ARVINO MAFATLAL GROUP

44th Annual Report

2005-2006

NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

Arvind N. Mafatlal Chairman - Emeritus

DIRECTORS

Hrishikesh A. Mafatlal Chairman

Rohit Arora
REGISTERED OFFICE :
T.D. Chaudhuri nd
(upto 2 Feb. 2006) Mafatlal House,
(IIBI Nominee) H.T. Parekh Marg,
Backbay Reclamation,
Berjis Desai Churchgate,
Mumbai 400 020.
V. R. Gupte

Maj. Gen. (retd) S.C.N. Jatar (upto 5* Oct.2005)

S. K. Mahapatra
Vishad P. Mafatlal
(ICICI Bank Nominee)
BANKERS
(GIC Nominee) HDFC BANK LIMITED
UTI BANK LIMITED

N. Sankar

C.R. Gupte Managing Director PLANT:

(from 1 !t August, 2005) C-37, Trans Thane Creek
Industrial Area,
Off. Thane Belapur Road,
SECRETARY
Navi Mumbai 400 701.
Maharashtra
U.M. Karnik

MANAGEMENT TEAM
AUDITORS
Hrishikesh A. Mafatlal Chairman C.C. Chokshi & Co.
Chartered Accountants.
C.R. Gupte Managing Director

S.R. Deo Vice President - Technical

R.M. Gadgil Vice President - Marketing SOLICITORS & ADVOCATES

PDS Legal.
S.R. Iyer Vice President - Manufacturing Vigil Juris.
Vice President - Legal
U.M. Karnik & Company Secretary.

General Manager - Personnel

S.D. Ghate & Administration.

General Manager - Marketing and

C.S. Inamdar Technical Services.

A. Sivaraman General Manager - Purchase

P. Srinivasan General Manager - Finance

 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED
CONTENTS
Notice
Directors Report
Corporate Governance Report
Management Discussions and Analysis Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Schedules to the Balance Sheet
Schedules to the Profit and Loss Account
Accounting Policies and Notes to the
Balance Sheet and Profit and Loss Account
Auditors' Report on Consolidated Accounts
Consolidated Accounts
Registrar and Share Transfer Agents
Sharepro Services (India) Pvt. Ltd.
Office :
Satam Estate, 3rd Floor,
Above Bank of Baroda,
Cardinal Gracious Road,
Chakala, Andheri ( East),
Mumbai 400 099.
Tel.: 2821 5168,2821 5169
Fax: 2837 5646
e-mail: sharepro@vsnl.com
Investor Relation Centre :
912, Raheja Centre,
Free Press Journal Road, Nariman Point,
Mumbai 400 021.
Tel.: No. 2282 5163 2288 4527
Fax: 2282 5484
Page No. FOR MEMBERS ATTENTION
3 1. The Register of Members and the Share Transfer Books of the
Company will remain closed from Friday, the 14th July 2006
to Monday, the 31 st July 2006 to ascertain the names of the
8
members who will be entitled to receive the dividend as
may be approved by the members at the Annual General
14
Meeting.
21 2. The Shares of the Company have been brought under
compulsory dematerialisation. All the shareholders are
23 requested to convert their shareholdings from physical form
to demat form.
26
3. The members are requested to quote their Folio Number or
27 Client Id/ DP ID in all correspondence and also to notify
immediately, change of address, if any to the Registrar and
Share Transfer Agents, Sharepro Services (India) Pvt. Ltd.,
28
Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal
Gracious Road, Chakala, Andheri (East), Mumbai 400 099.
29
4. Pursuant to the provisions of Section 205A of the Companies
35 Act, 1956, the Company has transferred unclaimed dividends
for the financial year 31 st March 1998 and unclaimed fixed
deposits upto 31 sl March 1999 to the Investor Education and
Protection Fund.
37
5. Members are requested to bring their copy of the Annual
49 Report along with them to the Annual General Meeting as,
the practice of distributing copies of the Report at the Meeting
has been discontinued and also to bring with them their
50
Attendance Slip which may be submitted at the entrance
duly signed.
44* Annual General Meeting
Date : 3 1 s July 2006
Day : Monday
Time : 4.00 P.M.
Place : •Patkar Hall. S.N.D.T.. Womcns' University,
• 1, Nathibhai Damodar Thackersey Road,
Mumbai 400 020.
 M NOCIL \

NOTICE
NOTICE IS HEREBY GIVEN THAT THE FORTY FOURTH Annual General Meeting of the Members of NATIONAL ORGANIC CHEMICAL
INDUSTRIES LIMITED will be held at 4.00 p. m. on Monday, the 31** July 2006, at Patkar Hall, S. N. D. T. Women's University, 1,
Nathibhai Damodar Thackersey Road, Mumbai - 400 020, to transact the following business:
ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Profit & Loss Account of the Company for the year ended 31 st March, 2006 and the
Balance Sheet as at 31 st March, 2006 and the Reports of the Directors and the Auditors thereon.

2. To declare dividend on Equity Shares.

3. To appoint a Director in place of Mr. Rohit Arora who retires by rotation under Article 145 of the Articles of Association of the
Company and being eligible, offers himself for reappointment.

4. To appoint a Director in place of Mr. Berjis Desai, who retires by rotation under Article 145 of the Articles of Association of the
Company and being eligible, offers himself for reappointment.

5. To consider and if thought fit, to pass with or without modification, the following resolution as a Special Resolution:

"RESOLVED THAT pursuant to sections 224, 224A and other applicable provisions, if any, of the Companies Act, 1956, M/s. C. C.
Chokshi & Co., Chartered Accountants, Mumbai, be and are hereby appointed as Auditors of the Company from the conclusion
of this Annual General Meeting until the conclusion of the next Annual General Meeting at such remuneration as may be mutually
agreed between the Board of Directors 'of the Company and the Auditors, plus service tax as may be applicable apart from
reimbursement of out-of-pocket expenses incurred by them for the purpose of audit."
SPECIAL BUSINESS:

6. To consider and, if thought fit, to pass with or without modification, the following resolution as a Special Resolution:

"RESOLVED THAT pursuant to sections 198, 269 and 309, Schedule XIII and other applicable provisions, if any, of the Companies
Act, 1956, and subject to the approval of the Central Government and the shareholders of the Company being obtained, approval
be and is hereby given for increase in the remuneration of Mr.C.R. Gupte, Managing Director of the Company, with effect from 1*
April 2006 for a period of three years, on the revised terms and conditions as set out in the Explanatory Statement annexed to the
Notice of this Meeting and in the absence or inadequacy of profits in any of the said three years, the said remuneration may be
paid to him as minimum remuneration with the liberty to the Board of Directors to alter and vary the said terms and conditions
in such a manner as may be agreed to between the Board of Directors and Mr. C. R. Gupte."

"RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby severally authorised to take such steps as
may be necessary to give effect to this resolution."

7. To consider and if thought fit, to pass with or without modification, the following Resolution as an Ordinary Resolution :

"RESOLVED THAT pursuant to the provisions of Section 293(1) (e) and other applicable provisions, if any, of the Companies Act,
1956, the Company in General Meeting hereby accords its consent to the Board of Directors contributing, from time to time, to
charitable and other funds or institutions not directly relating to the business of the Company or the welfare of the Company
notwithstanding, that the moneys to be contributed together with the moneys already contributed by the Company in any financial
year will or may in aggregate exceed Rupees fifty thousand or five per cent of the average net profits of the Company as determined
in accordance with the provisions of sections 349 and 350 of the Companies Act, 1956 during the three financial years immediately
preceeding, whichever is greater, but so that the aggregate amount of such contributions by the Board of Directors shall not
exceed a sum of Rs. 10 lakhs in each of the financial year from 1 st April 2006."

By Order of the Board

For National Organic Chemical Industries Limited
(U. M. Karnik)
Secretary

Registered Office:
Mafatlal House
H. T. Parekh Marg, Backbay Reclamation
Churchgate
Mumbai - 400 020.

Date: 30lh May 2006.

 -JNOCILB- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

NOTES:
1. A MEMBER ENTITLED TO ATTEND AND TO VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND TO VOTE INSTEAD
OF HIMSELF AND A PROXY NEED NOT BE A MEMBER.
2. The relevant Explanatory Statement pursuant to section 173 of the Companies Act, 1956 is annexed hereto.
3. The Register of Members and the Share Transfer Books of the Company will remain closed from Friday, the 14th July 2006 to
Monday, the 31 st July 2006 (both days inclusive).
4. The dividend as recommended by the Directors for the year ended 31 st March 2006 and as may be approved by the members of
the Company at the Annual General Meeting will be payable to those shareholders whose names appear on the Register of
Members as on 31 st July 2006 on or after 1 M August 2006. In respect of shares held in demat form, the dividend will be paid on the
basis of the beneficial ownership as per details to be received from the Depositories as at the end of business on 13th July, 2006 .

5. All the documents relating to the accompanying Notice and the Explanatory Statement are open for inspection on any working
day during office hours at the Registered Office at Mafatlal House, H. T. Parekh Marg, Backbay Reclamation, Churchgate, Mumbai
- 400 020.
6. Reappointment of Directors:
a) At the ensuing Annual General Meeting Mr. Rohit Arora is due to retire by rotation. Mr. Rohit Arora being eligible, offers
himself for re-appointment. The necessary information regarding Mr.Rohit Arora is given below:
Mr. Rohit Arora:

Qualification Mr. Rohit Arora is a Chartered Accountant and is a Fellow Member of the Institute of
Chartered Accountants of India.

Expertise in Specific Functional Areas Mr. Arora has over two decades of experience in business process outsourcing,
investment banking and management consultancy.

Directorships held in other A.R. Credit Information Services Pvt. Ltd., ARCIS International Pvt. Ltd. (Mauritius),
Companies ARCIS e Services Pvt. Ltd., Asia Investments Pvt. Ltd., Caair Travel Pvt. Ltd., EMR
Technology Ventures Ltd., Menkel Teroson India Pvt. Ltd., Profile Estates Pvt. Ltd.

Memberships / Chairmanships of NIL

Committees across Public Companies

b) At the ensuing Annual General Meeting Mr. Berjis Desai is due to retire by rotation. Mr. Berjis Desai being eligible, offers
himself for re-appointment. The necessary information regarding Mr.Berjis Desai is given below:

Mr. Berjis Desai:

Qualification Mr. Berjis Desai has done his graduation from the Elphinstone College. He is a Law
Graduate and stood first in the Solicitor's Exams held by the Mumbai Incorporated
Law Society.

Expertise in Specific Functional Areas Mr. Desai is an eminent Lawyer and is the Managing Partner of J. Sagar & Associates.

Directorships held in other Sterlite Industries (India) Ltd., Praj Industries Ltd., Onward Technologies
Companies Ltd., Adlabs Films Ltd., Piramyd Retail Ltd., Emcure Pharmaceuticals Ltd., Bp
Ergo Ltd., Watson Wyatt India Pvt. Ltd., 3D PLM Software Solutions Ltd., Isagro
(Asia) Agrochemicals Pvt. Ltd., Vadhvan Port Pvt. Ltd., Centrum Fiscal Pvt. Ltd.,
Seafreight Pvt. Ltd., Ferrari Express (1) Pvt. Ltd., Capricorn Studfarm Pvt. Ltd., Capricorn
Agrifarms & Developers Pvt. Ltd., Jakari Express Pvt. Ltd., Jakari Holdings Pvt. Ltd.,
Capricorn Plaza Pvt. Ltd., Capricorn Group Pvt. Ltd., Capricorn Castle Pvt. Ltd.,
Capricorn Residency Pvt. Ltd.

Memberships / Chairmanships of Committee member in Sterlite Industries (India) Ltd., Praj Industries Ltd., Onward
Committees across Public Companies Technologies Ltd., Adlab Films Ltd., Emcure Pharmaceuticals Ltd.
 ANNEXURE TO THE NOTICE
(Explanatory Statement as required under section 173 of the Companies Act, 1956)

The following Explanatory Statement sets out all the material facts relating to item Nos. 5, 6 and 7 mentioned in the accompanying
Notice.

Item No.. 5:
According to the provisions of section 224A of the Companies Act, 1956, the appointment of the Auditors of the Company is
required to be made by means of a Special Resolution if, the combined share holding of the Public Financial Institutions, Nationalised
Banks and Insurance Companies in the Company exceeds twenty-five percent of the paid up equity share capital of the Company.
Even though at present the shareholding of the Financial Institutions is less than 25%, the members are requested to pass the
resolution for appointment of Auditors of the Company as a Special Resolution in accordance with the provisions of section 224A
of the Companies Act, 1956 as and by way of abundant caution.

The Board recommends the re-appointment of M/s. C. C. Chokshi & Co. as the Auditors of the Company.

None of the Directors of the Company are concerned or interested in the above resolution.

Item No. (> :

Statement as required under Section II of Part II of Schedule XIII of the Companies Act, 1956 :

I. General Information :

a) Nature of Industry :
The Company is engaged in the business of manufacture and sale of Rubber Chemicals. It has manufacturing facilities at
TTC Industrial Area, in Thane and Regional Sales Offices at Mumbai,Delhi, Chennai and Kolkatta.

b) Date of Commencement of Commercial Production :

The Company started its commercial production in the year 1976.

c) Financial Performance :
The paid up share capital of the Company is Rs. 160.79 Crores and Reserves of the Company as on 31SI March 2006 stood
at Rs. 164.40 Crores. The total turnover of the Company during the year 2005-06 was Rs. 403.76 Crores and the profit
before tax was Rs. 67.07 Crores.
The Company has demerged certain assets and liabilities of the Petrochemicals Division and Plastic Products Division in
two separate companies under a sanctioned Scheme of Arrangement in terms of the provisions of Section 391/394 of the
Companies Act, 1956. The Appointed Date for the said Scheme of Arrangement was 30lh September 2003 and the Effective
Date was 20th July 2005. The Company has settled dues of all the Secured Creditors of the Petrochemicals Division as per the
said sanctioned Scheme of Arrangement. Consequent upon the restructuring of the business as stated above the Company
continues to operate the Rubber Chemicals Business as its main business. The operation of this business has been profitable
for the last several years on a stand alone basis.

d) Export Performance :
The Company achieved export turnover of Rs. 138 Crores during the period 1 st October 2003 to 31 s ' March 2005 and Rs.
146 Crores during the financial year ended 31SI March 2006. The foreign exchange earnings of the Company for the year
2005-06 amounted to Rs. 142.90 Crores.

e) Foreign Investments or Collaborators :

The Company does not have any substantial foreign investment or collaborators.

II. Information about Mr. C.R. Gupte :

a) Background details :
Mr. C.R. Cupte completed his graduation in Science and is a Chartered Accountant and a Fellow Member of the Institute of
Chartered Accountants of India.
Mr. C.R. Gupte is currently the Managing Director of the Company. Mr.C.R. Gupte joined the Rubber Chemicals Division
from its inception in 1976 as Head of Internal Audit and held important positions of Chief Accountant, Marketing Manager,
General Manager - Marketing, Vice President - Sales & Marketing and eventually as Chief Executive of the said Division
from 1995.

b) Details of past and proposed remuneration :

As the Chief Executive of the Rubber Chemicals Division, Mr. C.R. Gupte was drawing a gross remuneration of Rs. 11.39
lakhs per month prior to his appointment as Managing Director.
 M NOCIL \ NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

The Board of Directors at its meeting held on 29th July 2005 appointed Mr. C.R. Cupte as the Managing Director of the
Company with effect from 1 st August 2005 for a period of five (5) years. His appointment as Managing Director and his
terms of remuneration were also approved by the Members of the Company at the Annual General Meeting held on 15'h
September 2005. Mr. Gupte is currently in charge of the entire management and affairs of the Company subject to the
superintendence and control of the Board of Directors of the Company. However, due to the fact that there was an inadequacy
of profits under Section 349 as explained earlier, Mr. Gupte could not be paid remuneration as per the terms approved by
the Members of the Company and therefore, as recommended by the Remuneration Committee, the Board of Directors at
its meeting held on 30th January 2006 decided to revise the remuneration payable to Mr. C.R. Gupte with effect from 1 s '
April 2006 for a period of three years subject to the approval of the Central Government, if necessary, and the Shareholders
in the Annual General Meeting.

The terms of revised remuneration of Mr. C.R. Gupte as Managing Director will be as under:

A) (i) Salary of Rs.2,50,000/- (Rupees Two Lac Fifty Thousand only) per month including Dearness Allowance.

(ii) Perquisites and Allowances the aggregate monetary value of which shall not exceed Rs. 9,00,000/- (Rupees Nine
Lakhs only) per annum or as may be decided by the Board from time to time. These perquisites and other allowances
will be in addition to items mentioned in Clause C) below.

(iii) The salary and perquisites as mentioned under (i) and (ii) above will be exclusive of:

• Contribution to the Provident Fund, Superannuation Fund or Annuity Fund to the extent they are not taxable
under the Income Tax Act, 1961.

• Gratuity at the rate of one month's salary for every completed year of service or part thereof in excess of six
months on the basis of the last drawn salary.

• Encashment of leave as per Company's Rules at the end of the tenure of service from the Company.

B) Performance Bonus as may be fixed by the Board from time to time on the basis of the performance of the Company subject
to a maximum of Rs. 90 lakhs per annum.

C) Apart from the above mentioned remuneration, he shall be entitled to:

(i) Furnished Residential Accommodation. In case no accommodation is provided by the Company he will be entitled to
a suitable House Rent Allowance.

(ii) Leave as per the rules of the Company.

(iii) Reimbursement of Domiciliary Medical Expenses actually and properly incurred by him and his family and Mediclaim
Policy for hospitalisation.

(iv) Expenses actually and properly incurred by him in the course of legitimate business of the Company.

(v) Long Service benefit at the rate of one and half month's salary for every completed year of service or part thereof in
excess of six months on the basis of last drawn salary.

(vi) Club Membership Fees subject to a maximum of two Clubs.

(vii) Personal Accident Insurance Policy.

(viii) Provision for use of motor car with driver for both official and personal use and reimbursement of telephone, gas and
electricity expenses incurred at his residence.

(ix) Life Insurance as per the rules of the Company,

c) Job Profile and his suitability :
Mr. C.R. Gupte has been responsible for leading the Rubber Chemicals Business successfully and ha; been instrumental in
achieving substantial benefits for the Company during his tenure as the Chief Executive of the Rubber Chemicals
Division. To name a few, the operating profits of the Company as percentage of capital employed and of sales rose to the
level of 22.34% and 11.35% respectively during the term of Mr.C.R. Gupte as the Chief Executive of the Rubber Chemicals
business. The Rubber Chemicals Division itself earned a total pre-tax profit of Rs. 302 crores till 3 1 " December 2005 during
his tenure.
Mr. C.R. Gupte as the Chief Executive of the Rubber Chemicals Division has been instrumental in making the said division
a profitable one. The Company has also made considerable progress in the area of R & D and Technology under the
leadership of Mr. Gupte. Looking to the contribution made by Mr.C.R. Gupte for the growth of Rubber Chemicals business
during the last ten years, it is in the interest of the Company and its shareholders to retain his services as Managing Director.
 d) Comparative Remuneration :
Having regard to the present remuneration of Chief Executive Officers and Managing Directors of this size of companies in
India, it is imperative for the Company to pay the said proposed remuneration to Mr. C.R. Gupte.

e) Pecuniary Relationship:
Mr. C.R. Cupte does not have any pecuniary relationship directly or indirectly with the Company, or any relationship with
the managerial personnel of the Company. He is the brother of Mr. V.R. Gupte, a non-executive Director of the Company.

III. Other information :

a) Reasons for inadequacy of profits :

It will be observed that the Annual Accounts for the year 2005-06 being a part of this Annual Report show a profit of Rs.
67.07 Crores before tax. However, the profits calculated according to the provisions of Section 349 of the Companies Act,
1956 for payment of managerial remuneration are inadequate due to accumulated losses of the demerged Petrochemicals
Division which have resulted into excess of expenditure over income. Whilst the divesting of assets and liabilities of the
Petrochemicals and Plastic Product Divisions under the said Scheme of Arrangement has resulted into surplus on demerger
amounting to Rs. 152.39 Crores, the aforesaid demerger surplus is required to be excluded while computing the profit for
payment of managerial remuneration according to the provisions of Section 349 of the Act. This exclusion has resulted in
inadequacy of profits for the purpose of payment of managerial remuneration to Mr. C.R. Gupte. This has caused unnecessary
hardship to Mr. Gupte since these carry forward losses do not pertain to the Rubber Chemicals business which he heads and
in fact, they belong to the now demerged business of Petrochemicals with which he had no connection. Therefore, in order
to remove the undue hardships to Mr. Gupte, the approval of the members is being sought by means of a special resolution
for payment of the proposed increased remuneration. The said remuneration may also be paid as minimum remuneration
in the event of loss or inadequacy of profits.

b) Increase in productivity and profits :

The Company under the leadership of Mr. C.R. Gupte has been instrumental in establishing business with world leaders in
tyre industry such as Bridgestone, Yokohama, Pirelli, Continental and Michelin, etc., and, as a result, the export performance
of the Company leaped by nearly 4 times to touch above Rs. 100 crores for the year ended 31 st March 2005. For the year
2005-06. the figure for export has in fact, reached Rs.146 Crores.

There is an overall increase in the worldwide demand of tyres and rubber based products due to which the Company is
proposing to develop new products and expand the volume of its existing products. The Company is looking for alternative
site to augument the production of some of its key products. All these efforts are likely to result into substantial increase in
the productivity of the Company.

None of the Directors except Mr. V.R. Gupte and Mr. C.R. Gupte shall be deemed to be concerned or interested in the said
Resolution.

This explanatory statement together with the accompanying Notice, is and should be treated as an abstract under Section
302 of the Companies Act, 1956.

Item No. 7 :

According to the provisions of Section 293(1 Me) of the Companies Act, 1956, the Company is required to obtain the consent of the
Members in General Meeting for making contribution to charitable and other funds not directly related to the business of the
Company or the welfare of its employees in case the aggregate of such contribution in any financial year is likely to exceed a sum
of Rupees fifty thousand or five per cent of its average net profits as determined in accordance with the provisions of Section 349
and 350 of the Companies Act, 1956, which ever is greater immediately three preceding financial years. The approval of the
Members is, therefore, being sought under the provisions of Section 293(1) to enable the Board of Directors of the Company to
contribute to charitable and other funds in excess of the prescribed limits the aggregate amount of which in any financial year with
effect from 1st April 2006 will not exceed a sum of Rs. 10 lakhs.

None of the Directors of the Company shall be deemed to be concerned or interested in the proposed resolution.

By Order of the Board

For National Organic Chemical Industries Limited

( U.M.Karnik)
Secretary
Registered Office:
Mafatlal House
H.T. Parekh Marg, Backbay Reclamation,
Churchgate, Mumbai 400 020.
 JNOCIL J- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

DIRECTORS' REPORT
TO THE MEMBERS
NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

Your Directors present their Report together with the Audited Accounts of the Company for the year ended 31s1 March 2006.

FINANCIAL RESULTS
(Rupees in Crores)

For the year ended For the period 1"' October, 2003
31 s1 March, 2006 to 31 9 March,2005
Operating Profit before Depreciation, interest and taxation &
exceptional items 73.83 35.23
Add: Exceptional / Non-recurring items - 152.39
Less: Depreciation 6.07 8.91
Less: Interest 0.69 3.99
Profit before Tax 67.07 174.72
Provision for Taxation (including wealth tax and fringe benefit tax) (5.97) (0.04)
Provision for deferred tax (including MAT credit) (1.41) 8.69
Profit after Tax 59.69 183.37
Excess provision for taxes of earlier years 1.24 -
Transferred from Contingency Reserve - 40.00
Transferred from Debenture Redemption Reserve 3.08 2.32
(Deficit) / Surplus brought from previous period (75.35) (301.04)
Proposed Dividend 8.04 -
Tax on Dividend 1.13 -
Balance carried to Balance Sheet (20.51) (75.35)

During the current year as per the terms of the Scheme of Arrangement approved by the Bombay High Court by its order dated 8th June
2005, the specified net current assets of the Plastic Products Division have been transferred to RELPOL Plastics Products Limited (formerly
known as NOCIL Petrochemicals Limited, a business associate of Reliance Industries Limited) with effect from 20lh July 2005 which was
the "Effective Date" in terms of the said Scheme of Arrangement. Consequently as mentioned in the previous Annual Report the Rubber
Chemicals business remains with the Company and accordingly the core business of your Company will be manufacture and sale of
rubber chemicals.

You are aware that the net worth of the Company which was completely eroded as on 30th September 2003 due to the accumulated
losses of the Petrochemicals Division, has become positive on account of the transfer of certain liabilities of the Petrochemicals Division
to Relene Petrochemicals Private Limited under the Scheme of Arrangement and your Company has ceased to be a sick company under
the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. You will be pleased to know that BIFR has by its order
dated 30th November 2005 declared that your Company is no longer a sick company.

Consequent to the demerger of the divisions, the Company during the year made provisions and has written back liabilities pertaining to
such divisions as per the understanding and the terms of the demerger.
DIVIDEND
We are pleased to announce that considering the healthy performance of the rubber chemicals business subsequent to the restructuring
of your Company, the Board has recommended payment of dividend of 5% on the equity share capital of the Company.
TRANSFER OF UNPAID DIVIDEND TO GENERAL REVENUE ACCOUNT OF CENTRAL GOVERNMENT

As per the provisions of section 205-C of the Companies Act, 1956 all unpaid dividends including and upto final dividend for the year
1997-98 have been transferred to the Investor Education and Protection Fund.
PERFORMANCE OF THE COMPANY

The turnover of the Company for the period under review was Rs.398 crores as compared to Rs.440 crores during the 18 month period
ended 31 st March 2005. The production of rubber chemicals and their intermediates was 30922 MT for the year under review. The
production of finished products during the year was higher by 5% than that of the corresponding previous period.
 •J N0C1L \

During the year under review the Rubber Chemicals business witnessed relatively stable market conditions as compared to the previous
year and showed a growth in both domestic as well as export market. Despite stiff competition the Company was in a position to record
a positive growth in its volumes both in the domestic as well as international market. The high prices of natural rubber resulted in
slowing down of production of some of the non tyre customers and the continued import of low priced rubber chemicals from China
remained a major cause for concern. During the year under review the Company was able to secure a favourable decision from the
appropriate authorities in the anti - dumping proceedings. However, some of the products were not included by the authorities and
hence these products continue to be imported in large volumes at low prices. Even though the decision is inadequate in its scope and
coverage, it will to some extent help in curtailing the rampant dumping of low priced rubber chemicals in the country.

There was some relief on the raw material front as the volatility in the price of raw material abated for some time which resulted in
favourable input cost than what was anticipated at the beginning of the year. A fairly exhaustive shut down of the Plant was carried out
after a gap of nearly two years.

During the year under review a number of process improvements were completed resulting in further improvement in cost and quality
of the products. As a result of extensive development work, new products were introduced and commercial production was started in
these products.

The Company has undertaken various energy conservation and other efficiency measures due to which there was an improvement in the
consumption norms of utilities and raw materials.

During the year under review there was temporary disruption of work due to unprecedented rains on 26th July 2005 but all the plants
were put back in operation within a short time by taking prompt corrective and preventive actions.

EXPORTS

The Company has been successful in achieving export of rubber chemicals of a total value of Rs. 146 crores during the year under review
signifying a growth of about 44% as compared to the previous period. The increased volumes and better pricing in the international
market contributed largely to this better performance. The Company was able to finalise contracts with major international buyers for
their annual requirement of rubber chemicals. The Company was successful in obtaining the approvals from some of the customers for
newly developed products which are expected to start contributing to the business very soon. The Company continues to maintain very
strong long term relationship with all its domestic as well as international customers who have accepted the status of the Company as
one of the leading manufacturers of rubber chemicals.

REVALUATION OF FIXED ASSETS

The Management of the Company felt the need to revalue certain class of Fixed Assets of the Company in order to reflect the true value of
these assets as on the date of the Balance Sheet as on 31 st March 2006. The revaluation was done by an approved valuer. The market value
of these assets which have been revalued now stand at Rs. 166.34 Crores as against Rs.64.75 Crores computed on the historical cost basis.

FIXED DEPOSIT

As at 31 st March 2006 fixed deposits amounting to Rs. 0.42 crores have not been claimed by the depositors from the Company. The fixed
deposits which have matured on or before 31 st March 1999 but remained outstanding since then have been transferred to Investor
Education & Protection Fund as required under Section 205 C of the Companies Act, 1956.

INSURANCE

The Company has taken appropriate steps to insure all the properties and insurable interest of the Company as required under the
various legislative enactments. The Company was able to recover a sum of Rs.2.21 crores from the Insurance Company by way of
settlement towards material loss and loss of profit on account of stoppage of production due to the impact of flooding in the plant on 26*
July 2005.

HEALTH, SAFETY AND ENVIRONMENT

The Company has continued its efforts to ensure the health, safety and environment of the employees and the surrounding area by
setting up state of the art technology to monitor the various environmental and other parameters within the plant premises. The
employees of the Company as well as those of its contractors are being given extensive training in handling of hazardous chemicals, fire
fighting and first aid. The Company also arranged training programmes for the drivers of chemical tankers to enable them to handle
emergencies on road thereby ensuring safety of the general public. The Company has been monitoring the health of all its own as well
as contractor's employees through regular medical check ups.

TOTAL QUALITY MANAGEMENT

The Company continues to be certified for ISO 9000 (Quality Management Systems) and ISO 14001 (Environment Management Systems)
as well as for OHSAS - 18001 (Occupational Health & Safety System Standards).
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

RISK ASSESSMENT AND MANAGEMENT

As a part of good Corporate Governance practices the Company has appointed M/s Deloitte Touche Tohmatsu India Private Limited as
consultants to prepare a framework for reporting to the Board of Directors various operational and business risks being faced by the
Company. The Company is fully aware of these risks and has well trained manpower to minimize these risks. The report of the consultants
will enable the Company to codify and streamline the procedures for handling the risks by the concerned employees.
SUBSIDIARY COMPANIES
The Company has received approval from the Central Government for not publishing the Annual Reports of its two subsidiaries viz.
Ensen Holdings Limited and Urvija Investments Limited alongwith the Annual Accounts of the Company for the year ended 31 s ' March
2006. However, the Annual Accounts and the related detailed information of both the subsidiary companies will be made available to
the members on demand and they shall be kept for inspection by any member at the Registered Office of the Company as well as the
registered offices of the respective subsidiary companies.
PERSONNEL
The Directors wish to thank all the employees for their support and co-operation during the year under review. Information as per
Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this Report
and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the
Company Secretary.
DIRECTORS
During the year under review ICICI Bank Limited and Industrial Investment Bank of India Limited withdrew the nominations of their
Directors - Maj.Gen. (Retd.) S. C. N. Jatar and Dr. T. D. Chaudhuri respectively as the Company had repaid the dues of both these
Financial Institutions under the sanctioned Scheme of Arrangement. The Board has placed on record its appreciation for the valuable
contribution made by both the Directors during their tenure with the Company.
At the forthcoming Annual General Meeting, Mr. Rohit Arora and Mr. Berjis Desai have agreed to retire by rotation pursuant to Article
145 of the Articles of Association of the Company. Being eligible, they offer themselves for reappointment.
DIRECTORS RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956 we hereby state that ;
1. In the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanations
relating to material departures, if any.
2. The Directors selected such accounting policies and 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 as at 3 1 " March 2006 and of the
profit for the year ended on that date.
3. The Directors have taken proper and sufficient care 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.
4. The Directors have prepared the annual accounts on a going concern basis.
REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As required under the Listing Agreement with Stock Exchanges, reports on "Corporate Governance" and "Management Discussion and
Analysis" are attached and form a part of this Report.
OTHER PARTICULARS
Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be
disclosed in terms of 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 and forms a part of this Report.
AUDITORS
The term of Messrs. C.C.Chokshi & Co, as Auditors, expires at the conclusion of this Anuual General Meeting and they are eligible for
reappointment. The Audit Committee has recommended the reappointment of M/s C.C.Chokshi & Co. Chartered Accountants as Auditors
of the Company. The Auditors have given a Certificate to the effect that the reappointment, if made, will be within the prescribed limits
specified under section 224 (1B) of the Companies Act,1956.

For and on behalf of the Board of Directors

Mumbai Hrishikesh A. Mafatlal

Dated : 30th May, 2006 Chairman

10
 APPENDIX
Additional information to be furnished in terms of notification 1029 of 31.12.1998 issued by the Dept. of Company Affairs is as follows:
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken in the year 2005-2006 :
1. Replacing cooling tower pump by a higher efficiency pump has resulted in electrical energy saving of Rs. 4.00 lakhs per
annum on annualized basis.
2. Installation of continuous distillation column has resulted in fuel and electrical energy saving of Rs. 14.00 lakhs per
annum on annualized basis.
3. Energy conservation in off sites has resulted in energy saving of Rs. 20.50 lakhs per annum on annualized basis.
4. Energy conservation in refrigeration system has resulted in electrical energy saving of Rs. 20.00 lakhs on annualized basis.
5. Detailed energy audit conducted at plant and action plan of recommended measures prepared for implementation in a
phased manner.
b) Energy conservation measures to be taken in the year 2006-2007 :
1. Installation of steam turbine will result in electrical energy saving of Rs. 30.00 lakhs per annum.
2. Energy conservation measures on electrical utilities will result in electrical energy saving of Rs.6.50 lakhs per annum.
3. Installation of solvent recycling system will result in steam saving of Rs. 12.00 lakhs per annum.
4. Operation of single aeration column will result in electrical energy saving of Rs. 4.00 lakhs per annum.
5. Implementation of action plan based on energy audit recommendations will result in thermal energy saving of Rs. 15.00
lakhs per annum.
1" April 2005 October 2003
to 3 1 " March 2006 to March 2005
c) Impact of measures at 'a' and V above for reduction MWH/MT MWH/MT
of energy consumption and consequent impact on the
cost of production of goods: 0.90. 0.94

d) Total energy consumption and energy consumption per unit of production :

Please see Form 'A'

B. TECHNOLOGY ABSORPTION
Efforts made towards technology absorption :

Please see Form 'B'

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to export; initiatives taken to increase exports, development of new export market and services, and export
plans :

Please refer to the para on Exports in the main report.

b) Total foreign exchange used and earned :

Rs. in crores
Foreign exchange used "*""
i) Raw materials, stores and spare parts,
capital goods and other products. 84.95

ii) Expenditure in foreign currency. 1,46

Foreign Exchange Earned :

Export of goods on FOB basis, commission and service charges 142.90

11
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

FORMA
Disclosure of particulars with respect to conservation of energy

1st April 2005 October 2003

to to
31" March 2006 March 2005

A. POWER AND FUEL CONSUMPTION

1. ELECTRICITY
(for manufacturing)
(a) Purchased
Unit MWH 25479 37872
Total amount Rs. Lakhs 884.79 1284.31
Rate/Unit Rs. /KWH 3.47 3.39

(b) Own generation

(Through Diesel Generator)
Unit MWH 11 19.00
Unit/MTof Diesel Oil MWH 2.66 3.71
Fuel Cost/Unit Rs./ KWH 10.53 6.47
Through Steam/Turbine Ceneralor NIL NIL

2. COAL NIL NIL

3. FURNACE OIL
Quantity MT 592.75 886.15
Total cost Rs. Lakhs 93.63 101.37
Average rate Rs./MT 15796 11439

4. OTHER/INTERNAL GENERATION
(a) Low Sulphur Heavy Stock
(LSHS)
Quantity MT 13101.52 19315.43
Total Cost Rs. Lakhs 2019.42 2214.00
Average rate Rs./MT 15414 11462
(b) Internally Generated Fuel NIL NIL

B. CONSUMPTION PER UNIT OF PRODUCTION

Electricity MWH/MT 0.90 0.94
Fuel/LSHS MT/MT 0.46 0.4-3
Furnace Oil MT/MT 0.02 0.02

12
 FORMB
Disclosure of Particulars with respect to Technology Absorption

A. RESEARCH AND DEVELOPMENT

1. Specific areas in which R & D is carried out by the Company
(i) Development of new products as per the emerging business needs.
(ii) Translating the new technologies into commercial manufacturing facilities.
(iii) Development of eco-friendly/cost effective processes.
(iv) Continuous improvement in the existing processes/technology to achieve
- improved product quality
- raw material usages
- production rates.
(v) Pollution abatement.
(vi) Development of Technology for converting waste streams into value added products.
2. Benefits derived as a result of R & D
(i) Addition of niche products in product portfolio.
(ii) To meet changing customer needs.
(iii) Improved yields and quality.
(iv) Improvements in waste management.
3. Future plan of action
(i) Continued development of new products.
(ii) Continued efforts for cost efficiency in manufacturing process.
(iii) Minimise energy costs.
4. Expenditure on R & D
1*Aprit2005 October 2003
. •. 'i:X\:y:r-.,.fo ' tO
31" March 2006 March 2005
;'..V Rs./Lakhs•" Rs./Lakhs

Capital : •'/ 43.89 28.17

Recurring 191^61 241.14

Total ;••,• /••:"'235.50" 269.31

Total R & D expenditure as % to total turnover ,., - «; v i; : 0.58 0.59
B. TECHNOLOGY ABSORPTION
1. Efforts in brief made towards technology absorption and innovation.
(i) Understanding the needs of the rubber industry with respect to the new product application and quality requirements,
(ii) Incorporating additional features in the new products to offer improved rubber processing and performance benefits.
(iii) Development of Product Manufacturing Technology in the Pilot Plant and translating the same into setting up the
production plant.
2. Benefits derived as a result of above efforts
Quick acceptance, approval and commercialization of the new products in the rubber industry.

13
 •S NOCiL J - NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

CORPORATE GOVERNANCE
Company's philosophy on Corporate Governance
The Company's policy on Corporate Governance is committed to the principles of full disclosure and transparency in the various aspects
of the working of the Company and endeavors to protect the rights and interests of its stakeholders. This commitment is further strengthened
by the implementation of all the applicable provisions of clause 49 of the Listing Agreement by the Company. The Company has already
adopted the Code of Conduct for the Directors and Senior Management. The Company also has a Code for Prevention of Insider Trading
for the Directors and the designated employees of the Company.

1. Policies and Procedures

The Company has well established systems and procedures for the day to day functioning of its various departments.
i. The Company has adopted the accounting policies according to the Accounting Standards prescribed by the Institute of
Chartered Accountants of India.
ii. The Company engaged the services of professionals to prepare a framework on risk management. On that basis, the company
prepared the framework for risk assessment and minimization procedures which was presented and adopted by the Board
of Directors at the meeting held on 30th May, 2006. The Company continues to review such policies.
iii. The Personnel Policy prescribes the policy on recruitment, perquisites, allowances, and benefits due to each employee of
the Company.
iv. The Contract Policy formulates the procedure for placement of contracts by the various departments and contains standard
terms and conditions for placement of orders on contractors.
v. The Company has issued Authority Sheets to senior management staff which enables the Management to supervise the
financial matters and exercise control over the expenditure incurred by the Company in its day to day operations.
vi. The Company places a high priority on health and safety of its employees and of other persons working in its plants and
gives due regard to the conservation of the environment and has declared a well defined policy on Health, Safety and
Environmental Conservation.
vii. The Company has given utmost priority to the maintenance of quality in the manufacture of all its products and has decided
to conduct its activities in such a manner so as to give foremost account of quality of its products a'nd services to meet the
requirements of internal and external customers.
2. Board of Directors
The composition of Board of Directors of the Company is as under:

SR.NO. NAME OF DIRECTOR CATEGORY OF DIRECTOR

1. Mr. Hrishikesh A. Mafatlal Chairman - Non-executive Promoter Group Director
2. Mr. Vishad P. Mafatlal Non-executive Promoter Group Director
3. Mr. Rohit Arora Non-executive Independent Director
4. Mr. Berjis Desai Non-executive Independent Director
5. Mr. V.R.Gupte Non-executive Director
6. Mr. N. Sankar Non-executive Independent Director
7. Mr. S. K.Mahapatra Nominee Director of GIC Independent Director
8. Mr. C.R.Gupte Managing Director - Executive Director

The Board's role, functions, responsibility and accountability are clearly defined. In addition to its primary role of monitoring
corporate performance, the functions of the Board include:
• approving corporate philosophy and mission;
• formulation of strategic and business plan;
• reviewing and approving financial plans and budgets;
. monitoring corporate performance against strategic and business plans.
• ensuring ethical behavior and compliance with laws and regulations;

• reviewing and approving borrowing limits.

During the year under review, five meetings of the Board were held at Mumbai on 27th April 2005, 29lh July 2005, 15lh September
2005, 28th October 2005 and 30lh January 2006. The details of the attendance of each of the Directors at the Board Meetings and

14
 at the last Annual General Meeting are as under:
Attendance of Directors at Board Meetings and Last Annual General Meeting
Sr.No. Name of Director No. of Board AGM
Meetings Attended
1. Mr. Hrishikesh A. Mafatlal 5 Y
2. Mr. Rohit Arora 3 Y
3. Mr. Berjis Desai 2 N
4. Dr. T.D. Chaudhuri (IIB1 Nominee) 4 Y
5. Maj.Cen. (Retd.) S.C.N. Jatar, ICICI Bank Nominee 3 Y
6. Mr. V.R. Gupte 4 Y
7. Mr. Vishad P. Mafatlal 4 Y
8. Mr. S.K. Mahapatra (CIC Nominee) 5 Y
9. Mr. N. Sankar 3 Y
10. Mr. C.R. Gupte (Managing Director) 4 Y

Notes :
a) Mr.Rohjt Arora, Mr. Berjis Desai, Mr.Vishad Mafatlal, Mr.N.Sankar and Mr.C.R.Gupte were appointed as Directors on 29th
July 2005.
b) The nomination of Maj.Gen. (Retd.) S.C.N. Jatar was withdrawn by ICICI Bank Limited with effect from 5'h October 2005.
c) The nomination of Dr.T.D. Chaudhuri was withdrawn by Industrial Investment Bank of India with effect from 2nd February
2006.
The number of Directorships and committee memberships held by each Director in other companies and the number of committees, if
any, of which each of them is a Chairman are given in the following statement:

Sr. Name of Director Number of Number of Board

No. Directorships committee membership
1. Mr. Hrishikesh A. Mafatlal 11 (4) 3
2. Mr. Rohit Arora 1 1
3. Mr. Berjis Desai 9 (1) 5
4. Mr. V. R. Gupte 2 (2) Nil
5. Mr. Vishad P. Mafatlal 6 Nil
6. Mr. S. K.Mahapatra (GIC Nominee) Nil Nil
7. Mr. N. Sankar 5 (3) 2 (1)
8. Mr. C. R. Gupte (Managing Director) 2 Nil
(Figures in bracket indicate number of Chairmanships held by the Director)
None of the Directors of the Company is a member of more than ten committees or Chairman of more than five committees across
all companies in which he is a Director.
3. Audit Committee
The Audit Committee was constituted by the Company in the year 1987 for reviewing the internal audit reports and the Annual
Accounts. The Audit Committee was reconstituted after the restructuring of the Company in July 2005. The Audit Committee of
the Company as on 31 s ' March 2006 comprises of four directors. Mr. S.K. Mahapatra, nominee director of General Insurance
Corporation (GIC) is the Chairman of the Audit Committee. Mr. Rohit Arora, Mr.V. R. Gupte and Mr. N. Sankar are the other three
members of the Audit Committee. These directors possess the knowledge of corporate finance, accounts and company law. Maj.
Gen. (Retd.) S. C. N. Jatar and Dr. T. D. Chaudhuri ceased to be members of the Audit Committee with effect from 5th October
2005 and 2nd February 2006 respectively.
Role of Audit Committee
The terms of reference of the Audit Committee are in accordance with clause 49 of the Listing Agreement entered into with the
Stock Exchanges in India and includes the following major items :
i) Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the
financial statement is correct, sufficient and credible.

15
 -I NOCILJ- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

ii) Recommending to the Board, the appointment, re-appointment and if required, replacement and removal of the Statutory
Auditors and fixation of the Audit fees.
iii) Approval of payment to Statutory Auditors for any other services rendered by them.
iv) Reviewing with the management the annual financial statements before submission to the Board for approval, with particular
reference to :
a) Matters required to be included in the Director's Responsibility Statement to be included in the Board's report in
terms of clause (2AA) of Section 21 7 of the Companies Act, 1956.
b) Changes if any, in accounting the accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by the management.
d) Significant adjustments made in the financial statements arising out of audit findings.
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report.
v) Reviewing with the management, the quarterly financial statements before submission to the Board for approval.
vi) Reviewing, with the management, performance of statutory and internal auditors, and adequacy of internal control systems.
vii) Reviewing the adequacy of 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.
viii) Discussion with internal auditors, any significant findings and follow-up thereon.
ix) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or
irregularity or failure of internal control systems of a material nature and reporting the matters to the Board.
x) Discussions with statutory auditors before audit commences, about the nature and scope of audit as well as post audit
discussions to ascertain any area of concern.
xi) To look into the reasons for substantial defaults in the payment to the depositors, debentureholders, shareholders (in case of
non-payment of declared dividends ) and creditors.
xii) Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Date of Audit Committee Meeting No. of Committee Members present

Ih
27 April 2005 3
th
29 July 2005 2
28"1 October 2005 S
th
30 January 2006 4

The Board of Directors has appointed M/s. Borkar & Muzumdar, Chartered Accountants as Internal Auditors to conduct the
internal audit of the various records of the Company. The reports of the said auditors is placed before the Audit Committee along
with the comments of the Management on the action taken to remedy any deficiencies that may be observed on the working of the
various departments of the Company.
The Audit Committee also assures the Board about the adequate internal control procedures and financial disclosures being in
conformity with the requirements of Listing Agreement of the Stock Exchanges.
4. Share Transfer Committee
The Company has a Share Transfer Committee of five directors to review and approve the transfer of shares in physical form issued
by the Company. Mr. Hrishikesh A. Mafatlal, a non-executive director is the Chairman of the Committee. The Committee also
approves the issue of duplicate share certificates and requests regarding transmission of shares received from the heirs of the
deceased shareholders. The Committee meets four times a month to approve the transfer requests received from the investors
during the previous week so as to ensure prompt return of securities to the shareholders. The share department verifies the
signature of the transferor on the transfer deed with the specimen signature registered with the Company and recommends the
transfer of shares to the Committee.
5. Investors Grievance Committee
The Directors have constituted a committee of five directors for dealing with the grievances of the investors. Mr. Hrishikesh A.
Mafatlal is the Chairman of this committee. The committee meets once every month and reviews thecomplaints received by the
Company from its investors and the action taken by the management to sort out these complaints.
The Company received 393 complaints from shareholders during the year under review and all the 393 complaints were resolved
to the satisfaction of the investors. There were 37 requests for share transfers and 42 requests for Demat pending as on 31 sl March
2006. These transfers and Demat requests were processed and approved on 10thApril 2006.

16
6. Remuneration Committee
The Remuneration Committee comprises of four members. Mr. S.K.Mahapatra nominee director of GIC is the Chairman of the
Committee. Mr. Rohit Arora, Mr. Berjis Desai and Mr. N. Sankar are its other members. The Remuneration Committee was
reconstituted by the Board of Directors with effect from 29lh July 2005. The Remuneration policy of the Company is determined by
the members of the Committee on the basis of the performance of the Company from time to time in line with the trends in the
market with a view to attract the right talent. During the year two meetings of the Remuneration Committee were held which
approved the remuneration of Mr.C.R.Cupte as the Managing Director of the Company. The Committee Meeting of 29Ih July 2005
was attended by Mr.S.K.Mahapatra and Maj.Gen. (Retd.) S.C.N. Jatar and the Committee Meeting of 30th January 2006 was
attended by Mr.S.K.Mahapatra, Mr.Berjis Desai and Mr.N.Sankar.
7. Remuneration of Directors

Name of the Salary Perquisites ( onlrihution to Provident Total

Director (Rs) .nut other Kinds (Rs) (Rs)
Mr. C.R.Gupte li>,oiuiius. i ill sue, aao 21,65,000/-
(From 1.08.2005 to 31.03.200b)

The Company has paid an amount of Rs.2,55,000 towards sitting fees to the non-execuii-. e directors ot Ihe Company during the
financial year 2005-06.
8. Means of communication
I. The Board takes on record the unaudited quarterly financial results in the for.nat prescribed by clause 41 of the Listing
Agreement with the stock exrh?nges within one month of close of the quarter and announces forthwith the results to all the
stock exchanges where the shares of the Company are listed. The quarterly unaudited financial results are also published in
Free Press Journal and Nav Shakti within 48 hours of the conclusion of the meeting of the Board in which they are
approved.
II. The quarterly results are then submitted to the Statutory Auditors of the Company for a Limited Review and the report of the
Auditors is also filed with all the Stock Exchanges after it is approved by the Board of Directors.
The quarterly results are not being sent to each household of shareholders as shareholders are intimated through press.
IV. The Company has established a website "www.natocil.com" for giving information about the Company to its existing and
prospective stakeholders. The quarterly results are displayed on the Company's website alongwith other relevant information.
9. Management Discussion and Analysis Report forms part of this Annual Report
10. Compliance Officer
The Board of Directors has designated Mr. U.M.Karnik, Company Secretary as the Compliance Officer of the Company.
11. General Meetings:
Location and time where last three Annual General Meetings were held is given below:
Financial Year Date Location , , ': Time
2001-2002 30.12.2002 Patkar Hall, Mumbai 4.00 p.m.
2002-2003 18.03.2004 Jai Hind College iviumbai 3.30 p.m.
2003-2005 15.09.2005 Patkar Hall, Murnbai 4.00 p.m.
The number of special resolutions which were passed in the last three Annual Genera! Meetings are as under:

Date of Annual General Mefiiiu Klb-of-

Mi!_'.:.'i'w • 2.
lB.0i.2uui \
i'.J »'»..•« i.r, \
No special resolutions were passed through postal ballot at the last Annual Genera! .Vieeting nor is any proposed at the ensuing
Annual General Meeting.
12. Disclosures:
A. Disclosure on materially significant related party transactions i.e. transactions cf the Company of material nature with its
promoters, directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests
of the Company at large:
• The Company does not have any related party transaction, which may have potential conflict with the interests of the
Company at large. Disclosure of transactions with related parties entered into by the Company in the normal course
of business are given in the Notes to Accounts.

17
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

B. Details of non compliance by the Company, penalties, strictures imposed on the Company by Stock Exchange or SEBI or
any statutory authority on any matter related to capital markets, during the last three years:
• There were no instances of non-compliance of any matter related to the capital markets during the last three years and
the Company has complied with the requirements of regulatory authorities on capital markets.
C. Details of compliance with mandatory requirements
• All the mandatory requirements of clause 49 of the listing agreement have been complied with by the Company.
13. Declaration of Compliance with the Code of Conduct/Ethics
All the Directors and Senior Management personnel have affirmed compliance with the Code of Conduct/Ethics as approved and
adopted by the Board of Directors.
14. General Shareholders information:
a) Registered Office Mafatlal House, H.T. Parekh Marg, Backbay Reclamation,
Churchgate, Mumbai-400 020.
b) Annual General Meeting
Date and time 31s'July 2006, at 4.00 p.m.
Venue Patkar Hall, Mumbai.
c) Financial Calender 2006 - 2007 (tentative)
Annual General Meeting (next year) July/August 2007
Financial Reporting:
For quarter ending on June 2006 end of July 2006
Half year ending on September, 2006 end of October 2006
For quarter ending on December, 2006 end of lanuary 2007
For the year ending on March, 2007 end of April, 2007
d) Date of Book Closure : 14lh July 2006 to 31 st July 2006 (both days inclusive)
e) Listing on Stock Exchange: '
Equity shares of the Company are listed on Bombay Stock Exchange Limited (Stock Code 500730), National Stock Exchange
of India Limited (Scrip Code 'NOCIL') and The Calcutta Stock Exchange (Stock Code 10024057).
The Company has received approval from the Ahmedabad Stock Exchange for delisting of its shares with effect from 2nd
January 2006. The Company's application for delisting of shares on The Calcutta Stock Exchange is pending.
15. Demat Information :
The shares of the Company have been brought under compulsory demat mode with effect from 29lh May, 1999. As on 31 sl March
2006 about 83% shareholding representing 133450717 shares of the Company have been converted into demat form. The
Company has executed agreements with both NSDL and CDSL for demat of its shares.
ISIN numbers in NSDL & CDSL for equity shares : INE 163 A 01018
16. Stock Market Data:
The monthly high/low quotation of shares traded on Bombay Stock Exchange Limited and National Stock Exchange of India
Limited is as follows:

Bombay Stock Exchange Limited National Stock Exchange of India Limited

Month High Low Month High Low
April 2005 22.80 19.60 April 2005 22.70 19.55
May 2005 24.25 20.50 May 2005 24.25 20.40
June 2005 28.70 23.60 June 2005 28.70 23.55
July 2005 35.65 24.00 July 2005 35.70 24.00
August 2005 34.90 27.50 August 2005 35.00 28.15
September 2005 40.35 30.50 September 2005 40.35 30.50
October 2005 34.30 25.00 October 2005 34.50 25.00
November 2005 34.30 26.00 November 2005 34.40 25.25
December 2005 33.95 29.50 December 2005 34.00 28.35
January 2006 33.10 29.05 January 2006 33.10 29.00
February 2006 31.10 25.75 February 2006 31.00 25.55
March 2006 26.15 20.45 March 2006 26.20 20.15

18
17. Registrar & Transfer Agents:
The Company has appointed M/s. Sharepro Services (India) Private Limited as its Registrar & Share Transfer Agents with effect from
1 sl September, 2000. The Sharepro Services has a dedicated, highly reputed top management team consisting of professionally
qualified managers. It is headed by Mr. G.R. Rao who is a qualified Company Secretary and has 24 years experience in handling
the share transfer work. The organisation has a proven track record and is committed to maintain quality of service of the highest
standards. Sharepro Services has demonstrated high volume handling capacity with built in resilence to quickly upgrade the
capacity at a short notice.
18. Distribution of Shareholding as on 31 st March ?0Of.

No. of Equity No. of %of No. of % of

Shares held Shareholders Shareholders Shares held Share holding
Upto 500 94390 80.50 17398038 10.82
501 to 1000 12235 10.44 10405801 6.47
1001 to 2000 5156 4.40 8169760 5.08
2001' to 3000 1730 1.48 4540760 2.82
3001 to 4000 791 0.67 2922000 1.82
4001 to 5000 822 0.70 3964860 2.47
5001 to 10000 1094 0.93 8263150 5.14
10001 and above 1035 0.88 105122611 65.38

Total 117253 100.00 160786980 100.00

19. Shareholding Pattern as on 31" March 2006 :

Category No of shares % of shareholding

1 Indian Promoters 47440100 29.50
2 Mutal Fund and UTI 44980 0.03
3 Banks, Financial Institutions, Insurance companies,
(Central/State Govt. Institutions/Non-Government Institutions) 21461654 13.35
4 Flls 1089406 0.68
5 Private Corporate Bodies 19990287 12.43
6 Indian Public 69146084 43.00
7 NRI/OCBs 1569941 0.98
8 Foreign Banks 44528 0.03
TOTAL 160786980 100.00

20. Performance of NOCIL equitv share relative to BSE Sensitive Index (SENSEX)

Particulars BSE Sensex (Rs.) NOCIL share price

st
As on 1 April 2005 6492.82 21.15
As on 3 1 " March 2006 11279.96 24.40
% IncreaseADecrease) at year end. 73.73 15.37

21. Plant C-37, Trans Thane Creek Industrial Area

Off Thane Belapur Road, Navi Mumbai - 400 705.
Maharashtra
22. Investor Correspondence:
For any assistance regarding dematerialisation of shares, share transfers, transmissions, change of address, non-receipt of dividend,
interest and any other query relating to the shares of the Company, please write to:
Sharepro Services (India) Pvt. Ltd.,
Satam Estate, 3rd Floor,
Above Bank of Baroda
Cardinal Gracious Road
Chakala, Andheri (East)
Mumbai - 400 099.

19
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

AUDITORS'CERTIFICATE
To the Members of
National Organic Chemical Industries Limited

We have examined the compliance of conditions of Corporate Governance by National Organic Chemical Industries Limited for the
year ended on 31s1 March 2006, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the corporate
governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

The Company prepared the framework for risk management and the minimisation procedures which was presented and adopted at the
Board Meeting held on 30th May, 2006.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, we certify that
the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with
which the management has conducted the affairs of the Company.
For C. C. Chokshi & Co.
Chartered Accountants

P. R. Barpande
Partner
Membership No. 15291
Mumbai, dated: 30th May, 2006

20
 •S N O C I L I

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is engaged in the business of manufacture and sale of Rubber Chemicals. It has manufacturing facilities at TTC
Industrial Area in Thane and Regional sales offices at Mumbai, Delhi, Chennai and Kolkatta.

The rubber chemicals manufactured by the Company are mainly used by the tyre industry and also by various other industries
manufacturing rubber products. These chemicals not only facilitate the vulcanization process of rubber they also improve and
enhance the life of rubber products. The Company is constantly working towards achieving further improvement in technological
and operational efficiency of the existing products in their application. It also strives to develop new products to increase its
participation in the market and to enlarge its product range.

2. OPPORTUNITIES AND THREATS

The overall increase in the worldwide demand for tyres and rubber based products has presented a golden opportunity to the
Company to embark upon developing of new products and on expanding of the volume of its existing products. The Company is
in the process of acquiring a plot of land in a suitable industrial area for augmenting the manufacturing capacities of some of its
key products. During the year the Company has been able to achieve substantial growth in its business and is confident that this
trend will continue in future so that its position as a leader in the business of rubber chemicals both within and outside the country
is maintained in the future.

High crude prices are certainly a matter of concern since these not only drive our energy costs very high but also push prices of our
raw materials up. This trend is already being felt. Last couple of quarters, we have been witnessing certain amount of erosion in
Rubber Chemicals prices mainly caused by a temporary slowdown in the Rubber Industry due to very high natural rubber and
synthetic rubber prices. However a correction is expected in a reasonable period.

3. PRODUCTWISE PERFORMANCE
;
The rubber chemicals business was able to improve its performance during the year due to relatively stable market conditions.
There was a growth in the volume of tyre business but the volumes in the non tyre business declined due to large imports of
Rubber Chemicals particularly from China, at unrealistically low prices. However, due to reasonable market corrections in the
selling prices of the finished products, the Company was able to show good results during the year. The increase in the sales
volumes of rubber chemicals and better pricing in the international market contributed to a better performance in exports by the
Company. The business has been able to prove its intrinsic robustness and strengths as the quality of its finished products is well
accepted by all its domestic as well as foreign customers. The Company expects that the demand for rubber products is likely to
continue to increase due to relatively strong global economy and substantial investments in infrastructure projects in the country
and both are driving forces for Rubber Chemicals.

4. BUSINESS OUTLOOK

The rubber chemicals businesses expected to show a decent growth in the near future which should increase the demand for the
Company's products. The well established and wide marketing network which the Company has created which is in turn fully
supported by operations of the manufacturing facilities should enable the Company to meet this growing demand of rubber
chemicals both within and outside the country. The quality of the rubber chemicals manufactured by the Company is very well
accepted by both domestic and international customers.

The Company is in the process of increasing the capacity of some of its key products by debottlenecking and also through
technical developments based on ongoing Research & Development efforts. It also intends to take up the manufacture of some
critical new products which will not only help in the overall growth of the Company but will also help in achieving special status
in the Rubber Industry. The Company also proposes to set up additional manufacturing facilities for some of its key products at a
suitable alternate site.

During the year under review the Company was able to secure a favourable decision from the appropriate authority in the anti-
dumping proceedings in some of the products. While the decision is inadequate in its scope and coverage, it will to some extent
help in curtailing the rampant dumping of low priced rubber chemicals in the country.
5. RISKS AND CONCERNS

One of the major risk being faced by the Company is from the rampant dumping of some of the key products manufactured by it.
With the reduction in global prices of rubber chemicals towards the end of the year it has become easier for some of the foreign
manufacturers to offload their excess production in India at relatively low prices thereby creating problems for the domestic
industries. Even though the Government has imposed anti dumping duties these are not enough and the industry continues to
suffer the effects of dumping as some of the products have not been included by the authorities in the scope of the anti dumping

21
 •JNOC!L S- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

duties and these products continue to be imported in large volumes at very low prices. Over the past few years the rubber
chemicals business has also become very competitive due to the efforts being made by some of the major players particularly from
China, Korea etc. to acquire a larger market share of the global/regional business.

The Company has engaged the services of professionals for tabulating the risks faced by the various functions of the Company
and to prepare a framework for minimization of such risks. On the basis of the report submitted by the consultant, the company
prepared the formal risk management framework and minimization procedures which was presented and adopted by the Board of
Directors at their meeting held on 30th May, 2006. The Company plans to take this exercise forward so as to monitor the risks on
a regular basis and strive to minimize the risks.
6. FINANCIAL PERFORMANCE - OPERATIONAL PERFORMANCE

The Company has settled all the secured liabilities of the erstwhile Petrochemicals Division under the Scheme of Arrangement and
now there are no encumbrances on the fixed assets of the Company. The Company has been able to obtain working capital
facilities from two banks and is now confident of meeting all its financial commitments as well as raising necessary finances for
meeting the costs of the various expansion projects proposed to be undertaken by the Company. The Management has revalued
certain classes of fixed assets of the Company in order to reflect the true value of these assets. As on 3151 March 2006 the market
value of these assets is Rs.166.34 crores as against Rs.64.75 crores computed on the historical cost basis.

7. INTERNAL CONTROL SYSTEMS

The Company has in place adequate Internal Control Systems and procedures covering all the financial and operating functions.
These systems and procedures have been designed to provide reasonable assurance to the management regarding maintenance of
the appropriate accounting records, monitoring the economy and efficiency of operations, protecting the assets of the Company
from losses and ensuring the reliability of financial and operational information and proper compliance with the statutory enactments
and the rules and regulations made thereunder. Some of the significant features of the Internal controls systems and procedures
are as follows:

Appropriate delegation of authority limits with responsibility for incurring capital and revenue expenditures.

Approval and monitoring of annual revenue budget for all operating and service functions.

Procedure for approval of capital budget proposals and monitoring the expenditure on such acquisitions.

Formulating and reviewing the annual and long term business plans.

A comprehensive code of conduct for ensuring the integrity of financial reporting, ethical conduct, regulatory compliances
and conflict of interest, if any.

Review of the operations and financial plans in key business areas by way of monthly management meetings.

Appointment of an independent consultant for conducting internal audit for reporting to the Management and the Audit
Committee the adequacy and compliance with the internal controls and the efficiency and effectiveness of operations.

An Audit Committee of the Board of Directors which is functional since 1987 regularly reviews the findings of the internal
auditors, adequacy of internal controls, compliance with the accounting standards as wellas recommends to the Board the
quarterly and annual results of the Company and appointment of Auditors. The Audit Committee also reviews the related
party transactions, entered into by the Company during each quarter.
8. MATERIAL DEVELOPMENT IN HUMAN RESOURCES

The Company has 140 Management employees and 246 Non-Management employees at all the locations. The industrial relations
have remained cordial throughout the year. The Company has entered into a long term settlement with NOCIL-RCD Employees
Union which is valid up to December 2006.
9. CAUTIONARY STATEMENT

Statement in this Management Discussion and Analysis Report describing the Company's objectives, projections, estimates,
expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations.
Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the
Company's operations include raw material availability and prices, cyclical demand and pricing in the Company's principal
markets, changes in Government regulations, tax regimes, economic development within India and the countries in which the
Company conducts business and other incidental factors.

22
 AUDITOR'S REPORT

To the Members of National Organic Chemical Industries Limited

1. We have audited the attached Balance Sheet of National Organic Chemical Industries Limited, as at 31 s1 March 2006 and also the
Profit and Loss Account and Cash Flow Statement of the Company for the year ended 31 st March 2006 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.
2. 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.
3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of Section 227
(4A) of the Companies Act, 1956, we give in the Annexure, a statement on the matters specified in paragraph 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to above, we report that
a) 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;
b) 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;
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the
books of account;
d) 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.
e) On the basis of written representations received from the Directors of the Company and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on 31 s1 March 2006 from being appointed as a director in
the terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read
together with significant accounting policies and other notes thereon, 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March 2006; and
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For C. C. Chokshi & Co.
Chartered Accountants

P. R. Barpande
Partner
Membership No. 15291
Mumbai, dated: 30tPl May 2006

ANNEXURE TO THE AUDITOR'S REPORT

Re: National Organic Chemical Industries Limited
Referred to in Paragraph 3 of our report of even date
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed
assets.
(b) The Company has physically verified certain assets during the year in accordance with a programme of verification, which
in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information
and explanations given to us no material discrepancies were noticed on such verification.
(c) The Company has not disposed off substantial part of fixed assets during the year,
(ii) In respect of its inventories:
(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

23
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of
inventories followed by the management were reasonable and adequate in relation to the. svz.e of tUe. CovwpMV^ aud the
nature of its business.
(c) In our opinion and according to the information and explanations given-to us, the Company has maintained proper records
of its inventories and no material discrepancies were noticed on physical verification.
(iii) In respect of loans, secured or unsecured, the Company has not granted or taken any loan during the year to or from companies,
firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause (iii)
of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for
the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the
internal control procedures.
(v) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act, 1956,
to the best of our knowledge and belief and according to the information and explanations given to us :
(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the register maintained
under the said section have been so entered.
(b) Where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices,
which are prima facie reasonable having regard to the prevailing market prices at the relevant time or as available with the
Company.
(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of
Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the Companies (Acceptance of Deposits)
Rules, 1975, with regard to the deposits accepted from the public.
(vii) In our opinion, the internal audit functions carried out during the year, by firm of Chartered Accountants appointed by the
Management have been commensurate with the size of the Company and the nature of its business.
(viii) According to the information and explanations given to us the Central Government has not prescribed maintenance of Cost
Records under Section 209 (1) (d) of the Companies Act, 1956, in respect of products manufactured by the company during the
year.
(ix) According to the information and explanations given to us in respect of statutory dues: -..',.
(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident fund, Employees
state insurance, Income tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess, Investor Education and Protection
fund, and any other material statutory dues with the appropriate authorities except the dues to Investor Education and
Protection fund Rs.68,000/- (since deposited), Navi Mumbai Municipal Corporation cess Rs.34.87 lakhs and Maharashtra
Industrial Development Corporation dues Rs.1 74.72 lakhs, which were outstanding for more than six months as at 31 st
March 2006 from the date such amount became payable.
(b) The dues in respect of following, which are disputed, have not been deposited since the matters are pending before relevant
appellate authorities:

Name of the Statute Nature of Dues Amount Period to which Pending before
(Rs. In Lakhs) dispute relates to

Central Excise Act, 1944 Excise Duty 234.96 1997, 2000 Customs, Excise and Service Tax
to 2003 Appellate Tribunal (CESTAT)
70.29 2001 to 2004 Commissioner - Central Excise
Appeals
25.05 1994 to 1999 and Assistant / Deputy Commissioner
2001 to 2005
Central Sales Tax Act, 1956 Sales Tax 301.13 1995 to 1998 and Appellate Tribunal
and Various State sales tax Acts 2003
274.29 1984 to 1990 and Deputy Commissioner -
1994 to 2002 SalesTax Appeals
54.52 1987 to 1992, Assistant Commissioner /
1995 to 2000 Assessing officer
Customs Act, 1962 Custom Duty 718.77 1998 to 2000 and CESTAT
2004

24
(x) The accumulated losses of the Company at the end of the financial year do not exceed fifty per cent of its net worth and the
Company has not incurred cash losses during the current year and in the immediately preceding financial period.
(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the
company has not defaulted in the repayment of dues to financial institutions, banks and debentureholders.
(xii) During the year, the Company has granted a loan, which is to be secured by pledge of shares, in respect of which the Company has
adequate documents and records, which in relation to pledge of shares would be updated as and when the shares are actually
pledged.
(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor's Report) Order, 2003 are
not applicable to the Company.
(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the
provisions of clause (xiv) of paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others
from bank or financial institutions.
(xvi) To the best of our knowledge and belief, and according to the information and explanations given to us, company has not
obtained any term loan during the year and hence the question of applying term loans for the purpose for which the loans were
obtained does not arise.
(xvii) According to information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds
raised on short term basis have, prima-facie, not been used for long term investment.
(xviii) 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 and hence the question of whether the price at which shares have been issued is
prejudicial to the interest of the Company does not arise.
(xix) The Company has not issued any debentures during the year, hence the question of creation of security or charge in respect of
debentures issued does not arise.
(xx) The Company has not raised any money by way of public issue during the year.
(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the
Company was noticed or reported during the year.

For C. C. Chokshi & Co.

Chartered Accountants

P. R. Barpande
Partner
Membership No. 15291
Mumbai, dated: 30th May, 2006

25
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

BALANCE SHEET AS AT 31 ST MARCH, 2006

As at
31-03-2005
Schedule Rupees Rupees Rupees
No. in Lakhs in Lakhs in Lakhs
SOURCES OF FUNDS
1. Shareholders' Funds:
(a) Capital 1 16,078.70 12,260.57
(b) Reserves and surplus 2 16,439.61 3,774.21
32,518.31 16,034.78
2. Loan Funds:
(a) Secured loans 3 25.67 5,727.34
(b) Unsecured loans 4 47.75 47.75
73.42 5,775.09
TOTAL 32,591.73 21,809.87
APPLICATION OF FUNDS
1. Fixed Assets:
(a) Gross block 5 29,156.43 11,647.04
(b) Less: Depreciation 12,522.09 4,910.42
(c) Net block 16,634.34 6,736.62
(d) Capital work-in-progress 164.22 89.63
16,798.56 6,826.25
2. Investments 6 302.31 • 301.39
3. Deferred tax assets (net) 157.87 868.71
4. Current assets, loans and advances:
(a) Inventories 7 6,037.37 5,829.10
(b) Sundry debtors 8 7,904.97 9,278.30
(c) Cash and bank balances 9 2,884.00 1,200.95
(d) Other current assets 10 0.40 0.40
(e) Loans and advances 11 8,058.32 6,374.45
24,885.06 22,683.20
Less: Current liabilities and provisions:
(a) Liabilities 12 5,460.75 9,527.48
(b) Provisions 13 4,091.32 2,012.85
9,552.07 11,540.33
Net current assets 15,332.99 11,142.87
5. Profit and Loss Account (per contra.... Schedule 2) 2,670.65
TOTAL 32,591.73 21,809.87
Significant Accounting Policies and notes to
Balance Sheet and Profit and Loss Account 18

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R, CUPTE
As per our attached report of even date
For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. GUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

26
 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
Previous Period
(18 months)
Schedule Rupees Rupees Rupees
No. in Lakhs in Lakhs in Lakhs
INCOME
Sales including excise duty 40,375.89 45,872.52
Less: Excise duty on Sales 4,073.20 4,736.26
36,302.69 41,136.26
Other income 14 3,914.59 9,980.62
Increase in stocks of finished products and stock-in-process 15 271.65 736.60
40,488.93 51,853.48
Less: Sales / Income on behalf of Relpol Plastic
Products Limited (Refer note 1 of Schedule 18) 960.01 2,649.77
39,528.92 49,203.71
EXPENDITURE
Manufacturing and other expenses 16 32,734.24 47,573.46
Purchase of trading products 281.53 542.07
Excise duty 80.60 206.00
Depreciation 606.75 890.54
Interest 17 68.88 398.65
33,772.00 49,610.72
Less: Expenditure incurred on behalf of Relpol Plastic
Products Limited (Refer note 1 of Schedule 18) 950.33 2,640.12
32,821.67 46,970.60
Profit before exceptional / non recurring item and tax 6,707.25 2,233.11
Add: Exceptional / non recurring item - Surplus on Demerger 15,238.93
Profit before tax 6,707.25 17,472.04
Provision for Taxation:
Current income tax (including wealth tax Rs.0.82 lakh
previous period Rs. 4.00 lakhs) 570.82 4.00
Deferred tax charge / (credit) 710.84 (868.71)
Fringe benefit tax 26.21
MAT credit entitlement (Refer note 19 (a) of Schedule 18) (570.00)
737.87 (864.71)
Profit after tax 5,969.38 18,336.75
Excess provision for taxes of earlier years 123.93
Transferred from Contingency Reserve, no longer required 4,000.00
Transferred from Debenture Redemption Reserve 308.00 232.00
Deficit brought forward from previous period (7,535.36) (30,104.11)
Proposed Dividend on Equity shares 803.94
Corporate tax on dividend 112.75
Balance carried to balance sheet (2,050.74) (7,535.36)
Earnings per share of face value of Rs. 10 each (Basic and Diluted)
(Refer note 20 of Schedule 18)
- before exceptional / non recurring item 4.11 2.53
- after exceptional / non recurring item 4.11 14.96
Significant Accounting Policies and notes to Balance Sheet
and Profit and Loss Account 18

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R. CUPTE
As per our attached report of even date
For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors <'
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. GUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

27
 •JNOCILI- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH, 2006

Previous Period
(18 months)
Rupees Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES : in Lakhs in lakhs in Lakhs

Profit before tax 6,707.25 17,472.04

Adjustments for:
Depreciation and obsolete fixed assets written off 637.66 915.68
Bad Debts written off 1,048.32 243,36
Provision for doubtful debts and advances 418.39 325.56
Loans and Advances / Other dues written off 13.50 68.47
Loss on disposal of long term investments (net) 2,440.48
Profit on sale of fixed assets (net) (1,076.39) (564.77)
Income from Long Term Investments (12.56) (17.36)
Intrest on Deposits, Overdue bills etc. (97.89) (39.63)
Unrealised gain on foreign currency cash and cash equivalents (1.41) (0.01)
Interest 68.88 398.65
Provision for doubtful debts/advances made in previous years written back (1,080.65) (351.46)
Excess provision of earlier year written back (260.65) (1,964.17)
Gain on Renunciation of right to subscribe (158.58)
Excess provision for Interest of earlier years written back (4,288.19)
Surplus - Oemerger (15,238.93)
(342.80) (18,230.90)
Operating profit/I loss) before working capital changes 6,364.45 (758.86)
Adjustments for:
Trade and other receivables 327.79 (1,814.11)
Inventories (208.27) (982.10)
Trade payables (3,786.99) 1,940.66
Provisions 714.54 281.60
(2,952.93) (573.75)
Cash generatedAused) from operations 3,411.52 (1,332.61)
Interest paid (70.17) (419.75)
Direct Taxes paid (549.24) (92.35)
Net cash generated/(used) from operating activities 2,862.28 (1,424.96)

CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets (487.23) (196.87)
Sale of fixed assets 1,113.09 704.18
Purchase of Investments (1.00)
Sale of Investments 0.08 2,036.64
Movement in Loans and Deposits 55.50 98.81
Gain on Renunciation of right to subscribe - 158.57
Interest received 99.08 48.93
Dividend received 11.37 11.39
790.89 2,861.65

CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from long term borrowing 25.67
Repayment of long term borrowings (net) (1,909.21) (43.18)
Unclaimed Dividend paid (10.81) (42.14)
Unclaimed Matured Deposits paid (7.00) (785.13)
Interest Paid (70.17) (419.75)
Net Cash used in financing activities (1,971.52) (1,290.20)
Net increase in cash and cash equivalents 1,681.65 146.49
Opening balance of cash and cash equivalents (Refer note 1 below) 1,200.94 1,054.45
Closing balance of cash and cash equivalents (Refer note 1 below) 2,882.59 1,200.94

Notes to cash flow statement:

1. Components of cash and cash equivalents includes cash, remittances in transit, bank balances in current & deposit accounts (Refer Schedule 9 to the accounts).

Current year Previous period

Cash and Bank balances 2,884.00 1,200.95
Unrealised gain on foreign currency cash and cash equivalents (1.41) (0.01)
Cash and cash equivalents 2,882.59 1,200.94

2. Repayments of long term borrowings reflect the decrease in secured and unsecured loans after netting off the issue of equity shares consequent to the approval of the scheme of
arrangement duly approved by the Bombay High Court (Refer note (b) of Schedule 1).
3. Interest received on investments, deposits, employee loans etc. is classified as cash flow from investing activities and other interest recieved is classified under operating activities.
4. Purchase of fixed assets are stated inclusive of movements of capital work in progress between the commencement and end of the financial year and are considered as part of investing
activity.
5. The Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard (AS 3) on "Cash Flow Statement" issued by the Institute of Chartered
Accountants of India and the listing agreement with the Stock Exchanges.
6. Cash Flow includes the activities undertaken on behalf of Relpol Plastics Products Limited in trust (Refer note 1 of Schedule 18).
7. Previous period figures are regrouped / reclassified, wherever necessary, to corespond to those of the current year.

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary
As per our attached feport of even date V. R. CUPTE
For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA
P. R. BARPANDE
C. R. GUPTE Managing Director
Partner
Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

28
 •a NOCIL J-

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006

As at
31-03-2005
Rupees Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs in Lakhs
SCHEDULE 1: SHARE CAPITAL

Authorised:
1,200,000,000 Equity shares of Rs. 10 each 120,000.00 120,000.00

Issued and subscribed:

160,786,980 (previous period 122,605,700)
Equity shares of Rs.10 each, fully paid-up 16,078.70 12,260.57

Notes: Of the above Equity shares :

(a) 97,302,850 shares were alloted as fully paid-up by way

of bonus shares by capitalisation from the General
Reserve and Share Premium Account and 13,302,850
shares had been allotted to the shareholders of the
erstwhile Polyolefins Industries Limited pursuant to the
scheme of amalgamation without payment in cash.

(b) 38,181,280 shares have been alloted on 29th July, 2005,

• to the Secured Lenders without payment in cash (refer
••• note 7 of Schedule 3) in terms of the scheme of
• : arrangement as approved by the Bombay High Court.

SCHEDULE 2: RESERVES AND SURPLUS

1. Capital Reserve:
Balance at the commencement of the year/period 15.29 15.29

2. Share Premium Account:

Balance at the commencement of the year/period 450.92 450.92

3. Debenture Redemption Reserve:

Balance at the commencement of the year/period 308.00 540.00
Less: Transferred to Profit and Loss Account 308.00 232.00
308.00

4. Revaluation Reserve 10,159.43

(Refer note 2 of Schedule 18)

5. General Reserve:
Balance at the commencement of the year/period 4,864.71 4,864.71
Less: Debit balance in Profit and Loss Account 2,050.74 7,535.36
Less: Debit balance in excess of general reserve (per contra) - 2,670.65
2,050.74 (4,864.71)

2,813.97 -
6. Reserve for Contingency:
Balance at the commencement of the year/period 3,000.00 7,000.00
Less: Amount transferred to Profit and Loss Account - 4,000.00
3,000.00 3,000.00

TOTAL 16,439.61 3,774.21

29
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2006

As at
31-03-2005
Note No. Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
SCHEDULE 3: SECURED LOANS

1. (a) 15% Non-convertible secured debentures

Privately placed with:
Industrial Development Bank of India. 68.00
Series IV (1994-2001)

(b) 16% Non-convertible secured debentures

Privately placed with:
Industrial Credit and Investment Corporation of India
Series X to XIII 240.00
- 308.00
2. Term loans:
From financial institutions 2 . 533.60
Loan taken from Industrial Development Bank of India (IDBI) 3 - 22.62
- 556.22
3. Cash credit accounts etc. from Banks 4 - 3,760.24

4. Other loans and advances:

From Surekha Holdings Private Limited 4 822.88
From Infrastructure Leasing and Financial Services Limited (ILFS) 5 - 280.00
- 1,102.88

5. Vehicle loans from a Bank 6 25.67 -

TOTAL 25.67 5,727.34

Notes:
1. a) The debenture series IV were secured by first mortgage / charge in favour of the debenture trustees on the immovable and
movable properties (save and except book debts) of the Company's erstwhile Petrochemicals division (PCD), subject to
charges created in favour of bankers/ IL & FS (Refer notes 4 and 5 below). Such division was demerged to Relene Petrochemicals
Private Ltd. (REPPL) during the previous period.
b) The debenture series X to XIII were secured by a charge in favour of the debenture trustees on the Company's fixed assets by
a first mortgage and charge on the immovable and movable properties of the erstwhile PCD, which was demerged during
the previous period, subject to charges created in favour of Company's bankers on current assets for securing borrowings for
working capital requirements and ranked pari passu with the mortgage and charge created in favour of financial institutions.
2. Term loans from financial institutions were secured by joint mortgage of all immovable properties by deposit of title deeds, and
first charge by hypothecation of all movable properties (save and except book debts and excluding specific items of machinery -
refer note 5 below) of the Company pertaining to erstwhile PCD, and creation of second charge on current assets of PCD, which
was demerged during the previous period.
3. Term loans from IDBI were secured by hypothecation of specific plant, machinery equipment and accessories of the Rubber
Chemicals Plant.
4. Loans from banks on cash credit accounts and loans assigned to Surekha Holdings Pvt. Ltd. during the previous period were
secured by joint hypothecation of stocks, book debts and other current assets by way of first charge and second charge over its
fixed assets, located at plot nos 5/6, Trans Thane Creek Industrial area, Thane Belapur Road, Thane i.e. PCD, which was demerged
during the previous period.
5. Loan from IL & FS was secured by an exclusive charge on the Ethylene pipeline from Nagothane to the erstwhile PCD, which was
demerged during the previous period.
6. Vehicle loan is secured by charge on vehicles purchased.
7. During the year, secured loans as stated in notes 1 to 5 above have been settled by payment of cash aggregating to Rs.1,909.21
lakhs and by way of issue of 38,181,280 equity shares of Rs.10/- each aggregating to Rs.3,818.13 lakhs and necessary forms
towards release of charges have been filed with Registrar of Companies

30
 SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006
As at
31-03-2005
Rupees Rupees
in Lakhs in Lakhs
SCHEDULE 4: UNSECURED LOANS
Loans and advances from subsidiary 47.75 47.75

TOTAL 47.75 47.75

SCHEDULE: 5 FIXED ASSETS

Rupees in lakhs

PARTICULARS Land Building Plant and Furniture Vehicles Total As at

Machinery Fixture and 31.3.2005
Leasehold Freehold
Equipments

Cost as at 01.4.2005 17.65 2.49 801.76 9,556.72 1,187.18 81.24 11,647.04 49,203.03

Additions 3,163.35 - 2,217.92 12,252.41 26.38 41.37 17,701.43 631.95

Disposals / Retirements /
Adjustments - 2.49 34.51 62.13 72.39 20.52 192.04 38,187.94

Total Cost as at 31.3.2006 3,181.00 - 2,985.17 21,747.00 1,141.17 102.09 29,156.43 11,647.04

Depreciation upto 31.3.2006 995.89 - 976.16 10,067.12 455.22 27.70 12,522.09 4,910.42

Net Value as on 31.3.2006 2,185.11 - 2,009.01 11,679.88 685.95 74.39 16,634.34 6,736.62

Net Value as on 31.3.2005 15.01 2.49 585.30 5,345.46 739.10 49.26 6,736.62

Depreciation for the year 0.22 - 18.47 508.80 70.39 8.87 606.75

Capital work-in-progress (including machineries under erection and advances

aggregating to Rs. 46.91 lakhs (previous period Rs. 29.10 lakhs)). 164.22 89.63

Notes:

1. Additions during the year and accumulated depreciation upto 31st March, 2006, includes amounts substituted for historical cost
on revaluation as on 31st March, 2006 and have been disclosed in note 2 of Schedule 18.

2. Disposals include Rs. Nil (previous period Rs. 37,945.82 lakhs gross (net Rs. 15,876.23 lakhs)) being the assets demerged to two
transferee Companies during the previous period (Refer note 1 of Schedule 18).

31
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2006

SCHEDULE 6 : INVESTMENTS (at cost/carrying amount unless otherwise stated)

As at
31-03-2005
Rupees Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs in Lakhs
Long term investments:

1. In Government Securities:
National Savings Certificates
(certificates deposited with Government Department) 0.01 0.09

2. In Subsidiary companies: (Unquoted)

37,500,000 Equity shares of Rs. 10 each, fully
paid in Ensen Holdings Limited 230.00 230.00

1,225,000 Equity shares of Rs. 100 each, fully

paid in Urvija Investments Limited 60.00 60.00
290.00 290.00
3. Other Investments:
1 7,623, 6.75% Tax free US64 Bonds of Unit Trust
of India of Rs. 100 each (Quoted) 11.18 11.18
566,320 Equity shares of Rs. 10 each fully paid in
Mafatlal Industries Limited (Quoted) Re. 1
566,340 Equity shares of Rs. 10 each fully paid in
Navin Fluorine International Limited (Quoted) Rs. 200
1,000 Equity shares of Rs. 10 each, fully paid
in HDFC Bank Limited (Quoted) 0.10 0.10
17,101 Equity shares of Rs. 100 each, fully paid
in Mafatlal Engineering Industries Limited (Unquoted) 17.67 17.67
Less: Provision for diminution in the value of investment (17.67) (1 7.67)

1 Equity share of Rs. 2,000 fully paid in

Shree Balaji Sahakari Sakhar Karkhana Limited (Unquoted) 0.02 0.02

10,000 Equity shares of Rs. 10 each, fully paid in

The Bharat Co-operative Bank Limited (Unquoted) 1.00
12.30 11.30
TOTAL 302.31 301.39

(a) Aggregate of quoted investments

Cost / Carrying amount 11.28 11.28
Market value 1,875.45 1,05^.59

(b) Aggregate of unquoted investments

Cost/Carrying amount 291.03 290.11

NOTE:
Under the Rehabilitation scheme of Mafatlal Industries Limited sanctioned by The Board for Industrial and Financial Reconstruction in
its order dated 30th October, 2002:

(i) The Company was allotted 566,320 Equity shares of Rs. 10 each of Navin Fluorine International Limited.

(ii) The Company was entitled to the allotment of 1,132 Equity shares of Rs. 10 each in Sulakshana Securities Limited, a special
purpose vehicle formed under the schedule. However, in terms of the sanctioned scheme of rehabilitation of the said Company,
such entitlement of shares, being fractional wou Id accrue to transferee Company and shareholders would be entitled to proportionate
payment which would be accounted on distribution thereof by the said company on completion of formalities.

32
 •B NOCILg-

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006

SCHEDULE 7: INVENTORIES (at cost or net realisable value, whichever is lower)

As at
31-03-2005
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Stores and spares 395.62 378.58
2. Stock-in-trade
(a) Raw materials 1,784.29 1,660.59
(b) Stock-in-process 874.13 698.63
(c) Finished stocks
Manufactured products 2,957.73 3,019.56
Trading products 25.60 36.29
(d) Other products 35.45
5,641.75 5,450.52
TOTAL 6,037.37 5,829.10
SCHEDULE 8: SUNDRY DEBTORS

Sundry debtors (unsecured):

Outstanding over six months 240.77 1,353.65
Others 7,892.14 9,213.18
8,132.91 10,566.83
Less: provision 227.94 1,288.53
TOTAL 7,904.97 9,278.30
NOTES:
1. (a) Considered good 7,904.97 9,278.30
(b) Considered doubtful 227.94 1,288.53
8,132.91 10,566.83
2. Debtors include Rs. Nil (previous period Rs. 1,819.99 lakhs)
towards debt recoverable from the transferee Companies on
demerger of two divisions of the Company (Refer note 1 of Schedule 18).
SCHEDULE 9: CASH AND BANK BALANCES
1. Cash on hand including cheques on
hand Rs. 199.97 lakhs (previous period Rs. 896.36 lakhs) 205.21 912.06
2. Remittances in transit 79.97 44.28
3. Bank balances:
With Scheduled Banks:
In current accounts 652.96 221.74
In deposit account (including margin money deposits aggregating to
Rs. 317.85 lakhs previous period Rs. 2.00 lakhs) 1,945.80 22.81
With Others:
Municipal Co-operative Bank Limited, Mumbai:
(i) In current account 0.01 0.01
(maximum balance Rs. 0.01 lakh previous period Rs. 1.82 lakhs)
(ii) In deposit account 0.05 0.05
(maximum balance Rs. 0.05 lakh previous period Rs. 1.30 lakhs)
2,598.82 244.61
TOTAL 2,884.00 1,200.95
SCHEDULE 10: OTHER CURRENT ASSETS
Interest accrued on Investments 0.40 0.40
TOTAL 0.40 0.40

33
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006

SCHEDULE 11: LOANS AND ADVANCES

As at
31-03-2005
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Loans
Advance / loans to subsidiary company 127.08 127.48
(including interest thereon)
Deposit with public company (including interest thereon) 2,094.00 2,094.00
Loan to private company @ 1,000.00
2. Advances recoverable in cash or in kind or for value to be received 2,357.19 2,392.42
3. Advance payment of income-tax 2,381.28 1,857.89
4. Balances with customs and excise 25.27 25.83
5. MAT credit entitlement (Refer note 19 (a) of Schedule 18) 570.00 -
8,554.82 6,497.62
Less: provision 496.50 123.17
TOTAL 8,058.32 6,374.45
To be secured by way of pledge of certain shares held as
investments by loanee Company.
NOTE:
(a) Considered good 8,058.32 6,374.45
(b) Considered doubtful 496.50 123.17
8,554.82 6,497.62

SCHEDULE 12: CURRENT LIABILITIES

Acceptances 803.02 1,148.52

Sundry creditors
- Dues to Small Scale Industrial Undertakings 12.51 12.89
- Dues to others 4,598.75 8,296.21
4,611.26 8,309.10
Unclaimed Dividends 10.81
Unclaimed matured Deposits * 42.48 49.48
Unclaimed Debentures - 4.29
Interest accrued but not due on loans 3.99 5.28
TOTAL 5,460.75 9,527.48
* The amount of unclaimed matured deposits aggregating to
Rs. 1.49 lakhs during the year 1998-99, was deposited on
27th April, 2006, in the Investor Education and Protection
Fund. There are no amounts due and outstanding to be
credited to Investor Education and Protection Fund.

SCHEDULE 13: PROVISIONS

For Gratuity 265.90 228.41

For Taxation 1,803.35 1,356.45
For Fringe benefit tax (net of advance tax Rs. 25.87 lakhs) 0.34 -
For Proposed dividend 803.94
For Corporate tax on dividend 112.75 -
For Leave encashment 386.27 427.99
Others (Refer note 7 of Schedule 18) 718.77 -
TOTAL 4,091.32 2,012.85

34
 -I NOCIL \

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
SCHEDULE 14: OTHER INCOME
Previous Period
(18 months)
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Commission 3.21
2. Miscellaneous income 142.78 459.21
3. Income from Long Term Investments
(i) Dividend - Others 11.37 11.38
(ii) Interest from Investments 1.19 5.98

12.56 17.36

4. Interest on deposits, overdue bills, advance payment of taxes, etc.

(tax deducted at source Rs. 16.52 lakhs, previous period Rs. 19.66 lakhs) 216.42 383.82
5. Claim for sales tax set off 73.16 284.98
6. Provision for doubtful debts / advances made in previous years
written back (Refer note to Schedule 16) 1,080.65 351.46
7. Gain on Renunciation of right to subscribe - 158.58
8. Profit on Sale of fixed assets (net) 1,076.39 564.77
9. Excess provision of earlier year written back 260.65 1,964.17
10. Excess provision for interest of earlier years written back - 4,288.19
11. Works contracts and installation recovery (including tax deducted at source
Rs. Nil previous period Rs. 4.15 lakhs) 322.22 843.13
12. Processing charges received 152.83 337.40
13. Rent received (including tax deducted at source Rs. 62.59
lakhs, previous period Rs. 20.91 lakhs) (Refer note 8 of Schedule 18) 243.68 100.00
14. Insurance Claims received 241.94 18.56
15. Export incentives 91.31 205.78

TOTAL 3,914.59 9,980.62

SCHEDULE 15: INCREASE IN STOCKS OF FINISHED PRODUCTS

AND STOCK! N-PROCESS

Stocks as at 31st March, 2006

Stock-in-process 874.13 698.63
Finished stocks:
Manufactured products 2,957.73 3,019.56
Trading products 25.60 36.29
3,857.46 3,754.48
Stocks as at 1st April, 2005
Stock-in-process 698.63 477.98
Finished stocks:
Manufactured products 3,019.56 2,606.42
Trading products 36.29 47.82
3,754.48 3,132.22
Less: Transferred pursuant to Demerger (Refer note 1 of Schedule 18) 168.67 114.34
3,585.81 3,017.88

INCREASE 271.65 736.60

35
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006

SCHEDULE 16: MANUFACTURING AND OTHER EXPENSES

Previous Period
(18 months)
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Materials consumed:
(a) Raw materials 19,199.08 25,380.83
(b) Packing materials 452.69 571.25
19,651.77 25,952.08
2. Utilities:
(a) Power and fuel 3,218.15 4,118.32
(b) Other utilities - water 148.75 232.38
3,366.90 4,350.70
3. Payments to and provisions for employees:
(a) Salaries, wages and bonus 2,155.89 6,059.09
(b) Contribution to provident and other funds 136.87 383.06
(c) Gratuity including provision for gratutity 279.85 518.28
(d) Staff welfare 282.66 487.89
2,855.27 7,448.32
4. Operating expenses:
(a) Stores and spares 394.51 543.51
(b) Processing charges (includes transportation cost
Rs. 77.67 lakhs, previous period Rs. 81.75 lakhs) 720.49 616.76
(c) Rent (Refer note 8 of Schedule 18) 288.18 125.59
(d) Rates, taxes and duties (Refer note 7 of Schedule 18) 1,019.79 441.45
(e) Insurance 125.96 237.44
(f) Repairs and maintenance to plant and machinery 395.29 584.24
(g) Repairs and maintenance to buildings 93.14 104.49
(h) Repairs and maintenance - others 36.01 54.37
(i) Travelling 92.54 154.30
(j) Advertising and sales development expenses 12.36 47.65
(k) Freight & forwarding charges (net) 655.60 1,033.87
(I) Miscellaneous expenses (including printing and stationery, postage,
installation expenses, service charges, bank charges, legal charges, etc.) 986.28 1,995.43
4,820.15 5,939.10
5. Commission and discounts 526.48 778.28
6. Bad debts written off * 1,048.32 243.36
7. Loans/advances/other dues written off * 13.50 68.47
8. Obsolete fixed assets written off 30.91 25.14
9. Donations and contributions - 0.10
10. Directors' sitting fees 2.55 1.87
11. Loss on sale of investments (net) 2,440.48
12. Provision for doubtful debts and advances 418.39 325.56
TOTAL 32,734.24 47,573.46
* Bad debts / advances written off represent the debts/advances written
of in respect of divisions demerged for which provision made in the
earlier years has been written back (Refer Schedule 14).

SCHEDULE 17: INTEREST

On Debentures 17.60
On fixed loans and deposits 61.10
Others 68.88 319.95
TOTAL 68.88 398.65

36
 -JNOCVL \

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH, 2006 AND PROFIT AND LOSS
ACCOUNT FOR THE YEAR ENDED 31 S T MARCH, 2006

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
I. SIGNIFICANT ACCOUNTING POLICIES:

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted
accounting principles in India and the provisions of the Companies Act, 1956, except for certain fixed assets which have
been revalued. (Refer note 2 of schedule 18 below)

2. Use of estimates
The preparation of financial statements in conformity with the generally accepted accounting principles requires estimates
and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and
reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates
are recognised in the period in which the results are known/materialise.

3. Fixed Assets

Fixed Assets are stated at cost of acquisition or construction or at revalued amounts less accumulated depreciation, amortisation
and impairment, if any.

Intangible Assets

Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to the assets will
flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are
carried at cost less accumulated amortisation and accumulated impairment losses, if any.

4. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged
to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the estimate of recoverable amount.

5. Assets taken on lease are accounted as under:

Finance Leases

Assets taken on finance lease are accounted for as fixed assets in accordance with Accounting Standard (AS 19) on "Leases",
issued by The Institute of Chartered Accountants of India. Accordingly, the assets are accounted at fair value. Lease payments
are apportioned between finance charge and reduction of outstanding liability.

Operating Leases

Assets taken on lease under which all the risks and rewards of ownership are effectively retained by the lessor are classified
as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with
the respective lease agreements.

6. Depreciation

Depreciation on fixed assets is provided on straight line method in accordance with the Companies Act, 1956. Cost of
leasehold land is written off over the period of lease. Depreciation on fixed assets revalued is provided on straight line
method and charged over the residual life of the asset. The additional charge of depreciation on account of revaluation is
withdrawn from revaluation reserve and credited to Profit and Loss Account.
7. Investments

Investments classified as long term investments are stated at cost. Provision is made to recognise a decline, other than
temporary, in the value of investments.

8. Inventories
Items of inventories are measured at lower of the cost or net realisable value. Cost of inventories comprise all costs of
purchase (net of CENVAT and sales tax set-off), cost of conversion and other costs incurred in bringing the inventories to
their present location and condition. Cost of stores and spares, raw materials, trading and other products is determined on
weighted average basis. Cost of stock-in-process and finished stocks is determined by absorption costing method.

37
 -B NOCIL 1 - NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued

9. Retirement benefits

Contributions payable to the Company's Superannuation and Provident funds are charged to revenue. Contributions payable
to gratuity fund and provision for additional gratuity are charged to revenue on the basis of actuarial valuation made at the
end of each financial year.

Long service benefits payable to eligible employees are provided based on valuation at the Balance Sheet date made by
independent actuaries.

Accrued leave has been provided at year end on actuarial basis.

10. Accounting of CENVAT credit

Cenvat Gredit available is accounted by recording materials purchased net of excise duty. Cenvat credit availed of is accounted
on adjustment against excise duty payable on despatch of finished goods.

11. Foreign currency transactions

Transactions in foreign currency are recorded at the original rate of exchange in force at the time transactions are effected.
Exchange differences arising on repayment of foreign currency liabilities incurred for the purpose of acquiring imported
fixed assets are adjusted in the carrying amount of the respective fixed assets. Exchange differences arising on settlement of
other transactions are recognised in the Profit and Loss Account.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency are
restated using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is
recognised in the Profit and Loss Account. The exchange gain/loss arising on restatement of foreign currency liability
relating to imported fixed assets is adjusted in the value of the related fixed assets.

In case of monetary items which are covered by forward exchange contracts, the difference between the exchange rate on
the date of such contracts and the year end rate is recognised in the Profit and Loss Account. Any profit/loss arising on
cancellation of forward exchange contract is recognised as income or expense of the year. Premium/Discount arising on
such forward exchange contracts is amortised as income/expense over the life of the contract.

12. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of
such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or
sale. All other borrowing costs are charged to revenue.
13. Revenue recognition
(a) Revenue on sale of products is recognised when the products are despatched to customers, all significant contractual
obligations have been satisfied and the collection of the resulting receivable is reasonably expected. Sales are stated
net of returns and sales tax collected.

(b) Revenue in respect of insurance/other claims, interest, commission etc. is recognised only when it is reasonably
certain that the ultimate collection will be made.

14. Income taxes

Tax expense comprises current tax, deferred tax and fringe benefit tax (FBT). Current tax and deferred tax are accounted
for in accordance with Accounting Standard (AS 22) on "Accounting for Taxes on Income", issued by the Institute of
Chartered Accountants of India. Current tax is measured at the amount expected to be paid/recovered from the tax
authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences
attributable to timing differences between taxable income and accounting income, that are capable of reversing in one
or more subsequent periods and are measured at relevant enacted/substantively enacted tax rates. At each Balance Sheet
date, the Company reassesses unrealised deferred tax assets, to the extent they become reasonably certain or virtually
certain of realisation, as the case may be. FBT is recognised in accordance with the relevant provisions of the Income
Tax Act, 1961 and the Guidance note on FBT issued by the Institute of Chartered Accountants of India.

15. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as
a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised,
but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

38
SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
0
- Continued

II. NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. Consequent to sanctioning of the scheme of arrangement in the previous period, the Company has given effect to the said scheme
during the previous period and in the current year as under:

a) The specified assets (including fixed assets) and liabilities of Petrochemicals division (PCD) and fixed assets of Plastics
Products division (PPD) were transferred with effect from the appointed date viz. 30th September, 2003 and specified net
current assets of PPD were transferred and vested in Relpol Plastic Products Limited ("Relpol") (formerly NOCIL Petrochemicals
Limited) from effective date viz. 20th July, 2005.

b) Specified assets and liabilities of PCD were hived off to Relene Petrochemicals Private Limited (REPPL) from the appointed
date and the surplus on demerger of Rs. Nil (previous period Rs. 15,238.93 lakhs (net of Rs. Nil, previous period Rs. 131.84
lakhs), being loss on transfer of fixed assets of PPD) is credited to Profit and Loss Account as 'Exceptional/non recurring
item'.

c) The Company continued to conduct the business relating to PPD in trust up to the effective date viz. 20th July, 2005 and
carried out sales/earned income aggregating to Rs. 960.01 lakhs (previous period Rs. 2,649.77 lakhs) and incurred expenditure
aggregating to Rs. 950.33 lakhs (previous period Rs. 2,640.12 lakhs) on behalf of "Relpol" and the same has been disclosed
in the Profit and Loss Account.

d) In accordance with the scheme, entire overdue interest, penal interest, liquidated damages and other charges on the total
dues to secured lenders of the Company were waived and an amount of Rs. Nil (previous period Rs. 4,288.19 lakhs) has
been written back since no longer payable and has been disclosed under 'other income'.

e) Subsequent to the implementation of the scheme of arrangement, the core business of the Company is that of manufacturing
and sale of rubber chemicals.

2. During the year, in order to reflect the current reinstatement cost/market value, the Company revalued its plant and machinery,
leasehold land and buildings located at its factory as on 31st March, 2006 on the basis of valuation carried out by approved
valuers based on reinstatement/market values. The resultant appreciation aggregating to Rs. 10,159.43 lakhs (net) (gross block Rs.
17,288.78 lakhs minus accumulated depreciation Rs. 7,129.35 lakhs) in the aforesaid assets has been added to the assets and
credited to revaluation reserve. The details of such appreciation in the values are as under:
(Rupees in Lakhs)

Description Gross block Accumulated depreciation Net value

Leasehold Land 3,163.35 993.03 2,170.32
Buildings 2,202.15 749.93 1,452.22
Plant & Machinery 11,923.28 5,386.39 6,536.89
Total 17,288.78 7,129.35 10,159.43

Since the valuation of the aforesaid assets has been carried out as on 31 st March, 2006, there is no additional charge on account
of depreciation on the assets revalued.

3. The Company has presented data relating to its segments based on its consolidated financial statements, which are presented in
the same annual report. Accordingly, in terms of the provisions of Accounting Standard (AS 17) on "Segment Reporting", no
disclosures related to segments are presented in these stand-alone financial statements.

4. The Company made a reference on January 22, 2004 to the Board of Industrial and Financial Reconstruction (BIFR) under
section 15 of the Sick Industrial Companies (Special Provision) Act, 1985 (SICA), which was registered by the said Board.
Consequent upon the positive net worth as at 31st March, 2005, the Company is no longer a sick Company under the provisions
of SICA and is discharged from the purview of SICA as per BIFR Order dated 30th November, 2005.

5. The Company as at 31st March, 2006, carries a total contingency reserve of Rs. 3,000.00 lakhs (previous year Rs. 3,000.00 lakhs)
which, in its opinion, is adequate to meet any short fall/diminution in the ultimate realisation of its investments, current assets and
loans and advances etc.

6. During the year, a bank has sanctioned working capital credit facilities for an amount aggregating to Rs. 2,700.00 lakhs in respect
of which hypothecation agreement has been entered into with the said bank and consequent to which, stocks and book debts
have been duly hypothecated. However, the Company has not availed any credit facility under the sanction during the year.

39
 •a NOCIL I NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued
7. "Other provision" represent provision made by the Company based on substantial degree of estimation as at 31st March, 2006
towards Custom duties of Rs. 718.77 lakhs. Future cash outflow in respect of the same is determinable only on receipt of judgements/
decisions pending with the customs authorities.

8. The Company's significant leasing arrangements are in respect of operating leases for premises, (residential, offices, godowns,
subletting etc.). These lease arrangement which are not non-cancellable range between 11 months and S years generally or longer
and are usually renewable by mutual consent or mutually agreeable terms. The aggregate lease rentals payable or receivable are
reflected under serial no. 4 (c) of Schedule 16 and serial no. 13 of Schedule 14 respectively.

9. The Ministry of Company Affairs, Government of India vide its order no. 47/201 /2006-CL-l 11 dated 26th April, 2006 issued under
section 212 (8) of the Companies Act, 1956, has exempted the Company from attaching the Balance Sheet and Profit and Loss
Account of subsidiaries under section 212 (1) of the Companies Act, 1956. As per the order, key details of each subsidiary are
attached along with the statement under section 212 of the Companies Act, 1956.

10. The net amount of foreign exchange fluctuation gain included in the Profit and Loss Account for the year is Rs. 2.84 lakhs
(previous period, exchange loss Rs. 13.61 lakhs).
(Rupees in lakhs)
2005-06 Previous Period
(18 months)
11. Estimated amount of contracts remaining to be executed on capital
account and not provided for. 418.52 60.95

12. Claims against the Company not acknowledged as debts. 122.73 76.95

13. Contingent liability in respect of:

(a) Central excise duty and Customs duty demand disputed. 330.30 1,188.44
(b) Income tax demands (including interest of Rs. 259.86 lakhs,
previous period Rs. 284.60 lakhs) disputed in appeals. 1,205.99 1,230.73
(c) Sales tax demands disputed in appeals. 629.95 457.62

14. Research and development cost charged as an expense to Profit and Loss Account. 191.61 241.14

15. Related Parties

(A) Name of related parties and description of relationship
(i) Subsidiary Companies:
Ensen Holdings Limited
Urvija Investments Limited
(ii) Others:
(Entities in which the Key Management Personnel have control or significant influence).
Navin Fluorine International Limited
Mafatlal Industries Limited
Mafatlal Finance Company Limited
Eyeglobal Technologies Private Limited
(iii) Key Management Personnel:
Mr. A. N. Mafatlal (up to 29th July, 2005)
Mr. H. A. Mafatlal
Mr. C. R. Gupte (from 1st August, 2005)
Mr. V. R. Gupte (up to 31 st July, 2005)
(iv) Relatives of Key Management Personnel:
Mr. A. N. Mafatlal (from 30th July, 2005)
Mr. V. R. Gupte (from 1st August, 2005)
Mr. C. R. Gupte (up to 31st July, 2005)
Mrs. A. C. Gupte (from 1 st August, 2005)

40
 M NOCIL \

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued
(B) Transactions with related parties (Rupees in lakhs)
Nature of Transactions Subsidiary Others Key Relatives of Key Total
Companies Management Management
Personnel Personnel
Purchases and reimbursement of expenses - 21.67 - - 21.67
(15.71) (15.71)
Loan given - - -
(0.40) (0.40)
Loan returned 0.40 - - - 0.40

Loan taken - - -
(14.00) (14.00)
Remuneration - - 141.46 91.16 232.62
(56.43) (54.24) (110.67)
Rent deposit paid - 331.07 - - 331.07

Rent paid - 243.68 0.60 2.40 246.68

(2.70) (2.70)
Sitting fees - - 0.25 0.25 0.50
(0.54) (0.54)
Income from Right Renunciation -
- (105.72) ..,-T ,; .,„ , w (105.72)

Out of above, related Party transaction in excess of 10% are as under:- (Rupees in lakhs)
Nature of Transactions Year ended on Previous Period
31st March, 2006 (18 months)
1. Finance (Including loans and equity contributions) in cash or in kind:
(a) Loan given: Subsidiary Company - Ensen Holdings Limited - 0.40
(b) Loan returned: Subsidiary Company - Ensen Holdings Limited (0.40) -
(c) Loan taken: Subsidiary Company - Urvija Investments Limited - 14.00
2. Purchases and reimbursement of expenses:
(a) Reimbursement of expenses: Others - Mafatlal Industries Limited 13.24
(b) Purchase of materials: Others - Navin Fluorine International Limited 6.70 15.71
(c) Services received: Others - Eyeglobal Technologies Private Limited 1.73 -
3. Remuneration Paid to:
(a) Key Management Personnel
Mr. C. R. Gupte * 21.65 -
Mr. V. R. Gupte 119.81 56.43
(b) Relative of Key Management Personnel
Mr. C. R. Gupte ** 91.16 54.24
4. Rent Deposit paid to 'Others':
Mafatlal Industries Limited 331.07 -
5. Rent Paid to:
(a) Others:
Mafatlal Industries Limited 222.08
Navin Fluorine International Limited 21.60
(b) Key Management Personnel
Mr. V. R. Gupte 0.60 2.70
(c) Relatives of Key Management Personnel
Mrs. A. C. Gupte 1.20
Mr. V. R. Gupte 1.20 -
6. Sitting Fees to:
(a) Key Management Personnel
Mr. A. N. Mafatlal 0.21
Mr. H. A. Mafatlal 0.25 0.33
(b) Relatives of Key Management Personnel
Mr. V. R. Gupte 0.25 -
Appointed as Managing Director from 1st August, 2005.
Includes one-time ex-gratia payment of Rs.50.00 lakhs, as approved during the year, for services rendered in the capacity as Chief Executive of
Rubber Chemicals Division for the past 10 years.

41
 •ff NOCiL \ NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued

(C) Amounts outstanding from / to related parties as at 3 1 " March, 2006

(Rupees in lakhs)
Nature of Transactions Subsidiary Relatives of Key Others Total
Companies Management
Personnel
Inter Corporate Deposit taken 47.75 - - 47.75
(47.75) (47.75)
Inter Corporate Deposit given 127.08 2,094.00 2,221.08
(127.48) (2,094.00) (2,221.48)
Rent Deposit given - 150.00 331.07 481.07
(150.00) (150.00)

Notes: (i) Related party relationship is as identified by the company and relied upon by the auditors,
(ii) Figures in brackets represent previous period figures.

(D) Loans and Advances in the nature of Loans (As required by clause 32 of the listing agreement with the stock exchanges)

Name of the Company Nature of Balance as on Maximum amount

Relation 31.3.2006 outstanding during the year

Ensen Holdings Limited Subsidiary 127.08 127.48

Mafatlal Industries Limited Others 2,094.00 2,094.00

Notes: (i) Loan to Ensen Holdings Limited is interest free and repayable on demand.
(ii) Loan to Mafatlal Industries Limited: Interest on loan to Mafatlal Industries Limited has been waived pursuant to
sanctioning of Mafatlal Industries Limited's revival scheme under Sick Industrial Companies (Special Provisions)
Act, 1985 and repayment is as per the said schem.

16. Managerial Remuneration under Section 198 of the Companies Act, 1956:
(Rupees in lakhs)

2005-06 Previous Period

(18 months)
Salaries 16.00 5.60
Contribution to provident and other funds 5.65 2.44
Perquisites in cash or in kind 4.17
21.65 * 12.21"
* For the period 1st August, 2005 to 31st March, 2006, paid to Managing Director. *
** For the period 1st October, 2003 to 31st May, 2004, paid to Executive Director - Finance

17. In view of inadequacy of profits as computed under Section 349 of the Companies Act, 1956, no commission is payable to
Directors as per Section 198 read with Section 309 of the Companies Act, 1956.

18. Payment to auditors:

(a) Audit fees 8.00 11.76
(b) As adviser, or in any other capacity in respect of:
(i) Taxation matters 2.00 16.00
(ii) Company law matters 1.00 8.00
(iii) In any other manner (certification work, limited reviews,
audit of provident and other funds, etc.) 3.62 12.20
(iv) Tax audit fees 2.00 3.48
8.62 39.68
(c) As expenses 0.02 -
16.64 51.44
(Excluding service tax)

42
 •B NOCIL \

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued
19. Income Taxes:
(a) Provision for Income Tax of Rs 570.00 lakhs has been computed on the basis of Minimum Alternate Tax (MAT) in accordance
with Section 115JB of the Income Tax Act, 1961, in view of carried forward losses / unabsorbed depreciation. Considering
the future profitability and taxable positions in the subsequent years, the Company has recognised the 'MAT credit entitlement'
as an asset by crediting the Profit and Loss Account for an equivalent amount and disclosed under 'Loans and advances'
(Schedule 11) in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternate
Tax under the Income Tax Act, 1961" issued by Institute of Chartered Accountants of India.
(b) The breakup of the Deferred Tax Assets / Liabilities is as under
(Rupees in lakhs)
1
"""CTOy^W ' Previous Period
(18 months)
(i) Deferred tax liability:
Depreciation 1,911.56 2,110.55
Others 286.61 285.82
Total 2,198.17 2,396.37

(ii) Deferred tax assets:

Unabsorbed depreciation and carried forward losses 1,626.41 2,251.57
Provision for doubtful debts and advances 243.85 475.18
Provision for leave encashment 130.02 77.03
Others 355.76 461.30
Total 2,356.04 3,265.08

Net deferred tax asset 157.87 868.71

20. Earnings per share:

Profit before exceptional / non recurring item after Tax "595538 3,097.82
Excess provision for taxes of earlier years 123.93
Profit before exceptional / non recurring item 6,093.31 3,097.82
Exceptional / non-recurring item - Surplus on Demerger - 15,238.93
Profit after exceptional non-recurring item 6,093.31 18,336.75
Weighted average number of Equity shares 148,338,837 122,605,700
Nominal value of Equity share (Rs.) 10 10
Earnings per share (Rs.) before exceptional / non recurring item (Basic and diluted) 4.11 2.53
Earnings per share (Rs.) after exceptional / non recurring item (Basic and diluted) 4.11 14.96
21. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956:
(Rupees in lakhs)
2005 - 06 Previous Period
(18 months)
Unit Quantity Value Quantity Value
(a) Turnover:
Manufactured products:
Processed Polyethylene / EVA products MT 735 625.76 3,731 3,438.27
Rubber Chemicals MT 19,234 38,851.62 27,276 41,071.77
Others MT 456.21 604.66
Trading products:
PVC pipes MT - - 112 61.60
Rubber Chemicals MT 325 442.30 541 696.22
TOTAL @ 40,375.89 @ 45,872.52

@ Turnover of manufactured products includes Rs. 625.76 lakhs (previous period Rs. 1,895.91 lakhs) and trading products
Rs. Nil lakhs (previous period Rs. 17.73 lakhs) sales effected on behalf of "Relpol" (Refer note 1 of this Schedule)

43
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued
(Rupees in lakhs)
2005 - 0 6 Previous Period
(18 months)
Unit Quantity Value Quantity Value
(b) Raw materials consumed:
Chlorinated aromatics & amines MT 4,570 3,057.32 6,531 3,299.05
Solvents MT 16,580 9,411.13 23,499 12,214.86
Chlorine MT 1,822 171.79 2,431 220.05
Chemicals . MT 17,653 5,379.26 23,905 6,914.48
Other raw materials MT 1,169.30 2,480.97
Bought out semi-finished products MT 10.28 251.42
TOTAL g 19,199.08 @ 25,380.83

Includes Rs. 492.25 lakhs (previous period Rs. 998.15 lakhs) being raw materials consumed on behalf of "Relpol" (Refer
note 1 of this Schedule)

(c) Stocks:
Opening Stock:
Finished stocks-manufactured products:
Petrochemicals MT - - 13 56.14
Processed polyethylene / EVA products MT 227 194.58 735 514.49
Rubber Chemicals MT 1,651 2,806.96 1,497 2,030.11
Others 18.02 5.68
TOTAL 3,019.56 2,606.42

Trading products:
Plastics MT 1 0.25
PVC pipes MT 7 2.21 26 14.93
Rubber Chemicals MT 34 34.08 40 32.64

TOTAL 36.29 47.82

(d) Purchases:
Trading products:
PVC pipes MT 90 50.79
Rubber Chemicals MT 321 281.53 535 491.28
TOTAL 281.53 542.07

(e) Closing Stocks:

Finished stocks-manufactured products:
Processed polyethylene / EVA products * MT 227 194.58
Rubber Chemicals MT 1,966 2,929.60 1,651 2,806.96
Others 28.13 18.02

TOTAL 2,957.73 3,019.56

Trading products:
PVC pipes * MT 7 2.21
Rubber Chemicals MT 30 25.60 34 34.08

TOTAL 25.60 36.29

Excludes stock of "Relpol" which has been transferred as per the scheme of arrangement (Refer note 1 of this Schedule)

44
 M NOCILS

SCHEDULE 1 8 : SIGNIFICANT A C C O U N T I N G POLICIES A N D NOTES T O BALANCE SHEET A N D PROFIT A N D LOSS A C C O U N T

- Continued • •'•

2005 - 06 Previous Period (18 months)

Unit Capacity (per annum) Actual Capacity (per annum) Actual
licensed Installed production licensed Installed production
including including
internally internally
consumed as consumed as
intermediates intermediates
(f) Capacity and production:
Processed polyethylene/
EVA products MT N.A. NIL@@ 1,452 # N.A. 8,100 @ 4,622 #
Rubber chemicals and
their intermediates MT N.A. 33,450 @ 30,922 * N.A. 33,450 @ 43,702 *
Note:
Installed capacity is as certified by the management.
Installed capacity of 8,100 MT represents the installed capacity of Plastics Products division, used by the Company for
manufacture on behalf of "Relpol", which division was completely demerged on 20th July, 2005 to Relpol.
Consequently, there is no installed capacity for Processed polyethylene/EVA products at the end of this year. (Refer note 1
of this schedule).
Includes 2,736 MT (previous period 3,390 MT) converted for the Company by third parties.
Includes 588 MT (previous period 2,976 MT) produced by the Company for third party.
N.A. - not applicable.
(Rupees in lakhs)
2005 - 06 Previous Period
(18 months).
(g) Value of Imports on CIF basis in respect of:
(i) Raw Materials 8,426.69 9,335.11
(ii) Stores and spares 19.50 32.42
(iii) Capital goods 48.95 19.31
TOTAL 8,495.14 9,386.84

(h) Expenditure in Foreign Currency (on accrual basis)

on account of (including expenditure capitalised)
(i) Professional & technical fees (net of tax) 3.32 3.64
(ii) Interest 1.32 2.27
(iii) Other matters 141.08 179.29
TOTAL 145.72 185.20

(i) Value of Raw materials, stores and spares, etc. consumed during the year: (Rupees in lakhs)

2005-06 Previous Period (18 months)

Imported Indigenous Imported Indigenous
Value % of total Value % of total Value % of total Value % of total
consumption consumption consumption consumption
(a) Raw materials 9,152.22 47.7 10,046.86 52.3 10,341.71 40.7 15,039.12 59.3
(b) Stores and spares 16.64 4.2 377.87 95.8 25.06 4.6 518.45 95.4

(Rupees in lakhs)
(j) Earnings in foreign exchange: 2005-06 Previous Period
(18 months)
(i) F.O.B. value of goods exported 14,289.97 13,802.20
(ii) Other income (commission, research services etc.) 3.21
TOTAL 14,289.97 13,805.41

45
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE * 8 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued
22. Dues to Small Scale Industrial undertakings outstanding for more than 30 days:

Eby Industries, Gujarat Engineering Co., Goma Engineering P.Ltd., Igp Engineers Ltd., Imperial Electric & Engg. Works, Joseph
Leslie & Co., Kusum Enterprises, M A S Engineers, Precision Industries, Paramount Forge, R. S. V. Agencies, Svar Associates,
Sairam Polymer Industries, Sitson India Pvt. Ltd., Sharpenn Technologies Pvt. Ltd., Standard Equipments, Thermal Instruments
Company, Vijoy Power Transmission Pvt. Ltd..

23. Figures for the previous accounting period have been regrouped / rearranged wherever necessary to correspond with the figures of
the current year and are disclosed in brackets. Amounts and other disclosures for the preceding period are included as an integral
part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the
current year.

24. The amounts of Balance Sheet and Profit and Loss Account are rounded off to the nearest thousand and indicated in lakhs of
rupees.

25. Figures for the current year are strictly not comparable with those of the previous period, since the previous period results were for
eighteen months and included the impact of demerger of two divisions, where as the figures of current year are for a period of
twelve months and includes the impact of transfer of Income / Expenses and specified net current assets up to 20th July, 2005 as
detailed in note 1 of this Schedule.

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R. GUPTE
As per our attached report of even date
For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. GUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

46
 •S NOCIL \

SCHEDULE 18: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
- Continued

Balance Sheet Abstract and Company's General Business Profile

I. Registration Details
Registration No. [ [1 I2 I0 I0 I3I State Code I 1 I 1 I
(Refer Code List 1)
Balance Sheet Date 1 31 1 1 I 0 I 3 I I 2 I 0 I 0 1 6 1
Date Month Year
II. Capital Raised during the Year (Amount in Rs.Thousands)
Public Issue Rights Issue
^T^ 1^1
Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds ( Amount in Rs. Thousand )

Total Liabilities Total Assets
1 4 1 2 1 1 1 4 ) 3 F8 101 141 2 1 1 I 41 31 8 T 0 l
Sources of Funds
Paid-Up Capital Reserves & Surplus
11 l 6 l Q [ 7 l 8 T y T 0 i 11 I 6 I 4 I 3 I 9 T 6 T T 1
Secured Loans Unsecured Loans
I I I I 21 51 61 71 I I 1 I 41 71 71 51
Application of Funds
Net Fixed Assets Investments
II I 6 I 7 I 9 I 8 I 5 I 6 I I I I 31 Ol 2l 3l 11
Net Current Assets Deferred Tax Assets
M |5|3|3|2|9|9| | | |1|5|7TJJT]
Accumulated Losses Misc. Expenditure

mn^r i i i n I I-I i i l
IV. Performance of Company (Amount in Rs. Thousands)
Turnover Total Expenditure
I3 I9I7I5I0TTT31 I 3 I 2 I 8 I 21 1 T 6 T 7 1
+ - Profit/Loss before tax + - Profit/Loss after tax
I /I I I I 61 71 Ol 7T2I 51 FVT H I I 51 91 6T9T3T81
(Please tick Appropriate box + for Profit - for Loss)
Earning Per Share in Rs. • Dividend rate %
i i i 14i .rrm \r\
Note: Turnover and expenditure excludes turnover made and expenditure incurred on behalf of Relpol in trust. ( Refer note no. 1 of
schedule 18 )
V. Generic Names of Three Principal Products/Services of Company(as per monetory terms)
Item Code No. (ITC Code) Product Description
I I I I I NTTTT1 I I I I INTTTn

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R. GUPTE
VISHAD P. MAFATLAL Directors
S. K. MAHAPATRA

C. R. GUPTE Managing Director

Mumbai, Dated : 30th May, 2006

47
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO COMPANY'S
INTEREST IN THE SUBSIDIARY COMPANIES

1. Name of the Subsidiary Companies Ensen Holdings Limited Urvija Investments Limited

2. The financial year of the Subsidiary Companies ended on 31st December, 2005 31st December, 2005

3. (a) Number of shares held by National Organic Chemical The entire issued equity shares The entire issued equity shares
Industries Limited in the subsidiaries as at the end of consisting of 3,75,00,000 equity consisting of 12,25,000 equity
financial year of the Subsidiary Companies shares of Rs.10 each fully paid up shares of Rs.100 each fully paid up

(b) Extent of interest of National Organic Chemical

Industries Limited in the capital of Subsidiary
Companies as at the end of the financial year of the
Subsidiary Companies 100% 100%

4. Net aggregate amount so far as it concerns members of

National Organic Chemical Industries Limited and is not
dealt with in the Company's accounts, of the Subsidary
Companies' profit/losses

(a) Profit / (Loss) for the Subsidary Companies financial

year ended 31st December, 2005 (29,242) 228,390
(b) Profits/ (Loss) for the previous financial years of
Subsidiary companies since they became the
Subsidiary Companies of National Organic Chemical
' Industries Limited (361,741,059) (116,497,467)

5. Net aggregate amount of profits/losses of the Subsidiaries,

so far as those profits/losses are dealt with, or provision is
made for those losses in National Organic Chemical
Industries Limited's accounts

(a) Loss for the Subsidaries Companies financial year

ended on 31st December, 2005 • ;l

(b) Profit/(Loss) for their previous financial years since they

became Subsidiary Companies of National Organic
Chemical Industries Limited (352,000,000) (116,500,000)

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R. GUPTE
VISHAD P. MAFATLAL Directors
S. K. MAHAPATRA

C. R. GUPTE Managing Director

Mumbai, Dated : 30th May, 2006

48
 REPORT OF THE AUDITORS ON THE CONSOLIDATED ACCOUNTS

AUDITOR'S REPORT TO THE BOARD OF DIRECTORS OF NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED ON THE
CONSOLIDATED FINANCIAL STATEMENTS OF NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED AND ITS SUBSIDIARIES.

1. We have audited the attached Consolidated Balance Sheet of National Organic Chemical Industries Limited ("the Company") and
its subsidiaries as at 31 s1 March 2006 and also the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement
for the year ended 31 st March 2006 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.

2. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in
accordance with an identified financial reporting framework and are free of material misstatements. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that the consolidated financial statements have been prepared by the company in accordance with the requirements of
Accounting Standard (AS 21) on "Consolidated Financial Statements" and Accounting Standard (AS 23) on "Accounting for
Investments in Associates in Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India.

4. In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial
statements give a true and fair view in conformity with the accounting principles generally accepted in India :

a) in the case of the consolidated balance sheet, of the state of affairs of the Company and its subsidiaries as at 31 st March
2006,

b) in the case of the Consolidated Profit and loss account, of the consolidated profit of the Company and its subsidiaries for the
year ended on that date;

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company and its subsidiaries for
the year ended on that date.

For C. C. Chokshi & Co.

Chartered Accountants

P. R. Barpande
Partner
Membership No. 15291

Mumbai, dated: 30th May 2006

49
 NATIONAL ORGANIC CHEMICAL INDUSTRIES UMITED

CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 2006

•MHHBHB9 As at
31-03-2005
Schedule Rupees Rupees Rupees
No. in Lakhs in Lakhs in Lakhs
SOURCES OF FUNDS
1. Shareholders' Funds:
(a) Capital 1 16,078.70 12,260.57
(b) Reserves and surplus 2 16,402.95 3,832.93
32,481.65 16,093.50
2. Loan Funds: •
(a) Secured loans 3 25.67 5,727.34
TOTAL 32,507.32 21,820.84
APPLICATION OF FUNDS
1. Fixed Assets:
(a) Gross block 4 29,156.43 11,647.04
(b) Less: Depreciation 12,522.09 4,910.42
(c) Net block 16,634.34 6,736.62
(d) Capital work-in-progress 164.22 89.63
16,798.56 6,826.25
2. Investments 5 54.83 53.91
3. Deferred tax assets (net) 157.87 868.71
4. Current assets, loans and advai
(a) Inventories 6 6,037.37 5,829.10
(b) Sundry debtors 7 7,904.97 9,278.30
(c) Cash and bank balances 8 2,893.42 1,209.49
(d) Other current assets 9 0.40 4.70
(e) Loans and advances 10 8,209.11 6,524.30

25,045.27 22,845.89
Less: Current liabilities and provisions:
(a) Liabilities 11 5,457.22 9,528.63
(b) Provisions 12 4,091.99 2,013.31
9,549.21 11,541.94
Net current assets 15,496.06 11,303.95

5. Profit and Loss Account (per contra.... Schedule 2) 2,768.02

TOTAL 32,507.32 21,820.84

Significant Accounting Policies and notes to Balance

Sheet and Profit and Loss Account 17

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

As per our attached report of even date V. R. CUPTE

For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. GUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

50
 M NOC1L j -

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
w Previous Period
(18 months)
Schedule Rupees Rupees Rupees
No. in Lakhs in Lakhs in Lakhs
INCOME
Sales including excise duty 40,375.89 45,872.52
Less: Excise duty on Sales 4,073.20 4,736.26
36,302.69 41,136.26
Other income 13 3,917.81 9,983.96
Increase in stocks of finished products and stock-in-process 14 271.65 736.60
40,492.15 51,856.82
Less: Sales / Income on behalf of Relpol Plastic
Products Limited (Refer note 2 of Schedule 1 7) 960.01 2,649.77
39,532.14 49,207.05
EXPENDITURE
Manufacturing and other expenses 15 32,735.26 47,576.21
Purchase of trading products 281.53 542.07
Excise duty 80.60 206.00
Depreciation 606.75 890.54
Interest 16 68.88 398.65
33,773.02 49,613.47
Less: Expenditure incurred on behalf of Relpol Plastic
Products Limited (Refer note 2 of Schedule 17) 950.33 2,640.12
32,822.69 46,973.35
Profit before exceptional / non recurring item and tax 6,709.45 2,233.70
Add: Exceptional / non recurring item - Surplus on Demerger 15,238.93
Profit before tax 6,709.45 17,472.63
Provision for Taxation:
Current income tax (including wealth tax Rs.0.82 lakh
previous period Rs. 4.00 lakhs) 571.03 4.31
Deferred tax charge / (credit) 710.84 (868.71)
Fringe benefit tax 26.21 _
MAT credit entitlement (Refer note 19 (a) of Schedule 17) (570.00) -
738.08 (864.40)
Profit after tax 5,971.37 18,337.03
Excess provision for taxes of earlier years 123.93 (0.07)
Transferred from Contingency Reserve, no longer required 4,000.00
Transferred from Debenture Redemption Reserve 308.00 232.00
Deficit brought forward from previous period (7,632.73) (30,201.69)
Proposed Dividend on Equity shares 803.94 -
Corporate tax on dividend 112.75 -
Balance carried to balance sheet (2,146.12) (7,632.73)
Earnings per share of face value of Rs. 10 each (Basic and Diluted)
(Refer note 20 of Schedule 17)
- before exceptional / non recurring item 4.11 2.53
- after exceptional / non recurring item 4.11 14.96
Significant Accounting Policies and notes to Balance Sheet
and Profit and Loss Account 17

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

As per our attached report of even date V. R. GUPTE

For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. CUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

51
 NATIONAL ORGANIC CHEMICAL INDUSTRIES UMITED

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2006
Previous Period
(18 months}
Rupees Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES : in Lakhs in Lakhs in Lakhs

Profit before tax 6,709.45 17,472.63

Adjustments for:
Depreciation and obsolete fixed assets written off 637.66 915.68
Bad Debts written off 1,048.32 243.36
Provision for doubtful debts and advances 418.39 325.56
Loans and Advances / Other dues written off 68.48
Loss on disposal of Jong term investments (net) 2,442.73
Profit on sale of fixed assets (net) (1,076.39) (564.77)
Income from Long Term Investments (15.70) (20.70)
Intrest on Deposits, Overdue bills etc. (9789) (39.63)
Unrealised gain on foreign currency cash and cash equivalents (1.41) (0.01)
Interest 68.88 398.65
Provision for doubtful debts/advances made in previous years written back 0,080.65) (351.46)
Excess provision of earlier year written back (260.73) (1,964.17)
Cain on Renunciation of right to subscribe (158.58)
Excess provision :"or Interest of earlier years written back (4,288.19)
Surplus - Demerger (15,238.93)
(346.02) (18,231.98)
Operating profit/Ooss)before working capital changes M63.43 (759.35)
Adjustments for:
Trade and other receivables 327,39 (1,807.45)
Inventories (208.27) (982.10)
Trade payables (3,787-60) 1,945.26
Provisions 714.54 281.60
(2,953.94) (562.69)
Cash generated/iused) from operations 3,409.49 (1,322.04)
Direct Taxes paid (549.7S) (92.57)
Net cash generated/(used) from operating activities 2,859.71 (1,414.61)
CASH FLOW FROM INVESTING ACTIVITIES :
Purchase of fixed assets (487.23) (196.87)
Sale of fixed assets 1,113.09 704.19
Purchase of Investments (1.00)
Sale of Investments 0.08 2,034.39
Movement in Loans and Deposits 15.50 98.81
Gain on Renunciation of right to subscribe 158.57
Interest received 103.91 45.17
Dividend received 13.98 14.18
798.33 2,858.44
C. CASH FLOW FROM FINANCING ACTIVITIES :
Proceeds from long term borrowing 25.67
Repayment of long term borrowings (net) (1,909.21) (57.18)
Unclaimed Dividend paid (10.81) (42.14)
Unclaimed Matured Deposits paid (7.00) (785.13)
Interest Paid (74.16) (419.75)
Net Cash used in financing activities (1,975.51) (1,304.20)
Net increase in cash and cash equivalents 1,682.53 139.63
Opening balance of cash and cash equivalents (Refer note 1 below) 1,209.48 1,069.85
Closing balance of cash and cash equivalents (Refer note 1 below) 2,892.01 1,209.48

Notes to cash flow statement:

1. Components of cash and cash equivalents includes cash, remittances in transit, bank balances in current & deposit accounts (Refer Schedule 8 to the accounts).

Current year Previous period

Cash and Bank balances 2,893.42 1,209.49
Unrealised gain on foreign currency cash and cash equivalents (1.41) (0.01)
Cash and cash equivalents 2,892.01 1,209.48

2. Repayments of long term borrowings reflect the decrease in secured and unsecured loans after netting off the issue of equity shares consequent to the approval of the scheme of
arrangement duly approved by the Bombay High Court (Refer note (b) of Schedule 1).
3. Interest received on investments, deposits, employee loans etc. is classified as cash flow from investing activities and other interest recieved is classified under operating activities.
4. Purchase of fixed assets are stated inclusive of movements of capital work in progress between the commencement and end of the financial year and are considered as part of investing
activity.
5. The Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard (AS 3) on "Cash Flow Statement" issued by the Institute of Chartered
Accountants of India and the listing agreement with the Stock Exchanges.
6. Cash Flow includes the activities undertaken on behalf of Relpol Plastics Products Limited in trust (Refer note 2 of Schedule 17).
7. Previous period figures are regrouped / reclassified, wherever necessary, to corespond to those of the current year.

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary
As per our attached report of even date V. R. CUPTE
ForC.C. CHOKSHI & CO. VISHAD P. MAFATLAL
Chartered Accountants S. K. MAHAPATRA
P. R. BARPANDE C. R. GUPTE Managing Director
Partner
Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

52
 -H NOCIL !•

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2006
As at
31-03-2005
Rupees Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs in Lakhs
SCHEDULE 1: SHARE CAPITAL
Authorised:
1,200,000,000 Equity shares of Rs. 10 each 120,000.00 120,000.00

Issued and subscribed:

160,786,980 (previous period 122,605,700)
Equity shares of Rs.10 each, fully paid-up 16,078.70 12,260.57

Notes: Of the above Equity shares :

(a) 97,302,850 shares were alloted as fully paid-up by way

of bonus shares by capitalisation from the General
Reserve and Share Premium Account and 13,302,850
shares had been allotted to the shareholders of the
erstwhile Polyolefins industries Limited pursuant to the
scheme of amalgamation without payment in cash.

(b) 38,181,280 shares have been alloted on 29th July, 2005,

to the Secured Lenders without payment in cash (refer
note 7 of Schedule 3) in terms of the scheme of
arrangement as approved by the Bombay High Court.

SCHEDULE 2: RESERVES AND SURPLUS

1. Capital Reserve:
Balance at the commencement of the year/period 15.29 15.29
2. Share Premium Account:
Balance at the commencement of the year/period 450.92 450.92
3. Debenture Redemption Reserve:
Balance at the commencement of the year/period 308.00 540.00
Less: Transferred to Profit and Loss Account 308.00 232.00
308.00

4. Revaluation Reserve 10,159.43

(Refer note 3 of Schedule 17)

5. General Reserve:
Balance at the commencement of the year/period 4,864.71 4,864.71
Less: Debit balance in Profit and Loss Account 2,146.12 7,632.73
Less: Debit balance in excess of general reserve (per contra) 2,768.02
2,146.12 (4,864.71)

2,718.59
6. Reserve for Contingency:
Balance at the commencement of the year/period 3,000.00 7,000.00
Less: Amount transferred to Profit and Loss Account 4,000.00
3,000.00 3,000.00
7. Reserve under Section 45 IC of Reserve Bank of India (Amendment)
Act, 1997:
Balance at the commencement of the year/period 58.72 58.72
TOTAL 16,402.95 3,832.93

53
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2006
SCHEDULE 3: SECURED LOANS
As at
31-03-2005
Note No. Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
(a) 15% Non-convertible secured debentures
Privately placed with:
Industrial Development Bank of India. 68.00
Series IV (1994-2001)

(b) 16% Non-convertible secured debentures

Privately placed with:
Industrial Credit and Investment Corporation of India
Series X to XIII 240.00
- 308.00
2. Term loans:
From financial institutions 2 • . 533.60
Loan taken from Industrial Development Bank of India (IDBI) 3 - 22.62
- 556.22
3. Cash credit accounts etc. from Banks 4 - 3,760.24
4. Other loans and advances:
From Surekha Holdings Private Limited 4 822.88
From Infrastructure Leasing and Financial Services Limited (ILFS) 5 - 280.00
1,102.88
5. Vehicle loans from a Bank 6 25.67 -
TOTAL 25.67 5,727.34

Notes:
1. a) The debenture series IV were secured by first mortgage / charge in favour of the debenture trustees on the immovable and
movable properties (save and except book debts) of the Company's erstwhile Petrochemicals division (PCD), subject to
charges created in favour of bankers / IL & FS (Refer notes 4 and 5 below). Such division was demerged to Relene Petrochemicals
Private Ltd. (REPPL) during the previous period.
b) The debenture series X to XIII were secured by a charge in favour of the debenture trustees on the Company's fixed assets by
a first mortgage and charge on the immovable and movable properties of the erstwhile PCD, which was demerged during
the previous period, subject to charges created in favour of Company's bankers on current assets for securing borrowings for
working capital requirements and ranked pari passu with the mortgage and charge created in favour of financial institutions.
2. Term loans from financial institutions were secured by joint mortgage of all immovable properties by deposit of title deeds, and
first charge by hypothecation of all movable properties (save and except book debts and excluding specific items of machinery -
refer note 5 below) of the Company pertaining to erstwhile PCD, and creation of second charge on current assets of PCD, which
was demerged during the previous period.
3. Term loans from IDBI were secured by hypothecation of specific plant, machinery equipment and accessories of the Rubber
Chemicals Plant.
4. Loans from banks on cash credit accounts and loans assigned to Surekha Holdings Pvt. Ltd. during the previous period were
secured by joint hypothecation of stocks, book debts and other current assets by way of first charge and second charge over its
fixed assets, located at plot nos 5/6, Trans Thane Creek Industrial area, Thane Belapur Road, Thane i.e. PCD, which was demerged
during the previous period.
5. Loan from IL & FS was secured by an exclusive charge on the Ethylene pipeline from Nagothane to the erstwhile PCD, which was
demerged during the previous period.
6. Vehicle loan is secured by charge on vehicles purchased.
7. During the year, secured loans as stated in notes 1 to 5 above have been settled by payment of cash aggregating to Rs. 1,909.21 •
lakhs and by way of issue of 38,181,280 equity shares of Rs.10/- each aggregating to Rs.3,818.13 lakhs and necessary forms
towards release of charges have been filed with Registrar of Companies

54
 SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 2Q0§
SCHEDULE: 4 FIXED ASSETS
• .
Rupees in lakhs

PARTICULARS Land Building Plant and Furniture Vehicles Total As at

Machinery Fixture and 31.3.2005
Leasehold Freehold
Equipments

Cost as at 01.4.2005 17.65 2.49 801.76 9,556.72 1,187.18 81.24 11,647.04 49 '03.03

Additions 3,163.35 - 2,217.92 12,252.41 26.38 41.37 17,701.43 J31.95

Disposals / Retirements /
Adjustments - 2.49 34.51 62.13 72.39 20.52 192.04 38, 87.94

Total Cost as at 31.3.2006 3,181.00 - 2,985.17 21,747.00 1,141.17 102.09 29,156.43 11,547.04

Depreciation upto 31.3.2006 995.89 - 976.16 10,067.12 455.22 27.70 12,522.09 4,J10.42

Net Value as on 31.3.2006 2,185.11 - 2,009.01 11,679.88 685.95 74.39 16,634.34 6," 36.62

Net Value as on 31.3.2005 15.01 2.49 585.30 5,345.46 739.10 49.26 6,736.62

Depreciation for the year 0.22 - 18.47 508.80 70.39 8.87 606.75

Capital work-in-progress (including machineries under erection and advances

aggregating to Rs. 46.91 lakhs (previous period Rs. 29.10 lakhs)). 164.22 89.63

Notes: '
1. Additions during the year and accumulated depreciation upto 31st March, 2006, includes amounts substituted for historical cost
on revaluation as on 31st March, 2006 and have been disclosed in note 3 of Schedule 17.

2. Disposals include Rs. Nil (previous period Rs. 37,945.82 lakhs gross (net Rs. 15,876.23 lakhs)) being the assets demerged to two
transferee Companies during the previous period (Refer note 2 of Schedule 17).

55
 M NOCIL \ NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2006
SCHEDULE 5 : INVESTMENTS (at cost / carrying amount unless otherwise stated)
As at
31-03-2005
Rupees Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs in Lakhs
Long term investments:
1. In Government Securities:
National Savings Certificates
(certificates deposited with Government Department) "~B:OT 0.09
2. Other Investments:
18,538, 6.75% Tax free US64 Bonds of Unit Trust
of Indja of Rs. 100 each (Quoted) 11.66 11.66
566,320 Equity shares of Rs. 10 each fully paid in
Mafatlal Industries Limited (Quoted) Re. 1
566,340 Equity shares of Rs. 10 each fully paid in
Navin Fluorine International Limited (Quoted) Rs. 200
1,000 Equity shares of Rs. 10 each, fully paid
in HDFC Bank Limited (Quoted) 0.10 0.10
17,101 Equity shares of Rs. 100 each, fully paid
in Mafatlal Engineering Industries Limited (Unquoted) 17.67 17.67
Less: Provision for diminution in the value of investment (17.67) (17.67)

1 Equity share of Rs. 2,000 fully paid in

Shree Balaji Sahakari Sakhar Karkhana Limited (Unquoted) 0.02 0.02
10,000 Equity shares of Rs. 10 each, fully paid in
The Bharat Co-operative Bank Limited (Unquoted) 1.00
6,850,000 Equity shares of Rs. 10 each, fully paid in
Mafatlal Finance Company Limited (Quoted) Re 1
19,900 Equity shares of Rs. 10 each,
fully paid in Bank of India (Quoted) 8.96 8.96
2,400 Equity shares of Rs. 10 each,
fully paid in Corporation Bank (Quoted) 1.89 1.89
23,000,000 Equity shares of Rs. 10 each, fully paid in
Vibhadeep Investments and Trading Limited (Unquoted) Rs 2
32,000 ordinary shares of Stg. Pd. of 10 each fully paid
in Mafatlal Limited U.K. (Unquoted) Rs 2
22,320 Equity shares of Rs. 10 each, fully paid in
Mafatlal Services Limited (Unquoted) 22.32 22.32
10,560 Mastershares of Unit Trust of India of Rs. 10 each 0.86 0.86
50,000 Units of J.M.Mutual Fund of Rs. 10 each 5.00 5.00
30, 12% Bonds of I.C.I.C.I (Series VII) of Rs. 10,000 each 3.01 3.01
54.82 53.82
TOTAL 54.83 53.91
(a) Aggregate of quoted investments
Cost / Carrying amount 22.61 22.61
Market value 1,910.46 1,072.45
(b) Aggregate of unquoted investments
Cost / Carrying amount 32.21 31.30

NOTES: Under the Rehabilitation scheme of Mafatlal Industries Limited sanctioned by I he Board tor Industrial and Financial Reconstruction in
its order dated 30th October, 2002:
(i) The Company was allotted 566,320 Equity shares of Rs. 10 each of Navin Fluorine International Limited.
(ii) The Company was entitled to the allotment of 1,132 Equity shares of Rs. 10 each in Sulakshana Securities Limited, a special
purpose vehicle formed under the schedule. However, in terms of the sanctioned scheme of rehabilitation of the said Company,
such entitlement of shares, being fractional would accrue to transferee Company and shareholders would be entitled to
proportionate payment which would be accounted on distribution thereof by the said company on completion of formalities.

56
 •¥ NOCIL \

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 2006

SCHEDULE 6 : INVENTORIES (at cost or net realisable value, whichever is ,_....,
As at
31-03-2005
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Stores and spares 395.62 378.58
2. Stock-in-trade
(a) Raw materials 1,784.29 1,660.59
(b) Stock-in-process 874.13 698.63
(c) Finished stocks
Manufactured products 2,957.73 3,019.56
Trading products 25.60 36.29
(d) Other products 35.45
5,641.75 5,450.52
TOTAL 6,037.37 5,829.10
SCHEDULE 7 : SUNDRY DEBTORS
Sundry debtors (unsecured):
Outstanding over six months 240.77 1,353.65
Others 7,892.14 9,213.18
8,132.91 10,566.83
Less: provision 227.94 1,288.53
TOTAL 7,904.97 9,278.30
NOTES:
1. (a) Considered good 7,904.97 9,278.30
(b) Considered doubtful 227.94 1,288.53
8,132.91 10,566.83
2. Debtors include Rs. Nil (previous period Rs. 1,819.99 lakhs)
towards debt recoverable from the transferee Companies on
demerger of two divisions of the Company (Refer note 2 of Schedule 17).

SCHEDULE 8 : CASH AND BANK BALANCES

1. Cash on hand including cheques on
hand Rs. 199.97 lakhs (previous period Rs. 896.36 lakhs) 205.21 912.06
2. Remittances in transit 79.97 44.28
3. Bank balances:
With Scheduled Banks:
In current accounts 662.38 230.28
In deposit account (including margin money deposits aggregating to
Rs. 317.85 lakhs previous period Rs. 2.00 lakhs) 1,945.80 22.81
With Others:
Municipal Co-operative Bank Limited, Mumbai:
(i) In current account 0.01 0.01
(maximum balance Rs. 0.01 lakh previous period Rs. 1.82 lakhs)
(ii) In deposit account 0.05 0.05
(maximum balance Rs. 0.05 lakh previous period Rs. 1.30 lakhs)
2,608.24 253.15
TOTAL 2,893.42 1,209.49
SCHEDULE 9 : OTHER CURRENT ASSETS
Interest accrued on Investments 0.40 4.70
TOTAL 0.40 4.70

57
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 2006

SCHEDULE 10: LOANS AND ADVANCES
As at
31-03-2005
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Deposits with public company (including interest thereon) @ 2,371.00 •2,371.00
Loan to private company @@ 1,000.00
3,371.00 2,371.00
2. Advances recoverable in cash or in kind or for value to be received 2,357.19 2,392.42
3. Advance payment of income-tax 2,382.15 1,858.22
4. Balances with customs and excise 25.27 25.83
5. MAT credit entitlement (Refer note 19 (a) of Schedule 17) 570.00
8,705.61 6,647.47
Less: provision 496.50 123.17
TOTAL 8,209.11 6,524.30
@ Deposit aggregating to Rs.277.00 lakhs (previous period
Rs. 277.00 lakhs) is secured by mortgage of three
flats / garages in housing societies.
@@To be secured by way of pledge of certain shares held
as investments by loanee Company.
NOTE:
(a) Considered good 8,209.11 6,524.30
(b) Considered doubtful 496.50 123.17
8,705.61 6,647.47

SCHEDULE 11: CURRENT LIABILITIES

Acceptances 803.02 1,148.52
Sundry creditors
- Dues to Small Scale Industrial Undertakings 12.51 12.89
- Dues to others 4,599.21 8,297.36
4,611.72 8,310.25
Unclaimed Dividends 10.81
Unclaimed matured Deposits * 42.48 49.48
Unclaimed Debentures 4.29
Interest accrued but not due on loans - 5.28
TOTAL 5,457.22 9,528.63
* The amount of unclaimed matured deposits aggregating to
Rs. 1.49 lakhs during the year 1998-99, was deposited on
27th April, 2006, in the Investor Education and Protection
Fund. There are no amounts due and outstanding to be
credited to Investor Education and Protection Fund.

SCHEDULE 12: PROVISIONS

For Gratuity 265.90 228.41

For Taxation 1,804.02 1,356.91
For Fringe benefit tax (net of advance tax Rs. 25.87 lakhs) 0.34 -
For Proposed dividend 803.94
For Corporate tax on dividend 112.75 -
For Leave encashment 386.27 427.99
Others (Refer note 7 of Schedule 17) 718.77 -
TOTAL 4,091.99 2,013.31

58
 CONSOLIDATED SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
SCHEDULE 13 : OTHER INCOME
Previous Period
(18 months)
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Commission 3.21
2. Miscellaneous income 142.78 459.21
3. Income from Long Term Investments
(i) Dividend - Others 13.98 14.19
(ii) Interest from Investments (tax deducted at source
Rs. 0.12 lakh previous period Rs. 0.07 lakh) 1.72 6.51
15.70 20.70
4. Interest on deposits, overdue bills, advance payment of taxes, etc.
(tax deducted at source Rs. 16.52 lakhs, previous period Rs. 19.66 lakhs) 216.42 383.82
5. Claim for sales tax set off 73.16 284.98
6. Provision for doubtful debts / advances made in previous years
written back (Refer note to Schedule 15) 1,080.65 351.46
7. Cain on Renunciation of right to subscribe 158.58
8. Profit on Sale of fixed assets (net) 1,076.39 564.77
9. Excess provision of earlier year written back 260.73 1,964.17
10. Excess provision for interest of earlier years written back 4,288.19
11. Works contracts and installation recovery (including tax deducted at source
Rs. Nil previous period Rs. 4.15 lakhs) 322.22 843.13
12. Processing charges received 152.83 337.40
13. Rent received (including tax deducted at source Rs. 62.59 lakhs,
previous period Rs. 20.91 lakhs) (Refer note 8 of Schedule 17) 243.68 100.00
14. Insurance Claims received 241.94 18.56
15. Export incentives 91.31 205.78
TOTAL 3,917.81 9,983.96

SCHEDULE 14 INCREASE IN STOCKS OF FINISHED PRODUCTS

AND STOCK-IN-PROCESS

Stocks as at 31st March, 2006

Stock-in-process 874.13 698.63
Finished stocks:
Manufactured products 2,957.73 3,019.56
Trading products 25.60 36.29
3,857.46 3,754.48

Stocks as at 1st April, 2005

Stock-in-process 698.63 477.98
Finished stocks:
Manufactured products 3,019.56 2,606.42
Trading products 36.29 47.82
3,754.48 3,132.22
Less: Transferred pursuant to Demerger (Refer note 2 of Schedule 17) 168.67 114.34
3,585.81 3,017.88

INCREASE 271.65 736.60

59
 IATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

: CONSOLIDATED SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
SCHEDULE 15: MANUFACTURING AND OTHER EXPENSES
Previous Period
(18 months)
Rupees Rupees Rupees
in Lakhs in Lakhs in Lakhs
1. Materials consumed:
(a) Raw materials 19,199.08 25,380.83
(b) Packing materials 452.69 571.25
19,651.77 25,952.08
2. Utilities:
(a) Power and fuel 3,218.15 4,118.32
(b) Other utilities - water 148.75 232.38
3,366.90 4,350.70
3. Payments to and provisions for employees:
(a) Salaries, wages and bonus 2,155.89 6,059.09
(b) Contribution to provident and other funds 136.87 383.06
(c) Gratuity including provision for gratutity 279.85 518.28
(d) Staff welfare 282.66 487.89
2,855.27 7,448.32
4. Operating expenses:
(a) Stores and spares 394.51 543.51
(b) Processing charges (includes transportation cost
Rs. 77.67 lakhs, previous period Rs. 81.75 lakhs) 720.49 616.76
(c) Rent (Refer note 8 of Schedule 17) 288.18 125.59
(d) Rates, taxes and duties (Refer note 7 of Schedule 17) 1,019.83 441.51
(e) Insurance 125.96 237.44
(f) Repairs and maintenance to plant and machinery 395.29 584.24
(g) Repairs and maintenance to buildings 93.14 104.49
(h) Repairs and maintenance - others 36.01 54.37
(i) Travelling 92.54 154.30
(j) Advertising and sales development expenses 12.36 47.65
(k) Freight & forwarding charges (net) 655.60 1,033.87
(I) Miscellaneous expenses (including printing and stationery, postage,
installation expenses, service charges, bank charges, legal charges, etc.) 987.26 1,995.86
4,821.17 5,939.59
5. Commission and discounts 526.48 778.28
6. Bad debts written off * 1,048.32 243.36
7. Loans/advances/other dues written off * 13.50 68.48
8. Obsolete fixed assets written off 30.91 25.14
9. Donations and contributions 0.10
10. Directors' sitting fees 2.55 1.87
11. Loss on sale of investments (net) - 2,442.73
12. Provision for doubtful debts and advances 418.39 325.56
TOTAL 32,735.26 47,576.21
* Bad debts / advances written off represent the debts/advances written
off in respect of divisions demerged for which provision made in
the earlier years has been written back (Refer Schedule 13).
SCHEDULE 16: INTEREST

On Debentures 17.60
On fixed loans and deposits 61.10
Others 68.88 319.95
TOTAL 68.88 398.65

60
 SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH, 2006 AND
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2006
SCHEDULE 17:SIGNIFfCANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND
LOSS ACCOUNT

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956, except for certain fixed assets which have been revalued.
(Refer note 3 of schedule 1 7 below)
2. Use of estimates
The preparation of financial statements in conformity with the generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and
reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are
recognised in the period in which the results are known/materialise.
3. Principles of consolidation
The consolidated financial statements relate to National Organic Chemical Industries Limited ("the Company") and its subsidiary
companies. The consolidated financial statements have been prepared in accordance with Accounting Standard (AS 21) on
"Consolidated Financial Statements", issued by The Institute of Chartered Accountants of India 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 value of like items of assets, liabilities, income and expenses, after fully eliminating intra-group
balances and intra-group transactions resulting in unrealised profit or losses,
(ii) The consolidated financial statements have been prepared using uniform accounting policies for like transactions and
other events in similar circumstances and are prepared to, in the same manner as the Company's separate financial
statements.
4. Fixed Assets
Fixed Assets are stated at cost of acquisition or construction or at revalued amounts less accumulated depreciation, amortisation
and impairment, if any.
Intangible Assets
Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to the assets will
flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are
carried at cost less accumulated amortisation and accumulated impairment losses, if any.
5. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to
the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the estimate of recoverable amount.
6. Assets taken on lease are accounted as under:
Finance Leases
Assets taken on finance lease are accounted for as fixed assets in accordance with Accounting Standard (AS 19) on "Leases",
issued by The Institute of Chartered Accountants of India. Accordingly, the assets are accounted at fair value. Lease payments
are apportioned between finance charge and reduction of outstanding liability.
Operating Leases
Assets taken on lease under which all the risks and rewards of ownership are effectively retained by the lessor are classified as
operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the
respective lease agreements.
7. Depreciation
Depreciation on fixed assets is provided on straight line method in accordance with the Companies Act, 1956. Cost of leasehold
land is written off over the period of lease. Depreciation on fixed assets revalued is provided on straight line method and
charged over the residual life of the asset. The additional charge of depreciation on account of revaluation is withdrawn from
revaluation reserve and credited to Profit and Loss Account.
8. Investments
Investments classified as long term investments are stated at cost. Provision is made to recognise a decline, other than temporary,
in the value of investments.

61
 NATIONAL DTK-iAWC

SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued
9. Inventories
Items of inventories are measured at lower of the cost or net realisable value. Cost of inventories comprise all costs of purchase
(net of CENVAT and sales tax set-off), cost of conversion and other costs incurred in bringing the inventories to their present
location and condition. Cost of stores and spares, raw materials, trading and other products is determined on weighted average
basis. Cost of stock-in-process and finished stocks is determined by absorption costing method.
10. Retirement benefits
Contributions payable to the Company's Superannuation and Provident funds are charged to revenue. Contributions payable to
gratuity fund and provision for additional gratuity are charged to revenue on the basis of actuarial valuation made at the end of
each financial year.
Long service benefits payable to eligible employees are provided based on valuation at the Balance Sheet date made by
independent actuaries.
Accrued leave has been provided at year end on actuarial basis.
11. Accounting of CENVAT credit
Cenvat credit available is accounted by recording materials purchased net of excise duty. Cenvat credit availed of is accounted
on adjustment against excise duty payable on despatch of finished goods.
12. Foreign currency transactions
Transactions in foreign currency are recorded at the original rate of exchange in force at the time transactions are effected.
Exchange differences arising on repayment of foreign currency liabilities incurred for the purpose of acquiring imported fixed
assets are adjusted in the carrying amount of the respective fixed assets. Exchange differences arising on settlement of other
transactions are recognised in the Profit and Loss Account.
Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency are restated
using the exchange rate prevailing at the date of the Balance Sheet and the resulting net exchange difference is recognised in
the Profit and Loss Account. The exchange gain/loss arising on restatement of foreign currency liability relating to imported
fixed assets is adjusted in the value of the related fixed assets.
In case of monetary items which are covered by forward exchange contracts, the difference between the exchange rate on the
date of such contracts and the year end rate is recognised in the Profit and Loss Account. Any profit/loss arising on cancellation
of forward exchange contract is recognised as income or expense of the year. Premium/Discount arising on such forward
exchange contracts is amortised as income/expense over the life of the contract.
13. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such
assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All
other borrowing costs are charged to revenue.
14. Revenue recognition
(a) Revenue on sale of products is recognised when the products are despatched to customers, all significant contractual
obligations have been satisfied and the collection of the resulting receivable is reasonably expected. Sales are stated net of
returns and sales tax collected.
(b) Revenue in respect of insurance/other claims, interest, commission etc. is recognised only when it is reasonably certain
that the ultimate collection will be made.
15. Income taxes
Tax expense comprises current tax, deferred tax and fringe benefit tax (FBT). Current tax and deferred tax are accounted for in
accordance with Accounting Standard (AS 22) on "Accounting for Taxes on Income", issued by the Institute of Chartered
Accountants of India. Current tax is measured at the amount expected to be paid/recovered from the tax authorities using the
applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences
between taxable income and accounting income, that are capable of reversing in one or more subsequent periods and are
measured at relevant enacted/substantively enacted tax rates. At each Balance Sheet date, the Company reassesses unrealised
deferred tax assets, to the extent they become reasonably certain or virtually certain of realisation, as the case may be. FBT is
recognised in accordance with the relevant provisions of the Income Tax Act, 1961 and the Guidance note on FBT issued by
the Institute of Chartered Accountants of India.
16. Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a
result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised, but
are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

62
 SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued
II. NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. i) The consolidated financial statements of National Organic Chemical Industries Limited ("the Company") and its subsidiaries,
as under, have been prepared in accordance with Accounting Standard (AS 21) on "Consolidated Financial statements" issued
by the Institute of Chartered Accountants of India. Financial statements of all these companies incorporated in the consolidated
financial statements are as at 31 s ' December, 2005. The subsidiary companies considered in the consolidated financial
statements are:

Name of the subsidiaries Country of incorporation Ownership interest

Ensen Holdings Limited India 100%

Urvija Investments Limited India 100 %

ii) The Company holds 48.94% investments in equity shares of Vibhadeep Investments and Trading Limited through its subsidiaries.
The said Company has, as per audited accounts as at 31 st March, 2005, reported accumulated losses. Since the Holding
Company has recognised the share of losses which equals to the carrying value of investments, after writing off permanent
diminution, no further losses are recognised as required under Accounting Standard (AS 23) on "Accounting for Investments in
Associates in Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India.

2. Consequent to sanctioning of the scheme of arrangement in the previous period, the Company has given effect to the said scheme
during the previous period and in the current year as under:

a) The specified assets (including fixed assets) and liabilities of Petrochemicals division (PCD) and fixed assets of Plastics Products
division (PPD) were transferred with effect from the appointed date viz. 30th September, 2003 and specified net current assets
of PPD were transferred and vested in Relpol Plastic Products Limited ("Relpol") (formerly NOCIL Petrochemicals Limited)
from effective date viz. 20th July, 2005.

b) Specified assets and liabilities of PCD were hived off to Relene Petrochemicals Private Limited (REPPL) from the appointed date
and the surplus on demerger of Rs. Nil (previous period Rs. 15,238.93 lakhs (net of Rs. Nil, previous period Rs. 131.84 lakhs)
being loss on transfer of fixed assets of PPD) is credited to Profit and loss account as 'Exceptional/non recurring item'.

c) The Company continued to conduct the business relating to PPD in trust up to the effective date viz. 20th July, 2005 and
carried out sales/earned income aggregating to Rs. 960.01 lakhs (previous period Rs. 2,649.77 lakhs) and incurred expenditure
aggregating to Rs. 950.33 lakhs (previous period Rs. 2,640.12 lakhs) on behalf of Relpol and the same has been disclosed in the
Profit and loss account.

d) In accordance with the scheme, entire overdue interest, penal interest, liquidated damages and other charges on the total dues
to secured lenders of the Company were waived and an amount of Rs. Nil (previous period Rs. 4,288.19 lakhs) has been
written back since no longer payable and has been disclosed under 'other income'.

e) Subsequent to the implementation of the scheme of arrangement, the core business of the Company is that of manufacturing
and sale of rubber chemicals.

3. During the year, in order to reflect the current replacement cost/market value, the Company revalued its plant and machinery,
leasehold land and buildings located at its factory as on 31st March, 2006 on the basis of valuation carried out by approved valuers
based on reinstatement/market values. The resultant appreciation aggregating to Rs. 10,159.43 lakhs (net) (gross block Rs. 17,288.78
lakhs minus accumulated depreciation Rs. 7,129.35 lakhs) in the aforesaid assets has been added to the assets and credited to
revaluation reserve. The details of such appreciation in the values are as under:
(Rupees in Lakhs)

Description Gross block Accumulated depreciation Net value

Leasehold Land 3,163.35 993.03 2,170.32
Buildings 2,202.15 749.93 1,452.22
Plant & Machinery 11,923.28 5,386.39 6,536.89
Total 17,288.78 7,129.35 10,159.43

Since the valuation of the aforesaid assets has been carried out as on 31 st March, 2006, there is no additional charge on account of
depreciation on the assets revalued.

63
SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued
4. The Company made a reference on January 22, 2004 to the Board of Industrial and Financial Reconstruction (BIFR) under section
15 of the Sick Industrial Companies (Special Provision) Act, 1985 (SICA), which was registered by the said Board. Consequent upon
the positive net worth as at 31st March, 2005, the Company is no longer a sick Company under the provisions of SICA and is
discharged from the purview of SICA as per BIFR Order dated 30th November, 2005.
5. The Company as at 31 st March, 2006, carries a total contingency reserve of Rs. 3,000.00 lakhs (previous year Rs. 3,000.00 lakhs)
which, in its opinion, is adequate to meet any short fall/diminution in the ultimate realisation of its investments, current assets and
loans and advances etc.
6. During the year, a bank has sanctioned working capital credit facilities for an amount aggregating to Rs. 2,700.00 lakhs in respect of
which hypothecation agreement has been entered into with the said bank and consequent to which, stocks and book debts have been
duly hypothecated. However, the Company has not availed any credit facility under the sanction during the year.
7. 'Other provision' represents provision made by the Company based on substantial degree of estimation as at 31 st March, 2006 towards
Custom duties of Rs. 718.77 lakhs. Future cash outflow in respect of the same are determinable only on receipt of judgements/decisions
pending with the various authorities.
8. The Company's significant leasing arrangements are in respect of operating leases for premises, (residential, offices, godowns, subletting
etc.). These lease arrangement which are not non-cancellable range between 11 months and 5 years generally or longer and are usually
renewable by mutual consent or mutually agreeable terms. The aggregate lease rentals payable or receivable are reflected under serial
no. 4 (c) of Schedule 15 and serial no. 13 of Schedule 13 respectively.
9. The net amount of foreign exchange fluctuation gain included in the Profit and Loss Account for the year is Rs. 2.84 lakhs (previous
period exchange loss Rs. 13.61 lakhs).
10. Segment information
The principal business of the company is of manufacturing 'rubber chemicals'. All other activities of the Company revolve around its
main business. Hence, there is only one primary reportable business segment as defined by Accounting Standard (AS 17) on "Segment
Reporting" issued by the Institute of Chartered Accountants of India.
The Secondary Segments are identified based on the geographical location of customers within India and outside India.
(Rupees in lakhs)
Previous period
Particulars Within India @ Outside India Total Within India @ Outside India Total
Revenues 25,890.20 14,485.69 40,375.89 31,734.13 14,138.39 45,872.52
Segment Assets (Debtors) 5,588.38 2,316.59 7,904.97 7,303.00 1,975.30 9,278.30

Segregation of assets (except debtors) into secondary segments has not been done as all the assets are located in India and the
Company is of the view that it is not practical to reasonably allocate such assets and an adhoc allocation will not be meaningful.
Consequently, the carrying amounts of assets by location are not given.

@ includes revenues earned Rs. 625.76 lakhs (previous period Rs. 1,913.64 lakhs) on behalf of "Relpol" for the period from April
1, 2005 to July 20, 2005 and segment assets (debtors) includes Rs. nil (previous period Rs. 797.93 lakhs) as on 31 st March, 2006
on behalf of "Relpol".
(Rupees in lakhs)
2005-06 Previous Period
(18 months)
11. Estimated amount of contracts remaining to be executed on capital
account and not provided for. 418.52 60.95

12. Claims against the Company not acknowledged as debts. 122.73 76.95

13. Contingent liability in respect of:

(a) Central excise duty and Customs duty demand disputed 330.30 1,188.44
(b) Income tax demands (including interest of Rs. 259.86 lakhs,
previous period Rs. 284.60 lakhs) disputed in appeals. 1,205.99 1,230.73
(c) Sales tax demands disputed in appeals. 629.95 457.62

14. Research and development cost charged as an expense to Profit and Loss Account. 191.61 241.14

64
SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued
15. Related Parties

(A) Name of related parties and description of relationship

(i) Others:
(Entities in which the Key Management Personnel have control or significant influence).
Navin Fluorine International Limited
Mafatlal Industries Limited
Mafatlal Finance Company Limited
Eyeglobal Technologies Private Limited

(ii) Key Management Personnel:

Mr. A. N. Mafatlal (up to 29th July, 2005)
Mr. H. A. Mafatlal
Mr. C. R. Cupte (from 1st August, 2005)
Mr. V. R. Gupte (up to 31 st July, 2005)

(iii) Relatives of Key Management Personnel:

Mr. A. N. Mafatlal (from 30th July, 2005)
Mr. V. R. Gupte (from 1 st August, 2005)
Mr. C. R. Gupte (up to 31st July, 2005)
Mrs. A. C. Gupte (from 1 st August, 2005)

(B) Transactions with related parties

(Rupees in lakhs)

Nature of Transactions Others Key Relatives of Key Total

Management Management
Personnel Personnel

Purchases and reimbursement of expenses 21.67 - - 21.67

(15.71) (15.71)

Remuneration 141.46 91.16 232.62

_ (56.43) (54.24) (110.67)

Rent deposit paid 331.07 - - 331.07

Rent paid 243.68 0.60 2.40 246.68

(2.70) (2.70)
Sitting fees 0.25 0.25 0.50
_ (0.54) (0.54)

Income from Right Renunciation -

(105.72) - (105.72)

65
 NOCIL!- NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued

Out of above, related Party transaction in excess of 10% are as under:- (Rupees in lakhs)

Nature of Transactions Year ended on Previous Period

31st March, 2006 (18 months)

1. Purchases and reimbursement of expenses:

(a) Reimbursement of expenses: Others - Mafatlal Industries Limited 13.24
(b) Purchase of materials: Others - Navin Fluorine International Limited 6.70 15.71
(c) Services received: Others - Eyeglobal Technologies Private Limited 1.73

2. Remuneration Paid to:

(a) Key Management Personnel
Mr. C. R. Gupte * 21.65
Mr. V. R. Cupte 119.81 56.43

(b) Relative of Key Management Personnel

Mr. C. R. Cupte ** 91.16 54.24

3. Rent Deposit paid to Others:

Mafatlal Industries Limited 331.07 _

4. Rent Paid to:

(a) Others:
Mafatlal Industries Limited 222.08 -
Navin Fluorine International Limited 21.60

(b) Key Management Personnel

Mr. V. R. Cupte 0.60 2.70
(c) Relative of Key Management Personnel
Mrs. A. C. Gupte 1.20 -
Mr. V. R. Cupte 1.20

5. Sitting Fees to:

(a) Key Management Personnel
Mr. A. N. Mafatlal 0.21
Mr. H. A. Mafatlal 0.25 0.33

(b) Relative of Key Management Personnel

Mr. V. R. Cupte 0.25 -
st
Appointed as Managing Director from 1 August, 2005.
Includes one-time ex-gratia payment of Rs. 50.00 lakhs, as approved during the year, for services rendered in the capacity
as Chief Executive of Rubber Chemicals Division for the past 10 years.

(C) Amounts outstanding from / to related parties as at 3 1 " March, 2006

(Rupees in lakhs)

Nature of Transactions Relatives of Key Others Total

Management
Personnel

Inter Corporate Deposit given - 2,094.00 2,094.00

(2,094.00) (2,094.00)

Rent Deposit given 150.00 331.07 481.07

(150.00) (150.00)

Notes: (i) Related party relationship is as identified by the company and relied upon by the auditors,
(ii) Figures in brackets represent previous period figures.
 SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT - Continued

16. Managerial Remuneration under Section 198 of the Companies Act, 1956:
t (Rupees in lakhs)
2005-06 Previous Period
(18 months)
Salaries 16.00 5.60
Contribution to provident and other funds 5.65 2.44
Perquisites in cash or in kind - 4.17
21.65 * 12.21**

For the period 1st August, 2005 to 31st March, 2006, paid to Managing Director.
For the period 1st October, 2003 to 31st May, 2004, paid to Executive Director - Finance

17. In view of inadequacy of profits as computed under Section 349 of the Companies Act, 1956, no commission is payable to
Directors as per Section 198 read with Section 309 of the Companies Act, 1956.

18. Payment to auditors:

(a) Audit fees 8.30 12.09
(b) As adviser, or in any other capacity in respect of:
(i) Taxation matters 2.59 16.00
(ii) Company law matters 1.00 8.00
(iii) In any other manner (certification work,
audit of provident and other funds, etc.) 3.62 12.20
(iv) Tax audit fees 2.00 3.48
9.21 39.68
(c) As expenses 0.02 -
17.53 51.77
(Excluding service tax)

19. Income Taxes:

(a) Provision for Income Tax of Rs 570.00 lakhs has been computed on the basis of Minimum Alternate Tax (MAT) in accordance
with Sec 115JB of the Income Tax Act, 1961, in view of carried forward losses / unabsorbed depreciation. Considering the
future profitability and taxable positions in the subsequent years, the Company has recognised the 'MAT credit entitlement'
as an asset by crediting the Profit and Loss account for an equivalent amount and disclosed under 'Loans and advances'
(Schedule 10) in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternate
Tax under the Income Tax Act, 1961" issued by Institute of Chartered Accountants of India.

(b) The breakup of the Deferred Tax Assets / Liabilities is as under

(i) Deferred tax liability:

Depreciation 2,110.55
Others 286.61 285.82
Total 2,198.17 2,396.37

(ii) Deferred tax assets:

Unabsorbed depreciation and carried forward losses 1,626.41 2,251.57
Provision for doubtful debts and advances 243.85 475.18
Provision for leave encashment 130.02 77.03
Others 355.76 461.30
Total 2,356.04 3,265.08

Net deferred tax asset 157.87 868.71

67
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED BALANCE SHEET AND TOOW
ACCOUNT - Continued
20. Earnings per share:
(Rupees in lakhs)
2005 - 06 Previous Period
(18 months)
Profit before exceptional / non recurring item after Tax 5,971.37 3,098.10
ExcessAShort) provision for taxes of earlier years 123.93 (0.07)
Profit for the year exceptional / non recurring item 6,095.30 3,098.03
Exceptional / non-recurring item - Surplus on Demerger 15,238.93
Profit for the year after exceptional non-recurring item 6,095.30 18,336.96
Weighted average number of Equity shares 148,338,837 122,605,700
Nominal value of Equity share (Rs.) 10 10
Earnings per share (Rs.) before exceptional / non recurring item (Basic and diluted) 4.11 2.53
Earnings per share (Rs.) after exceptional / non recurring item (Basic and diluted) 4.11 14.96

21. Figures for the previous accounting period have been regrouped / rearranged wherever necessary to correspond with the figures of
the current year and are disclosed in brackets. Amounts and other disclosures for the preceding period are included as an integral
part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the
current year.

22. The amounts of balance sheet and profit and loss account are rounded off to the nearest thousand and indicated in lakhs of rupees.

23. Figures for the current year are strictly not comparable with those of the previous period, since the previous period results were for
eighteen months and included the impact of demerger of two divisions, where as the figures of current year are for a period of
twelve months and includes the impact of transfer of Income / Expenses and specified net current assets up to 20th July, 2005 as
detailed in note 2 of this Schedule.

U. M. KARNIK HRISHIKESH A. MAFATLAL Chairman

Secretary

V. R. GUPTE
As per our attached report of even date
For C. C. CHOKSHI & CO. VISHAD P. MAFATLAL Directors
Chartered Accountants S. K. MAHAPATRA

P. R. BARPANDE
C. R. GUPTE Managing Director
Partner

Mumbai, Dated : 30th May, 2006 Mumbai, Dated : 30th May, 2006

68
 NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED
ATTENDANCE SLIP
To be handed over at the entrance of the Meeting Hall
Regd. Folio No DP ID No Client ID No
Name of the attending member( in BLOCK LETTERS )
Name of the Proxy ( in BLOCK LETTERS )( To be filled in, if the Proxy attends, instead of the Member)
I hereby record my presence at the FORTY FOURTH ANNUAL GENERAL MEETING of the Company being held at 4.00 P.M. on 31 st July 2006 at
Patkar Hall, S.N.D.T. Women's University, 1, Nathibai Dadmodar Thackersey Road, Mumbai 400 020.

Member's / Proxy's Signature

(To be signed at the time of handing over this slip)

NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED

PROXY FORM

I/We of being member/members of the above named

Company, hereby appoint or failing him
of as my/our proxy to vote for me/us on my/our behalf at the FORTY FOURTH ANNUAL
GENERAL MEETING of the Company to be held at 4.00 P.M. on Monday, the 31 st July 2006 at Patkar Hall, S.N.D.T. Women's University, 1, Nathibai
Damodar Thackersey Road, Mumbai 400 020 and at any adjournment thereof.

Regd. Folio No. Affix

Revenue
DP ID No Client ID No..
Stamp
15 paise
No. of Shares held

Signed this day of 2006 Signature across Revenue Stamp

Important
a) A revenue stamp of 15 paise is to be affixed on this Proxy Form.
b) The Proxy Form should be signed across the stamp as per specimen signature(s) registered with the Company.
c). The Companies Act, 1956 lays down that an instrument appointing a proxy shall be deposited at the Registered Office of the Company, at Mafatlal
House, H.T. Parekh Marg, Backbay Reclamation, Churchgate, Mumbai - 400 020 not less than FORTY EIGHT HOURS before the time fixed for
holding the Meeting.
d) A Proxy need not be a member.

_A_ Q.

BANK ACCOUNT PARTICULARS/ECS MANDATE FORM

I/We do hereby authorize National Organic Chemical Industries Limited to :

* Print the following details on my/our dividend warrant
* Credit my/our dividend amount directly to my/our Bank Account by ECS.
(* strike out whichever is not applicable ) My/Our Folio No
DP ID No Client A/c.No
Particulars of Bank Account:
A. Bank Name
B. Branch Name
Address (For Mandate only)
C. 9 digit code number of the Bank and branch
as appearing on the MICR Cheque.
D. Account type (Saving/Current/Overdraft )
E. Account number as appearing on the cheque book.
F. STD Code & Tel. No.
I/We shall not hold the Bank responsible if the ECS could not be implemented or the Bank discontinue(s) the ECS , for any reason.
MAIL TO :
Sharepro Services Limited - Unit: NOCIL,
3rd Floor, Satam Estate, Above Bank of Baroda,
Cardinal Gracious Road, Chakala,
Andheri (East), Mumbai 400 099. Signature of the First Shareholder/Joint Shareholder.
Please attach the photocopy of the cheque or a blank cancelled cheque issued by your Bank relating to your above account for verifying the accuracy
of 9 digit code number.
In case you are holding shares in demat form kindly advise your Depository Participant to take note of your Bank Account particulars/ECS mandate.
-H NOCIL \