production efficiency through cost control measures. The existing supply chain management is also being strengthened. While at local level, the Company shall continue to leverage cost effectiveness arising from captive availability of chemical grade limestone, solar salt and efficient energy and water management, at global level it will optimise resource utilisation across plants in three different geographies. From being an India-centric player making inroads into global markets through exports, TCL now is a significant and influential company in the global soda ash market. Through multi-location

2001-02 2002-03 2003-04 2004-05 2005-06

Amount in Rs. Crore

Quantity in Lakh MT

20

production facilities, Tata Chemicals is ideally placed to offer an optimal value proposition to major global customers. The Company is positioning itself as a supplier to growth markets that fill the structural and geographical gap between the two major players in the soda ash market, namely USA and China. Cement TCL’s cement plant was originally envisaged as a forward integration for treating waste limestone. Today, this is a growth oriented business. The cement business is focused on the regional market of Gujarat and its ‘Tata Shudh’ cement brand is well accepted there.
TCL’s Cement Sales
125 113.2 104.0 100 4.7 4.5 4.9 4 101.3 5 142.5

6

The Company’s cement sales increased by 26% from Rs.113 crores in 2004-05 to Rs. 143 crores in 2005-06. Cement accounted for 10% of the inorganic chemical sales and 4% of total sales. TCL’s cement business remains a unique proposition that continues to harness improvements in environment management to grow its output. The Company has invested in six filters for solid waste management, and has spent over Rs.340 crores in its Effluent Solid Filtration (ESF) processes to preserve the environment. These investments will sustain the growth in capacity and develop the cement business while addressing the needs of environmental sustainability.
Lakh MT
7 6 5 4 3 2 1

Rs. Crores

75

4.3

Outlook With the continuing emphasis on development of infrastructure and the boom in construction industry, the current momentum in the cement industry would continue. Salt During the financial year 2005-06, sales of all varieties of salt grew by 17% from Rs. 274 crores to Rs. 321 crores. Salt accounted for 23% of the inorganic chemicals sales and 9% of the total sales. Markets A pioneer in the branded edible salt segment, Tata Salt continues to be the market leader with a share of 40.1%. Branded salt accounts for a little over a quarter of the 5.4 million tonne edible salt market in India. During the year under review, the iodized edible salt market in India de-grew by 7 per cent to 4.7 million tons per annum. However, within this category, the share of national-level edible salt brands grew by 3.6 per cent. Salt has low entry barriers and hence there is competition from a plethora of brands at both the local and regional levels. Further, entities in the fast moving consumer goods (FMCG) sector have staked for a place in the national branded segment through competitive products as well as aggressive sales and marketing strategies. These relatively recent brands have limited brand equity but have been generating sales through aggressive pricing at high levels of discount. In addition, salt is a high-volume, low-value product; and logistics planning for such a product is a challenging task. The financial year witnessed challenges like hike in rail freight rates and insufficient availability of railway wagon capacity.

3 50.5 50 2.2 25 2

1

0

2001-02 2002-03 2003-04 2004-05 2005-06

0

Amount in Rs. Crore

Quantity in Lakh MT

TCL’s Salt Sales
300 274.3 250 220.7 200 227.3

321.5

5.90 5.0

Notwithstanding these challenges, TCL has done well during the year. Sales realisation and volumes of Tata Salt grew by 17% and 22% respectively in 2005-06. Key sales initiatives like Weak Market Development, Project Coverage and Operation Reach were undertaken during the year to increase the width and depth of the sales distribution network. Use of alternative transport routes (primarily by sea) helped in optimising the product supply chain. The Company has developed a well-defined brand architecture model, which positions the existing products (Tata Salt, Tata Fine Table Salt, Tata Samunder Crystal Salt, Tata Samunder Cooking Soda). Several marketing activities like redefining the consumer perception of ‘Tata Salt’ through a new commercial campaign “Chutki Bhar Vishwas” and trade linked localised promotional activity were undertaken by the Company. Tata Samunder Crystal Salt (which meets a specific consumer requirement within the salt category in South India) has achieved sales growth of 42 per cent. Tata Samunder Cooking Soda (India’s first refined food grade branded cooking soda) is gaining consumer acceptance in Western India. In the year 2005-06, Tata Salt was nominated as the ‘Most Trusted Food Brand’ in the country for the third consecutive year in an annual survey conducted by Economic Times and AC Nielsen. Within the overall FMCG category, it retained the fifth position for the second consecutive year.
Lakh MT

Rs. Crores

162 150 3.2 100 4.2

4.5

50

0

2001-02 2002-03 2003-04 2004-05 2005-06

0

Amount in Rs. Crore

Quantity in Lakh MT

21

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited ‘Tata Salt’ has also made a foray into the international market. It has an established presence in the international branded edible salt category in Singapore, UAE, Oman, Qatar and Bahrain through launch of “Topp Salt” in these geographies. The brand is backed by superior product quality and attractive packaging. Being a food product, extreme care is taken over the hygiene and infrastructure used in the production of Tata Salt. Both the packaging process as well as the packing material are carefully chosen to ensure a quality product for the consumer. As a result of these initiatives, the Mithapur production site is both ISO 9001:2000 and Hazard Analysis & Critical Control Parameters - HACCP (specifically related to food sector) compliant. Each individual packing centre is also in the process of applying for HACCP certification. Tata Salt continues to remain committed to ‘Desh Ko Arpan Programme’ (DKAP) in association with NanhiKali Foundation, which enables over a thousand children to avail school education. In addition, during 2005-06, it facilitated a joint programme for sports and academic coaching with Mumbai Municipal Corporation in some of the schools in Mumbai. This activity enabled the under-privileged children to improve their performance. Outlook In keeping with the philosophy of continuous consumer centric innovation, which is the hallmark of any true FMCG organisation, several developmental activities have been planned for the fiscal 2006-07. A comprehensive project to develop customised sales and marketing strategy has been launched with the twin objectives of growing market share and increasing realisations. A timeline has been developed for a series of new product development initiatives both within and outside the salt category. The exports market shall be expanded to cover entire Middle East, parts of South East Asia and Africa. II. Fertiliser Business TCL has a wide-product portfolio comprising nitrogenous fertiliser (urea), phosphatic fertiliser (DAP and complexes) and potassic fertiliser (SSP). Urea accounted for 33% of the fertiliser sales and 20% of total sales. Today, TCL has presence across all three key agro-nutrients: namely Nitrogen (N), Phosphorous (P) and Potassium (K). The Company’s manufacturing facility at Babrala, Uttar Pradesh (the country’s most energy efficient fertiliser complex) produces urea and ammonia. The Haldia plant produces bulk chemicals and phosphatic fertilisers.
9.5 9.5 9.0 800 8.6 700 637.3 600 617.6 660.4 8.6 722.1 8.5 819.7

TCL’s Urea Sales
9.5 900

During 2005-06, the Fertiliser and Phosphate businesses of TCL were merged into a single Fertiliser Strategic Business Unit. This will help in realising greater synergies from the operations at the two plant locations as well as servicing the Company’s customers, better. The year 2005-06 was also the year in which TCL extended its footprints outside the country by becoming an equal partner in a leading Moroccan Company, IMACID. The strategic intent of this acquisition was to reap maximum benefits from the phosphate value chain. The Joint Venture provides the Company with a consistent and regular source for phosphoric acid — a key raw material in the phosphatic fertiliser business. It also opens up opportunities to explore the North African and Middle Eastern geographies for fertiliser manufacturing. Markets Globally, 2005-06 was a good year for fertilisers. Demand-supply conditions remained stable and prices were firm. While global supply-demand conditions have an indirect effect on Indian markets through controlled imports, most of the Indian fertiliser market is still characterised by Government controls on prices. So, fortunes of domestic fertiliser companies depend mainly on the Indian market and pricing conditions. On the positive front, there has been a revival in the agriculture sector. In 2005-06, agriculture and allied sectors grew by 2.3 per cent — a bit over its long term trend growth rate. Food-grain

Rs. Crores

500 7.5 400 300 200 100 0 5.5 6.5

2001-02 2002-03 2003-04 2004-05 2005-06

Amount in Rs. Crore

Quantity in Lakh MT

22

Lakh MT

production increased by 4.7 MT to 209.3 MT in 2005-06. There was also a new found impetus to agriculture in the Union Budget 2006, through various incentive schemes and a conscious move to increase agriculture credit. Total domestic sales of Urea in India are around 220 lakh MT. TCL sold 9.53 lakh tonnes accounting for 4% of the country’s market. In the fertiliser business, Urea accounted for 33% of fertiliser sales and 20% of the total sales. In the core command area TCL’s market share was14.7% lower off-take of additional quantities by the Government impacted volumes. The financial year 2005-06 has truly been a year of operational excellence at Babrala. 9,60,113 tonnes of urea was produced. The plant set a new record in energy efficiency in the country by registering an energy consumption ratio of 5.058 Gcal/MT. It also set a new benchmark by recording uninterrupted production at the ammonia plant for 253 days and simultaneous production at both its urea units for an uninterrupted 167 days. It also set a new record of 10.6 million accident-free man hours and 1,194 accident free days. Awards - Babrala Plant During the year, the plant received several awards and recognitions. Among them are: • • • • • • • National Energy Conservation Award, 2005: First prize. Instituted by the Bureau of Energy Efficiency, Ministry of Power, Government of India. The IMC Ramkrishna Bajaj National Quality Award, 2005 in the manufacturing category. Award for Excellence in Natural Gas Conservation 2005: First prize in the fertiliser sector. Instituted by Gas Authority of India Limited. BSC 5 Star certification in Health and Safety Management System for the third time in a row; and BSC 5 Star in environment sustainability twice in a row. Best plant performance award 2005 from Fertiliser Association of India. Excellence Award in SHE Management from the Indian Chemicals Manufactures Association (ICMA). Golden Peacock Environment Management Award for 2005 for its environment performance.

DAP & NPK-HALDIA During the financial year 2005-06, DAP & NPK registered a production of 686,643 tonnes, 32% higher than the previous year. During the year under review, the Company was successful in improving the underlying profitability of its Haldia operations and in effecting considerable cost savings. The SSP plant in Haldia produced 140,236 MT, which was 14.6 per cent higher than the production in 2004-05. DAP, NPK, complex fertilisers and others accounted for 67% of the fertilisers sales and 40% of the total sales. While agriculture growth has been positive in 2005-06, it is a fact that farm output oscillates regularly between positive and negative growth. Moreover, India still has low productivity in agriculture. The right mix of NPK fertilisers across specific geographies will go a long way in improving this productivity. Thus, with the right kind of policy initiatives, there is considerable scope for growth of phosphatic and potassic fertilisers. TCL continued to do well in these fertiliser groups and maintained its market leadership in its core geographies of West Bengal, Bihar and Jharkand. There was a 40 per cent growth in overall sales of NPK fertilisers. These factors contributed to TCL’s fertiliser sales increasing by 17% from Rs.1866 crores in 2004-05 to Rs.2,181 crores in 2005-06. Outlook While TCL continues to leverage its production efficiencies and market reach, much of the future market growth would be dependent on the policies of the Government of India. The Government has a difficult balancing act in providing farmers with cheap fertilisers and also reducing their own subsidy burden. Nevertheless, the Company believes that the Government is taking steps in the right direction in respect of the fertiliser subsidy. The move from a pricing scheme based on individual

23

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited plants to one based on group of plants has corrected the process to a great degree, but is still not optimal. More reforms are needed for the future growth of this industry. Tata Kisan Sansar (TKS) TCL has further extended its presence in rural India through the Tata Kisan Sansar (TKS) initiative. While this had initially been set up as a one-stop-shop for dealing agricultural inputs like fertilisers and pesticides, the scope has increased immensely over the years. The TKS initiative has progressed in a manner which creates value for farmers by improving farm productivity through better agronomical practices, facilitating farm credit and providing agriculture inputs from a single source. The TKS network has spread considerably since its inception, and in 2004-05 extended to the eastern geographies of West Bengal, Bihar and Jharkhand. The Company has 487 centres which offer 204 products. This network is further supported by effective sourcing partners and efficient supply chain management. The Company has used this platform to inform, educate and develop farmers. This has been done through interactive sessions of over 3000 TKS Manchs, 300 crop seminars, 1,300 village meetings, 24,000 samples of soil and water testing and other similar initiatives. In addition, 37,000 acres of contract farming was facilitated through the TKS. Having made this foray into rural India, TCL sees this as a major platform to provide end-to-end agricultural and agronomic solutions which can be extended to a complete rural retailing initiative. Risk Management TCL pays utmost importance to risk management in all its business dealings. The Company has been following an enterprise-wide approach to risk management which lays emphasis on identifying and managing key operational and strategic risks. Through this approach, it strives to identify opportunities that enhance organizational value while managing or mitigating risks that can adversely impact the Company’s future performance. Within the organisation, the focus on risk management is entrenched at all levels of decision making — where each manager contributes to the risk management process and risks are ‘owned’ by concerned line and business managers. To ensure consistency of the risk management process across the organisation, TCL has also prepared and adopted a well-defined risk management charter based on the international standard AS/NZS 4360:1999. The risk management framework entails regular review of risk status and risk exposure by designated senior management committees. Internal Control Systems TCL has a internal audit and control system. The Company has an Internal Audit Department staffed with qualified and experienced people. The Internal Audits are conducted based on a risk based audit plan which is approved by the Audit Committee at the beginning of the year. Besides this, special audits are also carried out from time to time. In the year under review, the Company initiated a focussed programme to evaluate the design effectiveness of existing management controls across all its locations. Under this initiative, the Company also undertook steps to implement new control measures in line with global best-inclass practices. Control Effectiveness Index (CEI), a tool is being used for evaluating the effectiveness of controls in process/function. Human Resources Over the last few years, a key focus area of the Company has been on developing functional competencies among human resources. Key organisation initiatives such as “Unnati” and “Manthan” have gone a long-way in infusing new skills and fostering a climate of learning and collaboration. A structured communication process inside the organisation is critical to enhancing employee productivity and satisfaction levels. TCL systematically promotes skill sharing through cross-functional and cross-location movements of employees across the organisation. Employee perception on communication is also tracked closely and their feedback is used to further improve this process.

24

In the year under review, TCL launched a Voluntary Retirement Scheme (VRS) — the second in last four years — for its workforce at Mithapur. 184 workers or 12 per cent of the total eligible workforce availed the VRS. As of March 31,2006, TCL had 3,306 employees on its rolls. The Company continues to enjoy excellent Industrial Relations in all its plants. The acquisition of Brunner Mond Group Limited would add around 1000 employees. Community Development TCL, as with all other Tata Group companies, is actively committed to developing communities and takes pride in the commitment shown by the employees. Community development is conducted through a systematic process which includes a separate, dedicated department, established trusts and societies and programs such as ‘Desh Ko Arpan’. Senior leaders and employees are activily involved in cummunity develpment activities. During the year under review, the Company organised multiple volunteer programmes including medical camps such as Lifeline Express (a special train that visits sites providing medical help), eye camps, inoculation camps, capacity building training, impact assessment and education. All of these programmes were voluntarily serviced by the employees, with great enthusiasm. During the financial year 2005-06, TCL employees rendered in over 12,618 hours of voluntary service. The quality of the Corporate Social activities have been recognised at the district, state and the national level, and the Tata Chemicals Society for Rural Development (TCSRD) has been recognized as a lead NGO by various state and national bodies. Cautionary Statement Statements in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include a downtrend in the agriculture, fabric wash and glass industry— global or domestic or both, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs.

25

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

CORPORATE GOVERNANCE REPORT
1. Company’s Philosophy on the Code of Governance

Introduction Corporate Governance is about promoting corporate fairness, transparency, accountability and integrity of the management. It also aims to align as nearly as possible the interests of individuals, corporations and society and thereby enhancing the stakeholders’ value. Best results are achieved when the companies begin to treat the Corporate Governance system not as a mere structure but as a way of corporate life. Good corporate governance practices have always been an integral part of your Company’s Philosophy, which is further strengthened by adoption of the Tata Business Excellence Model and the Tata Code of Conduct. In compliance with the disclosure requirements of Clause 49 of the Listing Agreement executed with the stock exchanges, the details are set out below: 2. Board of Directors

The Board of Directors provide strategic direction and thrust to the operations of the Company, thereby enhancing the value of the stakeholders. Composition The Board has an optimum combination of Executive and Non-Executive Directors, and is in conformity with Clause 49 of the listing agreement entered into with the stock exchanges, in which the Company’s Ordinary Shares are listed. The composition of the Board as on March 31, 2006 was as under: 2 Promoter, Non-Executive Directors (Including the Chairman) 2 Executive Directors (Including the Managing Director) 5 Independent, Non-Executive Directors 1 Non Independent, Non Executive Director None of the Directors on the Board is a Member of more than 10 Committees and Chairman of more than 5 Committees (as per Clause 49(I)(C)(ii)) across all the companies in which he is a Director. All the Directors have made the requisite disclosures regarding Committee positions held by them in other companies. Meetings held The Board met eight times on the following dates during the financial year 2005-2006: May 13, 2005 July 21, 2005 October 25, 2005 January 31, 2006 Board Procedure The annual calendar of Board Meetings is agreed upon at the beginning of the year. The Agenda is circulated well in advance to the Board members. The items in the Agenda are backed by comprehensive background information to enable the Board to take appropriate decisions. In addition to the information required under Annexure IA to Clause 49 of the Listing Agreement, the Board is also kept informed of major events/items and approvals taken wherever necessary. The Managing Director, at the Board Meetings, keeps the Board apprised of the overall performance of the Company. May 31, 2005 September 16, 2005 December 13, 2005 March 28, 2006

26

Code of Conduct The Company has adopted the Tata Code of Conduct for all the employees of the Company including the Wholetime Directors. During the year, the Board had approved a Code of Conduct for Non-Executive Directors. The Code of Conduct for the employees as well as Non-Executive Directors are posted on the Company’s website. Further, all the Board members and senior management personnel (as per Clause 49 of the Listing Agreement) have affirmed compliance with the respective Code of Conduct. A declaration to this effect signed by the Managing Director (CEO) forms part of this report. Category and Attendance of Directors The names and categories of the Directors on the Board, their attendance at Board Meetings held during the financial year 2005-2006 and at the last Annual General Meeting (AGM), as also the number of Directorships and Committee positions held by them in other public limited companies as on March 31, 2006 are as follows: Name Category No. of Whether Board attended Meetings AGM attended held on during the July 21, financial 2005 year 2005-2006 5 8 6 No Yes Yes Number of Directorships in other public limited companies* Chairman of the Board 11 1 3 No. of Committee positions held in other public limited companies* Member

Board Chairman Member of the Committee 2 10 4 1

Mr. R. N. Tata (Chairman) Promoter, Non-Executive Mr. R. Gopalakrishnan (Vice-Chairman) Promoter, Non-Executive

3 -

Mr. Keshub Mahindra Independent, (Ceased to be a Director Non-Executive w.e.f. March 24, 2006) Mr. D. M. Ghia Mr. Nusli N. Wadia Mr. R. C. Khanna Dr. D. V. Kapur Mr. P. R. Menon (Managing Director) Dr. T. Mukherjee -do-do-do-doExecutive Non Independent, Non-Executive

7 5 8 8 8 7 8 6

Yes Yes Yes Yes Yes Yes Yes Yes

2 5 2 2 1

1 4 3 4 5 4 1 7

1 3 -

3 1 1 1 1

Mr.Homi R. Khusrokhan Executive (Executive Director) Dr. Vijay L. Kelkar Independent, Non-Executive

* Note: Excludes Directorships in Private Limited Companies, Foreign companies and Government Bodies. Only Audit Committee and Shareholders’/Investors’ Grievance Committee have been considered for the Committee positions.

27

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Shareholdings of Non-executive directors as on March 31, 2006 are as under: Name Mr. R. N. Tata (Chairman) Mr. R. Gopalakrishnan(Vice-Chairman) Mr. R. C. Khanna 3. Audit Committee No. of Ordinary shares held 28695 15000 8000 % of Paid-up Capital 0.013 0.007 0.004

Composition as at March 31, 2006 Mr. R. C. Khanna Mr. R. Gopalakrishnan Mr. D. M. Ghia — Chairman — Member — Member

Dr. Vijay L. Kelkar (w.e.f. April 1, 2005) — Member Mr. R. C. Khanna is a qualified Senior Chartered Accountant. Other members of the Committee have wide exposure in the relevant areas. The composition of the Committee is in conformity with Clause 49 (II) (A) of the Listing Agreement. Terms of Reference The terms of reference of the Audit Committee, broadly are as under: 1. Overseeing the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. Recommending to the Board, the appointment, re-appointment of the statutory auditor, fixation of audit fees and for other services. Reviewing, with the Management, the quarterly and annual financial statements before submission to the Board for approval. Reviewing the adequacy of internal control systems and internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. Discussing with internal auditors any significant findings and follow up there on. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. Discussion with the statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. To look into the reasons, if any, for substantial defaults in the payments to the depositors, debenture holders, shareholders (in case of non payment of declared dividend) and creditors. In addition to the above, all items listed in Clause 49 (II)(D) of the Listing Agreement.

2.

3.

4.

5. 6.

7.

8.

9.

28

Meetings held: During the financial year 2005-2006, seven Audit Committee meetings were held on the following dates: May 27, 2005 July 25, 2005 October 27, 2005 February 1, 2006 Attendance: Name of Director Mr. R. C. Khanna Mr. R. Gopalakrishnan Mr. D. M. Ghia Dr. Vijay L. Kelkar (Appointed w.e.f April 1, 2005) No. of Meetings Attended 7 7 7 3 July 20, 2005 October 24, 2005 January 30, 2006

The Managing Director, the Chief Financial Officer and the Chief Internal Auditor are invited for all the meetings. General Manager - Finance & Accounts, Chief Operating Officers and Head – Human Resources are invited for the meetings as and when required. Representatives of the Statutory Auditors are also present at all the meetings. Mr. B. Renganathan, Company Secretary acts as the Secretary to the Committee. All the members of the Audit Committee were present at the last Annual General Meeting held on July 21, 2005. 4. Remuneration Committee

Composition as at March 31, 2006 Mr. R. N. Tata Mr. R. Gopalakrishnan Member Member

Consequent to the resignation of Mr. Keshub Mahindra from the Board of Directors of the Company, with effect from March 24, 2006, he had also ceased to be the Chairman and member of the Remuneration Committee. Till cessation Mr. Keshub Mahindra was the Chairman of the Remuneration Committee. The Committee was reconstituted on May 15, 2006, with the induction of Mr. Nusli N Wadia (Independent Director) as the Chairman and member of the Remuneration Committee. Terms of Reference: • • To appraise the performance of Managing and Executive Directors; and To determine and recommend to the Board, compensation payable to Managing and Executive Director.

Meeting & Attendance One meeting was held during the financial year 2005-2006 i.e. on May 31,2005 and all the members attended the same. Mr. Keshub Mahindra, the then Chairman of the Remuneration Committee was present at the last Annual General Meeting.

29

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Remuneration Policy: Non-Executive Directors The remuneration of the Non-Executive Directors (NEDs) of the Company is decided by the Board of Directors. The NEDs are paid remuneration by way of Commission and Sitting Fees. In terms of the approval of the members at the 64th Annual General Meeting of the Company held on December 15, 2003, commission is paid at a rate not exceeding one per cent of the net profits of the Company calculated in accordance with the provisions of Sections 198, 349 and 350 of the Companies Act, 1956. The distribution of the commission amongst the NEDs is determined by the Board and is broadly based on attendance, contribution at the Board Meetings and various Committee Meetings as well as time spent on operational matters other than at the aforesaid meetings. The Company did not have any pecuniary relationship or transactions with the Non Executive Directors during the financial year 2005-2006. Sitting fees The Company pays Rs. 10,000/- per meeting towards sitting fees to Non-Executive directors for attending the meetings of the Board, Audit Committee and Committee of Directors. An amount of Rs. 5000/- per meeting is being paid for attending the meetings of Shareholders Investor Grievance Committee and Remuneration Committee. Managing Director and Executive Director The Company pays remuneration to its Managing Director and Executive Director by way of salary, perquisites and allowances (a fixed component) and commission (a variable component). Salary is paid within the overall limits approved by the members of the Company. The Board, on the recommendations of the Remuneration Committee, approves the annual increments (effective 1st April each year). Within the prescribed ceiling, the perquisite package is recommended by the Remuneration Committee to the Board. Commission is calculated with reference to the net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year based on the recommendations of the Remuneration Committee, subject to the overall ceiling as stipulated in Sections 198 and 309 of the Companies Act, 1956. Service Contracts, Severance Fees and Notice Period with Managing Director and Executive Director: Managing Director: Period of contract Termination of the contract : : 5 years from October 4, 2005 By either party giving the other six months notice or the Company paying six months salary in lieu thereof. Nil

Severance fees Executive Director: Period of contract Termination of the contract

:

: :

3 years from April 1, 2004 By either party giving the other six months notice or the Company paying six months salary in lieu thereof. Nil

Severance Fees

:

30

Details of remuneration paid to the Directors during the financial year 2005-2006 Executive Directors: Director Salary Perquisites and Allowances# 39,86,617/34,21,188/Commission (for the financial year 2004-2005) paid in 2005-2006 65,00,000/40,00,000/(Rupees)

Mr. P. R. Menon (Managing Director) Mr. Homi R. Khusrokhan (Executive Director)

28,80,000/24,00,000/-

# Does not include contribution to Gratuity Fund, as separate figures are not available for the Managing Director and Executive Director. Non-Executive Directors: Director Mr. R.N. Tata Mr. R. Gopalakrishnan Mr. Keshub Mahindra (Ceased to be a Director w.e.f March 24, 2006) Mr. D.M. Ghia Mr. Nusli N. Wadia Mr. R.C. Khanna Dr. D.V. Kapur Dr. T. Mukherjee Dr. Vijay L. Kelkar Mr. U. M. Rao (ICICI Bank Nominee Nomination withdrawn w.e.f. November 4, 2004) Sitting Fees 1,05,000 2,05,000 65,000 Commission (for the financial year 2004-2005) paid in 2005-2006 16,80,000 16,70,000 3,65,000

1,55,000 80,000 1,50,000 80,000 70,000 90,000 —

6,95,000 6,60,000 10,80,000 3,45,000 4,85,000 1,30,000 3,90,000

Commission payable to the directors for the financial year 2005-06 Non Executive Directors Managing Director Executive Director : : : Rs. 80,00,000 Rs. 80,00,000 Rs. 50,00,000

As per the practice, commission to the Directors is paid after the accounts are adopted by the members at the Annual General Meeting. 5. Shareholders’/Investors’ Grievance Committee Composition as at March 31, 2006 Mr. D. M. Ghia Mr. Prasad R. Menon (Managing Director) Chairman Member

31

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Terms of Reference: To look into redressal of investors’ complaints and requests such as transfer of shares/debentures, non-receipt of dividend, annual report, etc. Meetings held and attendance: During the financial year 2005-2006, three meetings were held on May 27, 2005, October 24, 2005 and February 01, 2006. All the members attended the aforesaid meetings. Compliance Officer Mr. B. Renganathan Company Secretary Tata Chemicals Limited Bombay House, 24 Homi Mody Street, Fort, Mumbai 400 001 Based on the report received from the Company’s Registrar, the number of complaints received from the shareholders comprises of correspondence identified as complaints i.e. letter received through statutory/regulatory bodies and letter pertaining to fraudulent encashment. Status of Investor Complaints as on March 31, 2006 and reported under Clause 41 of the Listing Agreement are as under: Complaints as on April 1, 2005 Received during the year Resolved during the year Pending as on March 31, 2006 Investor Satisfaction Survey A questionnaire to determine the satisfaction level of the investors and to explore avenues for improvement was sent to all the members of the Company, along with Annual Report for the year 2004-05. Responses received from the members were indicative of “Satisfied Investors” and the initiative taken by the Company in seeking such feedback was highly appreciated by the members. 6. Committee of Directors : : : : 3 37 37 3

This Committee (non-mandatory) was constituted in the year 1998. Composition as at March 31, 2006 Mr. R. N. Tata Mr. R. Gopalakrishnan Mr. Nusli N. Wadia Mr. Prasad R. Menon (Managing Director) Terms of Reference: • • • To periodically review the ongoing capital expenditure and the investments made by the Company To examine new proposals for investment from the stand point of their business and financial impact To formulate the future strategic direction and business development of the Company. Chairman Member Member Member

32

Meetings held: May 10, 2005 October 25, 2005 March 20, 2006 Attendance: Name of Director Mr. R. N. Tata Mr. R. Gopalakrishnan Mr. Nusli N. Wadia Mr. Prasad R. Menon 7.

September 06, 2005 February 22, 2006

No. of Meetings Attended 5 5 3 5

Details on General Body Meetings:

Location, date and time of General Meetings held during the last 3 years: Annual General Meeting: Year 2002-03 Location Y. B. Chavan Auditorium, General J Bhosale Marg, Near Mantralaya, Mumbai 400 021. Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersery Marg, Mumbai 400 020 Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersery Marg, Mumbai 400 020 Date December 15, 2003 Day Monday Time 3.30 p.m. No. of Special Resolutions 2

2003-04

September 20, 2004

Monday

3.30 p.m.

1

2004-05

July 21, 2005

Thursday

3.00p.m.

-

Extra Ordinary General Meeting (EGM): Type **CCM Location Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersery Marg, Mumbai 400 020 Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersery Marg, Mumbai 400 020 Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersery Marg, Mumbai 400 020 Date July 25, 2003 Day Friday Time 3.30 p.m. No. of Special Resolutions -

EGM

July 25, 2003

Friday

4.30 p.m.

-

EGM

January 18, 2005

Tuesday

3.30p.m.

2

** Court Convened Meeting None of the resolutions was required to be put through postal ballot.

33

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

8.

Disclosures

Related Party Transactions During the financial year 2005-2006 there were no materially significant transactions entered into between the Company and its promoters, directors or the management, subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Declarations have been received from the senior management personnel to this effect. Statutory Compliance, Penalties and Strictures The Company has complied with the requirements of the Stock Exchanges/SEBI/ and Statutory Authority on all matters related to capital markets during the last three years. No penalties or strictures have been imposed on the Company by these authorities. Non-Mandatory Requirements: The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement relating to Corporate Governance. The status of compliance with Non-mandatory requirements is as under: • The Company has adopted the guidelines for the composition of the Board of directors, which provide for the tenure and retirement age for the Non-Executive directors. • The Company has setup a remuneration Committee pursuant to Clause 49 of the Listing Agreement. The broad terms of reference of the Committee are to appraise the performance of Managing/ Executive Directors, determine and recommend to the Board, compensation payable to Managing/ Executive Directors. • The Company posts its results on its website at www.tatachemicals.com and this information is also available at www.sebiedifar.nic.in. A half yearly declaration of financial performance including summary of significant events in the last six-months has not been sent to each household of shareholders, as the quarterly results are published in widely circulated English newspaper. • During the financial year 2005-06 there is no audit qualification in the Company’s financial statements. The Company continues to adopt best practices to ensure the regime of unqualified financial statements. 9. Means of Communication: • The quarterly results are published in the following Newspapers: Indian Express (English) Loksatta (Marathi) Sandesh (Gujrati) • The financial results are displayed on www.tatachemicals.com • Management Discussion and Analysis forms part of the Annual Report. • The Company also regularly posts information relating to its financial results and shareholding pattern on Electronic Data Interpretation, Filing and Retrieval System (EDIFAR) at www.sebiedifar.nic.in • The official news releases, presentation made to the Shareholders at the Annual General Meeting and the presentation made to analysts are posted on the Company’s website.

10. General Shareholder Information Annual General Meeting Date and Time : July 17, 2006 at 3.30 p.m. Venue : Birla Matushri Sabhagar, 19 Sir Vithaldas Thackersey Marg, Mumbai - 400 020 Financial year : April to March Book Closure Date : July 1, 2006 to July 17, 2006 (both days inclusive - for the purpose of AGM and Dividend) Dividend payment date : On or after July 18,2006

34

Listing on Stock Exchanges : The Company’s Ordinary Shares are listed on the following Stock Exchanges: (1) The Bombay Stock Exchange Limited (BSE), Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001. (2) The National Stock Exchange of India Limited (NSE), Exchange Plaza, Bandra – Kurla Complex, Bandra (E), Mumbai 400 051 (3) The Calcutta Stock Exchange Association Limited, 7, Lyons Range, Kolkata 700 001 [The application for delisting of shares is still pending with the Calcutta Stock Exchange and the Company is vigorously following up matter.] The Company has paid the Annual Listing fees, for the financial year 2005-06. Stock Code: The Bombay Stock Exchange Limited (Physical Segment) TATACHM770 The Bombay Stock Exchange Limited (Demat Segment) TATACHM500770 The National Stock Exchange of India Limited TATACHEM EQ The Calcutta Stock Exchange Association Limited TATACHEM30012 Demat ISIN in NSDL and CDSL for Equity Shares Market Price Data: The Bombay Stock Exchange Limited (Rupees.) Apr- 2005 May-2005 Jun-2005 Jul-2005 Aug-2005 Sep-2005 Oct-2005 Nov-2005 Dec-2005 Jan-2006 Feb-2006 Mar-2006
12000

INE092A01019 The National Stock Exchange of India Limited (Rupees.) High 160.90 183.70 189.00 202.50 194.90 210.85 205.55 222.50 236.00 257.90 260.40 266.80
400

High 161.45 184.25 186.00 201.90 194.30 210.85 206.25 222.55 236.00 257.70 260.00 266.50

Low 145.00 151.00 164.30 165.00 176.00 182.70 174.65 187.15 211.00 227.00 231.90 232.50

Low 142.55 151.25 164.15 165.50 176.30 182.55 174.70 187.95 210.65 227.00 223.35 230.60

TCL’s Share Price Vs BSE Sensex
11000 350

10000 300 9000 250 8000 200 7000 150

6000

5000

100

Apr-05

Oct-05

Sept-05

Dec-05

May-05

June-05

July-05

Nov-05

Feb-06

Jan-06

Aug-05

TCL

Sensex

Mar-06

35

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Registrar and Share Transfer Agents TSR Darashaw Limited (Formerly Tata Share Registry Limited) Army & Navy Building 148, M. G. Road, Fort Mumbai 400 001 Tel. Fax E-mail Website Business Hours : : : : : 022-6656 84 84 022-6656 84 94 csg-unit@tsrdarashaw.com www.tsrdarashaw.com 10.00 a.m. to 3.30 p.m. (Monday to Friday)

For the convenience of investors based in the following cities, transfer documents and letters will also be accepted at the following branches of TSR Darashaw Limited: TSR Darashaw Limited 503, Barton Centre, 5th Floor 84, M. G. Road, Bangalore 560 001 Tel: 080 25320321 Fax: 080 25580019 E-mail: tsrlbang@tsrdarashaw.com TSR Darashaw Limited 2/42, Sant Vihar Ansari Road, Darya ganj New Delhi 110 002 Tel: 011 23271805 Fax: 011 23271802 E-mail: tsrldel@tsrdarashaw.com Share Transfer Process: Shares in physical forms are processed by the Registrar and Share transfer agent within 15-20 days from the date of receipt, if the documents are complete in all respects. The Managing Director, the Chief Financial Officer and the Company Secretary have been severally empowered to approve transfers. Distribution of Shareholding as on March 31, 2006 Category No. of Shares Percentage No. of shareholders 182635 13830 6640 2019 883 581 871 528 207987 Percentage TSR Darashaw Limited Tata Centre, 1st Floor, 43, Chowringhee Road Kolkata 700 071 Tel: 033 22883087 Fax: 033 22883062 e-mail; tsrlcal@tsrdarashaw.com TSR Darashaw Limited Bungalow No. 1, ‘E’ Road Northern Town, Bistupur Jamshedpur 831 001 Tel: 0657 2426616 Fax: 0657 2426937 E-mail: tsrljsr@tsrdarashaw.com

1 501 1001 2001 3001 4001 5001

-

500 1000 2000 3000 4000 5000 10000

23913279 10338143 9508493 5014725 3100712 2654781 6108684 154463834 215102651

11.12 4.81 4.42 2.33 1.44 1.23 2.84 71.81 100.00

87.81 6.65 3.19 0.97 0.43 0.28 0.42 0.25 100.00

Greater than 10000 Total

36

Category of shareholding as on March 31, 2006 Category Tata Companies & Trusts Resident Individuals Foreign Holdings Public Financial Institutions Government / Government Companies Other Companies, Mutual Funds Nationalised Banks Total No. of Shares 61567057 62518802 9646430 41302249 77165 38774731 1216217 215102651 Percentage 28.62 29.06 4.48 19.20 0.04 18.03 0.57 100.00

Dematerialization of shares and liquidity: Percentage of Shares held in physical form : 7.22 electronic form with NSDL : 89.93 electronic form with CDSL : 2.85 The Company’s Ordinary shares are regularly traded on the Bombay Stock Exchange Limited and on The National Stock Exchange of India Limited. Foreign Currency Convertible Bonds: Brief terms of the Foreign Currency Convertible Bonds (FCCBs) issued in 2004-05 are as under: Total Issue size : US$150 million Face Value : US$ 1000 each Initial conversion price : Rs. 231.375 per Ordinary Share New conversion price : Rs. 230.78 per Ordinary Share (refer Note No. 9 of Notes to Accounts) Conversion Period : Between March 13, 2005 and January 22, 2010 Conversion during 2005-06 : NIL Utilisation of FCCB proceeds : Partly for acquiring one-third stake in Indo Maroc Phosphore S.A. (IMACID) and the balance for acquiring the shares of Brunner Mond Group Limited Plant Locations Chemicals Division : Mithapur 361 345 Okhamandal, Gujarat Fertiliser Divison Haldia Works Subsidiaries : : : Indira Dham, P. O. Box No. 1 Babrala 202 521, Dist. Badaun, Uttar Pradesh P. O. Durgachak, Haldia, Dist. East Midnapore, West Bengal - 721 602 Homefield International Pvt. Ltd. IFS Court, Twenty Eight, Cybercity, Ebene, Mauritius Homefield Pvt. UK Ltd. 18, Grosvenor Place, London, SWIX7HS Brunner Mond Group Limited Mond House, Winnington, Northwich, Cheshire, CW84DT Joint Venture Address for correspondence : : Indo Maroc Phosphore S.A. (IMACID) Immeuble OCP, 2, rue Al Abtal - Hay Erraha, Casablanca, Morocco. Tata Chemicals Limited Bombay House 24, Homi Mody Street, Fort Mumbai 400 001.

37

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

DECLARATION
I Prasad R. Menon, Managing Director of Tata Chemicals Limited, hereby declare that all the members of the Board of Directors and the Senior management personnel have affirmed compliance with the Code of Conduct, for the year ended March 31, 2006. For Tata Chemicals Limited Mumbai May 30, 2006 Prasad R. Menon Managing Director

CERTIFICATE
TO THE MEMBERS OF TATA CHEMICALS LIMITED We have examined the compliance of conditions of Corporate Governance by Tata Chemicals Limited (the Company), for the year ended March 31, 2006, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of the certificate of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For S.B.BILLIMORIA & CO. Chartered Accountants N. VENKATRAM Partner Mumbai May 30, 2006

For N.M.RAIJI & CO. Chartered Accountants J.M. GANDHI Partner

38

Summarised Balance Sheet
WHAT THE COMPANY OWNED: 1. Fixed Assets Gross Block (Original cost including Capital Work-in -Progress) ........................ Less: Depreciation and Impairment ................................................................................. 2. 3. 4. 5. Net Block ..................................................................................................................................... Investments .............................................................................................................................. Net Current Assets ................................................................................................................ Miscellaneous Expenditure .............................................................................................. Total Assets (net) ....................................................................................................................

As at 31-Mar-06 Rupees in crores 3,228.99 1,678.02 1,550.97 713.74 1,673.41 7.02 3,945.14 1,454.49 2,167.70

As at 31-Mar-05 Rupees in crores 3,117.90 1,555.51 1,562.39 938.74 1,172.63 1.68 3,675.44 1,324.22 1,997.84

WHAT THE COMPANY OWED: 1. Borrowings from Institutions, Banks and others ................................................. 2. The Company’s Net Worth (Shareholders’ Equity) ............................................................................................................ Represented by (a) Share Capital ............... Rs.215.16 crores (previous year Rs.215.16 crores) (b) Reserves .................. Rs.1,952.54 crores (previous year Rs.1782.68 crores) 3. Deferred Tax Liability (net) ............................................................................................... 4. Total Capital employed ......................................................................................................

322.95 3,945.14

353.38 3,675.44

Summarised Profit and Loss Account
2005-06 Rs. in crores 1. Income Sales and Operating Income .............................................................................................. Investment Income (net) ...................................................................................................... Interest on refund of taxes .................................................................................................. Total ..................................................................................................................................... 2. Expenditure Raw materials, stores, wages and other expenses .................................................... Depreciation .............................................................................................................................. Interest (net) .............................................................................................................................. Total ..................................................................................................................................... 3. Profit before Exceptional Items ..................................................................................... 4. Exceptional Items .................................................................................................................. 5. Profit before tax ..................................................................................................................... 6. Tax ............................................................................................................................................... 7. Profit after tax ......................................................................................................................... 8. Balance brought forward .................................................................................................. 9. Amount available for Appropriations ........................................................................ 10. Appropriations (a) Proposed Dividend ........................................................................................................ (b) Tax on Dividend .............................................................................................................. (c) General Reserve .............................................................................................................. (d) Balance carried to Balance Sheet ........................................................................... Total 3,517.48 56.18 25.57 3,599.23 2,935.45 138.93 9.29 3,083.67 515.56 4.69 510.87 157.84 353.03 623.85 976.88 150.57 21.12 36.00 769.19 976.88 2004-05 Rs. in crores 3,008.14 70.87 30.87 3,109.88 2,492.61 137.70 24.57 2,654.88 455.00 2.06 452.94 112.39 340.55 478.03 818.58 139.82 19.91 35.00 623.85 818.58

39

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

AUDITORS’ REPORT
TO THE MEMBERS OF TATA CHEMICALS LIMITED 1. We have audited the attached Balance Sheet of TATA CHEMICALS LIMITED as at 31st March, 2006, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004, in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

2.

3.

4.

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) on the basis of written representations received from the directors, as on 31st March, 2006, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March, 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; (b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For S. B. BILLIMORIA & CO. Chartered Accountants N. VENKATRAM Partner Membership No.: 71387 Mumbai, 30th May, 2006. For N. M. RAIJI & CO. Chartered Accountants J. M. GANDHI Partner Membership No.: 37924

40

ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in Paragraph 3 of our Report of even date) (i) (a) (b) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. According to the information and explanations given to us, the Company has formulated a regular programme of verification by which all the assets of the Company shall be verified in a phased manner, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. To the best of our knowledge, no material discrepancies were noticed on verification conducted during the year as compared with the book records. There was no disposal of a substantial part of fixed assets. The stocks of semi finished and finished goods, work in progress and raw materials have been physically verified during the year by the Management. The Company has a perpetual inventory system in respect of stores and spare parts. In our opinion, the frequency of verification is reasonable. In the case of materials lying with third parties, certificates confirming stocks have been received in respect of a substantial portion of the stocks held. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company. According to the information and explanations given to us, during the year the Company has granted unsecured loans to a wholly owned subsidiary company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year and the balance as on 31st March, 2006 is Rs. 640.72 crores. According to the information and explanations given to us and in our opinion, the terms and conditions on which loans have been given to the company listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. The company to whom loans have been granted, as referred to in (a) above, was regular in the payment of principal and interest as per the agreed terms. In respect of the aforesaid loans, there are no overdue amounts. According to the information and explanations given to us, the Company has during the year not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (f ) and (iii) (g) of paragraph 4 of the Order are not applicable to the company.

(c) (ii) (a)

(b)

(c)

(iii)

(a)

(b)

(c) (d) (e)

(iv)

In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any major weakness in the internal controls. To the best of our knowledge and belief, and according to the information and explanations given to us, we are of the opinion that there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under Section 301 of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public during the year covered by our audit report. In respect of unclaimed deposits matured in the earlier years, that are outstanding during the year, the Company has complied with the

(v)

(vi)

41

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. To the best of our knowledge and according to the information and explanations given to us, no order on the Company under the aforesaid section has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) According to the information and explanations given to us, the Central Government has prescribed under Section 209(1)(d) of the Companies Act, 1956, the maintenance of cost records in respect of certain products manufactured by the Company viz., Cement, Caustic Soda, Soda Ash, Methyl Bromide, Ammonia, Urea, Diammonium Phosphate, Nitrogen Phosphorous Potash, Single Super Phosphate and Sodium Tripolyphosphate. We have broadly reviewed the books of accounts maintained and in our opinion, the prescribed accounts and records have prima facie been made and maintained by the Company. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. (ix) (a) According to the information and explanations provided to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, applicable to it. As explained to us, no undisputed amounts payable were in arrears, as at 31st March, 2006 for a period of more than six months from the date they became payable. According to the information and explanations given to us, the details of statutory dues of sales tax, income tax, custom duty and excise duty which have not been deposited on account of dispute are given below: Particulars Sales Tax (Central and State) and Value Added Tax Financial years to which the matter pertains 1997-2001 Forum where dispute is pending High Court Amount (Rs. in crores) 5.15

(b)

1991-95, 1997-2001 1995-97,2001-04,2005-06

Tribunal Appellate authority upto Commissioner’s level Supreme Court Appellate authority upto Commissioner’s level Commissioner Supreme Court Tribunal Appellate authority upto Commissioner’s level

6.04 35.59

Custom Duty

1992-93 1987-88, 1992-93, 2001-02

3.96 0.19

Income Tax Excise Duty

1996-97, 1999-2000, 2000-01, 2001-02 1978-79,1982-85 1985-88, 1989-90, 1990-95, 1997-98, 1999-06 1974-80, 1994-2000

28.00 * 0.03 712.82 2.16

* Amount paid/adjusted subsequently Rs.28 crores.

42

(x)

The Company does not have accumulated losses and has not incurred cash losses during the financial year and in the immediately preceding financial year. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xi) (xii)

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Order are not applicable to the Company. (xiv) In our opinion and according to the information and explanation given to us the Company is not dealing in shares, securities and debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Order are not applicable to the Company. (xv) In our opinion and according to the information and explanations given to us, the Company has not given guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised other than amounts temporarily invested pending utilization of the funds for the stated use. (xvii) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been utilized for long-term investment. (xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. (xix) According to the information and explanations given to us, the Company has not issued any secured debentures during the period covered by our report. Accordingly, the provisions of clause (xix) of the Order are not applicable to the Company. (xx) During the period covered by our Audit report, the Company has not raised any money by way of a public issue.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For S. B. BILLIMORIA & CO. Chartered Accountants N. VENKATRAM Partner Membership No.: 71387 Mumbai, 30th May, 2006.

For N. M. RAIJI & CO. Chartered Accountants J. M. GANDHI Partner Membership No.: 37924

43

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Balance Sheet as at 31st March, 2006
As at 31-Mar-05 Rupees in crores

Schedule SOURCES OF FUNDS 1. SHAREHOLDERS’ FUNDS (a) Share Capital ................................................ (b) Reserves and Surplus ............................... 2. LOAN FUNDS (a) Secured ........................................................... (b) Unsecured ..................................................... 3. 4. DEFERRED TAX LIABILITY (net) ....................... [See note 5, page 68] TOTAL FUNDS EMPLOYED ................................ C D A B

Page

Rupees in crores

Rupees in crores

52 52

215.16 1,952.54 2,167.70

215.16 1,782.68 1,997.84 201.60 1,122.62

53 53

160.43 1,294.06 1,454.49 322.95 3,945.14

1,324.22 353.38 3,675.44

APPLICATION OF FUNDS 5. FIXED ASSETS ......................................................... (a) Gross Block .................................................... (b) Less : Depreciation and Impairment .. (c) Net Block ........................................................ (d) Capital Work-in-Progress ......................... 6. 7. INVESTMENTS ........................................................ NET CURRENT ASSETS ........................................ (a) Current Assets, Loans and Advances . (b) Less : Current Liabilities and Provisions 8. 9. MISCELLANEOUS EXPENDITURE .................... TOTAL ASSETS (net) ............................................. H 62 F G 55 61 2,466.17 792.76 1,673.41 7.02 3,945.14 1,963.85 791.22 1,172.63 1.68 3,675.44 E 54 3,142.22 1,678.02 1,464.20 86.77 1,550.97 713.74 3,063.70 1,555.51 1,508.19 54.20 1,562.39 938.74

10. Notes on the Balance Sheet and Profit and Loss Account ........................................ As per our report attached For S. B. BILLIMORIA & CO. Chartered Accountants, N. VENKATRAM Partner. For N. M. RAIJI & CO. Chartered Accountants, J. M. GANDHI Partner.

I

63 For and on behalf of the Board R. N. TATA R. GOPALAKRISHNAN P. R. MENON P. K. GHOSE B. RENGANATHAN Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006

Mumbai, 30th May, 2006

44

Profit and Loss Account for the year ended 31st March, 2006
Schedule INCOME 1. SALES AND OPERATING INCOME ................... 2. INVESTMENT INCOME (net) .............................. 3. INTEREST ON REFUND OF TAXES ................... 4. TOTAL INCOME ....................................................... 3 4 49 50 2,935.45 9.29 2,944.74 138.93 3,083.67 515.56 4.69 510.87 182.75 (30.43) 5.52 157.84 PROFIT AFTER TAX ....................................................... 11. BALANCE BROUGHT FORWARD ...................... 12. AMOUNT AVAILABLE FOR APPROPRIATIONS 13. APPROPRIATIONS : (a) Proposed Dividend ..................................... (b) Tax on Dividend ........................................... (c) General Reserve ........................................... (d) Balance carried to Balance Sheet ........ 353.03 623.85 976.88 150.57 21.12 36.00 769.19 976.88 14. EARNINGS PER SHARE (Rupees) ..................... [See Note 3, Page 66] .......................................... 15. Notes on the Balance Sheet and Profit and Loss Account ........................................................... As per our report attached For S. B. BILLIMORIA & CO. Chartered Accountants, N. VENKATRAM Partner. For N. M. RAIJI & CO. Chartered Accountants, J. M. GANDHI Partner. R. N. TATA R. GOPALAKRISHNAN P. R. MENON P. K. GHOSE B. RENGANATHAN Mumbai, 30th May, 2006 (a) Basic (b) Diluted I 63 For and on behalf of the Board Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006 16.41 14.71 Page Rupees in crores 3,517.48 56.18 25.57 3,599.23 Rupees in crores Previous Year Rupees in crores 3,008.14 70.87 30.87 3,109.88 2,492.61 24.57 2,517.18 137.70 2,654.88 455.00 2.06 452.94 162.14 (49.75) — 112.39 340.55 478.03 818.58 139.82 19.91 35.00 623.85 818.58 15.83 15.53

1 2

48 48

EXPENDITURE 5. MANUFACTURING AND OTHER EXPENSES 6. INTEREST ................................................................... 7. 8. DEPRECIATION ........................................................ TOTAL EXPENDITURE ...........................................

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 9. EMPLOYEE SEPARATION COMPENSATION .. PROFIT BEFORE TAX .................................................... 10. PROVISION FOR TAX (a) Current ............................................................. (b) Deferred .......................................................... (c ) Fringe Benefit Tax .......................................

45

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Cash Flow Statement for the year ended 31st March, 2006
Rupees in crores 2005-06 A Cash Flow from Operating Activities Net Profit before Tax and Exceptional Items ......................................................................... Adjustments for : Unrealised exchange loss on Foreign Currency Convertible Bonds ................. Depreciation ............................................................................................................................... Interest expense - (net) ......................................................................................................... Profit on sale of investments - (net) ................................................................................ Dividend income ...................................................................................................................... Interest income on Government securities .................................................................. Provision for doubtful debts and advances ................................................................. Amortisation of miscellaneous expenditure ................................................................ Reduction in carrying cost of current investments .................................................. Lease rent charged .................................................................................................................. Loss on assets sold or discarded ....................................................................................... Operating Profit before Working Capital Changes ...................................................... Adjustments for : Trade and other receivables ................................................................................................ Inventories ................................................................................................................................... Trade payables and other liabilities ................................................................................. Cash Generated from Operations ........................................................................................... Taxes paid .................................................................................................................................... Cash Flow before Exceptional Items ..................................................................................... Employee separation compensation ............................................................................... Net Cash from Operating Activities ...................................................................................... B Cash Flow from Investing Activities Acquisition of fixed assets (net) ........................................................................................ Purchase/Sale of investments in Mutual Funds (net) .............................................. Purchase of other investments .......................................................................................... Sale of other investments .................................................................................................... Investment in and advance to Subsidiary .................................................................... Interest received ....................................................................................................................... Interest on Government securities received ................................................................ Dividend received .................................................................................................................... Net Cash used in Investing Activities ................................................................................... (132.35) 410.41 (181.18) — (1,040.63) 15.11 — 51.95 (876.69) (69.18) (363.38) (20.17) 110.86 — 9.72 0.59 31.17 (300.39) (190.52) (72.18) (19.62) 343.67 (86.31) 257.36 (11.06) 246.30 (33.58) (48.80) 131.67 607.66 4.24 611.90 (1.58) 610.32 13.35 138.93 9.29 (4.23) (51.95) — (2.77) 0.01 — 2.96 4.84 625.99 — 137.70 24.57 (39.25) (31.17) (0.59) 4.69 0.07 0.14 2.96 4.25 558.37 515.56 455.00 Rupees in crores 2004-05

46

Cash Flow Statement for the year ended 31st March, 2006 (Contd.)
Rupees in crores C Cash Flow from Financing Activities Proceeds from borrowings .................................................................................................. Proceeds from issue of Foreign Currency Convertible Bonds (net of expenses) .. Repayment of borrowings ................................................................................................... Interest paid ............................................................................................................................... Lease rent paid .......................................................................................................................... Dividends paid including distribution tax .................................................................... Net Cash (used in)/from Financing Activities .................................................................. Net Increase/ (Decrease) in Cash and Cash equivalents .................................................. Cash and Cash equivalents as at 1st April .............................................................................. ( Opening Balance ) Cash and Cash equivalents as at 31st March ........................................................................ ( Closing Balance ) 46.06 751.67 159.87 — (42.95) (30.23) (2.98) (158.93) (75.22) (705.61) 751.67 39.55 642.05 (136.82) (38.94) (2.97) (133.82) 369.05 678.98 72.69 Rupees in crores

As per our report attached For S. B. BILLIMORIA & CO. Chartered Accountants, N. VENKATRAM Partner. For N. M. RAIJI & CO. Chartered Accountants, J. M. GANDHI Partner. R. N. TATA

For and on behalf of the Board Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006

R. GOPALAKRISHNAN P. R. MENON P. K. GHOSE B. RENGANATHAN

Mumbai, 30th May, 2006

47

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Profit and Loss Account
Schedule 1 : Sales and Operating Income [Item No. 1, page 45] 1. Sales and services: (a) Sales ......................................................................................................................... Less : Excise duty ................................................................................................. 3,603.14 135.38 3,467.76 (b) Processing charges ............................................................................................. (Tax deducted at source Rs.0.77 crore; previous year Rs.1.18 crores) 35.09 3,043.19 115.27 2,927.92 54.72 Rupees in crores Rupees in crores Previous Year Rupees in crores

3,502.85 2. Operating income: (a) (b) (c) Town income ........................................................................................................ (Tax deducted at source Rs.0.03 crore; previous year Rs. 0.02 crore) Miscellaneous income ...................................................................................... (Tax deducted at source Rs.2.06 crores; previous year Rs. * crore) Insurance claims .................................................................................................. 1.35 13.21 0.07 14.63 3,517.48

2,982.64 1.06 15.64 8.80 25.50 3,008.14

Schedule 2 : Investment Income [Item No. 2 , page 45] 1. Income from Long Term Investments (Gross): (a) (b) Dividend on trade investments .................................................................... Profit on sale of investments .........................................................................

Rupees in crores

Rupees in crores 27.22 — 27.22

Previous Year Rupees in crores 18.25 34.27 52.52

2.

Income from Current Investments (Gross): (a) (b) (c) Dividend income ................................................................................................. Interest on investments in Government securities .............................. Profit / (Loss) on sale of investments (net) .............................................. 24.73 — 4.23 28.96 Less : Diminution in carrying amount of investments .................................. — 28.96 56.18 12.92 0.59 4.98 18.49 (0.14) 18.35 70.87

48

Schedules forming part of the Profit and Loss Account (Contd.)
Schedule 3 : Manufacturing and Other Expenses [Item No. 5 , page 45] 1. Raw materials consumed: (a) (b) (c) 2. 3. Stock on 1 April, 2005 ....................................................................................... Add : Purchases and cost of materials ....................................................... Less : Stock on 31st March, 2006 243.83 1,393.55 1,637.38 241.60 1,395.78 Cost of traded goods purchased Payments to and provisions for employees: (a) (b) (c) (d) 4. Wages and salaries, including bonus ......................................................... Company’s contribution to provident, superannuation and gratuity funds .............................................................................................. Company’s contribution under group insurance scheme ................ Workmen and staff welfare expenditure ................................................. 93.28 13.82 0.02 14.75 121.87 Operation and other expenses: (a) Stores, spare parts, loose tools and equipment consumed ............. (b) Packing material consumed (c) Power and fuel (d) Repairs — Buildings — Machinery — Others (e) Rent (f ) Royalty, rates and taxes (g) Commission and distributors’ service charges / discount (h) Sales promotion expenses (i) Insurance charges (j) Freight and forwarding charges (k) Lease rent (l) Loss on assets sold or discarded (net) (m) Provision for doubtful debts and advances (net) (n) Other expenses Less: Expenditure transferred to capital account 5. 6. Directors’ fees / commission Change in inventory of semi finished and finished products and work-in-process: (a) Opening Stock (b) Less : Closing Stock 85.30 107.56 320.83 2.59 37.39 0.84 13.74 10.85 66.79 44.01 10.25 225.39 2.96 4.84 (2.77) 116.00 1,046.57 1.23 1,045.34 2.20 3,022.89 79.50 13.19 0.01 13.73 106.43 45.34 99.26 381.07 3.03 29.28 1.21 9.44 6.93 57.68 32.28 10.15 198.35 2.96 4.25 4.69 99.00 984.92 0.44 984.48 1.91 2,451.56 457.70 156.29 1,209.72 1,366.01 243.83 1,122.18 236.56 Rupees in crores Rupees in crores Previous Year Rupees in crores

147.47 234.91 (87.44) 2,935.45

188.52 147.47 41.05 2,492.61

49

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Profit and Loss Account (Contd.)
Schedule 4 : Interest [Item No. 6 , page 45] Interest paid on: (a) (b) Debentures and fixed loans ........................................................................... Other loans ............................................................................................................ 12.12 24.71 36.83 Less - Interest received on: (Tax deducted at source Rs.0.32 crore; previous year Rs.0.20 crore) (a) (b) Inter-corporate loans and bank deposits ................................................. Sundry advances, etc. ....................................................................................... 11.85 15.69 27.54 9.29 3.27 1.63 4.90 24.57 17.53 11.94 29.47 Rupees in crores Rupees in crores Previous Year Rupees in crores

Schedule 5 : Computation of net profit in accordance with Section 349 of the Companies Act, 1956 for remuneration to Directors: Previous Year Rupees in crores 452.94

Rupees in crores 1. Profit as per Profit and Loss Account (before taxes) ...................................... Add / (Less) : 2. 3. 4. Directors’ remuneration, commission and fees ................................................ Provision for doubtful debts and advances ....................................................... Profit on sale of investments (net) ......................................................................... 3.47 (2.77) (4.23)

Rupees in crores 510.87

2.83 4.69 (39.25) (3.53) (31.73) 421.21

5. 6.

Net Profit in accordance with Section 349 of the Companies Act, 1956 Maximum amount permissible for the Managing Director and Wholetime Director under Section 309 of the Companies Act, 1956 .................

507.34

50.73 1.30 5.07 0.80

42.12 1.05 4.21 0.75

7. 8. 9.

Commission to Managing Director and Whole-time Director ................... Commission to non Whole-time Directors (maximum permissible 1%) Commission to non Whole-time Directors .........................................................

50

Schedules forming part of the Profit and Loss Account (Contd.)
Previous Year Rupees in crores

Notes on the Profit and Loss Account 1. Item 2(b) of Schedule 1 Miscellaneous income Rs. 13.21 crores (previous year Rs. 15.64 crores) include : Exchange gain on foreign currency transactions (net) ...............

Rupees in crores

Rupees in crores

2.41

2.

Item 4(n) of Schedule 3 Other expenses of Rs. 116.00 crores (previous year Rs. 99.00 crores) include : Exchange loss on foreign currency transactions (net) ................

14.94

3.

Items 3,4 and 5 of Schedule 3 Payments to and provisions for employees, operation and other expenses and Directors’ fees / commission includes remuneration to Managing Director and Whole-time Director : (a) (b) (c) Remuneration (including Company’s contribution to provident fund and superannuation fund) Commission ......................................................................................... (for computation see Schedule 5, page 50) Estimated value of benefits in cash or in kind .................... 0.91 1.30 0.36 2.57 Note:- The above figures do not include contribution to gratuity fund, as separate figures are not available for the Managing Director and Whole-time Director 0.75 1.05 0.17 1.97

4.

Item 4(n) of Schedule 3 Other Expenses Rs. 116.00 crores (previous year Rs.99.00 crores) include: (a) Auditors’ Remuneration (i) (ii) For Services as Auditors [includes Rs.0.03 crore to Cost Auditors (previous year Rs.0.02 crore)] For tax matters - Tax Audit ................................................ 0.59 0.17 0.45 0.01 1.22 0.39 2.13 0.41 0.12 0.27@ * 0.80 1.43 0.16

(iii) For other services .................................................................. (iv) Reimbursement of travelling and out-of-pocket expenses @ excludes Rs. 0.23 crore towards FCCB issue related expenses debited to Securities Premium account (b) (c) Research and development expenses ..................................... Donations .............................................................................................

51

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet
Rupees in crores Schedule A : Share Capital [Item No.1(a), page 44] ................................................................................................................................. 1. Authorised: 27,00,00,000 Ordinary Shares of Rs.10 each ............................................................................ (previous year 27,00,00,000 Ordinary Shares of Rs.10 each) As at 31-Mar-05 Rupees in crores

270.00 270.00

270.00 270.00

2.

Issued: 21,51,88,971 Ordinary Shares of Rs.10 each ............................................................................ (previous year 21,51,88,971 Ordinary Shares of Rs.10 each) Subscribed: 21,51,02,651 Ordinary Shares of Rs.10 each ............................................................................ (previous year 21,51,02,651 Ordinary Shares of Rs.10 each) Of the above Shares : (i) 37,000 Ordinary Shares of Rs.10 each were allotted as fully paid-up pursuant to a contract without payment being received in cash. (ii) 10,54,02,144 Ordinary Shares of Rs.10 each were issued as fully paid-up Bonus Shares by capitalisation of Rs. 92.97 crores from Share Premium Account and Rs.12.43 crores from General Reserve. (iii) 42,49,864 Ordinary Shares of Rs.10 each allotted as fully paid-up to the Shareholders of Tata Fertilisers Ltd., pursuant to the Scheme of Amalgamation. (iv) 3,44,64,000 Ordinary Shares of Rs. 10 each issued as fully paid-up to the Shareholders of Hind Lever Chemicals Limited as per the Scheme of Amalgamation. Forfeited shares: Amount paid-up on 86,320 shares .............................................................................................. (previous year 86,320 shares)

215.18 215.18

215.18 215.18 215.10

3.

215.10

4.

0.06 215.16

0.06 215.16 As at 31-Mar-05 Rupees in crores 0.66 0.10 20.75 332.04 13.90 137.03 181.11 — 743.14 67.39 35.00 710.75 245.46 623.85 1,782.68

Schedule B : Reserves and Surplus [Item No.1(b), page 44] 1. Capital reserve: Balance as per last account .............................................................. 2. Capital redemption reserve: Balance as per last account .............................................................. 3. Surplus on amalgamation: Balance as per last account .............................................................. 4. Securities premium: (a) Balance as per last account ................................................... (b) Less : Foreign Currency Convertible Bonds (FCCBs) issue expenses [see note 9 (b), page 69] (c) Less : Provision for premium on redemption of FCCBs [see note 9 (b), page 69] ......................................... 5. 6. Foreign currency translation reserve: For the year (debit balance) ............................................................. General reserve: (a) Balance as per last account ................................................... (b) Less : Impairment of assets ................................................... (c) Add : Transferred from Profit and Loss Account .......... Debenture redemption reserve: Balance as per last account .............................................................. Balance in Profit and Loss Account

Rupees in crores

Rupees in crores 0.66 0.10 20.75

181.11 — 2.79 178.32 (8.69) 710.75 — 36.00 746.75

7. 8.

245.46 769.19 1,952.54

52

Schedules forming part of the Balance Sheet (Contd.)
Schedule C : Loans - Secured [Item No.2(a), page 44] Rupees in crores Loans : (a) From Banks : (i) Cash / Packing credit (ii) Term Loans 23.88 89.24 113.12 (b) From Financial Institutions - Term Loans 47.31 160.43 53.33 87.46 140.79 60.81 201.60 Rupees in crores As at 31-Mar-05 Rupees in crores

Amount repayable within one year Rs. 103.22 crores (previous year Rs. 13.50 crores) excluding Cash/Packing Credit Notes : Secured Loans (a) (b) Loans from Banks on Cash/Packing Credit Accounts under item (a)(i) are secured by hypothecation of all stocks of raw materials, finished products, stores and stock-in-process as well as book debts. Term Loan from State Bank of India for Rs. 89.24 crores included in item (a)(ii) is secured by a pari passu first mortgage and charge on immovable properties at Chemicals and Cement Plant at Mithapur , Fertiliser Plant at Babrala and residential property at Mumbai. Item (b) represents Rs. 47.31 crores being interest - free loan under Sales Tax Deferment Scheme from Pradeshiya Industrial and Investment Corporation of Uttar Pradesh, which is secured by second charge on the Company’s properties at Babrala.

(c)

Schedule D : Loans - Unsecured [Item No.2(b), page 44] Rupees in crores 1. 2. Foreign Currency Convertible Bonds [See note 9(a), page 68] Short Term Loans from Banks (Repayable within one year ) 669.30 624.76 1,294.06

As at 31-Mar-05 Rupees in crores 655.95 466.67 1,122.62

53

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet (Contd.)
Schedule E : Fixed Assets
[Item No.5, page 44]
Rupees in crores Fixed Assets (At Cost) Gross Block as at 31-Mar-05 Additions / Adjustments Deductions / Adjustments Gross Block as at 31-Mar-06 Depreciation for 2005-06 Total Depreciation 31-Mar-06 Impairment @ Net Block as at 31-Mar-06

1.

Land : (a) Freehold ............................................... (b) Leasehold ............................................

7.58 7.58 15.02 15.02

0.46 — — —

— — — —

8.04 7.58 15.02 15.02

— — 0.16 0.16

— — 2.63 2.47

0.16 0.16 — —

7.88 7.42 12.39 12.55

2.

Works : (a) Saltworks,Reservoirs and Pans ............................................... (b) Plant and Machinery ...................... (c) Traction Lines and Railway Sidings ................................. (d) Buildings .............................................. 21.83 21.83 191.51 188.97 164.47 160.50 8.31 8.31 0.08 — 5.14 6.08 0.79 3.97 — — 4.94 2.51 2.40 2.14 99.98 46.03 — — 0.02 3.54 — — — — 1.44 0.53 6.70 0.17 21.46 24.81 21.91 21.83 196.63 191.51 165.26 164.47 8.31 8.31 47.91 44.41 22.07 26.37 3,142.22 3,063.70 86.77 54.20 3,228.99 3,117.90 0.82 0.82 5.95 6.87 2.83 2.92 0.13 0.13 2.77 2.72 0.90 0.97 138.93 137.70 — — 138.93 137.70 13.99 13.17 58.80 52.86 30.54 27.72 6.97 6.84 27.89 26.44 14.63 19.55 1,572.16 1,449.65 — — 1,572.16 1,449.65## 0.28 0.28 8.85 8.85 — — — — 0.10 0.10 0.11 0.11 105.86 105.86 — — 105.86 105.86 7.64 8.38 128.98 129.80 134.72 136.75 1.34 1.47 19.92 17.87 7.33 6.71 1,464.20 1,508.19 86.77 54.20 1,550.97 1,562.39 1,449.65 16.42 1,433.23 138.93 1,572.16 2. 3. 4. # Includes cost of residential flats aggregating to Rs.1.87 crores for which legal formalities relating to transfer of title are pending. The figures in light print are for previous year. @The impairment loss was proportionately allocated to reduce the cost of assets 26.26 25.18 2,557.94 2,548.26 6.69 1.08 79.48 30.25 — — 13.30 20.57 32.95 26.26 2,624.12 2,557.94 1.61 2.45 123.76 120.66 24.00 22.38 1,392.71 1,278.22 — — 96.36 96.36 8.95 3.88 1,135.05 1,183.36

3. 4. 5.

Town # ........................................................... Water Works ............................................... Furniture,Fitting and Office Equipment ................................... Vehicles ......................................................... Total ................................................................

44.41 42.43 26.37 24.40 3,063.70 3,042.48

6.

Capital Work-in-progress ...................................................................................................................... (including advances for Capital Expenditure)

NOTES : 1.

## Depreciation provided upto 31 March, 2005 ..................................................................................................................................................... Less : Adjustment in respect of assets sold or discarded ................................................................................................................................... Add : Provision for the year ................................................................................................................................................................................................

54

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No. 6, page 44] A Face Value Rupees Holdings As at 31-Mar-06 Rupees in crores Rupees in crores Holdings As at 31-Mar-05 Rupees in crores

LONG TERM INVESTMENTS Trade Investments : 1. Fully paid Ordinary/Equity Shares (Quoted): Indian Hotels Limited ................................ Madras Fertilisers Limited ....................... Oriental Hotels Limited ............................ Rallis India Limited** ................................. Tata Consultancy Services Limited ..... Tata Finance Limited .................................
(1,25,912 shares of Tata Motors allotted on 6 September 2005 on merger of Tata Finance Limited @ 8 shares of Tata Motors Limited for 100 shares held in Tata Finance Limited)

10 10 10 10 1 10

6,00,964 3,30,000 4,32,328 11,26,518 11,53,775 —

0.99 0.49 4.79 19.06 0.14 —

6,00,964 3,30,000 4,32,328 11,26,518 11,53,775 15,73,910

0.99 0.49 4.79 19.06 0.14 4.55

Tata Investment Corporation Limited
(17,65,800 bonus shares allotted in the ratio of 1 for 2)

10

52,97,400

10.34

35,31,600

10.34

Tata Iron and Steel Company Limited Tata Motors Limited ...................................
(1,25,912 shares of Tata Motors allotted on 6 September 2005 on merger of Tata Finance Limited @ 8 shares of Tata Motors Limited for 100 shares held in Tata Finance Limited)

10 10

31,09,302 6,03,207

50.26 11.47

31,09,302 4,77,295

50.26 6.92

Tata Tea Limited .......................................... Titan Industries Limited ...........................

10 10

43,17,514 14,30,580

16.09 19.68 133.31

43,17,514 14,30,580

16.09 19.68 133.31

2.

Investment in Subsidiary Companies: Fully paid Ordinary/Equity Shares (Unquoted): Homefield International Pvt. Limited . MRU 1
(100 shares purchased during the year )

100

* *

— —

3.

Investment in Joint Venture: Fully paid Ordinary/Equity Shares (Unquoted): Indo Maroc Phosphore, S.A. MAD 1,000
(2,06,666 shares purchased during the year)

2,06,666

166.26 166.26

— — 550 40,00,000 65,74,202 24,000 32,250 1,260 10,237 22,04,420 147.19 0.02 4.00 79.79 3.35 0.38 0.13 56.86 2.20 146.73

4.

Fully paid Ordinary/Equity Shares (Unquoted) in Others: Associated Building Co.Limited ............ 900 550 Taj Air limited ............................................... 10 40,00,000 Tata Industries Limited ............................. 100 65,74,202 Tata International Limited ....................... 1,000 24,000 Tata Projects Limited ................................. 100 32,250 Tata Services Limited ................................ 1,000 1,260 Tata Sons Limited ....................................... 1,000 10,237 Tata Teleservices Limited ......................... 10 25,13,039
(3,08,619 shares subscribed during the year ) ......

0.02 4.00 79.79 3.35 0.38 0.13 56.86 2.66

5.

Fully paid Preference Shares (Unquoted) in Others: Rallis India Limited (7.5% Cumulative 10 2,50,00,000 Redeemable Preference Shares) ...................... Tata Sons Limited (6% Cumulative 1,000 27,200 Redeemable Preference Shares) ...................... Investments carried forward ..................

25.00 2.72 474.48

2,50,00,000 27,200

25.00 2.72 307.76

55

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No.6, page 44] Investments brought forward ............... Tata Sons Limited (6% Cumulative
Redeemable Preference Shares) ......................

Face Value Rupees

Holdings As at 31-Mar-06

Rupees in crores

Rupees in crores 474.48

Holdings As at 31-Mar-05

Rupees in crores 307.76

1,000

2,00,000

20.00 47.72

2,00,000

20.00 47.72 327.76 0.25 327.51

LONG TERM INVESTMENTS Less: Provision for diminution in value of investments ............................................. LONG TERM INVESTMENTS (net) CURRENT INVESTMENTS B Other Investments : Quoted Equity Shares, Fully Paid : FAL Industries Limited .............................. Unquoted Equity Shares, Fully Paid : IFCI Venture Capital Funds Limited .... Kowa Spinning Limited ............................ Quoted Bonds/units : In Unit Trust of India 6.75% Tax free US 64 bonds ................... 6.6% Tax free - UTI Bonds ....................... Unquoted units: In Unit Trust of India — Mastershare ............................................. — US 2002 ..................................................... In units of Mutual Funds (Unquoted) : Birla Cash Plus Institutional Plan - Daily Dividend Reinvestment ............................
(19,62,92,126 units purchased and 15,56,05,722 units sold during the year )

494.48 0.25 494.23

10 10 10

9,756 2,50,000 60,000 0.25 *

*

9,756 2,50,000 60,000

* 0.25 * 0.25

0.25

100 100

2,54,705 13,90,000

2.55 14.46

2,54,705 —

2.55 —

10 10

96,100 56,496

0.09 0.03 0.12

96,100 56,496

0.09 0.03 0.12

10

4,06,86,404

40.76

Birla FMP Q-3 (Dividend) .........................
(1,99,88,207 units purchased and 4,00,65,831 units sold during the year)

10

2,00,77,624

20.09

Canliquid Institutional Daily Dividend Reinvestment Plan ......................................
(5,49,96,497 units purchased and 4,00,51,062 units sold during the year)

10

1,49,45,435

15.01

Deutsche Short Maturity (Weekly Dividend) ......................................
(1,50,19,956 units purchased and 2,48,31,489 units sold during the year)

10

98,11,533

10.02

DSP Merrill Lynch Liquidity Fund -Daily Dividend .........................................................
(2,75,47,127 units purchased and 4,45,44,038 units sold during the year)

10

1,69,96,911

17.01

DSP Merrill Lynch Liquidity Fund Institutional-Daily Dividend ...................
(6,75,276 units purchased 6,15,278 units sold during the year) and

10

59,998

6.00

Current Investments carried forward . Investments carried forward ..................

79.15 573.38

50.04 377.55

56

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No.6, page 44] Investments brought forward ............... Current Investments brought forward DSP Merril Lynch Floating Rate Fund - Weekly Dividend ..........................
(11,85,225 units purchased and 4,85,73,161 units sold during the year)

Face Value Rupees

Holdings As at 31-Mar-06

Rupees in crores

Rupees in crores 573.38 79.15

Holdings As at 31-Mar-05

Rupees in crores 377.55 50.04

10

4,73,87,936

47.52

Grindlays Cash Fund - Institutional Plan C - Daily Dividend ............................
(11,99,18,528 units purchased and 12,29,28,690 units sold during the year)

10

30,10,162

3.01

Grindlays Floating Rate — Long Term Plan B (Quarterly Dividend) ...................
(2,45,34,362 units were sold during the year)

10

2,45,34,362

24.69

Grindlays Fixed Maturity Plan - 10 (Dividend) ......................................................
(1,50,00,000 units were sold during the year)

10

1,50,00,000

15.00

HDFC MIP Long Term Plan - Growth ..
(11,10,224 units were purcahsed during the year)

10

11,10,224

1.50

HDFC Multiple Yield Fund - 2005 (Dividend) ......................................................
(1,50,55,988 units during the year) (1,29,66,723 units during the year) were purcahsed

10

1,50,55,988

15.06

HDFC Multiple Yield Fund - Dividend
were purcahsed

10

1,29,66,723

13.01

HSBC Cash Fund Institutional Plus (Growth) ..........................................................
(6,53,99,587 units purchased and 8,94,47,529 units sold during the year)

10

2,40,47,942

24.52

HSBC Equtiy Fund (Dividend) ................
(4,18,621 units purchased during the year)

10

5,25,353

1.25

1,06,732

0.23

HSBC Floating Rate Long Term Plan (Weekly Dividend) ......................................
(31,94,888 units purchased and 2,43,38,870 units sold during the year)

10

2,11,43,982

21.20

HSBC Income Fund Short Term Plan Institutional(Dividend) ..............................
(28,70,624 units sold during the year)

10

28,70,624

3.05

HSBC India Opportunities Fund Growth .............................................................
(3,26,385 units purchased during the year)

10

5,25,296

0.78

1,98,911

0.25

JM Equity and Derivative Fund (Dividend) ......................................................
(2,03,99,803 units purchased the year) during

10

3,03,99,803

30.85

1,00,00,000

10.00

JM Floater Fund Long Term Premium Plan ...................................................................
(44,422 units purchased and 85,49,220 units sold during the year)

10

85,04,798

8.51

JM FMP QSA 5(Dividend) ........................
(1,00,00,000 units sold during the year)

10

— 141.60 635.83

1,00,00,000

10.00 218.02 545.53

Current Investments carried forward . Investments carried forward ..................

57

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No.6, page 44] Investments brought forward ............... Current Investments brought forward K Floater - Long Term Plan (Monthly Dividend) ........................................................
(1,01,239 units purchased and 3,01,47,672 units sold during the year)

Face Value Rupees

Holdings As at 31-Mar-06

Rupees in crores

Rupees in crores 635.83 141.60

Holdings As at 31-Mar-05

Rupees in crores 545.53 218.02

10

3,00,46,433

30.12

Kotak Flexi Debt (Quarterly Dividend)
(1,20,96,909 units sold during the year)

10 10 10 10

— 4,53,166 19,480 —

— 0.65 0.02 —

1,20,96,909 1,91,542 19,480 50,43,246

12.12 0.24 0.02 5.05

Kotak Equity FOF (Dividend) .................
(2,61,624 units purchased during the year)

Kotak Equity FOF (Growth) ..................... Kotak Floater Short Term Plan (Weekly Dividend) ......................................
(38,591 units purchased and 50,81,837 units sold during the year)

Kotak Liquid Institutional Premium (Daily Dividend) ...........................................
(7,27,71,707 units purchased and 8,56,34,625 units sold during the year)

10

1,28,62,918

15.73

Kotak Liquid Institutional Premium (Growth) ..........................................................
(4,31,68,721 units purchased and 5,06,68,796 units sold during the year)

10

75,00,075

9.74

LIC Floating Rate Fund (Dividend) ......
(3,98,49,473 units purchased and 4,39,20,106 units sold during the year)

10

40,70,633

4.08

LIC Liquid Fund - (Dividend) ..................
(15,89,31,042 units purchased and 14,80,18,900 units sold during the year)

10

1,46,09,665

16.01

36,97,523

4.02

Principal Cash Management (Liquid) Institutional Premium (Daily Dividend) ....
(4,84,28,920 units purchased and 7,84,34,559 units sold during the year)

10

3,00,05,639

30.01

Prudential ICICI Liquid Plan Institutional Plus-Daily Dividend .........
(17,13,77,021 units purchased and 17,81,94,629 units sold during the year)

10

68,17,608

8.08

Prudential ICICI Floating Rate Plan C (Dividend) ..................................................... ( 1,83,745 units purchased and
2,84,32,693 units sold during the year)

10

2,82,48,948

28.27

Reliance Fixed Term Scheme Q VIII(Dividend) ...........................................
(1,00,00,000 units sold during the year)

10 10

— 1,98,65,866

— 25.00

1,00,00,000 —

10.00 —

Reliance Liquid Fund - TP (M Div.) ......
(5,91,47,081 units purchased and 3,92,81,215 units sold during the year)

SBI Magnum Institutional Income Fund-Savings Plan- Dividend ................
(10,61,80,995 units purchased and 17,39,81,120 units sold during the year)

10

6,78,00,125

68.02

SBI Magnum Income Floating Rate Plan - Short Term (Weekly Dividend) .
(41,306 units purchased 1,00,92,930 units sold during the year) and

10

1,00,51,624

10.22

Current Investments carried forward . Investments carried forward ..................

183.28 677.51

453.74 781.25

58

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No.6, page 44] Investments brought forward ............... Current Investments brought forward Tata Fixed Horizon Fund - Plan C - 371 days - Growth ...............................................
(2,50,00,000 units purchased during the year)

Face Value Rupees

Holdings As at 31-Mar-06

Rupees in crores

Rupees in crores 677.51 183.28

Holdings As at 31-Mar-05

Rupees in crores 781.25 453.74

10

2,50,00,000

25.00

Tata Fixed Horizon Fund (Aug. 04) Growth
(2,00,00,000 units sold during the year)

10 10

— —

— —

2,00,00,000 2,00,00,000

20.00 20.00

Tata Fixed Horizon Fund (Sept. 04) Growth
(2,00,00,000 units sold during the year)

Tata Floating Rate Fund Short Term Institutional Plan(Dividend) ...................
(5,69,022 units purchased and 2,18,96,197 units sold during the year)

10

2,13,27,175

21.35

Tata Short Term Bond Fund (Regular)
(2,33,98,942 units purchased 2,62,69,661 units sold during the year) and

10

28,70,719

3.09

Tata Liquidity Fund (Daily Dividend) ..
(99,791 units purchased during the year)

10

99,791

10.00

Templeton Treasury Management Account-Institutional - Growth ............. ( 2,89,263 units purchased and 5,31,069
units sold during the year)

1,000

2,41,806

24.70

Templeton India Bluechip - Dividend
(3,36,262 units purchased during the year)

10

4,62,520

1.23

1,26,258

0.29

Templeton India Short Term Plan (Weekly Dividend) ......................................
(2,34,156 units purchased and 2,52,913 units sold during the year)

1,000

18,757

2.05

UTI Liquid Cash Plan Inst. (Inc) ..............
(4,36,113 units purchased and 7,91,329 units sold during the year)

1,000

3,55,216

36.01

UTI-QFMP(Sr. VIII) Dividend ....................
(1,00,00,000 units sold during the year)

10 10

— —

— — 202.13 219.51 713.74

1,00,00,000 2,00,00,000

10.00 20.00 608.31 611.23 938.74

UTI-QFMP(Sr. IX) Dividend ......................
(2,00,00,000 units sold during the year) ......

CURRENT INVESTMENTS ....................... TOTAL INVESTMENTS ..............................

Aggregate of Quoted Investments . Aggregate of Unquoted Investments

Book Value Rupees in crores 150.07 563.67

Market Price Rupees in crores 1,299.08

Book Value Rupees in crores 135.61 803.13

Market Value Rupees in crores 757.26

* value below Rs.50,000/** Restriction on sale of shares imposed by the lenders of Rallis India Ltd.

59

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet (Contd.)
Schedule F : Investments [Item No. 6, page 44]
Face Value Rupees Number of Units Face Value Rupees in crores Purchase Cost Rupees in crores

Following Investments were acquired and sold during the year ............... Birla Bond Plus - I P - Dividend ......................................................................................... Birla Cash Plus - Institutional Premium Plan - Growth ............................................ Birla Floating Rate Fund - LTP - Monthly Dividend .................................................. Birla Floating Rate Fund - STP - IP - Daily Dividend ................................................. Birla SunLife Cash Manager - I P - Daily Dividend .................................................... Birla SunLife Cash Manager - I P - Growth ................................................................... Canliquid Institutional Plan - Growth ............................................................................. Deutsche FRF - Weekly Dividend ..................................................................................... Deutsche Insta Cash Plus Fund - IP - Daily Dividend .............................................. Deutsche Insta Cash Plus Fund - IP - Growth ............................................................. DSP ML Floating Rate Fund - IP - Wkly Dividend ...................................................... DSP ML Liquidity Fund - IP - Growth .............................................................................. DSP ML Liquidity Fund - Growth ...................................................................................... FT India MIP - Plan A - Growth .......................................................................................... Grindlays Cash Fund - Plan C - Super I P - Growth ................................................... Grindlays FMP - 17 - Plan A - Dividend .......................................................................... Grindlays SSIF - Short Term - Plan A - Monthly Dividend ...................................... Grindlays SSIF - Short Term - Plan C - Super IP - Monthly Dividend ................ HDFC Cash Mgmt Fund - Savings Plan - Daily Dividend ....................................... HDFC Cash Mgmt Fund - Savings Plus - Dividend ................................................... HDFC F R I F - STF - Daily Dividend ................................................................................. HDFC Liquid Fund - Premium Plus Plan - Growth .................................................... HDFC Liquid Fund - Premium Plus Plan - Wkly Dividend ...................................... HSBC Cash Fund - Institutional Plus - Daily Dividend ............................................. HSBC Cash Fund - Institutional Plus - Monthly Dividend ...................................... HSBC FRF - STP - IP - Wkly Dividend ............................................................................... ING Vysya Liquid Fund - IP - Daily Dividend ............................................................... ING Vysya Liquid Fund - Super IP - Daily Dividend .................................................. JM Floater Fund - S T P - Frtly Dividend ........................................................................ JM High Liquidity - Super I P - Daily Dividend ........................................................... JM High Liquidity - Super I P - Growth .......................................................................... JM Short Term Fund - I P - Frtly Dividend .................................................................... Kotak Bond Short Term Plan - Growth ........................................................................... Kotak Bond Short Term Plan - Monthly Dividend ..................................................... Kotak Cash Plus - Dividend ................................................................................................. Kotak Income Plus - Growth ............................................................................................... LIC MF Floating Rate Fund - ST - Growth ..................................................................... LIC MF Liquid Fund - Growth ............................................................................................. PRINCIPAL Cash Mgmt Fund LO- Inst Prem. Plan - Growth ................................... PRINCIPAL Floating Rate Fund - FMP - IP - Wkly Dividend ................................... PRINCIPAL Floating Rate Fund - SMP - IP - Daily. Dividend .................................. PRINCIPAL Income Fund - STP - I P - Weekly Dividend ........................................... Reliance FMP Series 2 - Monthly Plan 3 - Dividend ................................................. Reliance FMP Series 2 - QP 1 - Dividend ....................................................................... Reliance FMP Series 2 - QP 2 - Dividend ....................................................................... Reliance Liquid Fund - Cash Plan - Growth .................................................................. Reliance Short Term Fund - Dividend ............................................................................. SBI Magnum Institutional Income - Savings Plan - Growth .................................. Standard Chartered Liquidity Manager Fund - Daily Dividend .......................... Standard Chartered Liquidity Manager Fund -Growth ........................................... Tata Liquid Fund - SHIP - Dly Dividend ......................................................................... Tata Liquid Fund - SHIP - Growth ..................................................................................... Templeton India STIP - IP - Growth ................................................................................. Templeton India TMA - IP - Wkly Dividend .................................................................. UTI Floating Rate Fund - STP - Wkly Dividend ........................................................... UTI Liquid Fund - Cash Plan - IP - Growth ....................................................................

10 10 10 10 10 10 10 10 10 10 1,000 1,000 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 1,000 1,000 1,000 1,000 10 1,000

2,93,53,772 7,08,58,226 2,41,64,738 2,51,93,828 1,50,07,753 86,72,801 1,58,61,938 2,73,29,767 7,44,70,184 1,57,19,490 6,11,672 6,32,686 1,90,71,771 13,25,622 3,54,48,254 1,91,22,270 2,51,47,899 2,55,56,876 2,63,27,914 4,80,72,464 1,49,78,542 1,58,14,254 1,79,14,279 1,65,99,912 2,46,62,606 50,32,949 70,05,843 6,07,67,732 1,00,04,951 85,75,356 92,45,562 1,49,11,504 40,15,355 1,52,99,418 2,00,59,015 26,58,398 3,70,02,760 6,25,59,240 1,95,47,177 2,00,79,712 2,32,04,215 1,40,01,312 2,50,00,000 2,50,00,000 2,50,00,000 99,70,175 99,41,554 6,02,02,157 2,56,48,230 1,49,79,179 35,61,896 3,17,952 1,97,511 2,52,336 85,56,693 6,42,777

29.35 70.86 24.16 25.19 15.01 8.67 15.86 27.33 74.47 15.72 61.17 63.27 19.07 1.33 35.45 19.12 25.15 25.56 26.33 48.07 14.98 15.81 17.91 16.60 24.66 5.03 7.01 60.77 10.00 8.58 9.25 14.91 4.02 15.30 20.06 2.66 37.00 62.56 19.55 20.08 23.20 14.00 25.00 25.00 25.00 9.97 9.94 60.20 25.65 14.98 356.19 31.80 19.75 25.23 8.56 64.28

30.70 77.35 25.11 25.19 15.01 10.00 20.00 28.08 74.62 17.00 61.17 63.50 32.00 2.50 38.50 19.12 25.19 25.56 28.00 48.15 15.10 22.00 22.01 16.61 24.78 5.04 7.01 60.77 10.07 8.59 10.00 15.30 5.00 15.43 20.15 3.25 40.13 77.76 21.00 20.09 23.21 15.30 25.00 25.00 25.00 12.00 10.11 66.40 25.65 15.00 396.97 40.00 20.00 25.25 8.63 72.33

60

Schedules forming part of the Balance Sheet (Contd.)
Schedule G : Net Current Assets [Item No.7, page 44] 1. Current Assets, Loans and Advances : (a) Inventories : (at lower of cost and net realisable value) (i) Stores and spare parts ............................ (ii) Loose tools and equipment ................. (iii) Stock-in-trade : (a) Raw materials .................................. (b) Work-in-process .............................. (c) Semi-finished and finished products Rupees in crores Rupees in crores Rupees in crores Rupees in crores As at 31-Mar-05 Rupees in crores

84.25 0.06 241.60 0.68 234.23 476.51 560.82

97.29 0.05 243.83 3.68 143.79 391.30 488.64

(b)

Sundry Debtors : (unsecured) (i) Over six months old : Considered good ........................... Considered doubtful .................... (ii) Others : Considered good ........................... Considered doubtful ....................

100.56 29.87 130.43 500.79 — 500.79 631.22 29.87 601.35

76.51 27.19 103.70 363.92 4.47 368.39 472.09 31.66 440.43

Less : Provision for doubtful debts .... [including subsidy receivable of Rs.500.18 crores (previous year Rs 315.66 crores)] Cash and Bank Balances : (i) Cash on hand .............................................. (ii) Balance with scheduled banks in ...... (a) Current accounts ............................ (including cheques on hand Rs. 0.09 crore; (previous year Rs. 60.51 crores)) (b) Deposit accounts ........................... (maximum balance outstanding during the year Rs. 599.10 crores (previous year Rs. 645.21 crores)) (iii) Deposit account with Deustche Bank AG, Singapore Loans and Advances : (unsecured) (i) Deposits with Public Bodies ................ (ii) Advance to subsidiary # ......................... (iii) Advance payment of taxes ................... (net of provision) (iv) Other advances $ : Considered good ........................... Considered doubtful .................... Less: Provision for doubtful advances

(c)

0.26 45.80

0.16 106.30

599.10

— 46.06

46.11 751.67 16.31 — 170.46 96.34 5.86 102.20 5.86

(d)

23.68 1,031.94 68.50 133.82 6.57 140.39 6.57 133.82 1,257.94

96.34 283.11 2,466.17 1,963.85

Carried forward .......

61

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Balance Sheet (Contd.)
Schedule G : Net Current Assets (Contd.) [Item No.7, page 44] As at 31-Mar-05 Rupees in crores

Rupees in crores

Rupees in crores

Rupees in crores

Rupees in crores

2.

Brought forward .............................................................. Less : Current Liabilities and Provisions : (a) Current Liabilities : (i) Sundry creditors ........................................ (ii) Sundry deposits ......................................... (iii) Liability towards Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 (not due as on 31.03.2006) (a) Unclaimed dividend ....................... (b) Unclaimed debentures and interest (c) Unclaimed fixed deposits and interest (iv) Interest accrued but not due : On secured loans ......................................

2,466.17

1,963.85

427.52 20.17

453.82 16.54

6.98 1.48 0.01 8.47 9.24 9.24 465.40

6.49 1.59 0.01 8.09 2.64 2.64 481.09 139.82 19.61 137.03 13.67 310.13 792.76 791.22 1,172.63 1,673.41

(b)

Provisions : (i) Proposed dividend ................................... (ii) Tax on dividend ......................................... (iii) Provision for premium on redemption of FCCBs ........................................................ [See note No. 10, page 69] (iv) Provision for leave encashment .........

150.57 21.12 139.82 15.85 327.36

3.

Net Current Assets .......................................................

# Advance to Subsidiary include Rs. 404.63 crores being application money towards subscription for Equity shares $ Other Advances include loans: To Managing Director of the Company Rs.15,60,395 (previous year Rs.16,67,399). Maximum balance during the year Rs.16,67,399 (previous year Rs.17,74,403) To Officer of the Company Rs.1,33,728 (previous year Rs.1,55,988). Maximum balance during the year Rs.1,55,988 (previous year Rs. 1,78,248) Schedule H : Miscellaneous Expenditure [Item No.8, page 44] (to the extent not written off or adjusted) Rupees in crores 7.02 7.02 As at 31-Mar-05 Rupees in crores 1.68 1.68

Employee separation scheme .............................................. [See note 14, page 70] ............................................................

62

Schedule I : Notes on the Balance Sheet and Profit and Loss Account
1. Significant Accounting Policies : (a) Basis of Accounting The accounts of the Company are prepared under the Historical Cost Convention using the accrual method of accounting. (b) Fixed Assets Fixed Assets are carried at cost less depreciation and impairment loss. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets up to the date of commissioning of the assets and other incidental expenses incurred up to that date. Machinery spares whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of asset. Fixed Assets acquired and put to use for project purpose are capitalised and depreciation thereon is included in project cost. (c) Capital Work-in-Progress Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest. (d) Foreign Currency Transactions (i) Purchases and sales in foreign currency are accounted at exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currency as at the Balance Sheet date are translated at rates prevailing at the year end and the resultant net gains or losses are recognised as income or expense in the year in which they arise, except that: (a) In respect of liabilities for the acquisition of fixed assets from a country outside India, such exchange rate difference is adjusted in the carrying cost of fixed assets; Exchange rate difference on long term loans to non-integral foreign operations, are accumulated in a Foreign Currency Translation Reserve, until disposal of the net investment.

(b)

(ii)

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contract. Foreign currency options outstanding at the Balance sheet date are stated at fair value and any gains or losses are recognised in the Profit and Loss Account.

(e)

Investments Long term investments are carried at cost, less provision for diminution, other than temporary, in value of such investments. Current investments are carried at lower of cost and fair value.

(f)

Inventories Inventories are valued at lower of cost (on weighted average basis) and net realisable value after providing for obsolescence and other losses, where considered necessary. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

(g)

Employee Separation Compensation (a) Compensation paid / payable to employees who have opted for retirement under “Voluntary Retirement Scheme” / “Early Separation Scheme” is amortised over the period for which benefit is expected. Liability under “Early Separation Scheme” is computed and accounted at Net Present Value.

(b) (h)

Sales Sales are recognised, net of returns and trade discounts, on despatch of goods to customers. Sales tax and Value Added Tax are excluded. In respect of Urea, sales are recognised based on provisional rates of group concession as notified under

63

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
the New Pricing Scheme. Equated freight claims and escalation claims for Urea sales are estimated by management based on the norms prescribed or notified under the said Scheme. In case of complex fertilisers, other than traded goods, sales includes price concession, as notified under the Concession Scheme, or as estimated by the Management based on the norms prescribed. In case of traded complex fertilisers, revenue is accounted to the extent they are recoverable under the terms of contract with vendors. (i) Other Income Interest income is accounted on an accrual basis. Dividend income is accounted for when the right to receive income is established. (j) Research and Development Expenses Revenue expenditure pertaining to Research and Development is charged to Profit and Loss Account. Expenditure on fixed assets used in Research and Development is capitalised. (k) Depreciation (i) Depreciation has been provided on the straight line method as per Section 205(2)(b) of the Companies Act, 1956 as follows : (a) in respect of assets acquired prior to 31st March, 1987, in accordance with circular no. 1/86 dated 21st May, 1986 of the Department of Company Affairs; in respect of assets acquired on or after 1st April, 1987, at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 as amended, except for catalysts and temporary structures in the Fertiliser Plant and membrane cells in the Caustic Soda Plant which have been depreciated on the basis of useful life as technically assessed; and for the purpose of depreciation, impairment loss is taken into account.

(b)

(c) (ii) (l)

Leasehold land is amortised over the duration of lease.

Impairment of Assets Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

(m) Retirement Benefits Retirement benefits are dealt with in the following manner: (i) Contribution to Provident Fund and Superannuation Fund are accounted on accrual basis with corresponding contribution to recognised funds. Provision for Gratuity liability is made on the basis of actuarial valuation, with corresponding contribution to a recognised fund.

(ii)

(iii) Provision for value of unutilised leave due to employees on retirement is made on the basis of actuarial valuation. (n) Taxes Tax expense for the year comprises of current tax and deferred tax. Current tax provision has been determined on the basis of reliefs and deductions available under the Income Tax Act, 1961. Deferred tax is recognised for all timing differences, subject to the consideration of prudence, applying the tax rates that have been substantively enacted by the Balance Sheet date.

64

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
(o) Provisions and Contingencies A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent assets and liabilities are not recognised. 2. Segment Information for the year ended 31st March, 2006 (a) Information about Primary Business Segments Inorganic Chemicals 2005-06 2004-05 Revenue : External (net of excise) Inter-segment Total Revenue Result : Segment Result 321.38 222.28 200.66 207.79 522.04 (78.94) (9.29) 25.57 56.18 515.56 (4.69) 510.87 (157.84) 353.03 430.07 (52.24) (24.57) 30.87 70.87 455.00 (2.06) 452.94 (112.39) 340.55 1,326.56 1,326.56 1,135.32 1,135.32 2,190.92 2,190.92 1,872.82 1,872.82 3,517.48 3,517.48 3,008.14 3,008.14 Fertilisers 2005-06 Elimination 2004-05 (Rs. in crores) Total 2005-06 2004-05

2004-05 2005-06

Unallocated Expenditure net of Unallocated Income Interest Expense (net) Interest on Refund of Taxes Income from Investments Profit before Exceptional items Exceptional items Profit before Tax Provision for Taxation Profit after tax

Other Information : Inorganic Chemicals 2005-06 2004-05 Segment Assets Segment Liabilities Capital Expenditure Depreciation 1,156.06 236.86 121.77 57.25 1,021.04 144.26 57.51 56.29 Fertilisers 2005-06 1,661.50 199.72 8.54 80.83 Unallocated 2004-05 1,891.89 331.77 0.73 0.97

(Rs. in crores) Total 2005-06 2004-05 4,737.90 792.76 132.55 138.93 4,466.66 791.22 72.46 137.70

2004-05 2005-06 1,553.73 315.19 14.22 80.44 1,920.34 356.18 2.24 0.85

65

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
(b) Information about Secondary Business Segments Revenue by Geographical market Domestic 2005-06 External Inter-segment Total Segment Assets Capital Expenditure (c) Notes: (i) Management has identified two reportable business segments, namely : Inorganic Chemicals : - comprising of Soda Ash, Salt, Marine Chemicals, Caustic Soda, Cement and Bulk Chemicals. Fertilisers : - comprising of Urea, Phosphatic fertilisers and other agricultural inputs. 3,436.87 3,436.87 4,732.58 132.55 International 2004-05 85.27 85.27 12.90 (Rs. in crores) Total 2005-06 2004-05 3,517.48 3,517.48 4,737.90 132.55 3,008.14 3,008.14 4,466.66 72.46

2004-05 2005-06 2,922.87 2,922.87 4,453.76 72.46 80.61 80.61 5.32 -

Segments have been identified and reported taking into account the nature of products, the integration of manufacturing processes, the organisation structure and the internal financial reporting systems. (ii) Segment Revenue in each of the above domestic business segments primarily includes sales, miscellaneous income and insurance claims in the respective segments. (Rs. in crores) Segment Revenue comprises of : - Sales - Other Income excluding Income from investments 2005-06 3,502.85 14.63 3,517.48 (iii) The Segment Revenue in the geographical segments considered for disclosure are as follows : Domestic : - comprising of sales to customers located within India and earnings in India. International : - comprising of sales to customers located outside India. (iv) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis. 3. Earnings per Share : 2005-06 (a) (b) (c) (d) Profit after tax The weighted average number of equity shares of Rs.10 each Total number of shares Earning Per Share (Basic) Profit after tax for Basic EPS Add: Interest adjustment for Foreign Currency Convertible Bonds (net of tax) Profit after tax for Diluted EPS The weighted average number of equity shares for Basic EPS Add: Adjustments for Foreign Currency Convertible Bonds The weighted average number of equity shares for Diluted EPS Earning Per Share (Diluted) Rs. in crores Nos. Rupees Rs. in crores Rs. in crores Rs. in crores Nos. Nos. Nos. Rupees 353.03 21,51,02,651 16.41 353.03 5.08 358.11 21,51,02,651 2,83,71,176 24,34,73,827 14.71 2004-05 340.55 21,51,02,651 15.83 340.55 0.77 341.32 21,51,02,651 46,51,762 21,97,54,413 15.53 2004-05 2,982.64 25.50 3,008.14

(e) (f ) (g) (h) (i)

66

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
4. Related Party Disclosure (a) Related Party and their relationship Subsidiaries Joint Ventures Homefield International Pvt. Limited, Mauritius Indo Maroc Phosphore S.A., Homefield UK Pvt. Limited, UK Morocco Brunner Mond Group Limited, UK Kemax B.V., Netherlands Brunner Mond (UK) Limited, UK (indirectly through Brunner Mond Brunner Mond Limited, UK Group Limited, UK ) The Magadi Soda Company Limited, Kenya Brunner Mond (South Africa) Pty Limited, South Africa Brunner Mond Asset Management Limited, UK Northwich Resource Management Limited, UK Brunner Mond Trustees Limited, UK Brunner Mond Nominees Limited, UK Brunner Mond Generation Company Limited, UK Transcontinental Holdings Limited, UK Transcontinental Sales Limited, UK Pampascrown Limited, UK Brunner Mond Soda Holdings Limited, UK Brunner Mond CHP Limited, UK Magadi Railway Company Limited, Kenya Brunner Mond B.V. Netherlands (b) Transactions with the related parties Subsidiaries Homefield International Pvt. Ltd., Mauritius 13.78 404.63 1,119.69 478.58 12.15 Joint Ventures Indo Maroc Phosphore S.A., Morocco 312.38 166.26 20.62 Key Management Personnel Mr. Prasad R. Menon 0.01 -

Key Management Personnel Mr. Prasad R. Menon, Managing Director Mr. Homi Khusrokhan, Executive Director

(Rs. in crores)

Total

Interest Income Purchase of goods Investments (including advance towards subscription to equity shares) Loans given Amount received (in respect of loans) Amount payable (in respect of goods purchased) Interest receivable Amount receivable in respect of loans as on the Balance sheet date (including exchange rate difference) (previous year) Maximum amount outstanding during the year (previous year)

13.78 312.38 570.89 1,119.69 478.59 20.62 12.15

640.72

-

0.16 0.17 0.17 0.18

640.88 0.17 640.89 0.18

640.72

-

In addition to the above, remuneration is paid to Key Management Personnel, under their contract of employment with the Company (see Note 3, page 51). (c) Disclosure required by clause 32 of the Listing Agreement Amount of Loans/advances in the nature of loans outstanding from subsidiaries during 2005-06 (Rs. in crores) Name of the Subsidiary Outstanding as on March 31, 2006 Maximum amount outstanding during the year 640.72 Investment in shares of subsidiaries of the Company (No. of shares) 2@

Homefield International Pvt. Ltd., Mauritius

640.72

@ Excludes 5,12,87,335 shares applied for, pending allotment in Homefield Pvt UK Limited .

67

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
5. Deferred Taxes The significant component and classification of deferred tax assets and liabilities on account of timing differences are : (Rs. in crores) As at 31-Mar-06 Deferred Tax Assets : Provision for doubtful debts and advances Other timing differences Deferred Tax Liability : Depreciation Net deferred tax (liability)/asset 6. 341.09 (322.95) 372.54 (353.38) 9.69 8.45 18.14 11.20 7.96 19.16 As at 31-Mar-05

In May 2005, the Company acquired 33.33 percent equity interest in Indo Maroc Phosphore S.A. (IMACID), a Moroccan Phosphoric Acid manufacturing company for a total consideration of Rs.166.26 crores. IMACID is consequently a joint venture between Tata Chemicals Limited, Chambal Fertilisers and Chemicals Limited and Office Che’rifien Des Phosphates (OCP), Morocco . In December 2005, the Company, through its wholly owned overseas subsidiary, acquired a controlling equity interest in Brunner Mond Group Limited (BMGL), a Soda Ash manufacturing company. Subsequent to an open offer to the minority shareholders, which process was completed in February, 2006 , BMGL is a wholly owned subsidiary . The proportionate share of assets, liabilities, income and expenditure of the Joint Ventures included in the conslidated financial statements are given below:(Rs. in crores) Particulars LIABILTIES: Loan Funds Current Liabilities ASSETS: Fixed Assets - net-block Current Assets INCOME: Sales and Operating income EXPENDITURE: Manufacturing and other expenses Interest expenses (net) Depreciation Provision for Tax PROFIT/(LOSS) AFTER TAX FOR THE PERIOD IMACID 69.79 43.50 119.34 77.85 238.73 176.65 5.38 24.48 0.65 31.57 KEMAX 3.78 1.65 3.96 4.45 3.04 1.88 0.02 0.19 0.26 0.69

7.

8.

9.

(a)

During the previous year the Company has issued Foreign Currency Convertible Bonds (FCCBs) of a face value of US $ 1000 aggregating to US $ 150 million. As per the terms of the issue, the holders have an option to convert the FCCBs into Ordinary Shares at a conversion rate of Rs. 231.375 per Ordinary Share at a fixed exchange rate conversion of Rs. 43.65 = US $ 1, from 13th March, 2005 to 22nd January, 2010. The conversion price is subject to certain adjustments for corporate actions and consequently the conversion price has changed to Rs.230.78 per Ordinary Share. Further, under certain conditions the Company has an option of early redemption in whole but not in part. Unless previously converted, redeemed or purchased and cancelled, the Company will redeem these bonds at 120.89 per cent of the principal amount on 1st February, 2010.

68

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
(b) Exchange loss of Rs. 2.79 crores on account of year-end translation of liability denominated in foreign currency, relating to premium on redemption of FCCBs has been debited to the Securities Premium Account. In the previous year, FCCB issue expenses of Rs. 13.90 crores and provision for premium on redemption of FCCBs of Rs. 137.03 crores were debited to the Securities Premium Account.

10.

Provision for premium on redemption of Foreign Currency Convertible Bonds (FCCBs) (Rs. in crores) Opening Balance Add :- Exchange difference Closing Balance 137.03 2.79 139.82

Premium payable on redemption of FCCBs issued has been fully provided and debited to Securities Premium Account. 11. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 8.52 crores (previous year Rs.16.11 crores)

12. Contingent Liabilities : (a) Guarantees : Bank Guarantees issued by Banks on behalf of the Company Rs.49.58 crores (previous year Rs.45.88 crores). These are covered by the charge created in favour of the Company’s bankers by way of hypothecation of stocks and debtors. Claims not acknowledged by the Company relating to the following areas : (Rs. in crores) As at 31-Mar-06 (i) (ii) Excise and Customs ## Sales Tax 719.45 48.17 46.08 3.85 71.47 67.80 As at 31-Mar-05 13.46 19.81 37.20 3.24 107.96 103.16

(b)

(iii) Demand for utility charges (iv) Labour and other Legal matters (v) Income Tax (Pending before Appellate authorities in respect of which the Company is in appeal)

(vi) Income Tax (Decided in Company’s favour by Appellate authorities and Department is in further appeal)

##Waste products that are generated during the course of manufacture of excisable product have been used as an input for the manufacture of non-excisable product. The Excise Department at Haldia passed an Order on 29th March, 2006 determining the duty of Rs 278.35 crores and penalty of equal amount, and interest of Rs 153.78 crores. The management is filing an appeal against the claim to defend its position and believes, based on legal advice, that the likelihood of the claim of the authorities prevailing is low . (c) 13. Various claims pending before Industrial Tribunals and Labour Courts of which amounts are indeterminate.

The balance lease deposit of Rs. 25 crores remaining with the lessors is provided over the useful life of the asset and consequently a net amount of Rs.2.17 crores (previous year Rs.2.17 crores) has been charged to the Profit and Loss Account on the principle of matching of revenue and costs. Future obligations by way of lease rentals in respect of operating lease arrangements amount to : (a) (b) (c) due within one year Rs. 0.50 crore (previous year Rs. 0.55 crore) due within the following four years Rs. 0.02 crore (previous year Rs. 0.52 crore) due after five years Rs. NIL (previous year NIL)

69

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
14. (a) (b) (c) 15. (a) (b) Provision for Employee Separation Compensation has been calculated on the basis of the net present value of the future monthly payments of pension. The amount shown under Miscellaneous Expenditure on this account represents the balance amount to be amortised over the future years. An amount of Rs. 1.26 crores (previous year Rs. 1.44 crores) is payable under the scheme within one year. Sundry Creditors include dues to Small Scale Industrial Undertakings Rs.1.02 crores (previous year Rs.2.06 crores). Name of Small Scale Industrial Undertaking to whom the Company owes an amount for more than thirty days is : - NIL 16. Licensed and installed capacities : As at 31-Mar-2006 Licensed Capacity Tonnes Soda Ash Sodium Bicarbonate Sodium Bicarbonate IP/USP Caustic Soda Liquid Chlorine Hydrochloric Acid Bromine Hydrobromic Acid Vacuum Salt Pure Salt Gypsum Chemicals and other Industrial Machinery Clinker Pozzolana Portland Cement Ammonia Urea Sulphuric acid # Phosphoric acid # Sulphonic Acid # Sodium Tripolyphosphate (STPP) # Diammonium Phosphate (DAP) # Industrial Phosphates @ # Tetra Sodium Pyro Phosphate (TSPP) @ # Single Super Phosphate (SSP) # $ # @ 10,00,000 72,000 3,600 36,000 31,950 N.A. 2,520 50 N.A. N.A. N.R. 5,000 N.R. 4,40,000 N.R. N.R. 2,21,500 46,725 N.A. 40,000 6,70,000 15,000 15,000 1,65,000 Installed Capacity Tonnes $ 8,75,000 50,000 3,600 36,000 14,400 64,800 1,500 50 5,00,000 25,000 2,69,250 5,000 8,25,000 4,40,000 4,45,500 7,42,500 2,21,500 41,850 12,000 50,000 6,70,000 15,000 15,000 1,65,000 As at 31-Mar-2005 Licensed Capacity Tonnes 10,00,000 72,000 3,600 36,000 31,950 N.A. 2,520 50 N.A. N.A. N.R. 5,000 N.R. 4,40,000 N.R. N.R. 2,21,500 46,725 N.A. 40,000 6,70,000 15,000 15,000 1,65,000 Installed Capacity Tonnes $ 8,75,000 50,000 3,600 36,000 14,400 64,800 1,500 50 5,00,000 25,000 2,69,250 5,000 5,61,000 4,40,000 4,45,500 7,42,500 2,21,500 41,850 12,000 50,000 6,70,000 15,000 15,000 1,65,000

As certified by the Management and accepted by the Auditors. Licensed capacity includes capacity under the Industrial Entrepreneurs Memorandum filed with the Government and duly acknowledged by them under the scheme of delicensing notified by the Government. Alternate capacities to STPP.

N.A. Not Applicable N.R. Not Required

70

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
17. Production and Sales : Production/Purchase 2005-06 Tonnes Soda Ash Sodium Bicarbonate Caustic Soda Liquid Chlorine Hydrochloric Acid Bromine Ethyl Bromide Hydrobromic Acid Vacuum Salt # Pure Salt Solar Salt Gypsum Cement Clinker Ammonia Urea Sodium Tripolyphosphate (STPP) @ Diammonium Phosphate (DAP) NPK Single Super Phosphate Sulphuric Acid Phosphoric Acid Sulphonic Acid @@ Sale of Purchased Materials : Soda Ash Vacuum Salt Complex Fertilizers MOP Others 8,770 2,03,452 1,25,733 6,473 6,192 1,47,845 20,481 2,276 8,710 2,150 135 4,277 8,826 2,03,083 90,580 3.57 311.80 98.71 59.84 3,603.14 # Sales of Vacuum Salt includes free issues under sales promotion schemes. @ Excludes quantities processed under conversion arrangement 30,387 tonnes, (previous year 34,649 tonnes) @@ Excludes quantities processed under conversion arrangement 8,683 tonnes, (previous year 9,471 tonnes) 4,323 6,192 1,30,726 21,843 4.83 2.29 181.81 21.28 20.17 3,043.19 8,10,684 51,597 14,525 6,393 15,316 1,846 4 4,98,057 22,061 86,327 2,13,061 4,90,643 5,16,983 5,47,365 9,60,113 20,260 2,80,939 4,05,704 1,40,236 2,38,707 37,788 2,239 2004-05 Tonnes 7,81,858 49,076 12,346 3,185 18,241 1,414 4,75,984 21,167 1,74,449 4,65,832 4,69,001 5,52,107 9,69,307 20,480 2,54,990 2,64,684 1,22,399 2,48,849 42,061 543 Internal Use 2005-06 Tonnes 1,01,681 67 3,539 549 11,856 1 10,453 1,090 25,469 4,010 4,66,172 5,47,446 645 9 95 937 14,256 1,89,928 37,807 2004-05 Tonnes 1,09,566 89 3,067 191 9,572 4,515 2,979 27,946 2,990 4,42,362 5,52,869 547 23 4,313 1,590 9,348 1,92,663 42,062 2005-06 Tonnes Rs. in crores 7,06,907 53,321 11,052 5,891 3,602 1,862 3 4,74,189 20,284 86,327 1,73,780 4,86,064 23,633 9,53,518 16,108 2,74,636 3,87,098 1,26,184 53,456 30 2,038 712.64 57.84 19.15 3.73 0.32 16.67 0.02 310.28 6.18 1.47 7.92 142.54 4.39 722.07 74.40 421.75 547.79 55.32 14.03 0.07 10.64 Sales 2004-2005 Tonnes Rs. in crores 6,83,806 49,562 9,186 2,945 8,508 1,400 2 2 4,72,522 19,878 1,42,766 4,69,407 23,295 9,49,985 20,085 3,01,100 2,76,954 1,25,574 52,158 93 543 591.33 51.50 16.12 1.78 0.91 10.92 0.01 0.01 266.29 5.72 8.01 113.16 2.72 819.66 80.93 421.33 358.51 48.34 12.76 0.28 2.52

71

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
18. Closing Stocks of Semi - finished and Finished Products : As at 31-Mar-06 Tonnes Soda Ash Sodium Bicarbonate Caustic Soda Liquid Chlorine Hydrochloric Acid Bromine Ethyl Bromide Hydrobromic Acid Vacuum Salt Pure Salt Gypsum Cement Clinker Ammonia Urea Complex Fertilizers Sodium Tripolyphosphate (STPP) Diammonium Phosphate (DAP) NPK Single Super Phosphate Sulphuric Acid Phosphoric Acid Sulphonic Acid MOP Others 16,474$ 1,616$ 179 56 366 9 2 2 66,438 1,209 28,193 7,803 42,497 1,108 65,037 32,101 5,086 10,186 38,069 4,061 1,099 253 201 26,545 Rs. in crores 10.50@ 0.82@ 0.12 0.04 0.03 0.04 0.01 0.01 13.87# 0.19 0.28 1.28 5.35 0.72 35.55 45.66# 19.77 15.90 52.49 1.40 0.21 0.75 1.05 27.35# 0.84# 234.23 As at 31-Mar-05 Tonnes 14,378$ 3,407$ 245 103 508 25 2 2 53,079 522 14,381 7,234 15,319 1,189 59,087 34,008 943 3,978 20,400 4,265 5,776 302 102 Rs. in crores 8.85@ 2.31@ 0.30 0.06 0.04 0.13 0.02 0.01 11.03# 0.12 0.10 1.00 1.98 0.90 37.16 45.22# 3.32 5.14 23.32 1.03 0.85 0.55 0.13# 0.22# 143.79

@ $ #

Net of values written down for reprocessing charges and other incidental charges for cyclone / rain damaged stocks. Includes cyclone damaged stocks written down in the previous years Soda Ash- 262 Tonnes, Rs. * crore (previous year 262 Tonnes, Rs. * crore) and Sodium Bicarbonate- 432 Tonnes, Rs. * crore (previous year 494 Tonnes, Rs. * crore) Includes closing stock of traded goods

72

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
19. Raw Materials consumed : (inclusive of Salt, Limestone, Soda Ash and Gypsum produced and captively consumed) Measure (a) (b) (c) (d) (e) (f ) (g) (h) (i) (j) (k) (l) Limestone @ Liquid ammonia# Salt * Coke Anthracite coal Natural gas RLNG Naptha Phosphoric acid Ammonia MOP Rock Tonnes Tonnes Tonnes Tonnes Tonnes SCM SCM KL Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes 2005-06 Quantity Rs. in crores 16,87,566 2,914 15,41,656 60,851 46,875 16,58,62,765 21,34,36,931 604 2,40,118 1,18,771 1,61,039 1,40,440 57,919 58.91 4.31 15.71 68.47 35.86 80.06 156.14 0.86 497.42 198.27 138.13 56.57 29.23 73.74 1,413.68 @ # * ** Includes Rs. 4.96 crores (previous year Rs.3.24 crores) charged to wages, salaries and other revenue accounts. Includes Rs.0.43 crore (previous year Rs. 0.36 crore) charged to wages, salaries and other revenue accounts. Includes Rs. 5.28 crores (previous year Rs. 6.75 crores) charged to wages, salaries and other revenue accounts. Includes Rs. 7.23 crores (previous year Rs. 6.49 crores) charged to wages, salaries and other revenue accounts. Quantity 1,471,295 2,495 1,416,899 67,595 49,207 23,00,71,377 6,75,67,731 74,188 1,80,909 91,612 95,547 1,35,695 5,136 62,079 2004-05 Rs. in crores 45.58 3.99 15.20 86.03 37.96 93.81 49.68 106.30 335.75 142.07 77.36 49.08 4.74 29.80 61.67 1,139.02

(m) MAP (n) (o) Sulphur Other raw materials **

20. Value of Imports (C.I.F. Value) 2005-06 Rs. in crores (a) (b) (c) Raw materials and fuel Stores, components and spare parts Capital goods 1,163.57 11.37 2.18 1,177.12 2004-05 Rs. in crores 718.17 11.20 13.66 743.03

21. Expenditure in Foreign Currencies :

2005-06 Rs. in crores 4.32 3.39 2.87 10.58

2004-05 Rs. in crores 2.34 3.34 5.68

(a) (b) (c)

For technical know how fee Interest in foreign currency to Bank on foreign currency loans Payments on other accounts

73

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Balance Sheet and Profit and Loss Account (Contd.)
22. Remittances in foreign currencies for Dividends : The Company has remitted during the year Rs.6.11 crores (previous year Rs.0.01 crore) in foreign currencies on account of dividends and does not have information as to the extent to which other remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividends paid to non-resident shareholders for the year 2004-05, for which dividend was declared during the year, are as under : 2005-06 (a) (b) (c) Number of Non-Resident Shareholders Number of Ordinary Shares held by them Gross amount of dividend (Rs. in crores) 1308 94,06,026 6.11 2005-06 Rs. in crores 80.61 2004-05 1189 10,94,595 0.60 2004-05 Rs. in crores 85.27

23. Earnings in Foreign Exchange Export of goods on F.O.B. basis

24. Value of imported and indigenous raw materials, stores, components and spare parts consumed : 2005-06 Raw Materials Stores Components and Spare Parts % 3.55 96.45 100.00 Raw Materials 2004-05 Stores Components and Spare Parts % 68.39 31.61 100.00 Rs. in crores 2.29 43.05 45.34 % 5.06 94.94 100.00

Rs. in crores (a) (b) Imported Indigenous 965.61 # 448.07 1,413.68 # 25. 26.

% Rs. in crores 68.31 31.69 100.00 3.03 82.27 85.30

Rs. in crores 779.01 # 360.01 1,139.02

Includes Rs. 17.90 crores (previous year Rs. 16.84 crores) charged to wages, salaries and other revenue accounts.

Asterisks denotes figures below Rs.50,000. Previous years’ figures have been regrouped wherever necessary. Signatures to Schedules ‘1’ to ‘5’, ‘A’ to ‘H’, Notes to Accounts, Balance Sheet Abstract of Company’s General Business Profile. For and on behalf of the Board R. N. TATA R. GOPALAKRISHNAN P. R. MENON P. K. GHOSE B. RENGANATHAN Mumbai, 30th May, 2006 Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary

74

Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details Registration No. Balance Sheet Date II. 2 8 9 3 0 3 Month 0 6 Year Rights Issue N N State Code 1 1

3 1 Date Capital raised during the year (Amount in Rs. Thousand) Public Issue N Bonus Issue N I L I L

I I

L L

Private Placement

III.

Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities 3 9 4 5 1 4 2 1 Sources of Funds Paid up Capital 2 1 5 1 6 4 9 Secured Loans 1 6 0 4 3 2 7 Deferred Tax Liability (Net) 3 2 2 9 4 8 8 Application of Funds Net Fixed Assets 1 5 5 0 9 7 2 4 Net Current Assets 1 6 7 3 4 1 2 7 Accumulated Losses

Total Assets 3 9 4 5 1 4 2 1 Reserves and Surplus 1 9 5 2 5 3 6 5 Unsecured Loans 1 2 9 4 0 5 9 2

Investments 7 1 3 7 4 0 0 Misc. Expenditure 7 0 1 7 0

IV.

N I L Performance of Company (Amount in Rs. Thousands) Turnover (Gross Revenue) 3 7 3 4 6 0 7 3 +/Profit/Loss before tax + 5 1 0 8 6 9 1 Earnings per Share in Rs. 1 6 . 4 1

+/+

Total Expenditure 3 2 2 3 7 3 8 2 Profit/Loss after tax 3 5 3 0 2 9 1 Dividend rate % 7 0

V.

Generic names of three Principal Products/Services of the Company (as per monetory terms) Item code no. (ITC Code) 0 0 3 1 0 2 1 0 0 0 Product Description Item code no. (ITC Code) Product Description Item code no. (ITC Code) Product Description U R E A 0 0 2 8 3 6 2 0 0 9 S O D A A S H

0 0 3 1 0 5 3 0 0 0 D I A M M O N I U M P H O S P H A T E

75

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Summary of Financial Information of Subsidiary Companies
Name of Subsidiary Company Homefield International Pvt. Ltd. Homefield UK Pvt. Ltd. Brunner Mond Group Limited@ Issued and Subscribed Share Capital 397.57 * 0.78 Reserves Total Assets Total Liabilities Investments Turnover/ Total Income Profit before Taxation Provision for Taxation

(Rs. in crores)
Profit after Taxation Proposed Dividend

9.95 (3.64) 251.04

1,045.04 1,030.15 813.70

1,045.04 1,030.15 813.70

405.28 801.16 —

33.96 8.22 370.06

13.13 (3.64) 51.65

— — 13.82

13.13 (3.64) 37.83

— — —

@ Consolidated figures of Brunner Mond Group Limited and its subsidiaries * Figure below Rs. 50,000/-. The financial statements of subsidiaries are converted into Indian Rupees on the basis of appropriate exchange rate.

Financial Highlights - Last Decade
Year Turnover Net Oprating Income PAT/Net Income Earnings per ShareBasic (No. of (Rs. Crs.) (Rs. Crs.) (%) (Rs.) (Rs.) (%) (%) (%) times) (%) (Rs. Crs.) Dividend per Share Gross Return on Gearing Capital Employed Return on Net Worth Fixed Assets Working Capital Exports FOB Value Market Capitalisation As at March 31st (Rs. Crs.)

Cover Turnover

1996-97

1598.52

1502.94

16.8

13.96

6.50

53.0

17.5

17.6

0.66

56.5

23.72

2850.54

1997-98

1633.02

1527.54

18.9

15.97

6.50

48.9

17.5

18.1

0.65

55.0

19.98

2701.47

1998-99

1453.09

1358.84

13.4

10.06

5.00

48.4

12.5

10.8

0.55

69.7

2.05

1297.43

1999-00

1513.42

1424.65

8.2

6.50

5.00

44.7

10.7

6.9

0.52

54.6

5.46

948.68

2000-01

1470.00

1405.25

11.7

9.13

5.00

37.1

11.3

8.5

0.51

52.4

22.10

687.33

2001-02

1387.10

1357.68

9.3

7.02

5.00

34.5

10.1

8.2

0.48

50.0

20.75

839.97

2002-03

1612.42

1535.27

12.8

10.88

5.50

28.2

12.2

12.0

0.54

40.8

53.18

1190.41

2003-04

2593.07

2544.15

8.7

10.25

5.50

23.6

11.6

10.8

0.84

34.3

64.25

2293.62

2004-05

3043.19

3008.14

11.3

15.83

6.50

36.0

13.0

17.0

0.98

39.0

85.27

3260.96

2005-06

3603.14

3517.48

10.0

16.41

7.00

36.9

13.2

16.3

1.12

47.6

80.61

5675.48

76

Auditors’ Report on Consolidated Financial Statements
TO THE BOARD OF DIRECTORS OF TATA CHEMICALS LIMITED 1. We have audited the attached Consolidated Balance Sheet of TATA CHEMICALS LIMITED (‘the Company), its subsidiaries and joint ventures (collectively referred as ‘the TCL Group’) as at 31st March, 2006 and the Consolidated Profit and Loss account and the Consolidated Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets (net) of Rs. 2032.45 crores as at 31st March, 2006, total revenues of Rs. 382.76 crores and net cash inflows amounting to Rs.22.20 crores for the periods ended on that date. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. We did not audit the financial statements of a joint venture, whose financial statements reflect total revenue of Rs. 182.85 crores for the period from 1st May, 2005 (month of acquisition) to 31st December, 2005. These financial statements and other financial information have been audited by other auditors, whose report has been furnished to us, and our opinion is based solely on the report of other auditors. For the remaining period of the year, financial statements reflecting total assets (net) of Rs. 155.69 crores as at 31st March, 2006 and total revenue of Rs 55.88 crores for the three months period ended on that date, have not been audited and are as certified by the management. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of the Accounting Standards (AS) 21, Consolidated Financial Statements and Accounting Standards (AS) 27, Financial Reporting of Interests in Joint Ventures issued by the Institute of Chartered Accountants of India. Subject to the matter referred to in paragraph 4 above, based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Consolidated Balance Sheet, of the state of affairs of the TCL Group as at 31st March, 2006; (ii) in the case of Consolidated Profit and Loss Account, of the profit of the TCL Group for the year ended on that date; and (iii) in the case of Consolidated Cash Flow Statement, of the cash flows of the TCL Group for the year ended on that date. For S. B. BILLIMORIA & CO. Chartered Accountants N VENKATRAM Partner Membership No.: 71387 Mumbai, 30th May, 2006 For N.M. RAIJI & CO. Chartered Accountants J. M. GANDHI Partner Membership No.: 37924

2.

3.

4.

5.

6.

77

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Consolidated Balance Sheet as at 31st March, 2006
Schedule SOURCES OF FUNDS 1. SHAREHOLDERS’ FUNDS (a) Share Capital ................................................ (b) Reserves and Surplus ............................... 2. LOAN FUNDS (a) Secured ........................................................... (b) Unsecured ..................................................... DEFERRED CAPITAL GRANTS ........................... DEFERRED TAX LIABILITY .................................. [See note 6(a), page 95] TOTAL FUNDS EMPLOYED ................................ Page Rupees in crores Rupees in crores

A B

84 84

215.16 2,004.19 2,219.35

C D

85 85

682.26 1,365.74 2,048.00 27.62 322.95 4,617.92

3. 4. 5.

APPLICATION OF FUNDS 6. FIXED ASSETS ......................................................... (a) Gross Block .................................................... (b) Less : Depreciation and Impairment .. (c) Net Block ........................................................ (d) Capital Work-in-Progress ......................... 7. 8. 9. GOODWILL ON CONSOLIDATION ................. INVESTMENTS ........................................................ DEFERRED TAX ASSET ........................................ [See note 6(a), page 95] G 88 1,853.02 1,370.12 482.90 11. MISCELLANEOUS EXPENDITURE .................... 12. TOTAL ASSETS (net) ............................................. 13. Notes on the Consolidated Balance Sheet and Profit and Loss Account ........................... As per our report attached For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Chartered Accountants, Chartered Accountants, N. VENKATRAM Partner. J. M. GANDHI Partner. I 90 For and on behalf of the Board R.N. TATA R. GOPALAKRISHNAN P.R. MENON P.K. GHOSE B. RENGANATHAN Mumbai, 30th May, 2006 Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006 H 89 7.02 4,617.92 (a) Current Assets, Loans and Advances . (b) Less : Current Liabilities and Provisions F 87 E 86 4,846.24 2,625.73 2,220.51 558.90 2,779.41 707.49 547.48 93.62

10. NET CURRENT ASSETS ........................................

78

Consolidated Profit and Loss Account for the year ended 31st March, 2006
Schedule INCOME 1. SALES AND OPERATING INCOME .................. 2. 3. 4. INVESTMENT INCOME (net) ............................. INTEREST ON REFUND OF TAXES .................. TOTAL INCOME ...................................................... Page Rupees in crores 4,029.01 56.18 25.57 4,110.76 Rupees in crores

1 2

82 82

EXPENDITURE 5. MANUFACTURING AND OTHER EXPENSES 6. 7. 8. INTEREST .................................................................. DEPRECIATION ....................................................... TOTAL EXPENDITURE ..........................................

3 4

82 83

3,292.98 28.40 3,321.38 184.04 3,505.42 605.34 4.69 600.65 166.79 5.52 172.31

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 9. EMPLOYEE SEPARATION COMPENSATION . PROFIT BEFORE TAX ................................................... 10. PROVISION FOR TAX (a) Income Tax [See note 6(b), page 95] . (b) Fringe Benefit Tax ......................................

PROFIT AFTER TAX ...................................................... 11. BALANCE BROUGHT FORWARD ..................... 12. AMOUNT AVAILABLE FOR APPROPRIATIONS 13. APPROPRIATIONS : (a) Proposed Dividend .................................... (b) Tax on Dividend .......................................... (c) General Reserve .......................................... (d) Balance carried to Balance Sheet .......

428.34 623.85 1,052.19

150.57 21.12 36.00 844.50 1,052.19

14. EARNINGS PER SHARE (Rupees) .................... [See Note 4, Page 94] ......................................... 15. Notes on the Consolidated Balance Sheet and Profit and Loss Account ........................... As per our report attached For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Chartered Accountants, Chartered Accountants, N. VENKATRAM Partner. J. M. GANDHI Partner.

(a) Basic (b) Diluted I 90

19.91 17.80

For and on behalf of the Board R.N. TATA R. GOPALAKRISHNAN P.R. MENON P.K. GHOSE B. RENGANATHAN Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006

Mumbai, 30th May, 2006

79

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Consolidated Cash Flow Statement for the year ended 31st March, 2006
Rupees in crores 2005-06 A. Cash Flow from Operating Activities Net Profit before Tax and Exceptional Items ......................................................................... Adjustments for : Unrealised foreign exchange loss ..................................................................................... Depreciation ............................................................................................................................... Interest expense - (net) ......................................................................................................... Amortisation of deferred capital grant .......................................................................... Loss on sale of fixed assets - (net) .................................................................................... Profit on sale of investments - (net) ................................................................................ Dividend income ...................................................................................................................... Provision for doubtful debts and advances ................................................................. Amortisation of miscellaneous expenditure ................................................................ Lease rent charged .................................................................................................................. Operating Profit before Working Capital Changes ...................................................... Adjustments for : Trade and other receivables ................................................................................................ Inventories ................................................................................................................................... Trade payables and other liabilities ................................................................................. Cash Generated from Operations ........................................................................................... Taxes paid .................................................................................................................................... Cash Flow before Exceptional Items ..................................................................................... Employee separation compensation ............................................................................... Net Cash from Operating Activities ...................................................................................... B. Cash Flow from Investing Activities ...................................................................................... Acquisition of fixed assets (net) ........................................................................................ Sale of investments in mutual funds (net) ................................................................... Acquisition of subsidiaries ................................................................................................... Acquisition of equity interest in joint venture ........................................................... Purchase of other investments .......................................................................................... Interest received ....................................................................................................................... Dividend received .................................................................................................................... Net Cash used in Investing Activities ................................................................................... (189.30) 410.41 (817.95) (166.26) (14.92) 18.39 51.95 (707.68) (175.22) (88.85) (248.02) 263.34 (87.49) 175.85 (11.06) 164.79 14.85 184.04 28.40 (1.61) 0.40 (4.23) (51.95) (2.78) 0.01 2.96 775.43 605.34

80

Consolidated Cash Flow Statement for the year ended 31st March, 2006 (Contd.)
Rupees in crores 2005-06 C. Cash Flow from Financing Activities Proceeds from borrowings .................................................................................................. Principal payments on capital lease obligations ....................................................... Repayment of borrowings ................................................................................................... Interest paid ............................................................................................................................... Lease rent paid .......................................................................................................................... Dividends paid .......................................................................................................................... Net Cash used in Financing Activities ................................................................. Net Increase/ ( Decrease) in Cash & Cash equivalents ...................................................... Cash and Cash equivalents as at 1st April .............................................................................. ( Opening Balance ) Add: Cash and bank balance taken over acquisition ......................................................... Effect of foreign exchange translation of subsidiaries ...................................................... Cash and Cash equivalents as at 31st March ........................................................................ ( Closing Balance ) As per our report attached For S. B. BILLIMORIA & CO. For N. M. RAIJI & CO. Chartered Accountants, Chartered Accountants, N. VENKATRAM Partner. J. M. GANDHI Partner. 211.24 (1.59) (109.24) (52.70) (2.98) (158.93) (114.20) (657.09) 751.67 21.59 0.30 116.47

For and on behalf of the Board R.N. TATA R. GOPALAKRISHNAN P.R. MENON P.K. GHOSE B. RENGANATHAN Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006

Mumbai, 30th May, 2006

81

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Consolidated Profit and Loss Account
Rupees in crores Schedule 1 : Sales and Operating Income [Item No.1, page 79] 1. Sales and services: (a) Sales ........................................................................................................ Less : Excise duty ............................................................................... (b) Processing charges ........................................................................... 4,098.01 135.38 3,962.63 35.09 3,997.72 2. Operating income: (a) Town income ....................................................................................... (b) Miscellaneous income .................................................................... (c) Insurance claims ................................................................................ 1.35 29.87 0.07 31.29 4,029.01 Schedule 2 : Investment Income [Item No.2, page 79] Rupees in crores 1. Income from Long Term Investments (Gross): Dividend on trade investments ............................................................ Income from Current Investments (Gross): (a) Dividend income ............................................................................... (b) Profit / (Loss) on sale of investments (net) ............................ Rupees in crores 27.22 Rupees in crores

2.

24.73 4.23 28.96 56.18

Schedule 3 : Manufacturing and Other Expenses [Item No.5, page 79] Rupees in crores 1. 2. 3. Raw materials consumed ..................................................................... Cost of traded goods purchased ....................................................... Payments to and provisions for employees (a) Wages and salaries, including bonus ....................................... (b) Company’s contribution to provident, superannuation, and gratuity funds@ ........................................................................ (c) Company’s contribution under group insurance scheme (d) Workmen and staff welfare expenditure ................................ 141.68 (15.01) 0.02 22.17 148.86 Rupees in crores 1,466.02 461.86

82

Schedules forming part of the Consolidated Profit and Loss Account (Contd.)
Schedule 3 : Manufacturing and Other Expenses (Contd.) [Item No.5, page 79] 4. Operation and other expenses: (a) Stores, spare parts, loose tools and equipment consumed ... (b) Packing material consumed ......................................................... (c) Power and fuel ................................................................................... (d) Repairs - Buildings ......................................................................... - Machinery ...................................................................... - Others .............................................................................. (e) Rent ......................................................................................................... (f ) Royalty, rates and taxes .................................................................. (g) Commission and distributors’ service charges / discount (h) Sales promotion expenses ............................................................ (i) Insurance charges ............................................................................. (j) Freight and forwarding charges ................................................. (k) Lease rent ............................................................................................. (l) Loss on assets sold or discarded (net) ..................................... (m) Provision for doubtful debts and advances (net) ............... (n) Other expenses .................................................................................. Less: Expenditure transferred to capital account ............... 5. 6. Directors’ fees / commission ............................................................... Change in inventory of semi-finished and finished products and work-in-process (a) Opening Stock .................................................................................... (b) Add : Adjustments arising on acquisition of subsidiaries/ joint venture ........................................................................................ (c) Less : Closing Stock ........................................................................... Rupees in crores 92.67 112.97 422.29 4.12 71.30 2.66 20.46 14.63 67.36 46.65 14.22 311.22 2.96 0.40 (2.78) 135.42 1,316.55 1.23 1,315.32 2.31 3,394.37 147.47 41.37 290.23 (101.39) 3,292.98
@ Net of write back of an amount of Rs. 31.35 crores of pension liabilities in an overseas subsidiary, consequent to actuarial valuation.

Rupees in crores

Schedule 4 : Interest [Item No.6, page 79] Interest paid on: (a) Debentures and fixed loans ................................................................... (b) Other loans .................................................................................................... Less - Interest received on: (a) Inter-corporate loans and bank deposits ......................................... (b) Sundry advances, etc. ...............................................................................

Rupees in crores 17.65 29.30

Rupees in crores

46.95 11.85 6.70 18.55 28.40 Notes on the Profit and Loss Account 1. Item 2(b) of Schedule 1 Miscellaneous Income Rs. 29.87 crores include: Exchange gain on foreign currency transactions ......................... Item 4(n) of Schedule 3 Other Expenses of Rs. 135 crores include: Exchange loss on foreign currency transactions .......................... Rupees in crores 16.39

2.

16.18

83

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Consolidated Balance Sheet
Schedule A : Share Capital [Item No.1(a), page 78] Rupees in crores 1. Authorised: 27,00,00,000 Ordinary Shares of Rs.10 each ................................... 270.00 270.00 2. Issued: 21,51,88,971 Ordinary Shares of Rs.10 each ................................... 215.18 215.18 3. 4. Subscribed: 21,51,02,651 Ordinary Shares of Rs.10 each ................................... Forfeited shares: Amount paid-up on 86,320 shares ..................................................... 215.10 0.06 215.16

Schedule B : Reserves and Surplus [Item No.1(b), page 78] Rupees in crores 1. 2. 3. 4. Capital reserve .......................................................................................... Capital redemption reserve ................................................................ Surplus on amalgamation ................................................................... Securities premium: (a) Balance as per last account .......................................................... (b) Less : Provision for premium on Redemption of FCCBs [See note 9(b), page 96] ................................................................. Foreign currency translation reserve: For the year (debit balance) ................................................................... General reserve: (a) Balance as per last account .......................................................... (b) Add : Transferred from Profit and Loss Account ................. 710.75 36.00 746.75 7. 8. Debenture redemption reserve ......................................................... Balance in Profit and Loss Account .................................................. 245.46 844.50 2,004.19 181.11 2.79 178.32 5. (32.35) (32.35) 6. Rupees in crores 0.66 0.10 20.75

84

Schedules forming part of the Consolidated Balance Sheet (Contd.)
Schedule C : Loans - Secured [Item No. 2(a), page 78] Rupees in crores Loans : (a) From Banks : (i) Cash / Packing credits ..................................................................... 23.88 611.07 634.95 (b) From Financial Institutions - Term Loans ......................................... 47.31 682.26 (ii) Term Loans (includes Foreign Currency Term Loans) ....... Rupees in crores

Amount repayable within one year Rs. 420.41 crores excluding Cash/Packing Credit

Notes : Secured Loans (a) Loans from Banks on Cash/Packing Credit Accounts under item (a)(i) are secured by hypothecation of all stocks of raw materials, finished products, stores and stock-in-process as well as book debts. (b) Term Loan from State Bank of India for Rs. 89.24 crores included in item (a)(ii) is secured by a pari passu first mortgage and charge on immovable properties at Chemicals and Cement Plant at Mithapur , Fertiliser Plant at Babrala and residential property at Mumbai. (c) Other term loan of Rs. 521.83 crores included in item (a) (ii) relating to subsidiary companies is secured against certain movable and immovable assets of the subsidiary companies. (d) Item (b) represents Rs. 47.31 crores being interest - free loan under Sales Tax Deferment Scheme from Pradeshiya Industrial and Investment Corporation of Uttar Pradesh, which is secured by second charge on the Company’s properties at Babrala. (e) Consequent to the change in ownership of Brunner Mond Group Limited (BMGL), as a result of its’ acquisition by Tata Chemicals Limited, BMGL’s European banking facilities (amounting to Rs. 317.19 crores) became repayable on demand. Post the acquisition, negotiations for refinancing the existing loan are in progess and, in the interim, the outstanding loan amount as at the Balance Sheet date, forming part of the secured loan, is classified as repayable within one year.

Schedule D : Loans - Unsecured [Item No.2(b), page 78] Rupees in crores 1. 2. Foreign Currency Convertible Bonds [See note 9(a), page 96] From Banks / Others .................................................................................. 669.30 696.44 1,365.74

85

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Consolidated Balance Sheet (Contd.)
Schedule E : Fixed Assets [Item No.6, page 78]
Rs. in crores Fixed Assets (At Cost) Gross Block Assets of as at Subsidiaries/ 31-Mar-05 Joint Ventures acquired during the year Additions / Adjustments Deductions / Adjustments Gross Block as at 31-Mar-06 Depreciation Total for Depreciation 2005-06 31-Mar-06 ## Impairment @ Net Block as at 31-Mar-06

1.

Land : (a) Freehold .................................. (b) Leasehold ...............................

7.58 15.02

63.25 4.66

0.46 —

1.25 0.01

70.04 19.67

— 0.19

— 5.43

0.16 —

69.88 14.24

2.

Works : (a) Saltworks,Reservoirs and Pans ................................. (b) Plant and Machinery ......... (c) Traction Lines and Railway Sidings ....................

26.26 2,557.94 21.83 191.51 164.47 8.31 44.41 26.37 — 3,063.70

4.53 1,377.60 30.40 164.09 27.10 — 54.82 13.81 0.53 1,740.79

6.69 95.75 0.19 5.14 0.80 — 5.18 2.46 0.06 116.73

0.04 39.02 8.78 0.15 0.28 — 18.51 6.94 — 74.98

37.44 3,992.27 43.64 360.59 192.09 8.31 85.90 35.70 0.59 4,846.24 558.90

1.64 164.20 1.54 8.60 2.96 0.13 3.53 1.25 — 184.04 —

27.80 2,187.78 23.78 143.87 47.91 6.97 52.82 23.51 — 2,519.87 —

— 96.36 0.28 8.85 — — 0.10 0.11 — 105.86 —

9.64 1,708.13 19.58 207.87 144.18 1.34 32.98 12.08 0.59 2,220.51 558.90

(d) Buildings ................................. 3. 4. 5. 6. 7. Town ................................................... Water Works ................................... Furniture,Fitting and Office Equipment ........................ Vehicles ............................................. Patents(licence fees), marks and rights ........................................

Total ............................................................... Capital Work-in-progress .................. (including advances for Capital Expenditure) NOTES : 1. 2.

5,405.14 @The impairment loss was proportionately allocated to reduce the cost of assets.

184.04

2,519.87

105.86

2,779.41

## Total Depreciation as on 31-Mar-06 includes accumulated depreciation of Rs 776.66 crores on acquisition of Brunner Mond Group Limited (Subsidiary) and accumulated depreciation of Rs.171.05 crores on acquiring 33.33% equity interest in IMACID (Joint Venture).

86

Schedules forming part of the Consolidated Balance Sheet (Contd.)
Schedule F : Investments [Item No.8, page 78] A LONG TERM INVESTMENTS Trade Investments : 1. 2. 3. Fully paid Ordinary/Equity Shares (Quoted) ......................... Fully paid Ordinary/Equity Shares (Unquoted) .................... Fully paid Preference Shares (Unquoted) ............................... TOTAL ..................................................................................................... Less: Provision for diminution in value of investments .... TOTAL LONG TERM INVESTMENTS (net) ............................. 133.31 147.19 47.72 328.22 0.25 327.97 Rupees in crores

B

CURRENT INVESTMENTS : 1. 2. 3. 4. 5. Quoted Equity Shares, Fully Paid ............................................... Unquoted Equity Shares, Fully Paid .......................................... Quoted Bonds/units ........................................................................ Unquoted units .................................................................................. Mutual Funds (Unquoted) ............................................................. * 0.25 17.01 0.12 202.13 219.51 547.48

TOTAL CURRENT INVESTMENTS ....................................................... TOTAL INVESTMENTS .............................................................................

Book Value Rupees in crores Aggregate of Quoted Investments ................................................. Aggregate of Unquoted Investments ............................................ 150.07 397.41

Market Price Rupees in crores 1,299.08

87

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedules forming part of the Consolidated Balance Sheet (Contd.)
Schedule G : Net Current Assets [Item No.10, page 78] 1. Current Assets, Loans and Advances (a) Inventories : (at lower of cost and net realisable value) (i) Stores and spare parts .......................................................... (ii) Loose tools and equipment ............................................... (iii) Stock-in-trade : ......................................................................... (a) Raw materials .................................................................. (b) Work-in-process .............................................................. (c) Semi-finished and finished products .................... Rupees in crores Rupees in crores

147.37 0.06 147.43 260.66 8.12 282.11 550.89 698.32

(b) Sundry Debtors : (unsecured) (i) Over six months old : Considered good ........................................................... Considered doubtful .................................................... (ii) Others : Considered good ........................................................... Less : Provision for doubtful debts .................................. (c) Cash and Bank Balances : (i) Cash on hand ............................................................................ (ii) Balance with banks in: (a) Current accounts with scheduled bank .............. (b) Current accounts with other banks ....................... (c) Deposit accounts with other banks ...................... (d) Loans and Advances : (unsecured) (i) Deposit with Public Bodies ................................................. (ii) Advance payment of taxes ................................................. (net of provision) (iii) Other advances - Considered good .................................................................. - Considered doubtful ........................................................... Less: Provision for doubtful advances ............................

106.30 29.87 136.17 659.24 795.41 29.87 765.54 1.05 45.80 52.85 16.77 116.47

39.83 68.50

164.36 6.57 170.93 6.57 164.36 272.69

Carried forward ............................................................................................

1,853.02

88

Schedules forming part of the Consolidated Balance Sheet (Contd.)
Schedule G : Net Current Assets (Contd.) [Item No.10, page 78] Brought forward ................................................................................................... Less : 2. Current Liabilities and Provisions : (a) Current Liabilities : (i) Sundry creditors ...................................................................... (iii) Sundry deposits ....................................................................... (iii) Liability towards Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 (not due as on 31.03.2006) (a) Unclaimed dividend ..................................................... (b) Unclaimed debentures and interest ..................... (c) Unclaimed fixed deposits and interest ................ (iv) Interest accrued but not due : On secured loans ..................................................................... Rupees in crores Rupees in crores 1,853.02

591.93 20.17

6.98 1.48 0.01 8.47 14.84 14.84 635.41

(b) Provisions : (i) Proposed dividend ................................................................. (ii) Tax on dividend ....................................................................... (iii) Provision for taxes (net) ........................................................ (iv) Provision for premium on redemption of FCCBs ...... [See note No.10 , page 96] (v) Provision for leave encashment / pension ...................

150.57 21.12 56.64 139.82 366.56 734.71 1,370.12

3.

Net Current Assets ...................................................................................

482.90

Schedule H : Miscellaneous Expenditure [Item No.11, page 78] (to the extent not written off or adjusted) Rupees in crores Employee separation scheme ............................................................... [See note 14, page 98] 7.02 7.02

89

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account
1. Basis of Consolidation The consolidated financial statements relate to Tata Chemicals Limited (the Company), its subsidiary companies and joint ventures. The Company, its subsidiaries and joint ventures constitute the Group. (a) Basis of Accounting: I. The financial statements of the subsidiary companies and joint ventures used in the consolidation are drawn upto the same reporting date as of the Company, i.e. for the year ended 31st March, 2006. II. The financial statements of the Group have been prepared in accordance with the Accounting Standards issued by The Institute of Chartered Accountants of India, and other generally accepted accounting principles. (b) Principles of Consolidation: The consolidated financial statements have been prepared on the following basis: I. The financial statements of the Company and its subsidiary companies have been combined on a line- by- line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profit and losses as per Accounting Standard 21-Consolidated Financial Statement issued by The Institute of Chartered Accountants of India. II. Interests in joint ventures have been accounted by using the proportionate consolidation method as per Accounting Standard 27- Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The intra-group balances and intra group transactions and unrealised profits and losses are eliminated to the extent of the Company’s proportionate share. III. The excess of the cost to the Company of its investment in subsidiaries and joint ventures over the Company’s portion of equity as at the dates on which the investment in subsidiary companies and joint ventures is made is recognised in the financial statements as “Goodwill on Consolidation” . IV. The consolidated financial statements are presented, to the extent possible, in the same format as that adopted by the Company for its separate financial statements. Differences if any, in accounting policies have been disclosed separately. V. The operations of the Company’s subsidiaries and joint ventures are considered as non-integral operations for the purpose of consolidation. (c) Particulars of subsidiaries and joint ventures: Name of the Company Subsidiaries (held directly) Homefield International Pvt. Limited Subsidiaries (Indirect) Homefield UK Pvt. Limited Brunner Mond Group Limited Brunner Mond (UK) Limited Brunner Mond Limited, The Magadi Soda Company Limited Brunner Mond (South Africa) Pty Limited Brunner Mond Asset Management Limited Northwich Resource Management Limited Brunner Mond Trustees Limited Brunner Mond Nominees Limited Brunner Mond Generation Company Limited Transcontinental Holdings Limited Transcontinental Sales Limited Pampascrown Limited Brunner Mond Soda Holdings Limited Brunner Mond CHP Limited Magadi Railway Company Limited Brunner Mond B. V. Joint Venture Indo Maroc Phosphore S.A. (IMACID) Kemax B.V. Country of Incorporation Percentage of Voting power as at 31st March, 2006 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 33.33% 50%

Mauritius United Kingdom United Kingdom United Kingdom United Kingdom Kenya South Africa United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Kenya Netherlands Morocco Netherlands

90

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
2. Significant Accounting Policies : (a) Basis of Accounting The consolidated accounts of the Group are prepared under the Historical Cost Convention using the accrual method of accounting. (b) Fixed Assets Fixed Assets are carried at cost less depreciation and impairment loss. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets up to the date of commissioning of the assets and other incidental expenses incurred up to that date. Machinery spares whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of asset. Fixed Assets acquired and put to use for project purpose are capitalised and depreciation thereon is included in project cost. (c) Capital Work-in-Progress Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest. (d) Foreign Currency Transactions (i) Purchases and sales in foreign currency are accounted at exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currency as at the Balance Sheet date are translated at rates prevailing at the year end and the resultant net gains or losses are recognised as income or expense in the year in which they arise, except that: (a) (b) in respect of liabilities for the acquisition of fixed assets in India from a country outside India, such exchange rate difference is adjusted in the carrying cost of fixed assets., On consolidation of non-integral foreign operations, the assets, liabilities and goodwill or capital reserve arising on acquisition of the company’s overseas operations are translated at the exchange rate prevailing on the Balance Sheet date and item of income and expenditure are translated at the average exchange rate for the period. Exchange differences arising on consolidation are recognised in the Foreign Exchange Translation Reserve until the disposal of the net investment.

(ii)

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contract. Foreign currency options outstanding at the Balance sheet date are stated at fair value and any gains or losses are recognised in the Profit and Loss Account.

(e)

Deferred Capital Grants Government grants relating to tangible fixed assets are treated as deferred income and included in the Profit and Loss account over the expected useful life of the assets concerned.

(f)

Investments Long term investments are carried at cost, less provision for diminution, other than temporary, in value of such investments. Current investments are carried at lower of cost and fair value.

(g)

Inventories Inventories are valued at lower of cost (on weighted average basis) and net realisable value after providing for obsolescence and other losses, where considered necessary. Work in progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

(h)

Employee Separation Compensation (a) (b) Compensation paid / payable to employees who have opted for retirement under “Voluntary Retirement Scheme” / “Early Separation Scheme” is amortised over the period for which benefit is expected. Liability under “Early Separation Scheme” is computed and accounted at Net Present Value.

(i)

Sales Sales are recognised, net of returns and trade discounts, on despatch of goods to customers. Sales tax and Value added tax are excluded. In respect of Urea, sales are recognised based on provisional rates of group concession as notified

91

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
under the New Pricing Scheme. Equated freight claims and escalation claims for Urea sales are estimated by management based on the norms prescribed or notified under the said Scheme. In case of complex fertilisers, other than traded goods, sales includes price concession, as notified under the Concession scheme, or as estimated by the Management based on the norms prescribed. In case of traded complex fertilisers, revenue is accounted to the extent they are recoverable under the terms of contract with vendors. (j) Other Income Interest income is accounted on an accrual basis. Dividend income is accounted for when the right to receive payment is established. (k) Research and Development Expenses Revenue expenditure pertaining to Research and Development is charged to Profit and Loss Account. Expenditure on fixed assets used in Research and Development is capitalised. (l) Depreciation i) Depreciation on fixed assets is provided on the straight line method over the useful life estimated by the management or on the basis of depreciation rates prescribed under respective domestic laws, whichever is higher. Leasehold land is amortised over the duration of lease.

(ii)

(m) Impairment of Assets Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. (n) Retirement Benefits Retirement benefits are dealt with in the following manner: (i) (ii) Contribution to Provident Fund and Superannuation Fund are accounted on accrual basis with corresponding contribution to recognised funds. Provision for Gratuity liability is made on the basis of actuarial valuation, with corresponding contribution to a recognised fund.

(iii) Provision for value of unutilised leave due to employees on retirement is made on the basis of actuarial valuation. (iv) In respect of overseas subsidiary, the pension scheme liabilities are based upon the liabilities determined on the basis of actuarial valuation. Actuarial gains and losses are recognised in Profit and Loss account. (o) Taxes on Income Tax expense for the year comprises of current tax and deferred tax. Current tax provision has been determined on the basis of reliefs and deductions available under the Income Tax Act, 1961, except for the overseas subsidiaries and joint ventures where current tax provision is determined based on the local tax laws. Deferred tax is recognised for all timing differences, subject to the consideration of prudence, applying the tax rates that have been substantively enacted by the Balance Sheet date. (p) Provisions and Contingencies A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent assets and liabilities are not recognised. (q) Goodwill on Consolidation Goodwill on Consolidation represents the difference between the Group’s share in the net worth of the investee company at the time of acquisition and the cost of investment made.The said goodwill is not amortised, however, it is tested for impairment at each Balance Sheet date and loss if any is provided for.

92

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
3. Segment Information for the year ended 31st March, 2006 (a) Information about Primary Business Segments (Rs. in crores) Inorganic Chemicals 2005-06 Revenue : External (net) Inter-segment Total Revenue Result : Segment Result Unallocated Expenditure net of Unallocated Income Interest Expense (net) Interest on Refund of Taxes Income from Investments Profit before Exceptional items Exceptional items Profit before Tax Provision for Taxation Profit after Tax Other Information : Inorganic Chemicals 2005-06 Segment Assets Segment Liabilities Capital Expenditure Depreciation (b) Information about Secondary Business Segments Revenue by Geographical market India 2005-06 External Inter-segment Total Segment Assets Capital Expenditure 3,585.77 — 3,585.77 3,557.30 132.55 Asia (other than India) 2005-06 106.89 — 106.89 7.10 — Europe 2005-06 286.95 — 286.95 1,613.21 50.52 Africa 2005-06 33.05 — 33.05 810.43 8.68 3,299.66 992.21 172.29 77.88 Fertilisers Unallocated 2005-06 1,970.81 237.13 17.22 105.31 2005-06 717.57 140.78 2.24 0.85 383.90 238.26 — 622.16 (70.17) (28.40) 25.57 56.18 605.34 (4.69) 600.65 (172.31) 428.34 (Rs. in crores) Total 2005-06 5,988.04 1,370.12 191.75 184.04 (Rs. in crores) Total 2005-06 4,012.66 — 4,012.66 5,988.04 191.75 1,687.13 — 1,687.13 2,325.53 — 2,325.53 — — — 4,012.66 — 4,012.66 Fertilisers Elimination 2005-06 2005-06 Total 2005-06

93

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
(c) Notes: (i) Management has identified two reportable business segments, namely : Inorganic Chemicals : - comprising of Soda Ash, Salt, Marine Chemicals, Caustic Soda, Cement and Bulk Chemicals. Fertilisers : - comprising of Urea, Phosphatic fertilisers and its intermediaries and other agricultural inputs.

Segments have been identified and reported taking into account the nature of products, the integration of manufacturing processes, the organisation structure and the internal financial reporting systems. (ii) Segment Revenue in each of the above business segments primarily includes sales and miscellaneous income in the respective segments. Segment Revenue comprises of : (Rs. in crores) 2005-06 Sales Other Income excluding Income from Investments 3,981.37 31.29 4,012.66 (iii) The Segment Revenue in the geographical segments considered for disclosure are as follows : India : - comprising of sales to customers located within India and earnings in India. Asia (other than India) : - comprising of sales to customers located in Asia (other than India). Europe : - comprising of sales to customers located in Europe. Africa :- comprising of sales to customers located in Africa

(iv) Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis. 4. Earnings per Share : 2005-06 (a) (b) Profit after tax The weighted average number of equity shares of Rs.10 each Total number of shares (c) (d) Earning Per Share (Basic) Profit after tax for Basic EPS Add: Interest adjustment for Foreign Currency Convertible Bonds (net of tax) (e) (f ) (g) (h) (i) Profit after tax for Diluted EPS The weighted average number of equity shares for Basic EPS Add: Adjustments for Foreign Currency Convertible Bonds The weighted average number of equity shares for Diluted EPS Earning Per Share (Diluted) Nos. Rupees Rs. in crores Rs. in crores Rs. in crores Nos. Nos. Nos. Rupees 21,51,02,651 19.91 428.34 5.08 433.42 21,51,02,651 2,83,71,176 24,34,73,827 17.80 Rs. in crores 428.34

94

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
5. Related Party Disclosure: (a) Related Party and their relationship: Joint Ventures Indo Maroc Phosphore S.A., Morocco Kemax B.V., Netherlands (indirectly through Brunner Mond Group Limited, UK ) (b) Transactions with the related parties: Joint Ventures Kemex B.V.,Netherlands Joint Ventures Indo Maroc Phosphore S.A., Morocco 208.26 — 13.75 — — Key Management Personnel Mr. Prasad R. Menon — 0.01 — — 0.16 Key Management Personnel Mr. Prasad R. Menon, Managing Director Mr. Homi Khusrokhan, Executive Director

(Rs. in crores)

Total 208.26 0.01 13.75 1.89 0.16

Purchase of goods Amount Received (in respect of loans) Amount Payable in respect of goods purchased Amount payable in respect of loans as on the Balance sheet date Amount receivable in respect of loans as on the Balance sheet date 6. Deferred Taxes : (a)

— — — 1.89 —

The significant component and classification of deferred tax assets and liabilities on account of timing differences are : (Rs. in crores) As at 31-Mar-06 Deferred Tax Assets : Provision for doubtful debts and advances Provision for leave encashment/pension Other timing differences 9.69 107.38 15.33 132.40 Deferred Tax Liability : Depreciation (net of impairment) Accelerated capital allowances Other timing differences 341.09 12.88 7.76 361.73 Net deferred tax (liability)/asset Domestic deferred tax liability Overseas deferred tax asset Net deferred tax (liability)/asset (229.33) (322.95) 93.62 (229.33) 187.74 (20.95) 166.79

(b)

Income tax for the year comprises of: Curren t tax Deferred tax Total

95

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
7. In May 2005, the Company acquired 33.33 percent equity interest in Indo Maroc Phosphore S.A. (IMACID), a Moroccan Phosphoric Acid manufacturing company for a total consideration of Rs.166.26 crores . IMACID is consequently a joint venture amongTata Chemicals Limited, Chambal Fertilisers and Chemicals Limited and Office Che’rifien Des Phosphates (OCP), Morocco. In December 2005, the Company, through its wholly owned overseas subsidiary, acquired a controlling equity interest in Brunner Mond Group Limited (BMGL), a Soda Ash manufacturing company. Subsequent to an open offer to the minority shareholders which process was completed in February ,2006 , BMGL is a wholly owned subsidiary. The financial position and results included in the consolidated financial statements is as given below: Rs. in crores PARTICULARS @ LIABILITIES: Loan Funds Capital Grant Current Liabilities ASSETS: Fixed Assets-net block Goodwill on consolidation Deferred Tax Asset (net) Current Assets INCOME: Sales and Operating income EXPENDITURE: Manufacturing and other expenses Interest Expense (net) Depreciation Provision for Tax PROFIT/(LOSS) AFTER TAX FOR THE PERIOD 277.42 10.87 20.63 13.82 37.83 360.57 1,109.10 3.36 93.62 351.60 523.72 27.62 860.56

8.

@ The above mentioned financial details for the subsidiary acquired is inclusive of the proportionate share of assets, liabilities, income and expenses of the joint venture company Kemax B.V. 9. (a) During the previous year the Company has issued Foreign Currency Convertible Bonds (FCCBs) of a face value of US $ 1000 aggregating to US $ 150 million. As per the terms of the issue, the holders have an option to convert the FCCBs into Ordinary Shares at an conversion rate of Rs. 231.375 per Ordinary Share at a fixed exchange rate conversion of Rs. 43.65 = US $ 1, from 13th March, 2005 to 22nd January, 2010. The conversion price is subject to certain adjustments for Corporate actions and consequently the conversion price has changed to Rs. 230.78 per ordinary share. Further, under certain conditions the Company has an option of early redemption in whole but not in part. Unless previously converted, redeemed or purchased and cancelled, the Company will redeem these bond at 120.89 per cent of the principal amount on 1st February, 2010. During the year, foreign currency loss of Rs.2.79 crores on account of restatement of liability created for premium on redemption of FCCBs has been debited to the Securities Premium Account.

(b)

10. Provision for premium on redemption of Foreign Currency Convertible Bonds (FCCBs) (Rs. in crores) Opening Balance Add :- Exchange difference Closing Balance 137.03 2.79 139.82

Premium payable on redemption of FCCBs issued has been fully provided and debited to Securities Premium Account.

96

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
11. The proportionate share of assets, liabilities, income and expenditure of the joint ventures included in the consolidated financial statements are given below:(Rs. in crores) PARTICULARS LIABILITIES: Loan Funds Current Liabilities ASSETS: Fixed Assets-net block Current Assets INCOME: Sales and Operating income EXPENDITURE: Manufacturing and other expenses Interest Expense (net) Depreciation Provision for Tax PROFIT/(LOSS) AFTER TAX FOR THE PERIOD 176.65 5.38 24.48 0.65 31.57 1.88 0.02 0.19 0.26 0.69 238.73 3.04 119.34 77.85 3.96 4.45 69.79 43.50 3.78 1.65 IMACID KEMAX

12. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.96.11 crores 13. Contingent Liabilities : (a) Guarantees: Bank Guarantees issued by Banks on behalf of the Company Rs. 50.41 crores. These are covered by the charge created in favour of the Company’s bankers by way of hypothecation of stocks and debtors. The company has given counter guarantees to Bank and Financial institutions on account of facilities to subsidiaries amounting to Rs. 317.19 crores. (b) Claims not acknowledged by the Company relating to the following areas : (Rs. in crores) As at 31-Mar-06 (i) (ii) Excise and Customs ## Sales Tax 719.45 48.17 46.08 3.85 71.47 67.80

(iii) Demand for utility charges (iv) Labour and other legal matters (v) Income Tax (Pending before Appellate authorities in respect of which the Company is in appeal)

(vi) Income Tax (Decided in Company’s favour by Appellate authorities and Department is in further appeal)

##Waste products that are generated during the course of manufacture of excisable product have been used as an input for the manufacture of non-excisable product. The Excise Department at Haldia passed an order on 29th March, 2006 determining the duty of Rs 278.35 crores and penalty of equal amount, and interest of Rs 153.78 crores. The management is filing an appeal against the claim to defend its position and believes, based on legal advice, that the likelihood of the claim of the authorities prevailing is low . (c) Various claims pending before Industrial Tribunals and Labour Courts of which amounts are indeterminate.

97

CHEMICALS
Sixty-seventh annual report 2005-2006
Tata Chemicals Limited

Schedule I : Notes on the Consolidated Balance Sheet and Profit and Loss Account (Contd.)
14. The balance lease deposit of Rs. 25 crores remaining with the lessors is provided over the useful life of the asset and consequently a net amount of Rs.2.17 crores has been charged to the Profit and Loss Account on the principle of matching of revenue and costs. Future obligations by way of lease rentals in respect of operating lease arrangements amount to : (a) (b) (c) 15. (a) (b) due within One year Rs. 1.27 crores due within the following Four years Rs. 3.22 crores due after Five years Rs. 3.10 crores Provision for Employee Separation Compensation has been calculated on the basis of the net present value of the future monthly payments of pension. The amount shown under Miscellaneous Expenditure on this account represents the balance amount to be amortised over the future years.

16. Figures pertaining to the subsidiary companies and joint ventures have been reclassified wherever necessary to bring them in line with the Company’s financial statements. 17. Previous year figures have not been provided as this is the first occasion that Consolidated Financial Statements are presented

Signatures to Schedules ‘1’ to ‘5’, ‘A’ to ‘H’, Notes to Accounts, Balance Sheet Abstract of Company’s General Business Profile. For and on behalf of the Board R.N. TATA R. GOPALAKRISHNAN P.R. MENON P.K. GHOSE B. RENGANATHAN Chairman Vice-Chairman Managing Director Chief Financial Officer Company Secretary Mumbai, 30th May, 2006

98

FINANCIAL STATISTICS
CAPITAL ACCOUNTS REVENUE ACCOUNTS Development Rebate Reserve/ Export Reserve/ Debenture Redemption Reserve Rs. in lacs — — — — 14 12 20 55 40 77 68 52 75 51 174 94 128 240 200 132 261 519 524 457 2 350 582 500 2000 1000 5000 5500 17000 4500 — — — — — — — — — Distributable profit for the year Earnings per Dividends Ordinary (including Share Dividend (Basic) Tax) Dividend Net per Worth Ordinary per Share Ordinary Share Employees’ Earnings and Benefits Year Share Capital Reserves Borrow- Deferred ings Tax Liability (Net) Capital Employed Gross Block Depreciation Net Block Gross Revenue Expenses Depreciation Profit before Taxes Taxes

Rs. in lacs 1939-40 1944-45 1949-50 1954-55 1959-60 1964-65 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 (9 Months) 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 66 152 152 192 312 362 492 579 579 631 671 994 994 994 994 994 994 994 994 1105 1405 1594 2779 2719(c) 3717 4492 4917 7375 7375 9262 11268 11288 18069 18070 18070 18070 18070 18070 18070 18070 21516(d) 21516 21516

Rs. in lacs — 8 10 24 64 220 428 443 542 711 929 906 1165 1197 1441 1665 2036 2681 3267 3982 4906 6705 8636 10212 15036 21093 25926 26070 29831 41931 71225 92630 113349 125449 141396 149537 151240 176474 1370.66 145516 182018 178268 195254

Rs. in lacs — 69 126 86 325 281 243 399 484 612 1023 1189 1537 2275 2141 2403 2848 3522 4444 4410 6727 11987 12779 21929 23516 25850 34129 58398 62262 95966 125245 152664 154892 161606 152755 157023 137023 114627 106071 81626 76554 132422 145449

Rs. in lacs — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 46431 44076 44203 35338 32295

Rs. in lacs 66 229 288 302 701 863 1163 1421 1605 1954 2623 3089 3696 4466 4576 5062 5878 7197 8705 9497 13038 20286 24194 34860 42269 51435 64972 91843 99468 147159 207738 256582 286310 305125 312221 324630 306313 309171 307638 289288 324291 367544 394514

Rs. in lacs 35 186 240 315 708 1086 1642 1896 2184 2629 3075 3765 4395 5472 6056 6697 7480 8877 10459 11683 14254 17032 19559 22257 25991 28559 35310 49989 69797 119358 194562 209747 224475 241799 260896 273995 284488 281238 285989 283490 307025 311790 322899

Rs. in lacs 1 7 17 105 207 443 783 846 921 1038 1184 1375 1598 1926 2259 2638 3048 3544 4198 4758 6254 7317 8285 9170 10631 12125 14017 16047 18618 21050 22632 26717 36872 47837 59053 70516 82244 92802 104522 115049 132880 155551 167802

Rs. in lacs 34 179 223 210 501 643 859 1050 1263 1591 1891 2390 2797 3546 3797 4059 4432 5333 6261 6925 8000 9715 11274 13087 15360 16434 21293 33942 51179 98308 171930 183030 187603 193962 201843 203479 202244 188436 181467 168441 174145 156239 155097

Rs. in lacs 5 16 116 223 351 876 1253 1362 1568 1837 2333 3464 3866 3714 4348 4182 5860 7888 8350 7694 12610 13570 16746 19354 23040 29172 30902 35202 41204 48743 64698 92443 155565 162813 166151 150030 165882 173411 151605 170483 272984 322515 373461

Rs. in lacs 4 29 107 191 303 649 918 1002 1181 1400 1751 2652 2957 2729 3607 3253 4421 6010 6514 6143 9413 10429 12898 14878 17875 22392 23172 27354 29580 34754 40424 59171 103420 122372 121432 117432 139190 141518 118278 130588 225961 263451 308481

Rs. in lacs 1 — 9 18 21 72 75 87 96 128 160 201 256 328 334 400 513 649 670 610 1516 968 1102 1341 1645 1751 2056 2403 2650 2623 2266 4601 10489 11409 11513 11615 12347 13284 13321 13693 14415 13770 13893

Rs. in lacs — (13) — 14 27 155 260 273 291 309 422 611 653 657 407 529 926 1229 1166 941 1681 2173 2746 3135 3520 5029 5674 5445 8974 11366 22008 28671 41656 29032 33205 20983 14345 18609 20006 26202 32608 45294 51087

Rs. in lacs — — — — 1 63 117 104 112 74 127 250 230 300 — 141 364 370 365 118 760 450 578 875 800 1450 1600 1000 3000 3871 500 6 2200 3800 4350 2816 2616 2114 7324 6544 10555 11239 15784

Rs. in lacs — — — 14 12 80 123 114 139 158 227 309 348 306 233 294 434 619 601 691 660 1204 1644 1803 2718 3229 3612 3945 3974 6495 16508 23165 22231 20487 28863 18167 11729 16495 12682 19658 22053 34055 35303

Rs. in lacs — — — 14(a) 19(b) 53 69 82 93 103 73 154 163 163 163 163 191 214 214 197 297 352 684 683 1086 1392 1475 1844 2212 2944 6385 7342 11747 12916 12916 10026 10026 9953 9032 11208 13347 15973 17169

Rupees — — 0.07 1.03 0.90 2.91 3.21 3.18 3.36 4.45 4.66 3.82 4.48 3.78 4.31 4.10 5.97 9.16 8.53 8.03 7.84 12.34 7.96 8.30 7.51 7.97 8.29 6.03 8.10 8.91* 20.21* 25.38 21.83 13.96 15.97 10.06 6.50 9.13 7.02 10.88 10.25 15.83 16.41

Rupees — — — — 0.60 1.60 1.50 1.50 1.70 1.90 1.20 1.60 1.70 1.70 1.70 1.70 2.00 2.25 2.25 1.90 2.50 2.50 2.50 2.50 3.00 3.10 3.00 2.50 3.00 3.50 6.00 6.50 6.50 6.50 6.50 5.00 5.00 5.00 5.00 5.50 5.50 6.50 7.00

Rupees 7.39 8.11 7.83 10.80 11.68 15.52 18.30 16.96 18.67 21.23 23.57 18.06 20.73 22.82 25.43 27.83 31.80 38.70 44.99 48.10 46.47 53.70 41.76 47.55 51.80 56.96 62.73 45.35 50.45 54.84 73.03 92.00 72.72 79.42 88.28 92.79 93.73 105.36 84.35 89.81 94.48 92.80 100.45

Rs. in lacs 2 12 24 44 74 110 155 168 184 222 265 368 349 334 366 421 511 627 693 591 866 1068 1171 1365 1651 1779 1684 1909 2442 2527 3613 4053 4582 4830 6557 64.78 6038 6251 6035 6972 9793 10643 12187

EQUITY SHARES ISSUED ON CONVERSION OF BONDS/DEBENTURES Rs. Lacs Premium 1982-83 116 Rs. 8/- per share 1983-84 300 Rs. 10/- per share 1984-85/1985-89 600 Rs. 30/- per share 1987-88 725 Rs. 40/- per share 1987-88 725 Rs. 60/- per share 1992-93 1960 Rs. 40/- per share 1993-94 1960 Rs. 40/- per share 6386

RIGHTS ISSUES 1954-55 1957-58 1961-62 1972-73 1 for 2 at Par 4 for 5 at Par 1 for 5 at Prem Re. 0.5 per share 1 for 5 at Prem Re. 0.5 per share Rs. Lacs 48 112 50 104 1966-67 1968-69 1970-71 1974-75 1985-86 1990-91 1995-96

BONUS ISSUES 1 for 10 3 for 10 1 for 5 1 for 2 2 for 5 1 for 2 3 for 5 Rs. Lacs 30 100 87 311 777 2458 6777

314

10540

Note: (a) Including arrears of dividends on Preference Shares, (b) Including interest paid out of Capital on Ordinary Shares, (c) Reduction due to cancellation of Preference Share Capital and Issue of Non-Convertible Bonds. (d) Includes the balance lying in Share Capital Suspense Account amounting to Rs. 34.46 Crores. * Annualised.

99

CHEMICALS
Registered Office: Bombay House, 24, Homi Mody Street, Fort, Mumbai 400 001.

ATTENDANCE SLIP

Folio No. DP ID Account ID No. of Shares

I hereby record my presence at the SIXTY -SEVENTH ANNUAL GENERAL MEETING of the Company at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400 020, at 3.30 p.m. on Monday, July 17, 2006. Signature of the attending Member/Proxy Notes: 1. A Member/Proxyholder attending the meeting must bring the Attendance Slip to the meeting and hand it over at the entrance duly signed. 2. A Member/Proxyholder attending the meeting should bring copy of the Annual Report for reference at the meeting. 

CHEMICALS
Registered Office: Bombay House, 24, Homi Mody Street, Fort, Mumbai 400 001.

PROXY
I/We ............................................................................................................................................................................................................................................................................................... of ....................................................................................................................................................................... in the district of ........................................................................................ being a Member/Members of the above named Company, hereby appoint ...................................................................................................................................................................... ........................................................................ of ............................................................................ in the district of ..................................................................................... or failing him ............................................................................................................................................................................ of ........................................................................................... in the district of ................................................................................................................................................................................... as my/our Proxy to attend and vote for me/us and on my/our behalf at the SIXTY-SEVENTH ANNUAL GENERAL MEETING of the Company, to be held on Monday, July 17, 2006 at 3.30 p.m. and at any adjournment thereof. Signed this ........................................................................... day of ............................................................................ 2006

Signature

Affix Re. 0.15 Revenue Stamp

Folio No. DP ID Account ID No. of Shares

This form is to be used

*in favour of *against

the resolution. Unless otherwise instructed, the proxy will act as he thinks fit.

*Strike out whichever is not desired. Note: 1. The proxy must be returned so as to reach the Registered Office of the Company, Bombay House, 24, Homi Mody Street, Fort, Mumbai-400 001, not less than FORTY-EIGHT HOURS before the time for holding the aforesaid meeting. 2. A Proxy need not be a member of the Company.