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HIRMR

ANNUAL REPORT

NIRMA LIMITED

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Nirma Limited

BOARD OF DIRECTORS Dr. K. K. Patel, Chairman Shri Rakesh K. Patel, Vice Chairman Shri Shrenikbhai K. Lalbhai Shri Pankaj R. Patel Shri Rajendra D. Shah Shri A. P. Sarwan Shri Chinubhai R. Shah Shri Kaushikbhai N. Patel Shri Kalpesh A. Patel, Executive Director Shri Hiren K. Patel, Managing Director

AUDITORS Hemanshu Shah & Co. Chartered Accountants Ahmedabad

COMPANY SECRETARY Shri Paresh Sheth

REGISTERED OFFICE Nirma House Ashram Road Ahmedabad - 380 009

REGISTRARS AND SHARE TRANSFER AGENT M/s. Sharepro Services (India) Pvt. Limited Mumbai - 400 099

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To, The Members, Your Directors are pleased to present the 28th Annual Report together with Audited Statement of Accounts of the Company for the year ended on 31st March 2008.

Rs.in crores Financial Results 2007-08 2006-07 Turnover 2650.78 2541.05 Profit for the year before providing for the depreciation & taxation 382.34 385.90 Less : Provision for depreciation 226.65 207.51 Add : Provision for expenses of earlier years written back 70.89 Nil Less : Provision for taxation - Current Tax 26.00 20.00 Fringe Benefit Tax 0.40 0.50 Deferred tax (29.55) 48.77 Profit after depreciation & taxation 229.73 109.12 Add : Provision of Taxation Provided / earlier years written back (12.18) 110.67 Less : Loss of Demerged Undertaking for the prior period Nil 11138 Add : Balance in Profit & Loss Account brought forward 71.13 135.65 Profit available for Appropriation 288.68 244.06 Less : Transferred to General Reserve 100.00 100.00 Interim Dividend on Equity Shares Nil 63.50 Dividend on new Equity shares allotted pursuant to the Composite Scheme of Compromise and Arrangement Nil 0.29 Dividend on Preference Shares 0.17 0.17 Proposed Dividend on Equity Shares 63.66 - Tax on dividend 10.85 8.97 Balance carried to Balance Sheet 114.00 71.13

www.reportjunction.com DIVIDEND interest, depreciation and tax is Rs.390.26 crores during Your Directors are pleased to recommend the dividend : the year compared to Rs.379.38 crores of the previous year. The net profit has gone up to Rs.229.73 crores i) on Preference shares @ 6% i.e. Rs.6/- per share during the year under review. Volatility in the prices on 279285 Redeemable Non cumulative Non of some of the raw materials remained critical to the convertible Preference shares of Rs.100/- each business. For detailed analysis and performance refer absorbing Rs.0.20 crores including tax to the Management Discussion and Analysis section of ii) on equity shares @ 80% i.e. Rs.4/- per share of the Annual Report. Rs.5/- each absorbing Rs.74.48 crores including tax, for the financial year 2007-08. SHARE CAPITAL The Authorised Share Capital of the Company has ACQUISITION OF SEARLES VALLEY MINERALS INC. increased from Rs.100 crores to Rs.150 crores vide & SEARLES VALLEY MINERALS OPEARTIONS INC. resolution passed through the exercise of postal ballot Your Directors are pleased to inform that the Company conducted pursuant section 192A of the Companies has successfully completed the acquisition of Searles Act, 1956 on 19th March 2008. Valley Minerals Inc. (SVM) and Searles Valley Minerals Operations Inc. (SVMO) (Collectively "SVM") the USA PROJECTS based Soda Ash producer. The Company had entered Your Directors are pleased to state that the Company into definitive agreement for the acquisition on November has completed the Pure Water Project in all respect 27, 2007. SVM is the only producer of Soda Ash, and the plant commissioning trials started from February Sodium borates, Boric acid and Sodium sulfate utilizing 2008. With the above Pure Water Plant Capacity has the solution mining technology. It has total production been increased from 2240 m3/day to 4480 m3/day and in capacity over 1.9 million tonnes per annum. turn vaccum salt capacity from 800 TPD to 1600 TPD. For acquisition of SVM, the Company has incorporated The utility expansion for meeting pure water and caustic Karnavati Holdings Inc. (KHI) a corporation in the State soda plant project is also on the verge of completion. of Delaware U.S.A. on November 20, 2007 as Special The caustic soda plant of 240 TPD which is being put Purpose Vehicle. The total cost of acquisition including up at Kalatalav site, Dist. Bhavnagar, is expected to net current assets of USD 225 million has been funded commission by February 2009. The civil construction job by combination of External Commercial Borrowings, for this plant has been completed by 60% and mechnical direct investments and Corporate Guarantees. equipment erection has started. With this acquisition your Company is now amongst Your Company has also initiated a Cement Project the top rated Companies in manufacturing of Soda Ash at Tal. Mahuva Dist. Bhavnagar in Gujarat. The rated and has started establishing a strong presence in the capacity of the plant will be 1.91 million tonnes per international market. annum while the capacity of Captive Power will be 50 MW. The Company has already acquired the land at the BUSINESS OPERATIONS OVERVIEW plant site. The Government of Gujarat has sanctioned the supply of sweet water from Narmada pipeline. The year under review has been eventful for your Company. After acquisition of Sachana undertaking of Core Healthcare Limited last year, the acquisition of SVM in the U.S.A., enabled the Company to have strong and strategic base as Soda Ash producing unit. Your Company being one of India's leading manufacturer of Detergents & Soaps has already established it's position in this segment. Your Company has been growing from strength to strength and taken challenges on the global stage. The benefit of acquisition and the results of initiatives taken by the company will accrue in foreseeable future. The Turnover during the year on standalone basis has marginally increased from Rs.2541.05 crores to Rs.2650.78 crores showing increase by Rs.109.73 crores. On consolidated basis, the turnover is Rs.3003.03 crores during the year. The operating profit before

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i Nirma Limited

The major equipments pertaining to Cement Project (iv) Directors have prepared the annual accounts of the have been ordered for and for remaining long delivery Company on a 'going concern' basis. equipments the technical and commercial negotiations are under process. SUBSIDIARY COMPANIES During the year under review, the Company has CORPORATE GOVERNANCE incorporated Karnavati Holdings Inc. (KHI) in the state Your Company continues to commit good Corporate of Delaware, United States of America, on November Governance vis-a-vis corporate practices by complying 20, 2007 as Wholly Owned Subsidiary of the Company with various Standards prescribed by the Securities and signed the share purchase agreements with KHI. and Exchange Board of India vide Clause 49 of the KHI incorporated Searles Valley Minerals Operations Listing Agreement with the Stock Exchanges. Apart from Acquisition Corporation and Searles Valley Minerals mandatory requirements from Listing Agreement, the Acquisition Corporation in the state of Delaware, USA, Company is also complying some of the non mandatory which merged with and into Searles Valley Minerals requirements to maintain high degree of Governance. Operations Inc (SVMO) and Searles Valley Minerals Inc. A separate report on Corporate Governance alongwith (SVM) on 27th December 2007. Consequently, SVMO a certificate from the Auditors and Management and SVM, the surviving corporations have become step- Discussion and Analysis are annexed as part of the down subsidiaries of the Company. Annual Report. In terms of the approval granted to the Company by Ministry of Corporate Affairs, Government of India vide DIRECTORS its letter No. 47/495/2008-CL-lll dated 5th August 2008, Shri Rajendra D. Shah, Shri Rakesh K. Patel, and Shri the Company has been exempted from complying with Kaushik N. Patel Directors of the Company retire by the provisions of sub section (1) of section 212 of the rotation at the ensuing Annual General Meeting and are Companies Act, 1956, for the financial year under eligible for re-appointment. Your Directors recommend review. their re-appointment. None of the directors are disqualified from being appointed as director as specified in terms Further SVMO wholly owns four entities in U.S.A. of Sections 274(1) (g) of the Companies Act, 1956. namely Searles Domestic Water Company LLC, Searles The information on the particulars of Directors seeking Valley Residences LLC, Trona Railway Company re-appointments and appointment as required under LLC and NATI LLC, while NATI LLC has a 50 percent Clause 49 of the Listing Agreement executed with the membership in Trona Export Terminals LLC in U.S.A. Stock Exchanges, have been given alongwith the notice CONSOLIDATED FINANCIAL STATEMENTS of the ensuing Annual General Meeting. The Consolidated Financial Statements pursuant DIRECTORS' RESPONSIBILITY STATEMENT to clause 41 of the Listing Agreement entered into with stock exchanges and prepared in accordance Pursuant to the requirement under Section 217(2AA) with Accounting Standard 21 (consolidated financial of the Companies Act, 1956, with respect to Directors' statements) of Institute of Chartered Accountants of India, Responsibility Statement, it is hereby confirmed that: for the financial year ended March 31, 2008 is attached (i) in preparation of the annual accounts for the with this report. Further, the key financial information financial year ended 31st March, 2008, the of the subsidiaries / entities have been disclosed in applicable accounting standards have been followed a brief abstract forming part of this Annual Report. alongwith proper explanations relating to material In the absence of control of Trona Export Terminals departures; LLC, its operations are not included and considered for consolidation. The Annual Accounts of the subsidiary (ii) Directors have selected such accounting policies companies and related detailed information will be made and applied them consistently and made judgments available to any member of the Company seeking such and estimates that are reasonable and prudent so information at any point of time. The Annual Accounts of as to give a true and fair view of the state of affairs the subsidiary companies will also be kept for inspection of the Company as at 31st March 2008 and of the by any member at the Registered Office of the Company profit of the Company for the year ended on that and that of subsidiary companies concerned. date; PARTICULARS OF EMPLOYEES (iii) Directors have taken proper and sufficient care for the maintenance of adequate accounting records in In terms of the provisions of section 217(2A) of the accordance with the provisions of the Companies Companies Act, 1956, read with the Companies Act, 1956 for safeguarding the assets of the (Particulars of Employees) Rules, 1975 as amended, Company and for preventing and detecting fraud the names and other particulars of the employees are and other irregularities; and required to be set out in the annexure to the directors'

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HIRMH report. However, as per the provisions of section 219(1) are given in the Annexure forming part of this Report. (b)(iv) of the said Act, the annual report excluding the aforesaid information is being sent to all the members AUDITORS & AUDITORS' REPORT of the Company and others entitled thereto. Members The Auditors of the Company M/s. Hemanshu Shah & who are interested in obtaining such particulars may Co..Chartered Accountants, Ahmedabad, hold office until write to the Company Secretary at the Registered Office the conclusion of the ensuing Annual General Meeting of the Company. and are recommended for reappointment. Certificate from Auditors has been received to the effect that FIXED DEPOSITS their reappointment if made, would be within the limits During the year under review the Company has not prescribed under section 224(16) of the Companies accepted Public Deposits. Act, 1956. Notes forming part of Accounts, which are specifically referred to by the auditors in their report DEPOSITORY SYSTEM are self-explanatory and therefore, do not call for any As the members are aware, your Company's shares further comments. are compulsorily tradable in electronic form and your Company has established connectivity with both the INSURANCE depositories i.e. National Securities Depository Limited Assets of the Company are insured as required (NSDL) and Central Depository Services (India) Ltd to be. (CDSL). Members are requested to avail of the facility of dematerialization of the Company's shares on either ACKNOWLEDGEMENT of the depositories as aforesaid. Your Directors wish to place on record their appreciation In terms of the provisions of the Investor Education and of the continued co-operation and support given by the Protection Fund Rules, 2001, Rs.1.10 lacs has been various Government authorities, institutions, bankers, transferred to Investor Education and Protection Fund business constituents and shareholders. Your Directors during the year under review. also wish to place on record their appreciation of the devoted services of employees at all levels who have CONSERVATION OF ENERGY, TECHNOLOGY largely contributed to the efficient management of the ABSORPTION, FOREIGN EXCHANGE EARNINGS Company. AND OUTGO For and on behalf of the Board The particulars as required u/s. 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy, technology Place : Ahmedabad Dr. K. K. PATEL absorption and foreign exchange earnings and outgo Date : August 19, 2008 Chairman

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Nirma Limited

ANNEXURE TO DIRECTORS' REPORT

Information as required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out as under :-

A) Conservation of Energy The energy conservation continued to be a priority area for the Company. All possible inbuilt measures have been taken for energy conservation at the time of installation of plants and equipments. The particulars with respect to conservation of energy as per Form A are given hereunder in respect of Sulphuric Acid Plant (SAP), LAB Plant as well as Soda Ash plant of the Company.

FORM - A

A. Power & Fuel Current Year Previous Year Consumption SAP LAB Soda Ash SAP LAB Soda Ash 1 . Electricity

a] Purchased Units 5511417 64094529 13311400 5471940 62641650 14180750

Total amount Rs. 31097317 342960869 75571764 30803031 339372936 80378119

Av.Rate/Unit Rs. 5.64 5.35 5.68 5.63 5.42 5.67

b] Own Generation - - 42147103 - - 43407609

2. Coal (MT) - - 38355 - - 60167

Total amount Rs. - - 131067047 - - 152678067

Av.Rate/Unit Rs. - - 3417.21 - - 2537.57

3. Furnace Oil (KL) - 47537.47 238.23 - 46400.56 271.27

Total amount Rs. - 958571374 4502976 - 790941003 4688110

Av.Rate/Unit Rs. - 20164.54 18901.80 - 17045.94 17282.27

4. Others (L.P.G.) (MT) - 35.09 - - 53.33 -

Total amount Rs. - 1900773 - - 1663059 -

Av.Rate/Unit Rs. - 54163.88 - - 31184.31 -

5. Light Diesel Oil (KL) - - 878.84 - - 879.15

Total amount Rs. - - 26597254.60 - - 26431849

Av.Rate/Unit Rs. - - 30264.05 - - 30065.23

6. Lignite (MT) - - 435093.63 - - 454317.42

Total amount Rs. - - 789689485 - - 735955236

Av.Rate/Unit Rs. - - 1814.99 - - 1619.91

7. Petcock (MT) ------

Total amount Rs. ------

Av.Rate/Unit Rs. ------

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Current Year Previous Year

SAP LAB Soda Ash SAP LAB Soda Ash

B. Consumption per unit of production standard (if any)

Product : *Sulphuric Acid / LAB / Soda Ash ------

Electricity Units 55.75 738.92 154.59 54.16 704.07 131.45

Furnace Oil - kl/pmt - 0.55 0.001 - 0.52 0.001

Coal - - 0.107 - - 0.137

Others (L.P.G.) mt/pmt - 0.0004 - - 0.0006 -

Light Diesel Oil (KL) - - 0.002 - - 0.002

Lignite / pmt - - 1.21 - - 1.04

Petcock / pmt ------

* Sulphuric acid includes Oleum

8} Technology absorption

Form: B

Technology absorption, adoption and innovation The Company has adopted the latest technology in its production process. Technology and equipments are partly imported. This has improved the product quality and plant efficiency. The technology for manufacturing of LAB, based on Solid Bed Alkylation process, also known as DETAL technology, is provided by UOP Inter Americana, USA. This technology has following benefits over the conventional technology: • Avoids usage of hazardous Hydro Fluoric (HF) acid • Improves product quality • Improves solubility and preferred for liquid detergents also • Higher biodegradability For Soda Ash project, the Company has imported Dry lime process technology from M/s. Akzo Nobel Engineering B V of The Netherlands. This technology has been selected to achieve the advantage of energy conservation, reduced steam comsuption as well as water requirement and less effluents. The technology for Vacuum salt based on Akzo's three stage evaporation system is also successfully absorbed and the Company is producing world class free flowing salt for Indian market.

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" Nirma Limited

Research & Development (R & D) The company has established a well equipped R & D Laboratory and quality control laboratory with number of sophisticated instruments for testing and analysis. In Soda Ash plant, in order to have process checks, required "ON-LINE" instruments / analysis has been installed and established process Laboratory and R & D Laboratory have been set up. Both the Laboratories are fully equipped with all required instruments. Solid, Liquid and Gaseous effluent monitoring and equipments are established in Laboratory and effluent prior to discharge is monitored on regular basis. A detailed technical study of mixing of clear liquor of effluents of Soda Ash with Solar Salt of Brine was carried out. For validation, the Company has engaged M/s. Sriram Institute, which has helped in achieving zero liquid effluents discharge status. At LAB plant, the Company has well-established R & D facilities with sophisticated instruments. The R & D activities have enabled the Company to produce LAB of better quality, which is meeting with the global requirements of LAB as per the international customers' requirements. The same has been achieved with the same set up of plant equipment and machinery with minor modification. The Development and absorption of new methods of analysis to improve product profile for customers resulted in strengthening the Company's position in both local and global market.

C) Foreign exchange earnings and outgo The required information in respect of foreign exchange earnings and outgo has been given in the Note in Schedule 19 forming part of Accounts.