Castrol India Limited

Board of Directors

Non-Executive Directors Executive Directors

Chairman Chief Executive

S. M. Datta & Managing Director
N. K. Kshatriya

Directors Directors
R. Gopalakrishnan R. Elston-Green
P. Hughes A. S. Ramchander
A. K. Jhawar
D. S. Parekh
L. Freese – Alternate to P. Hughes

Company Secretary & Head – Legal

A. H. Mody

Bankers
Deutsche Bank
HDFC Bank Ltd.
The Hongkong & Shanghai Banking Corporation Ltd.
State Bank of India

Solicitors & Advocates

Crawford Bayley & Co.
Dhru & Co.

Auditors
S. R. Batliboi & Co.

Registered Office
Technopolis Knowledge Park
Mahakali Caves Road, Andheri (East)
Mumbai 400 093

Share Department
Tata Share Registry Limited
Unit: Castrol India Limited
Army & Navy Building
148, M. G. Road, Mumbai 400 001.

1
 Financials
Castrol India Limited

FINANCIAL HIGHLIGHTS
Year 2004 2003 2002 2001 2000 1999

Rupees in Crores
Sales 1523.21 1360.51 1338.95 1357.36 1237.81 1195.55

Less Excise Duty 218.09 189.36 187.15 194.91 179.31 166.40

Net Sales 1305.12 1171.15 1151.80 1162.45 1058.50 1029.15
Other Income 22.09 19.14 13.40 13.50 15.74 18.87
Cost of Materials 777.02 669.72 600.59 693.72 640.28 527.49
Operating and Other Expenses 319.88 299.33 313.45 308.11 251.43 251.75
Interest 2.87 2.57 7.45 7.46 7.21 2.62
Gross Profit (Before Depreciation and
Exceptional Items) 227.44 218.67 243.71 166.66 175.32 266.16
Depreciation 24.88 14.31 13.40 13.24 11.44 10.08
Profit Before Taxation and Exceptional Items 202.56 204.36 230.31 153.42 163.88 256.08

Exceptional Items:
VRS Expenses – Plant closure 3.72 — — — — —
Impairment of Fixed Assets – Plant closure 3.55 — — — — —
Profit Before Taxation 195.29 204.36 230.31 153.42 163.88 256.08

Current Taxation 68.73 63.35 79.90 43.45 29.50 51.70

Deferred Taxation (0.90) 3.63 (2.51) 1.57 — —
Profit After Taxation 127.46 137.38 152.92 108.40 134.38 204.38

Dividend 102.01 102.01 204.01 ‡ 92.73 92.63 247.01 ‡

Gross Fixed Assets 254.45 250.83 255.61 243.95 223.49 211.82
Net Fixed Assets 149.77 171.01 182.64 180.63 172.66 170.98
Investments 128.91 84.79 220.29 119.90 0.37 82.98
Net Current Assets/(Liabilities) 102.52 114.79 (57.41) 135.89 237.95 125.25
Net Assets 381.20 370.59 345.52 436.42 410.98 379.21

Share Capital 123.64 123.64 123.64 123.64 123.50 123.50

Reserves & Surplus 236.43 224.44 202.14 273.03 270.38 249.52
Net Worth 360.07 348.08 325.78 396.67 393.88 373.02
Loan Funds 3.72 4.20 5.06 22.56 17.10 6.19
Deferred Tax Liability 17.41 18.31 14.68 17.19 — —

Rupees
Earning per Share * 10.31 11.11 12.37 8.77 10.88 16.55

Dividend per Share 8.25 8.25 16.50 ‡ 7.50 7.50 20.00 ‡

Book Value per Share * 29.12 28.15 26.35 32.08 31.89 30.20

Debt Equity Ratio 0.03:1 0.03:1 0.04:1 0.18:1 0.14:1 0.05:1

* Arrived at after considering number of Shares as at the end of the period including Bonus Shares, if any, issued in the relevant period.
‡ Includes Rs. 10.00 special in 1999 and Rs. 8.25 special in 2002.

14
Directors’ Report
Castrol India Limited

REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31ST DECEMBER, 2004

The Directors have pleasure in presenting their Report and Statement of Accounts for the year ended
31st December, 2004.
For the year ended For the year ended
31st December, 2004 31st December, 2003
(Rupees in Crores) (Rupees in Crores)
FINANCIAL RESULTS
Gross Profit before Depreciation, Exceptional Items & Tax 227.44 218.67

Deducting therefrom:
Depreciation 24.88 14.31
Exceptional Items:
(i) Voluntary Retirement Scheme expenses – Plant closure 3.72 —
(ii) Impairment of Fixed Assets – Plant closure 3.55 —
Provision for Tax 68.73 63.35
Deferred Tax (0.90) 3.63

Profit after Tax 127.46 137.38

Adding thereto:
Balance as per last Balance Sheet brought forward 18.71 13.41

Profit available for Appropriation 146.17 150.79

The Appropriations are:

Dividend:
Interim 49.46 49.46
Final 52.55 52.55

Tax on Dividend:
Interim 6.46 6.34
Final 6.87 6.73
Education Cess on Tax on Final Dividend 2003 0.13 —
Transfer to General Reserve 14.00 17.00
Balance carried forward 16.70 18.71

146.17 150.79

15
 Directors’ Report
Castrol India Limited
PERFORMANCE
Total Sales and Other Income increased by 12% to
Rs. 1545 crores as a result of a 5.8% increase in
volumes and a similar increase in unit sales realizations
over last year. The cost of our main raw material —
Base Oil — continued to rise in 2004 averaging a 20%
increase over previous year. However, favourable forex
on imported raw material and continued focus on supply
chain efficiencies enabled us to restrict the annual
increase of the unit cost of material to 9.6%.
The annual increase in underlying operating expenses
(excluding brand investment) was 4.1%. Most of this
increase was due to increased freight costs as a result
of volume growth, hikes in diesel prices and costs
associated with our road safety programme. We
continued to grow the investment in our brands,
increasing annual spend on Advertisement and Sales
Promotion by 17.3%. This has helped us gain market
share in our focus segments.
During 2004, we considered it prudent to review the
useful lives of all our Fixed Assets and as a result have
increased the rates of depreciation for many categories
of assets (Refer Note 3 of Schedule M — Notes on
Accounts). Accordingly, the depreciation charge for the
year increased by Rs. 10.7 crores of which an estimated
Rs. 6 crores is non-recurring. During December 2004,
your Company announced the closure of its plant at
Ballabgarh and incurred an exceptional cost of
Rs. 7.3 crores (Refer Note 4 of Schedule M – Notes
on Accounts). Together, these two items total
Rs. 18 crores and have resulted in a drop in Profit
before Tax by 4% to Rs. 195 crores. Excluding these
two exceptional items, our Profit before Tax increased
by 4% to Rs. 213 crores.
Our tax rate for the year increased versus last year
by 2% due to the introduction of education cess, a
reduction in the Silvassa tax benefit and certain
expenses considered as non-deductible.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement, a
Management Discussion and Analysis Report and a
16
Report on Corporate Governance are given as
Annexures ‘A’ and ‘B’ respectively to this Report.
A certificate from the Statutory Auditors of the Company
regarding the Compliance by the Company of the
conditions stipulated under Clause 49 of the Listing
Agreement is attached to this Report.
DIRECTORS’ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies
Act, 1956 your Directors confirm that:
(i) In the preparation of the annual accounts, the
applicable accounting standards have been
followed and no material departures have been
made from the same.
(ii) The Directors had 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 on
31st December, 2004 and of the profits of the
Company for the year ended 31st December, 2004.
(iii) 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.
(iv) The Directors have prepared the annual accounts
on a going concern basis.
DIVIDEND
The Interim Dividend in respect of the year ended
31st December, 2004 of Rs. 4.00 per share on
12,36,40,298 Equity Shares was paid to the
Shareholders of the Company whose names appeared
on the Register of Members on 3rd August, 2004.
The Directors recommend a payment of final dividend of
Rs. 4.25 per share on 12,36,40,298 Equity Shares.
FIXED DEPOSITS
There were no fixed deposits outstanding and
unclaimed as on 31st December, 2004.
Directors’ Report
Castrol India Limited
DIRECTORS
Mr. U. DeSousa & Mr. R. Pisharody resigned as
Directors of the Company with effect from close of
business hours on 5th May, 2004.
Mr. A. K. Jhawar was nominated to the Board pursuant
to Article 112 of the Articles of Association of the
Company with effect from 21st June, 2004 in place of
Mr. C. D’Mello.
Mr. R. A. Savoor resigned as a Director of the Company
with effect from 17th January, 2005, a bit ahead of his
retirement by rotation at the Annual General Meeting
(AGM). In due course, a review of the Board vacancies
and structure would be undertaken.
Your Directors wish to place on record their gratitude for
the guidance & advice received from Mr. U. DeSousa,
Mr. R. Pisharody, Mr. C. D’Mello & Mr. R. A. Savoor
during their respective tenures as Directors of the
Company.
At the Board Meeting held on 21st October, 2004
Mr. A. S. Ramchander was appointed with effect from
1st January, 2005 as an Additional Director of the
Company. Consequent to the said appointment he was
also appointed as a Wholetime Director of the Company
designated as Director – Automotive. In accordance
with Section 260 of the Companies Act, 1956 (the Act)
he holds office upto the date of the forthcoming Annual
General Meeting of the Company. Notice has been
received under Section 257 of the Act along with the
requisite deposit from a shareholder proposing
Mr. Ramchander as candidate for the office of Director.
The information on the particulars of Directors seeking
appointment/re-appointment as required under
Clause 49 of the Listing Agreement executed with the
Stock Exchange, Mumbai, has been given under
Corporate Governance (Annexure ‘B’) of this Report.
Mr. R. Gopalakrishnan retires by rotation and is eligible
for re-appointment.
SUBSIDIARY COMPANY
The Directors of Indrol Chemicals & Specialities Private
Limited (Indrol) had Resolved to put the Company in
Voluntary Winding up. Accordingly all the investments
held by Indrol have been liquidated & sold & the
proceeds distributed to your Company.
A final meeting of the members of the Company was
called by the Liquidator & the paid up capital refunded
to your Company. An application has been made to the
Official Liquidator to formally wind up the Company.
In view of the above, the Audited Statement of Accounts
of the Company as required under
Section 212 of the Companies Act, 1956 have not been
annexed.
CONSERVATION OF ENERGY
(a) Energy conservation measures taken:
Energy conservation during the financial year has
accrued as a result of the following steps taken at
the various factories of the Company:
Tondiarpet
1. Installed lower Hp pumps 5 nos. (25 Hp to
15 Hp) for the higher capacity delivery upto
1000 lpm, lower noise levels also.
2. Installation of power saving tube lights for
corridors (5 nos).
3. Consolidated all airconditioning cabling into
one panel for easy shut down everyday
(not to leave any airconditioning running
inadvertently).
4. Continued focus on condensate recovery for
boiler efficiency (extending 2003 initiative).
5. Better production scheduling in terms of more
blends per day to better utilize the boiler and
avoiding under utilization situations.
6. Maintaining awareness of all employees on
conserving power and reduced extended
working in office as well as shop floor.
Paharpur
1. Setting up of an additional capacitor bank for
pf improvement.
17
 Directors’ Report
Castrol India Limited

2. Soft starter for high capacity motors. (c) Impact of measures at (a) and (b) above for
3. Putting up of 200 Energy Efficient tube lights. reduction of energy consumption and
consequent impact on the cost of production of
Patalganga goods:
1. Won the National Energy Conservation The measures mentioned in (a) above have led to
Awards 2004, Certificate of Merit, in savings in fuel & electricity of approximately
Petrochemical Sector from Bureau of Energy Rs. 10 lacs per annum.
Efficiency.
2. Installed and commissioned two nos. of TECHNOLOGY ABSORPTION
Compact Pressure Powered Condensate 1. During the year, in line with BP’s policies, greater
Pumps. emphasis was placed on implementing best
3. Installed and commissioned Solar Hot Water practices on Health Safety Security and
Systems of 1500 LPD and 2 X 300 LPD Environmental (HSSE) management. Pre and post
Capacity for Canteen. HSSE audits were conducted at Wadala by the
4. Fifty Nos. conventional tube lights replaced by HSSE experts in the U.K. to provide assurance that
Energy Efficient tube lights. none of the HSSE elements and related operating
practices at Wadala were having “red” traffic light.
5. Ten Nos. of old inefficient pumps replaced by
Apart from this, your Company’s ISO : 14001
Efficient Pumps.
Environment Management Systems certification
6. Modification of Induction Sealing Machines to was also re-validated.
reduce power consumption.
2. Your Company’s registration as a Research &
7. 35 KVAR Capacitor installed on output line of
Development Center with Department of Scientific
the transformer reduce losses.
& Industrial Research, Ministry of Science &
8. Modification of condensate return lines to the Technology, Government of India, has been
boiler house. renewed for the next three years, until March 2007.
Silvassa 3. Your Company continued its focus on
Quality Assurance in product design and
1. Timers introduced in Emergency lighting
operationalization.
system to prevent them from switching on
during day time. 4. A special Product Integrity audit team highlighted
and closed gaps between product claims and
2. Reprogrammed palletizer and transfer
performance.
conveyors from continuous mode to operate
on demand. 5. Cost re-engineering of various high volume product
3. Timer operated drain valve installed on the brands like CRB Plus and BP VMG resulted in cost
Dryer outlet instead of continuous blowing of of goods saving of the order of Rs. 5 crores per
air. annum. Work was completed during the year for
development of fuel efficient automotive gear oil
(b) Additional investments and proposals, if formulation and its benefit mapping, in combination
any, being implemented for reduction of with fuel efficient engine oil. The combination
consumption of energy: product offer is likely to hit the market during the
None in particular. 1st Quarter of 2005.

18
Directors’ Report
Castrol India Limited
6. The Technology Center at Wadala has developed a
novel technique of using radioactive engine
cylinders to measure the engine wear, on line. This
technique offers great possibilities for creating and
demonstrating the differential benefits of our
product technology, vis-à-vis competition. The
equipment is installed and operated in a German
laboratory.
7. A master plan for infrastructure development to
modernize the Technology Center has been
developed and approved. Some preliminary work
on the project was initiated during the year and the
entire master plan for reconstruction of
administrative block and laboratories will be
completed in the year 2005.
FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Activities relating to Export
There were no significant exports by the Company
during the year.
2. Earnings and Outgo
Members are requested to refer to note Nos. 17 to
19 of Schedule M forming part of the Balance Sheet
and Profit and Loss Account for the year ended
31st December, 2004.
PARTICULARS OF EMPLOYEES
The information required to be published under the
provisions of Section 217(2A) of the Companies Act,
1956 read with Companies (Particulars of Employees)
Rules, 1975 as amended is enclosed in this Report.
AUDITORS
The Shareholders of the Company are requested
to appoint Auditors and to fix their remuneration.
M/s. S. R. Batliboi & Co., Chartered Accountants, the
retiring Auditors have furnished to the Company the
required certificate under Section 224(1B) of the
Companies Act, 1956 and are therefore eligible for
re-appointment as Auditors of the Company.
PERSONNEL
The Board wishes to place on record its sincere
appreciation of the efforts put in by the Company’s
workers, staff and executives for achieving excellent
results under difficult conditions.
DISTRIBUTORS, BANKERS AND OTHER BUSINESS
ASSOCIATES
The Board also wishes to thank its Distributors,
Bankers and other business associates for their support
during the year.
On behalf of the Board of Directors
N. K. Kshatriya R. Elston-Green A. S. Ramchander
Managing Director Finance Director Director - Automotive
Mumbai
Dated: 8th March, 2005
19
 Directors’ Report
Castrol India Limited
ANNEXURE A
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Pursuant to Clause 49 of the Listing Agreement, a
Management Discussion & Analysis Report covering
segment-wise performance and outlook is given below:
(a) Industry structure and developments
The lubricant industry is broadly divided into three major
sectors; Automotive, Industrial and Marine. The
automotive sector is the largest and the share of
industrial sector grows as the market develops.
I. Automotive
The automotive lubricant sector can be segmented as
per vehicle categories: (i) Trucks, Tractors and Off Road
equipment – mainly diesel engine oils (ii) Passenger
cars – mainly gasoline engine oils (iii) Motorcycles and
three-wheelers – 2-stroke and 4-stroke engine oils.
The Diesel Engine Oil segment dominates the
automotive lubricant market with a volume contribution
of over 70%. The two-wheeler, passenger car and
multi-utility vehicle segments have been growing in
volume and value and account for around 24% of the
market.
The year 2004 started well with good off-take in the
agriculture as well as the transport markets. This was
primarily driven by a good monsoon in 2003 and
resultant improvement in the overall demand for goods
and services. Your Company, which has strong brand
equity in both these segments, especially in the agri
segment, was able to capitalize on this upswing and
further strengthen its market leadership position.
Vehicle growth across all segments has been very good
during 2004 but the lubricant demand has not grown
proportionately. New engine and lubricant technology
has resulted in lower requirement and longer usage life
of the lubricants. For example, the new generation
4-stroke motorcycles consume about 15% lesser
20
lubricants as compared to 2-stroke motorcycles. In
addition, in the Diesel Engine Oil segment, due to
increasing fuel costs and the relative inelasticity of
freight rates, owners of older trucks are delaying the oil
drain intervals in order to reduce costs and hence be
more competitive with the newer vehicle operators.
On the positive side, your Company, with its superior
technology based product portfolio, is in a strong
position to cater to the high quality / superior
performance products demanded by discerning
consumers owning new generation vehicles.
The passenger car market received a tremendous
boost during the year under review, with almost one
million vehicle sales recorded. This has resulted in the
vehicle dealer segment (OEM Franchise Workshops)
growing much faster than the rest of the market. Castrol
with its strong partnership arrangements with most
leading vehicle manufacturers, benefited from this
trend. The workshop segment continues to be a focus
area for your Company which now has a dedicated
sales team to service this segment.
India is the second largest two-wheeler market in the
world and is experiencing a further boom with around
6 million two-wheelers getting added in 2004. The
motorcycle has become the preferred choice of the
consumer as compared to scooters. Environmental
regulations, consumer desire for fuel economy and
lifestyle enhancement have led to the explosive growth
of the 4-stroke motorcycles. The consumer behavior
around 4-stroke bike oils is very different from that of
2-stroke bikes and Castrol has started communication
and promotional programmes which suit the profile and
behavior of the bikers.
Competition from the Public Sector companies is
growing with the PSUs increasing their focus and
investment in brand building and marketing activities.
However, with a well planned strategy and innovative
marketing, your Company has maintained its leadership
position in the retail automotive segment.
Directors’ Report
Castrol India Limited
II. Non-Automotive
The Industrial sector performed well during the year
under review on the back of rapid growth in
manufacturing related projects, especially in the area of
transport equipment manufacturers as well as auto
component manufacturers. The market grew by ~4% in
2004.
(b) Opportunities & Threats
I. Automotive
Opportunities
The huge growth in the personal vehicles segment i.e.
two-wheelers and passenger cars, coupled with
renewed growth in the trucks / tractor segment, provide
an excellent growth opportunity for the lubricant oil
business.
In addition, during the year under review, your
Company gained access to a new channel of
distribution i.e. petrol pumps owned by private players
like Essar and Reliance. This opens up a new business
opportunity, especially for our 2-stroke scooter oil
business. On the other hand, the growth in the
4-stroke motorcycle segment is seeing a shift in
lubricant consumption from petrol stations to retail
outlets where your Company has a significant
distribution advantage.
The lube oil business in the passenger car segment is
driven to a large extent by the workshop channel, where
superior service propositions, along with strong brands
have led to your Company making significant business
gains.
Long term partnerships with leading Original Equipment
Manufacturers (OEMs) have been the backbone of your
Company’s success and during the year under review
we forged new alliances with leading companies like
Mahindra & Mahindra and International Tractors and
further strengthened our relationships with our existing
partners like Escorts, Tata Motors and Tata Cummins.
This segment offers a further opportunity to your
Company to increase its market share.
Road infrastructure development continues to be a key
focus area for the Government. The North-South and
East-West corridor and the Golden Quadrilateral
projects are on course for completion by around 2007
and this is likely to provide a great fillip to the road
transport industry. This in turn would lead to higher
demand for lubricants from the commercial vehicle
segment in which your Company has a leadership
position.
In the short term, the off-road sector is likely to grow
faster than historic levels due to the increased
construction activity in the country. This augurs well for
your Company’s Institutional business.
Threats
Base oil prices have been on the rise since mid 2003
and the trend continued in 2004 with prices reaching
record highs. Base oil prices correlate closely with
crude oil prices and with the uncertainty in the global
crude price situation, the increasing trend in
base oils may continue, putting greater pressure on
margins.
Additive and packaging costs have also risen sharply in
2004 and are expected to harden in 2005. This adds to
input costs and with prices in the market being
competitively driven, presents a threat to our
profitability.
The move towards new generation vehicle technology
is resulting in longer drain intervals, affecting the
volume potential of the largest category — the
commercial vehicle segment. This segment has also
been impacted by the increasing cost of fuel with small
fleet operators being the worst affected.
II. Non-Automotive
Opportunities
With a good monsoon during the year under review, the
Industrial sector is showing signs of revival and this
being a driver of lubricant demand augurs well for the
Industrial business.
21
 Directors’ Report
Castrol India Limited
There is an increasing acceptance within the industries
towards value added products and services. Your
Company with its vast international solutions and
services experience can add value to the emerging
customer base. This in turn will add to the profitability of
your Company.
Threats
Price undercutting by small regional competitors and
the tendency of Public Sector players to absorb the high
raw material costs to gain competitive advantage, can
put pressure on our margins and market share.
(c) Segment-wise/Product-wise performance
I. Automotive
Your Company’s automotive business performance
saw a significant growth during 2004. At around 5%
volume growth, your Company grew at twice the
estimated market growth rate. Further, your Company
was able to raise the unit realization by over 6%
resulting in a net turnover growth of over 11%.
The communication of your Company’s flagship brand –
CRB Plus, was refreshed with the ‘Sukhiram–
Dukhiram’ campaign which communicated the
importance of using the right brand of oil for a truck. The
new tag line “CRB nahi daloge to mehenga padega”
explained the price premium of CRB Plus on the basis
of superior value proposition.
With the revival in the agricultural segment, your
Company actively reached out to farmers through
tractor clinics and special promotional offers. Our
partnership agreements with leading tractor
manufacturers like Mahindra & Mahindra and Escorts
enabled us to further leverage our strength in this
market.
The Castrol new gen truck engine oil range consisting of
CRB Turbo, RX Super Max and RX Super Plus showed
a strong growth in 2004. This was mainly due to good
market growth, our alliance with Tata Motors – the
22
leading truck manufacturer in the country and intensive
marketing activity.
Your Company also launched a new range of ancillary
products viz. Brake fluids, gear oils and greases under
the umbrella of Castrol Protector Series. This has given
increased focus to these ancillary products both from
the trade and our workshop customers.
The BP lubricant brand continued to focus on marketing
and field activity in 2004. The consumer testimonial
campaign communicated through mass media was
supported by on-ground activity and an intensive
consumer contact programme targeted at increasing
trials and off-take. This focus resulted in increased
brand awareness, trials and volumes. The BP brand
ended the year with a growth of 24%.
Two-wheeler lubricant sales continued to grow at a rate
faster than the market, driven by sales of our 4-stroke
motorcycle engine oils – Activ 4T and Power 1. Rahul
Dravid, India’s cricket Vice-Captain continues to be
the brand ambassador for your Company and the
two-wheeler brands successfully leveraged this
association through a series of communication
messages and on-ground promotional activities.
Innovative marketing activity including ‘Cricket Clinics’
conducted by Rahul Dravid, have paid rich dividends in
building long enduring relationships with our
consumers.
The focus in the passenger car segment continued to
be on Partnership Programmes with large OEMs like
Maruti and Tata Motors.
The Institutional business segment grew volumes
significantly due to the setting up of a focused sales
team, new customer offers and a growing market.
Here again, our strong partnerships with key OEMs
like L&T, JCB and Hitachi, enabled us to grow our
business.
During 2004, a foray was made into the ‘revenue
beyond lubes’ segment with the launch of a motorcycle
service offering named ‘Castrol BikeZone’. The Castrol
Directors’ Report
Castrol India Limited
franchised two-wheeler workshops are currently being
piloted in Chennai and Bangalore and will be taken to
other centers in India shortly.
II. Non-Automotive
2004 was a good year for Industrial Lubricants and
Services Division with sales showing a growth of 11%
versus 2003. Your Company’s market share in the
Industrial segment increased by 1.5% during this
period. Our new Customer Relationship Management
tool – ‘Platinum’ – has enabled us to improve our
customer facing touch time and allows us to measure
customer profitability with key accounts. This tool has
been very effectively used for making strategic
intervention in improving our value added customer
offers. This live database has also helped us in
engagement and communication within and outside the
organization.
Athena, a knowledge portal, to provide orientation
programme for new recruits, segment training modules
and tracking learning process, was also launched.
50% of our channel partners were accredited for
ISO-9001-2000 which tremendously helped to improve
the operational efficiency.
Innovative training modules titled ‘Castrol Professional
Way’, were also launched for all our channel partners.
This equipped them to understand customer
requirements and make suitable customer offers.
Your Company’s effort on the initiative to reduce the
working capital invested in the business through the
project ‘Cash is here’, has paid off. There has been a
marked reduction in the Receivables as also the stock
levels during the year under review.
(d) Outlook
I. Automotive
The growth trend in the personal mobility segment
is expected to continue. Passenger car manufacturers
continue to launch newer, international standard
vehicles on a regular basis and this offers your
Company an opportunity to leverage its market
leadership position in the passenger car engine oil
segment. Your Company’s focus continues to be on the
Franchised Workshop segment where it has strong
partnerships with leading OEMs.
Mass media coupled with innovative on-ground
activities continue to spearhead your Company’s efforts
in the two-wheeler segment. A new campaign called
‘‘Bikes ki nayi bhasha’’ has been launched nationally
and has been well accepted by consumers, mechanics
and trade.
The road transport sector and freight market continue to
look up on the back of a good economic performance.
The favorable monsoon in 2004 is also expected to
positively impact the performance in the tractor
segment. Your Company has recently relaunched the
Castrol CRB Plus brand sharply focusing the
communication on the agri and tractor segment. A new
campaign aimed at farmers has been created with the
tagline “Mehenti itna, aap jitna”. This has touched a
chord with the consumers and we expect to strengthen
the brand’s bond with the farmers.
Your Company will also continue to focus on creating
and strengthening sustainable partnerships with OEMs
and channel owners. This will help increase penetration
in the workshop segment and also create a barrier to
entry for the unorganized sector in lubricants.
After a long period of time, your Company’s products
are once again being sold through the fuel forecourts of
private players like Reliance and Essar. This has
opened up a new business opportunity for your
Company.
Competitive pressures will continue with more focus
being laid by the PSUs on their fuel and lubricant
marketing and brand building activities.
II. Non-Automotive
The Indian economy has performed creditably in the
recent past and this has been reflected by the growth in
the Industrial sector as well as the performance of the
23
 Directors’ Report
Castrol India Limited
Industrial business of your Company. However, the
aggressive pricing strategy adopted by competition,
continues to impact margins. To counter this, your
Company continues to offer innovative, value added
customer offers to targeted segments.
In addition, Castrol is sharply focusing all its efforts on
profitable customer segments and undertaking process
fitness and pricing projects which are designed to
improve the bottom line even under difficult trading
conditions.
With Indian manufacturing sector positioning itself as a
possible and credible outsourcing destination, we
believe that the Industrial growth and by inference, the
Industrial lubricant business, will grow faster in the next
three years.
(e) Risks and Concerns
I. Automotive
Increasing base oil price continues to put pressure on
margins and is a major cause of concern for your
Company. Whilst we have been able to convince our
consumers and customers about the inevitability of
increasing prices in the past, it may be difficult to
continue doing so. With many competitors pursuing a
volume share growth objective, our volume growth plan
may be at some risk.
II. Non-Automotive
The Industrial lubricant market continues to be
dominated by the Public Sector companies with
integrated base oil supplies which allows them the
flexibility of aggressive pricing. Continued price
undercutting by the unorganized sector poses a further
risk to delivery.
(f) Internal control systems and their adequacy
Your Company maintains an adequate and effective
internal control system commensurate with its size and
complexity. We believe that these internal control
systems provide, among other things, a reasonable
24
assurance that transactions are executed with
management authorization and that they are recorded
in all material respects to permit preparation of financial
statements in conformity with established accounting
principles and that the assets of your Company are
adequately safe-guarded against significant misuse or
loss. An independent internal audit function is an
important element of your Company’s internal control
system. The internal control systems are supplemented
through an extensive internal audit programme and
periodic review by Management and Audit Committee.
(g) Discussion on Financial Performance with
respect to Operational Performance
Your Company has achieved both volume (up 6%) and
unit sales realization (up 6%) growth in 2004 which in
turn has resulted in a healthy 12% growth in gross
sales. This growth is well above our estimate of the
market growth. On the other hand, raw material costs
also increased significantly for the second consecutive
year, which negated much of this top line growth. We
continue to increase the investment in our brands, but
have sought to minimize increases in other overheads.
Before exceptional items, the Profit Before Tax (PBT)
increased by 4%, however after exceptional items,
headline PBT declined by 4%. This was due to a
change in estimation of useful life of assets and costs
relating to our Ballabgarh plant closure. With reference
to working capital, the value of inventories has risen
solely due to the increase in raw material costs.
Outstanding debtors has been maintained at 2003
levels despite the increase in product prices. This has
been achieved through well implemented cash
collection efficiencies.
(h) Health, Safety, Security & Environment
Your Company lays great emphasis on Health, Safety,
Security and Environment (HSSE) which is one of its
Brand Values.
Road transport continues to be our greatest challenge
and your Company has taken a number of initiatives to
Directors’ Report
Castrol India Limited

propagate road safety not just amongst its own staff but
amongst contractors and society at large. During the
year under review, there was a reduction in fatalities
and injuries compared to previous year. There was one
third party fatality in a contractor road accident where
we had material influence.
During 2004, we launched the Driving Safety Standards
which are being implemented from 1st January, 2005.
This should improve our road safety in 2005 and
beyond. Your Company also implemented an
aggressive programme to upgrade staff as well as
transport operators’ vehicles to a higher safety
standard. Driving Safety programmes were also
introduced to our contractors and over 3000 heavy duty
truck drivers were given training in defensive driving.
The increased focus on safety in our Plants resulted in
improved safety records at all our Plants. Whilst your
Company’s Tondiarpet and Patalganga Plants
successfully completed seven years without any Days
Away from Work Cases (DAFWCs), the Paharpur Plant
completed five years without a DAFWC.
In recognition of your Company’s efforts towards
environment protection and energy conservation, the
Company’s Patalganga Plant was awarded the
National Energy Conservation Award 2004 – Certificate
of Merit, in the Petrochemicals sector.
encourages and further develops functional excellence
within your Company. In keeping with the functional
excellence theme, there was a lot of focus on
understanding functional capability and developing
functional competency frameworks.
During the year under review, development of
leadership capability in the organization continued to be
the key focus. A number of training initiatives directed
towards people development like Leadership
programmes for First level and Senior level leaders and
Assessment centers for development of Leadership
Potential were undertaken during the year. Our talent
continues to be recognized within the BP group and this
year too, we saw several of our Senior Managers being
seconded to assignments in other parts of the BP Group
worldwide.
Following a review of our manufacturing operations,
it was decided to close down our Ballabgarh Plant near
New Delhi. A voluntary retirement scheme
was announced in the Plant in November 2004.
11 executives and 32 workmen opted for voluntary
retirement.
Our relations with our employees continued to remain
cordial during the year. The total number of people
employed in the Company as on 31st December 2004
was 891.

(i) Material Developments in Human Resources/

Industrial Relations On behalf of the Board of Directors
2004 saw significant reorganization of our workforce to N. K. Kshatriya R. Elston-Green A. S. Ramchander

align the organization to the new lubricants global Managing Director Finance Director Director - Automotive

strategy of Market Spaces. The reorganization has Mumbai

helped create a more focused organization and one that Dated: 8th March, 2005

25
 Directors’ Report
Castrol India Limited

ANNEXURE B Mr. A. S. Ramchander was with effect from

1st January, 2005 appointed as a Wholetime Director of
CORPORATE GOVERNANCE the Company designated as Director - Automotive.
Mr. R. A. Savoor resigned with effect from
A. MANDATORY REQUIREMENTS
17th January, 2005 as a Director of the Company.
1. Company’s Philosophy on Code of Governance
The Company’s purpose is business and to maximise (b) Attendance of each Director at the Board
long-term shareholder value by selling its goods and Meetings and the last Annual General Meeting
services. Therefore, our Corporate Governance 4 Board Meetings were held during the financial year
processes are directed at ensuring that Company from 1st January, 2004 to 31st December, 2004.
actions, assets and agents are directed to achieving
The attendance of each of the Directors at the said
this purpose while complying with the Code of
Board Meetings is given below:
Governance and the Company’s own policies and
expectations. The Company’s policies reflect those Name of Director Cate- No. of % of total
gory of Meet- Meetings
adopted by the Parent Company in the UK - BP plc. and
Director- ings attended
covers aspects such as ethical conduct, health, safety
ship atten- during the
and the environment; control and finance; commitment ded tenure as
to employees; and relationships. Key aspects of the a Director
Company’s Governance Processes are:
Mr. S. M. Datta NED 4 100
• Clear statements of Board Processes and Board Mr. N. K. Kshatriya MD 4 100
Executive linkage. Mr. U. DeSousa ED 2 100
(upto 5th May, 2004)
• Disclosure, accountability, transparency, adequate
systems and procedures to monitor the state of Mr. R. Elston-Green ED 4 100
affairs of the Company to enable the Board to Mr. R. Pisharody ED 2 100
effectively discharge its responsibilities to the (upto 5th May, 2004)
stakeholders of the Company. Mr. C. D’Mello ND 1 50
(upto 21st June, 2004)
• Identification and management of key risks to
delivery of performance of the Company. Mr. R. Gopalakrishnan NED 4 100

Mr. A. K. Jhawar ND 2 100

2. Board of Directors (w.e.f. 21st June, 2004)
(a) Composition Mr. P. Hughes or his Alternate
As of the year ended 31st December, 2004, the Board Mr. L. Freese ND 3 75
of Directors had 8 members comprising of 2 Executive Mr. D. S. Parekh NED 3 75
Directors and 6 Non-Executive Directors. The Non-
Mr. R. A. Savoor NED 4 100
Executive Directors included 4 members who were
Independent Directors and 2 members who had been NED — Non-Executive Director

nominated by Castrol Ltd., U.K. as provided in the MD — Managing Director

Articles of Association of the Company. The Chairman ED — Executive Director
of the Board is a Non-Executive Independent Director. ND — Nominee Director of Castrol Ltd., U.K.

26
Directors’ Report
Castrol India Limited

All Directors except Mr. C. D’Mello & Mr. R. Pisharody, 3. Audit Committee
who were Directors of the Company on 5th May, 2004, (a) Terms of Reference
attended the Annual General Meeting held on the said
i. To investigate any activity within its terms of
date.
reference.
(c) Number of other Companies or Committees the ii. To seek information from any employee.
Director is a Director/Member/Chairman of: iii. To obtain outside legal or other professional advice.
Name of the Director(s) Number of other Number of iv. To secure attendance of outsiders with relevant
Companies Committees expertise, if it considers necessary.
(excluding (other than
Private Castrol India) It may be clarified that the role of the Audit Committee
Companies) in which includes matters specified under Clause 49 of the
in which Director Member Listing Agreement entered into between the Company
(excluding Alternate/
Nominee
and The Stock Exchange, Mumbai, on which the
Director) Company’s shares are listed.
Mr. S. M. Datta 12 (1) 9 (2)
Mr. N. K. Kshatriya — — (b) Composition, name of members and
Mr. R. Elston-Green — — Chairperson
Mr. A. K. Jhawar 2 1 As on 31st December, 2004, the Audit Committee
Mr. R. Gopalakrishnan 12 (3) 10 (4) comprised of 3 Non-Executive Directors viz.
Mr. P. Hughes — — Mr. D. S. Parekh, Mr. R. Gopalakrishnan and
Mr. D. S. Parekh 13 (5) 9 (6) Mr. P. Hughes with the Head-Internal Audit being a
Mr. R. A. Savoor 5 (7) 5 (8) Permanent Invitee to the Committee and the Company
Mr. L. Freese 1 — Secretary being the Secretary of the Committee.
1. Includes 3 Companies in which Chairman Mr. D. S. Parekh the Chairman of the Committee and
2. Includes 4 Committees in which Chairman Mr. R. Gopalakrishnan, Member are Independent
3. Includes 1 Company in which Chairman Directors on the Committee whereas Mr. P. Hughes is a
4. Includes 5 Committees in which Chairman Nominee Director of Castrol Ltd., U.K.
5. Includes 7 Companies in which Chairman
6. Includes 5 Committees in which Chairman
(c) Meetings and attendance during the year
7. Includes 1 Company in which Chairman
8. Includes 1 Committee in which Chairman 4 meetings were held during the financial year
1st January, 2004 to 31st December, 2004. The
(d) Number of Board Meetings held and the dates
attendance of each Member of the Committee is given
of the Board Meeting
below:
4 Board Meetings were held during the financial year
No. of % of total Meetings
1st January, 2004 to 31st December, 2004. The dates
Meetings attended during the
on which the said meetings were held are given below: attended tenure as a Director
30th January, 2004 Mr. D. S. Parekh 4 100
30th April, 2004 Mr. R. Gopalakrishnan 4 100
23rd July, 2004 Mr. P. Hughes or his Alternate 3 75
Mr. L. Freese
21st October, 2004

27
 Directors’ Report
Castrol India Limited

4. Remuneration Committee (e) Details of Remuneration paid to all Directors

(a) Terms of Reference (for the period 1st January, 2004 to
31st December, 2004)
The Remuneration Committee recommends
remuneration, promotions, increments etc. for the All Fixed Service Stock
Executive Directors to the Board for approval. elements compo- Cont- option with
of remu- nent & racts details,
(b) Composition, names of members and neration perfor- notice if any and
package mance period, whether
Chairperson
i.e. linked sever- issued at
As on 31st December, 2004, the Committee Salary incen- ance a discount
benefits, tives fees as well as
comprised of 3 Non-Executive Directors viz.
bonuses, along the period
Mr. R. Gopalakrishnan, Mr. P. Hughes and pension, with the over which
Mr. A. K. Jhawar. Mr. R. Gopalakrishnan is an etc. perform- accrued
ance and over
Independent Director whilst Mr. P. Hughes and
criteria which
Mr. A. K. Jhawar are Nominee Directors of Castrol Ltd., (Rs. in (Rs. in exercis-
U.K. Mr. R. Gopalakrishnan is the Chairman of the Lacs) Lacs) able
Committee.
i. Wholetime Director(s)
On 21st June, 2004 Mr. A. K. Jhawar was appointed as
a member of the Remuneration Committee in place of Mr. N. K. Kshatriya 119.47 38.45
Mr. C. D’Mello.

Please see Note ‘a’

Please see Note ‘b’

Mr. U. DeSousa 20.88 6.36
(c) Attendance during the year (Upto May, 2004)
Two Meetings were held during the year the attendance
of each Member of the Committee is given below:- Mr. R. Elston-Green 124.19 14.00

Name(s) of the No. of % of total Meetings Mr. R. Pisharody 22.93 5.81

Committee Meetings attended during the (Upto May, 2004)
Members attended tenure as a Director

Mr. R. Gopalakrishnan 2 100

Notes
Mr. C. D’Mello 1 100
(upto 21st June, 2004) (a) The agreement with each Wholetime Director is for a
Mr. P. Hughes. — — period of 5 years or the normal retirement date whichever
Mr. A. K. Jhawar 1 100 is earlier. Further, either party to the agreement is entitled
(w.e.f. 21st June, 2004) to terminate the Agreement by giving not less than six
calendar months notice in writing to the other party.

(d) Remuneration Policy

(b) Presently, the Company does not have a scheme for
The Directors are paid a Salary and Performance grant of stock options to its employees. However the
Linked Bonus, which is calculated, based on Management staff are entitled to the Shares of BP plc.
pre-determined parameters of Performance. under the BP Sharematch scheme as in force.

28
Directors’ Report
Castrol India Limited

ii. Non-Wholetime Director(s) (d) Number of complaints : All the Complaints have been
not solved to the resolved to the satisfaction of
Sitting Fees Commission satisfaction of the Complainants except for
(Rs.) (Rs.)
shareholders disputed cases and sub-judice
matters which would be solved
Mr. S. M. Datta 75,000 7,50,000
after the matter is duly
disposed by the Court.
Mr. R. Gopalakrishnan 85,000 6,00,000
(e) Number of pending : 7 transfers were pending at
Mr. D. S. Parekh 60,000 6,00,000 share transfers the close of the financial year.
at the close of
Mr. R. A. Savoor 70,000 6,00,000 the financial year

With effect from 1st April, 2004 the Company had 6A. General Body Meetings
increased the sitting fees payable to the Non-Executive (a) Location and time where last three AGMs
Independent Directors from Rs. 5000/- to Rs. 10,000/- were held
for each Board/Committee Meeting attended by them.
Location Date Time
(i) Yashwantrao Chavan : 5.5.2004 11.00 a.m.
5. Transfer & Shareholders’/Investors’ Grievance Pratishthan Auditorium
Committee Y.B. Chawan Centre
Gen. Jagannath Bhosle
As on 31st December, 2004, the Transfer and
Marg, Next to Sachivalaya
Shareholders’/Investors’ Grievance Committee Gymkhana, Mumbai 400 021
comprised of Mr. S. M. Datta, Chairman, (ii) Birla Matushri Sabhagar : 19.6.2003 3.00 p.m.
Mr. N. K. Kshatriya, Mr. R. Elston-Green and 19, Marine Lines
Mr. R. A. Savoor. The Company Secretary is the Mumbai 400 020
Secretary of the Committee. (iii) Birla Matushri Sabhagar : 5.8.2002 3.00 p.m.
19, Marine Lines,
(a) Name of the : Mr. S. M. Datta Mumbai 400 020
Non-Executive Director (b) Whether any Special : No
heading the Committee Resolutions were put
through Postal Ballot
(b) Name and Designation : Mr. A. H. Mody last year
of Compliance Officer Company Secretary & Details of voting pattern : Not Applicable
Head – Legal (c) Persons who conducted : Not Applicable
the Postal Ballot exercise
(c) No. of Shareholders : 7 complaints were (d) Are polls proposed to be : No resolutions
complaints received received from Stock conducted through Postal requiring postal ballot
during the financial Exchange/Investor Ballot this year for matters as required
year Associations/Securities and under Clause 4 of the
Exchange Board of India Companies (Passing of
(SEBI)/Department of Resolutions by Postal
Company Affairs and were Ballot) Rules, 2001
reported to the Transfer and have been placed for
Shareholders’/Investors’ Shareholders’
Grievance Committee in terms approval at the
of Circular No. 1 (96-97) Meeting.
dated 25.7.96 of SEBI. (e) Procedure for Postal Ballot : Not Applicable

29
 Directors’ Report
Castrol India Limited

6B. Notes on Directors seeking re-appointment as Idea Cellular Limited – Director

required under Clause 49 of the Listing Agreement
entered into with Stock Exchange, Mumbai. ICI India Limited – Director

(i) Mr. R. Gopalakrishnan Sheba Properties Limited – Director

Mr. Gopalakrishnan is a graduate in Physics from
Calcutta University and in Engineering from IIT,
Kharagpur. In 1967, he joined Hindustan Lever as
Management Trainee. After 20 years, he joined
Hindustan Lever’s Management Committee as
Executive Director-Exports. In 1991, he was
appointed Chairman, Unilever Arabia, based in
Jeddah to establish and manage Unilever’s
consumer products business in the GCC countries.
Upon return to India in 1995, he became Managing
Director of Brooke Bond Lipton, Unilever’s Indian
foods and beverages company. After the merger of
the Company, he was appointed Vice-Chairman of
the merged Hindustan Lever Ltd. After 31 years in
Levers he joined Tata Sons in August 1998. As on
31st December, 2004 he was a Director of the
following companies:
Rallis India Limited – Chairman
Tata Chemicals Limited – Vice Chairman
Tata Sons Limited – Director
Tata Motors Limited – Director
(ii) Mr. A. S. Ramchander
Mr. Ramchander is a Post Graduate in
Management from the Indian Institute of
Management (IIM) specializing in marketing &
finance. He has also done his graduation in
Chemical Technology (B. Tech) from Osmania
University Hyderabad.
He has over 19 years of experience in consumer &
customer marketing, business strategy & sales.
He joined Castrol India in 1994 & during the period
of 6 years that he was with Castrol India, he was
involved in the phenomenal growth of the unit from
a market share of 10% to 25% in the automotive
Lubricant business. He was Head – Brand
marketing in Castrol India when he was seconded
in the year 2000 to a senior marketing role in
Castrol Asia Pacific.
After Burmah Castrol worldwide was acquired by
BP, Mr. Ramchander moved to BP Asia Pacific
Regional Headquaters at Singapore. Since 2002
he has been the Regional Marketing Director of BP
Asia Pacific Lubes before he was appointed as a
Wholetime Director in Castrol India.

Tata Power Company Limited – Director

Prior to joining Castrol India, he had 9 years of
sales & marketing experience in the paints,
Tata Teleservices Limited – Director
construction material and organic chemical
Tata Teleservices industries. During his assignment in Singapore, he
(Maharashtra) Limited – Director was a lecturer on marketing & channel
management in the Nanyang Technological
Tata AutoComp Systems University in Singapore.
Limited – Director
Mr. Ramchander is not a Director in any other
Tata Technologies Limited – Director Company.

30
Directors’ Report
Castrol India Limited

}
7. Disclosure 9. General Shareholder Information
(a) Disclosures on materially significant (a) AGM : Tuesday,
None Date, Time and Venue 19th April, 2005,
related party transactions that may
at 2.00 p.m., at
have potential conflict with the Birla Matushri Sabhagar,
interests of Company at large. 19 Marine Lines,
Mumbai 400 020.

}
(b) Details of non-compliance by the
(b) Financial Year : (i) January 2005 to
company, penalties, strictures None in December 2005.
imposed on the company by Stock the last
(ii) First Quarter 2005.
Exchange or SEBI or any statutory three Results – 3rd/4th week
authority, on any matter related to years of April 2005.
capital markets, during the last (iii) Half yearly Results
three years. 2005 – 3rd/4th week
of July 2005.
8. Means of Communication (iv) Third Quarter 2005
(a) Half-yearly report sent : No, as the results of the Results – 3rd/4th week
to each household of Company are published in of October 2005.
shareholders the Newspapers all over (v) Results for the year
India ending 31st December,
2005 – January/
(b) Quarterly results : (i) Times of India – February, 2006.
Newspapers in which Mumbai, Delhi, Pune,
(c) Date of Book closure : 29th March, 2005 to
results are normally Ahmedabad, Lucknow,
19th April, 2005
published in Patna, Bangalore,
(both days inclusive).
Hyderabad & Kolkata
editions in English (d) Dividend Payment date(s) : Interim – 16th August, 2004
Final – on or after
(ii) Maharashtra Times – 19th April, 2005.
Mumbai edition in (e) Listing on Stock : The Company has paid the
Marathi Exchange, Mumbai listing fees for the period
1st April, 2004 to
(iii) Navbharat Times –
31st March, 2005.
New Delhi edition in
Hindi (f) (i) Stock Code – : 870
Physical
Any website, where : Yes – www.castrol.co.in
(ii) Demat ISIN Number : INE 172A01019
displayed for NSDL & CDSL
Whether it also displays : Yes (g) Market price Data: : Please See Annexure I of
official news releases High/Low during each this Report.
month in last financial
The presentations made : No
year
to institutional investors or
to the analysts (h) Stock Performance in : Please See Annexure II of
comparison to this Report.
(c) Whether MD&A is a part : Yes. Part of the Directors’ Broad-based indices
of the Annual Report Report as Annexure ‘A’ such as BSE Sensex,
or not CRISIL

31
 Directors’ Report
Castrol India Limited

(i) Registrar and Transfer : Tata Share Registry (m) Outstanding GDRs/ : The Company has not
Agents Limited, ADRs/Warrants or any issued any GDRs/ADRs/
Army and Navy Building, Convertible instruments, Warrants or any
148, M.G. Road, conversion date and likely Convertible instruments.
Mumbai 400 001. impact on equity

(j) Share Transfer System : The Company Secretary

(n) Plant Locations : The Company’s plants are
has been authorized to
located at Patalganga,
approve the transfer of
Paharpur, Silvassa,
shares which is done within
Ballabgarh, Tondiarpet &
the time-limit stipulated by
Hosakote.
the Listing Agreement. The
said transfers are then
noted at the subsequent (o) Address for : i. Shareholders
Transfer and correspondence correspondence
Shareholders’/Investors’ should be addressed to:
Grievance Committee Tata Share Registry
Meeting. Limited.
Unit: Castrol India
Limited
(k) Distribution of No. of No. of % of Army and Navy
Shareholding as on Shares Share- Share- Building, 148,
10-02-2005 holders holders M.G. Road,
Mumbai 400 001.
Tel. No. 5656 8484
Upto 500 7234246 58521 85.26 Fax No. 5656 8494/
5656 8496
501 – 1000 3588383 4872 7.10

1001 – 2000 4654325 3200 4.66

ii. Shareholders holding
2001 – 3000 2534420 1021 1.49 shares in electronic
mode should address
3001 – 4000 1732177 516 0.75 all their
correspondence to
4001 – 5000 693545 152 0.22 their respective
Depository
5001 – 10000 1559225 234 0.34
Participants.
1001 and above 101643977 126 0.18

Grand Total 123640298 68642 100.00 B. NON-MANDATORY REQUIREMENTS

1.
(l) Dematerialisation of : 40.99% of the paid-up
Shares and liquidity capital has been
dematerialised as on
10th February, 2005 which
includes 16.86% of the
paid-up capital held by
Castrol Ltd., U.K.
Whether Chairman of the : No, but the Company
Board is entitled to reimburses expenses in
maintain a Chairman’s relation to the performance
office at the Company’s of his duties as Chairman.
expense and also allowed
reimbursement of expenses
incurred in performance of
his duties

32
Directors’ Report
Castrol India Limited

2. Remuneration Committee : Please refer to Sr. No. 4 of Normally, there is no

this Report.
3. Shareholder rights – : As the Company’s half
The half-yearly yearly results are published
declaration of financial in English newspapers
performance including having a circulation all over
summary of the India and in a Marathi
significant events in last newspaper (having a
six months should be sent circulation in Mumbai) and
to each household of in a Hindi newspaper
Shareholders (having a circulation in
New Delhi) the same are
not sent to the
shareholders of the
Company.
second half-yearly results
as the audited results are
taken on record by the
Board and then
communicated to the
shareholders through the
Annual Report.
On behalf of the Board of Directors
N. K. Kshatriya R. Elston-Green A. S. Ramchander
Managing Director Finance Director Director - Automotive
Mumbai
Dated: 8th March, 2005

33
 Directors’ Report
Castrol India Limited

Annexure I Castrol India Limited

Market Price Data - High/Low during each month in the Year 2004

Month Rate (Rs.)

Highest Lowest
January 239.25 205.30
February 221.65 207.55
March 221.75 188.65
April 199.50 181.00
May 184.00 160.05
June 172.45 159.90
July 175.05 160.25
August 172.10 155.80
September 173.45 164.30
October 166.50 162.15
November 193.90 162.75
December 236.70 180.25

Annexure II

On behalf of the Board of Directors

N. K. Kshatriya R. Elston-Green A. S. Ramchander

Managing Director Finance Director Director - Automotive
Mumbai
Dated: 8th March, 2005

34
Directors’ Report
Castrol India Limited

AUDITORS’ CERTIFICATE

To The Members of Castrol India Limited We state that no investor grievance is pending for a
We have examined the compliance of conditions of period exceeding one month against the Company as
Corporate Governance by Castrol India Limited, for per the records maintained by the Share Registrars and
the year ended December 31, 2004 as stipulated in reviewed by the Shareholders’/Investors’ Grievance
Clause 49 of the Listing Agreement of the said Committee.
Company with the Stock Exchange. We further state that such compliance is neither an
assurance as to the future viability of the Company
The compliance of conditions of Corporate Governance
nor the efficiency or effectiveness with which the
is the responsibility of the management. Our
management has conducted the affairs of the
examination was limited to procedures and
Company.
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 For S.R. BATLIBOI & CO.
Company. Chartered Accountants
per Hemal Shah
In our opinion and to the best of our information and
Partner
according to the explanations given to us, we certify
Membership No. : 42650
that the Company has complied with the conditions of
Corporate Governance as stipulated in the above- Mumbai,
mentioned Listing Agreement. Dated: 8th March, 2005.

35
 Directors’ Report
Castrol India Limited

Shareholding Pattern as on 10th February, 2005

Sr. No. Category No. of shareholders No. of shares held % to paid-up capital

(i) Foreign Collaborator 1 87687455 70.92

(ii) Foreign Company 1 135474 0.11

(iii) Foreign Institutional Investors 24 1058110 0.86

(iv) Overseas Bodies Corporate 5 1169 0.00

(v) Non-Resident Individuals 288 154200 0.13

(vi) Financial Institutions 12 8516051 6.89

(vii) Indian Mutual Funds 17 1386910 1.12

(viii) (a) Nationalised Banks 37 107804 0.09

(b) Other Banks 78 36323 0.03

(ix) Domestic Companies 1396 2206561 1.78

(x) Resident Individuals 66779 22344232 18.07

(xi) Directors and Relatives 2 6009 0.00

Grand Total 68640 123640298 100.00

36
Auditors’ Report
Castrol India Limited

Auditors’ Report

To the Members of Castrol India Limited

1. We have audited the attached Balance Sheet of Castrol India Limited as at 31st December, 2004 and also
the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
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 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 (as amended) issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in
the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
i. We have obtained all the information and explanations, which to the best of our knowledge and belief
were necessary for the purposes of our audit;
ii. In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of those books;
iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in
agreement with the books of account;
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this
report comply with the accounting standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956;
v. Based on written representation received from the directors as on 31st December, 2004, which have
been taken on record by the Board of Directors, we report that none of the directors is disqualified as on
31st December, 2004 from being appointed as a director in terms of Clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to the explanations given to us, the
said accounts give the information required by the Companies Act, 1956, in the manner so required, and
give a true and fair view in conformity with the accounting principles generally accepted in India;
a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st December, 2004;
b. in the case of the Profit and Loss Account, of the profit of the Company for the year ended
on that date; and
c. in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For S. R. BATLIBOI & COMPANY

Chartered Accountants
per Hemal Shah
Partner
Membership No. : 42650
Mumbai
January 17, 2005

37
Auditors’ Report
Castrol India Limited

Annexure referred to in paragraph 3 of our report of even date

Re: Castrol India Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details
and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a
regular programme of verification which, in our opinion, is reasonable having regard to the size of the
Company and the nature of its assets. As informed to us, no material discrepancies were noticed on
such verification.
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during
the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were
noticed on physical verification.
(iii) (a) As informed to us, the Company has not granted any loans, secured or unsecured to companies, firms
or other parties covered in the register maintained under section 301 of the Companies Act, 1956.
(b) As informed to us, the Company has not taken any loans, secured or unsecured from companies, firms
or other parties covered in the register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal
control system 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 and services. During the course of our audit, no
major weakness has been noticed in the internal control system in respect of these areas.
(v) (a) According to the information and explanations provided by the management, we are of the opinion
that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made in
pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered
into during the financial year at prices which are reasonable having regard to the prevailing market
prices at the relevant time except in respect of certain transactions, where because of the unique and
specialized nature of the items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of
its business.
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules
made by the Central Government for the maintenance of cost records under section 209(1)(d) of the
Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records
have been made and maintained.
(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including
provident fund, investor education and protection fund, employees’ state insurance, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect
of provident fund, investor education and protection fund, employees’ state insurance, income tax,
wealth tax, service tax, sales tax, customs duty, excise duty, cess and other undisputed
statutory dues were outstanding, at the year end, for a period of more than six months from the date
they became payable.

38
Auditors’ Report
Castrol India Limited

(c) According to the records of the Company, the dues outstanding of income tax, sales tax, wealth tax,
service tax, custom duty, excise duty and cess on account of any dispute, are as follows:
Name of the statute Nature of dispute Amount Period to which Forum where dispute is pending
(Rs. in Crores) the amount relates
Central Sales Tax Non submission of declaration 18.67 1987 to 2003 Assistant Commissioner, Deputy
Act & Local Sales forms, Disallowance of Set off Commissioner, Tribunal and
Tax Act claim, Classification dispute, High Court.
Rate dispute, Disallowance of
credit notes and rebates and
Other dues.
Central Excise Act, Valuation, Modvat Credit, Stock 41.31 1990 to 2004 Deputy Commissioner, Additional
1944 Differences, Classification, Commissioner, Commissioner,
Provisional Assessments and Joint Commissioner,
Other Issues. Commissioner (Appeals),
CEGAT and Supreme Court.
Customs Act, 1962 Valuation 0.08 1998 Assistant Commissioner
Service Tax under Service Tax on Royalty and 7.50 1997 to 2004 Deputy Commissioner, Additional
the Finance Act, Service Tax on rented tanks. Commissioner and Commissioner.
1994

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash
losses in the current and immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and explanations given by the management,
we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution,
bank or debenture holders.
(xii) According to the information and explanations given to us and based on the documents and records
produced to us, the Company has not granted loans and advances on the basis of security by way of pledge
of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the
provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not
applicable to the Company.
(xiv) In respect of dealing/trading in securities, in our opinion and according to the information and explanations
given to us, proper records have been maintained of the transactions and contracts and timely entries have
been made therein. The securities have been held by the Company in its own name.
(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) The Company did not have any term loans outstanding during the year.
(xvii) According to the information and explanations given to us and on an overall examination of the Balance
Sheet and Cash Flow Statement of the Company, we report that no funds raised on short-term basis have
been used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies
covered in the register maintained under section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the year.
(xx) The Company has not raised any money through a public issue during the year.
(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the
financial statements and as per the information and explanations given by the management, we report that
no material fraud on or by the Company has been noticed or reported during the course of our audit.
For S. R. BATLIBOI & COMPANY
Chartered Accountants
per Hemal Shah
Partner
Membership No. : 42650
Mumbai
Dated: January 17, 2005

39
Balance Sheet
Castrol India Limited

Balance Sheet as at 31st December, 2004

2004 2003
Schedule Rupees Rupees Rupees
in Crores in Crores in Crores
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital A 123.64 123.64
Reserves and Surplus B 236.43 224.44
360.07 348.08
Loan Funds C
Unsecured Loans 3.72 4.20

Deferred Tax Liability (Net) D 17.41 18.31

TOTAL 381.20 370.59

APPLICATION OF FUNDS
Fixed Assets E
Gross Block 249.79 247.23
Less: Depreciation 100.89 79.58
Less: Impairment of Fixed Assets 3.79 0.24

Net Block 145.11 167.41

Capital Work-in-progress 4.66 3.60
149.77 171.01
Investments F 128.91 84.79

Current Assets, Loans & Advances G

Inventories 166.24 155.59
Sundry Debtors 131.26 131.25
Cash & Bank Balances 29.69 27.78
Other Current Assets 0.01 0.01
Loans & Advances 58.32 62.61
385.52 377.24
Less: Current Liabilities & Provisions H
Current Liabilities 197.02 192.20
Provisions 85.98 70.25
283.00 262.45
Net Current Assets 102.52 114.79
TOTAL 381.20 370.59

Notes on Accounts M
The schedules referred to herein form an integral part of the Balance Sheet.

As per our report of even date S. M. DATTA Chairman N. K. KSHATRIYA Managing Director
For S. R. BATLIBOI & COMPANY
Chartered Accountants Executive Directors

A. S. RAMCHANDER Director R. ELSTON-GREEN Director

per HEMAL SHAH A. H. MODY
Partner Company Secretary Non-Executive Directors
Membership No. : 42650 & Head Legal
A. JHAWAR Director R. GOPALAKRISHNAN Director
Mumbai P. HUGHES Director D. S. PAREKH Director
January 17, 2005 R. A. SAVOOR Director L. FREESE Alternate Director

40
Profit & Loss Account
Castrol India Limited

Profit and Loss Account for the year ended 31st December, 2004

2004 2003
Schedule Rupees Rupees Rupees
in Crores in Crores in Crores
INCOME
Sales [Net of rebates Rs. 41.94 Crores (2003 : Rs. 38.50 Crores)] 1523.21 1360.51
Less: Excise Duty 218.09 189.36
Net Sales 1305.12 1171.15
Other Income I 22.09 19.14
Total Income 1327.21 1190.29

EXPENDITURE
Cost of Materials J 777.02 669.72
Operating and Other Expenses K 319.88 299.33
Interest L 2.87 2.57
Depreciation (Refer Note 3 of Schedule M) 24.88 14.31
Total Expenditure 1124.65 985.93

PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEMS 202.56 204.36

Less: Exceptional Items (Refer Note 4 of Schedule M)
Voluntary Retirement Scheme Expenses – Plant closure 3.72 —
Impairment of Fixed Assets – Plant closure 3.55 —
PROFIT BEFORE TAXATION 195.29 204.36
Taxation
Current [Including Wealth Tax Rs. 0.16 Crore (2003 : Rs. 0.21 Crore)] 68.73 63.35
Deferred Taxation (0.90) 3.63
PROFIT AFTER TAXATION 127.46 137.38
Add: Balance as per last Balance Sheet brought forward 18.71 13.41
PROFIT AVAILABLE FOR APPROPRIATION 146.17 150.79

APPROPRIATION TO:
Interim Dividend 49.46 49.46
Tax on Interim Dividend 6.46 6.34
Proposed Final Dividend 52.55 52.55
Tax on Proposed Final Dividend 6.87 6.73
Education Cess on Tax on Final Dividend 2003 0.13 —
General Reserve 14.00 17.00
Balance carried forward 16.70 18.71
146.17 150.79

Earning per share (Basic & Diluted) (Face value of Rs. 10/-) 10.31 11.11
Notes on Accounts M
The schedules referred to herein form an integral part of the Profit and Loss Account.

As per our report of even date S. M. DATTA Chairman N. K. KSHATRIYA Managing Director
For S. R. BATLIBOI & COMPANY
Chartered Accountants Executive Directors

A. S. RAMCHANDER Director R. ELSTON-GREEN Director

per HEMAL SHAH A. H. MODY
Partner Company Secretary Non-Executive Directors
Membership No. : 42650 & Head Legal
A. JHAWAR Director R. GOPALAKRISHNAN Director
Mumbai P. HUGHES Director D. S. PAREKH Director
January 17, 2005 R. A. SAVOOR Director L. FREESE Alternate Director

41
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE A
2004 2003
Rupees Rupees
in Crores in Crores

SHARE CAPITAL
Authorised
124,000,000 (2003 : 124,000,000) Equity Shares of Rs. 10/- each 124.00 124.00

Issued and Subscribed (Refer Notes below)

123,640,298 (2003 : 123,640,298) fully paid up Equity Shares of Rs. 10/- each 123.64 123.64
123.64 123.64

Notes:
1. Includes 87,687,455 (2003 : 87,687,455) Equity Shares of Rs. 10/- each held by Castrol Ltd., U.K., the Holding Company.
(Also refer Note 7 of Schedule M).
2. Includes 116,353,318 (2003 : 116,353,318) Equity Shares allotted as fully paid up Bonus Shares by capitalisation of Share Premium/
General Reserve.

SCHEDULE B
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores

RESERVES & SURPLUS

Capital Reserve 13.62 13.62

General Reserve
As per last Balance Sheet 192.11 175.11
Add: Transferred from Profit and Loss Account 14.00 17.00
206.11 192.11
Balance in Profit and Loss Account 16.70 18.71
236.43 224.44

42
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE C
2004 2003
Rupees Rupees
in Crores in Crores
LOAN FUNDS

UNSECURED LOANS

Sales Tax Deferral Loan (Interest Free)

From SICOM Ltd. 0.23 0.52

(For Patalganga Plant — Repayable in next one instalment)
[Repayable within one year Rs. 0.23 Crore (2003 : Rs. 0.29 Crore)]

From Government of Karnataka, Department of Industries & Commerce 0.70 0.89

(For Hosakote Plant — Repayable in equal quarterly instalments)
[Repayable within one year Rs. 0.19 Crore (2003 : Rs. 0.19 Crore)]

From SICOM Ltd. 2.79 2.79

(For Patalganga Plant — Repayable from October 2011)
3.72 4.20

SCHEDULE D
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores

DEFERRED TAX LIABILITY (NET) [Refer Note 1(h) of Schedule M]

Deferred Tax Assets and Liabilities are attributable to the following items:
Liabilities
Depreciation 27.09 29.89

Less: Assets
Provision for Doubtful Debts 1.15 2.88
Voluntary Retirement Scheme Expenses 3.25 3.65
Accrual for expenses (Including Leave Encashment)
allowable only on payment 4.48 4.22

Others 0.80 0.83

9.68 11.58
17.41 18.31

43
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE E
FIXED ASSETS Rupees in Crores

GROSS BLOCK DEPRECIATION IMPAIRMENT NET BLOCK

As at Additions Deductions As at As at For the On As at LOSS ON As at As at
1.1.2004 for the for the 31.12.2004 1.1.2004 year Deductions 31.12.2004 CLOSURE 31.12.2004 31.12.2003
year year OF PLANTS

Freehold Land 6.79 — — 6.79 — — — — — 6.79 6.79

Leasehold
Land (1) 0.92 — — 0.92 0.28 0.02 — 0.30 — 0.62 0.64

Buildings (2) 66.92 0.48 0.08 67.32 12.00 2.64 0.02 14.62 — 52.70 54.92

Plant &
Machinery 145.56 7.47 3.09 149.94 58.73 16.48 2.07 73.14 3.79 73.01 86.59

Plant &
Machinery
Intangibles 2.45 — — 2.45 0.44 0.69 — 1.13 — 1.32 2.01

Furniture,
Fixtures
and Office
Equipments 23.37 0.91 2.50 21.78 7.50 4.72 1.01 11.21 — 10.57 15.87

Motor
Vehicles 1.22 — 0.63 0.59 0.63 0.33 0.47 0.49 — 0.10 0.59

247.23 8.86 6.30 249.79 79.58 24.88 3.57 100.89 3.79 145.11 167.41

Previous Year 251.39 13.55 17.71 247.23 72.97 14.31 7.70 79.58 0.24

Capital Work-in-progress (Including advances on Capital Account) 4.66 3.60

149.77 171.01

Refer Notes 1(b), 3 and 4 of Schedule M relating to Fixed Assets, Depreciation and Impairment.

Notes :
(1) Cost includes Rs. 0.49 Crore (2003 : Rs. 0.49 Crore) for which execution of Land Lease agreement in respect of plots in Mumbai is in progress.

(2) Comprises of cost of premises including shares of paid up value of Rs. 0.01 Crore (2003 : Rs. 0.02 Crore) in Co-operative Societies.

(3) Land & Building, Plant & Machinery and Furniture & Fixtures at Ballabgarh and Hosakote plants and Company owned Office Premises in Mumbai are retired
from active use and held for disposal. Accordingly these assets are carried at lower of cost and net realisable value. The Net Book Value of such assets as at
December 31, 2004 is Rs. 14.24 Crores (2003 : Rs. 7.88 Crores).

44
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE F
2004 2003
Rupees Rupees
in Crores in Crores

INVESTMENTS – [Refer Note 1(c) of Schedule M]

LONG TERM

Other than trade:

Quoted:
Government Securities * [Matured Face Value Rs. 0.01 Crore (2003 : Rs. 0.01 Crore)] 0.02 0.02

30,100 (2003 : 30,100) – 6.75% Tax Free Bonds (US 64) of Unit Trust of India of Rs. 100/- each 0.30 0.30
[Market Value Rs. 0.31 Crore (2003 : Rs. 0.34 Crore)]

CURRENT

Other than trade:

Unquoted:

Government Treasury bills [Face Value Rs. 130.00 Crores (2003 : Rs. 86.19 Crores)] 128.59 84.46

In Subsidiary Company
Nil (2003 : 1,000) Equity Shares of Rs. 10/- each fully paid in
Indrol Chemicals & Specialities Private Limited (Refer Note 16 of Schedule M) — 0.01
128.91 84.79

* Government Securities lodged with Mumbai Port Trust.

45
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE G
2004 2003
Rupees Rupees
in Crores in Crores

CURRENT ASSETS, LOANS AND ADVANCES

Inventories* [Refer Note 1(d) of Schedule M]

Raw Materials 81.78 66.72

Finished Products 70.71 73.72
Traded Items 6.26 7.53
Packages 6.08 6.49
Stores & Consumables 1.41 1.13
166.24 155.59

* Including Goods in Transit

Sundry Debtors @
Secured 3.98 5.00
Unsecured, considered good
Exceeding six months 2.17 2.73
Others 125.11 123.52
Unsecured, considered doubtful (Exceeding six months) 3.14 8.02
134.40 139.27
Less: Provision for Doubtful Debts 3.14 8.02
131.26 131.25

@ Includes amount due from Companies under same management Rs. 9.78 Crores
(2003 : Rs. 6.21 Crores), list of which as identified by management.

Cash and Bank Balances

Cash on Hand 0.05 0.04
With Scheduled banks:
On Current Account [including cheques on hand Rs. 4.35 Crores
(2003 : Rs. 1.47 Crores)] 24.57 22.44
On Deposit Account 0.01 0.01
Unclaimed Dividend Accounts 5.06 5.29
29.69 27.78

Other Current Assets

Interest accrued on Investments 0.01 0.01

0.01 0.01

46
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

SCHEDULE G — (Contd.)
2004 2003
Rupees Rupees
in Crores in Crores

Loans and Advances

(Unsecured, considered good, unless otherwise stated)
Advances recoverable in cash or in kind or for value to be received (Refer Note below)
Considered good 50.40 57.65
Considered doubtful 2.12 2.12
52.52 59.77
Less: Provision for doubtful advances 2.12 2.12
50.40 57.65
Balances with Customs, Port Trust and Excise Authorities 7.92 4.96
58.32 62.61
385.52 377.24

Note: Amounts due from Directors of the Company Rs. 0.19 Crore (2003 : Rs. 0.21 Crore) and maximum amount due from Directors of the
Company at any time during the year Rs. 0.22 Crore (2003 : Rs. 0.22 Crore).

SCHEDULE H
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities
Sundry Creditors (Refer Note 14 of Schedule M) 189.32 184.09
Advances from Customers 1.62 1.77
Interest accrued and not due on Loans/Deposits 0.10 —
Amount retained for taxation liability of Castrol Ltd., U.K. 0.92 1.05
Investor Education and Protection Fund shall be credited
by the following amount (Refer Note below)
Unclaimed Dividends 5.06 5.29
197.02 192.20
Provisions
Provision for Indirect Taxation 11.66 8.21
Provision for Current Taxation (Net of Advance Tax) 14.90 2.76
Proposed Final Dividend 52.55 52.55
Tax on Proposed Final Dividend 6.87 6.73
85.98 70.25
283.00 262.45

Note: There is no amount due and outstanding as at Balance Sheet date to be credited to Investor Education and Protection Fund.

47
Schedules
Castrol India Limited

Schedules forming part of the Profit and Loss Account for the year ended 31st December, 2004

SCHEDULE I
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores
OTHER INCOME

Interest (Gross)
From Current Investments (Non trade) 0.02 0.01
On Bank Deposits 0.06 0.42
On Income Tax Refund 2.87 0.72
Others [Tax deducted at source Rs. 0.01 Crore
(2003 : Rs. 0.09 Crore)] 0.75 0.71
3.70 1.86

Dividend from Long Term Investment (Non trade – Gross) — 0.39

[Tax deducted at source Rs. Nil (2003 : Rs. 0.03 Crore)]
Profit on sale of Investments – Current 3.90 6.93
Profit on Disposal/Write off of Fixed Assets (Net) 1.46 —
Miscellaneous Income [Tax deducted at source Rs. 0.48 Crore (2003 : Rs. 0.05 Crore)] 8.01 5.48
Debts written off in earlier years, realised 0.14 0.51
Excess Provision for Doubtful Debts written back 4.88 3.97
22.09 19.14

SCHEDULE J
2004 2003
Rupees Rupees
in Crores in Crores

COST OF MATERIALS

Opening Stock
Raw Materials and Packages 73.21 57.43
Traded Items 7.53 8.65
80.74 66.08
Add: Purchases 787.99 698.70
868.73 764.78
Less: Closing Stock
Raw Materials and Packages 87.86 73.21
Traded Items 6.26 7.53
94.12 80.74
774.61 684.04
(Increase)/Decrease in Stock of Finished Products:
Opening Stock 73.72 57.24
Closing Stock 70.71 73.72
3.01 (16.48)
Excise Duty on account of Increase/(Decrease) in Stock of Finished Products (0.60) 2.16
777.02 669.72

Note: Purchases include foreign exchange difference on imports — Gain Rs. 0.57 Crore (2003 : Gain Rs. 0.55 Crore)

48
Schedules
Castrol India Limited

Schedules forming part of the Profit and Loss Account for the year ended 31st December, 2004

SCHEDULE K
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores
OPERATING AND OTHER EXPENSES
Salaries, Wages and Bonus [Refer Note 1(e) of Schedule M] 46.12 47.01
Performance Linked Incentive to Wholetime Directors 0.43 0.58
Contribution to Provident and Pension Funds
[Refer Note 1(e) of Schedule M] 5.88 6.33
Gratuity [Refer Note 1(e) of Schedule M] 5.29 3.08
Staff Welfare Expenses 7.43 8.02
65.15 65.02
Rent 12.08 10.46
Rates & Taxes 1.67 1.68
Power & Fuel 3.46 3.44
Stores & Consumables 1.14 1.32
Freight & Forwarding Charges 47.56 40.54
Insurance 2.37 2.40
Repairs & Maintenance – Land & Building 1.97 2.48
Repairs & Maintenance – Plant & Machinery 2.33 2.65
Repairs & Maintenance – Others 4.16 3.92
Bad Debts Written Off 5.20 6.24
Processing & Filling Charges 21.72 20.64
Non-recovered Taxes 12.06 8.47
Advertisement & Sales Promotion 60.00 54.33
Stock Point Operating Charges 10.36 9.63
Loss on Disposal/Write Off of Fixed Assets (Net) — 3.16
Directors’ Sitting Fees 0.03 0.02
Voluntary Retirement Scheme Expenses [Refer Note 1(i) of Schedule M] 0.51 0.72
Commission to Resident Non-Wholetime Indian Directors 0.26 0.26
Royalty 21.70 22.71
Sales Promotion Fee 13.34 8.19
Travelling Expenses 12.60 10.41
Miscellaneous Expenses (Refer Note 13 of Schedule M) (Net) 20.21 20.64
319.88 299.33

SCHEDULE L

2004 2003
Rupees Rupees
in Crores in Crores
INTEREST
To Banks 2.26 2.27
On Others 0.61 0.30
2.87 2.57

49
Schedules
Castrol India Limited

Schedules forming part of the Balance Sheet as at 31st December, 2004

and the Profit and Loss Account for the year ended on that date.

SCHEDULE M
NOTES ON ACCOUNTS
1. Accounting Policies :
(a) Basis of Preparation of Accounts :
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the
Indian Accounting Standards and the relevant provisions of the Companies Act, 1956. The Financial Statements have
been prepared under the historical cost convention on an accrual basis.

(b) Fixed Assets and Depreciation :

Fixed Assets are stated at cost (net of cenvat wherever applicable) less accumulated depreciation and impairment loss.
Depreciation has been provided on straight line basis.
All Fixed Assets are depreciated over their estimated useful lives which have been determined by management. (Also
refer Note 3 of Schedule M – Notes on Accounts).

(c) Valuation of Investments :

Long term Investments are stated at cost less provision, if any, for diminution, which is other than temporary in nature.
Current Investments are valued at lower of cost and net realisable value.
(d) Valuation of Inventories :
Raw Materials, Packages, Traded Items and Finished Goods are valued at lower of monthly weighted average cost and
net realisable value. Cost of Finished Goods includes material & packaging cost, overheads and Excise Duty. Custom
Duty on stock lying in Bonded Warehouses is included in cost. Stores and Consumables are valued at cost.
(e) Employees’ Retirement Benefits :
Annual Contribution to Gratuity Fund is based on an actuarial valuation as on the Balance Sheet date. Monthly
contribution to Pension Fund is determined in accordance with Company’s Pension Scheme. Apart from this, under the
Company’s Pension Scheme, certain categories of employees on retirement, are eligible for monthly differential
Pension which is accounted monthly on payment basis. As per Company’s Scheme, accrued liability towards
encashment of leave accumulated by workers is provided for on an actuarial basis.
(f) Recognition of Income and Expenditure :
Sales are recognised when goods are supplied and are recorded net of rebates and sales tax and inclusive of excise
duty. Expenses are accounted for on accrual basis and provision is made for all known losses and expenses.
(g) Foreign Currency Transactions :
Foreign Currency Transactions are accounted at exchange rates on the date of transactions. Premium on forward cover
contracts in respect of import of raw materials is charged to Profit and Loss Account over the period of contract.
Amounts payable and receivable in foreign currency as at the Balance Sheet date, not covered by forward contracts are
reinstated at the applicable exchange rates prevailing on that date. All exchange differences arising on revenue
transactions, not covered by forward contracts, are charged to Profit and Loss Account.

(h) Taxation :
(i) Provision for Current Income Tax is made in accordance with the Income Tax Act, 1961.
(ii) Deferred Tax is recognised, subject to the considerations of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one period and are capable of reversal in one or
more subsequent periods.
(iii) The tax year for the Company being the year ending 31st March, the provision for taxation for the year is the
aggregate of the provision made for the three months ended 31st March, 2004 and the provision based on the
figures for the remaining nine months upto 31st December, 2004, the ultimate tax liability of which will be
determined on the basis of the figures for the period 1st April, 2004 to 31st March, 2005.

(i) Voluntary Retirement Scheme Expenses are fully written off to the Profit and Loss Account in the year in which they
accrue.

2. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for
Rs. 2.53 Crores (2003 : Rs. 2.37 Crores).

50
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
3. In view of recent trends in declining useful lives of assets e.g. due to the rate of change in digital technology, the Company has
considered it prudent to conduct a broad review of the remaining estimated useful lives of all its Fixed Assets. As a result the
Company has reduced the estimated useful life and correspondingly increased the rate of depreciation for certain categories of
assets, which are given below : (These Assets were depreciated till 2003 at rates prescribed under Schedule XIV to the
Companies Act, 1956)

Fixed Assets Revised Estimated Estimated useful Additional depreciation

useful life in years life in years – due to change in
Pre-revision estimated useful life
(Schedule – XIV) Rs. in Crores
Office & Residential Buildings 25 61 1.08
Computers 4 6 4.18
Workshop Equipments* 4 21 2.04
Furniture & Fixtures 8 16 1.95
Motor Cars 4 11 0.14
Office Equipments 10 21 1.32
Total 10.71
* Workshop Equipments provided against Sales Agreements will now be depreciated over the standard period of Agreement.
The written down value of these Fixed Assets as at 1.1.2004 is being depreciated over their revised remaining useful life. The
total impact of the revision is an increase of Rs. 10.71 Crores in depreciation for the year with a corresponding reduction in Profit
before tax for the year & written down value of Fixed Assets as at 31.12.2004. This amount includes an estimated non-recurring
amount of Rs. 6 Crores.
The remaining categories of Plant & Machinery, Laboratory Equipments, Factory Buildings, Moulds, Dealer Boards, Leasehold
Land & Leasehold Improvements will continue to be depreciated at the existing rates as they represent the estimated useful life
of these assets. (Also refer Note 1(b) of Schedule M – Notes on Accounts).
4. The Company has decided to close down its Plant located at Ballabgarh in the State of Haryana with effect from 1.1.2005, as
operations over there have become relatively cost inefficient. The Company had introduced a Voluntary Retirement Scheme
(VRS) for its employees at Ballabgarh Plant. VRS charge for the year includes an amount of Rs. 3.72 Crores for Ballabgarh
Plant. During the year the Fixed Assets at Ballabgarh Plant have been retired from active use and are held for disposal. The
Company has provided for an Impairment loss of Rs. 3.55 Crores (the difference between the carrying amounts and the net
realisable value estimated by the management) in respect of these Fixed Assets.
31st December, 31st December,
2004 2003
Rupees Rupees
in Crores in Crores
5. Contingent liabilities not provided for in the accounts :
(a) Counter Guarantees given to Banks 5.73 4.60
(b) Excise/Sales Tax/Customs Demands made by the Authorities,
in respect of which appeals have been filed 11.50 9.27
(c) Claims against the Company not acknowledged as debts
estimated at :
In respect of Third Parties – Miscellaneous 5.76 2.58
(d) A suit has been filed against the Company in the Delhi High Court in connection with the erstwhile Regional Office of
the Company. The suit is for eviction of the Company from the said premises and for claiming mesne profit/damages on
the grounds that with the increase in rent by the landlord the Delhi Rent Control Act ceased to apply to the said
premises. The Company has taken necessary steps to defend itself. However, till the matter is finally decided the
financial liability of the Company cannot be ascertained.
(e) The Company has received show cause notices from Excise Authorities in respect of stock differences at some of its
plants aggregating to Rs. 15.46 Crores. Based on the facts of the case and legal opinions obtained in this regard, the
Company is of the considered view that the demands are not sustainable. However, out of abundant caution, the
Company has made provisions/payments totalling to Rs. 3.82 Crores.
6. Certain disputed demand notices relating to Indirect taxes amounting to Rs. 38.20 Crores are neither have been considered as
contingent liabilities nor acknowledged as claims, based on expert legal opinions obtained in earlier years. Further, during the
year, the Company has carried out a health check on these disputed liabilities from reputed Tax Advisors, who have confirmed
the Company’s stand that the possibility of the demands materializing is remote.
7. A Shareholder of the Company had filed a Public Interest Petition in the Delhi High Court interalia challenging the allotment of
3,537,862 equity shares on a Preferential basis to Castrol Ltd., U.K. The said Petition has been dismissed by the Delhi High
Court. However, the Shareholder can go in appeal against the said Order to the Supreme Court of India.

51
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
8. Segment Information :
The business segment has been considered as the primary segment. The Company is organised into two business segments,
Automotive & Non Automotive.
The above business segments have been identified considering :
— The customers
— The differing risks and returns
— The organisation structure
— The internal financial reporting system
Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating
activities of the segment and amounts allocated on a reasonable basis.
Rupees in Crores

31st December, 2004 31st December, 2003

Automotive Non- Un- Total Automotive Non- Un- Total
Automotive allocated Automotive allocated

Revenue
Net Sales/Income from
Operations 1111.69 193.43 — 1305.12 1001.48 169.67 — 1171.15
Results
Segment Results 194.58 20.45 — 215.03 197.00 18.74 — 215.74
Unallocable Expenditure
net of Unallocable Income — — 9.60 9.60 — — 8.81 8.81
Exceptional Items
(Refer Note 4 of Schedule M) — — 7.27 7.27 — — — —
Interest — — 2.87 2.87 — — 2.57 2.57
Profit Before Taxation — — — 195.29 — — — 204.36
Provision For Current Taxation — — — 68.73 — — — 63.35
Deferred Taxation — — — (0.90) — — — 3.63
Profit After Taxation — — — 127.46 — — — 137.38
Other Information
Segment Assets 400.35 106.01 158.28 664.64 412.08 108.72 112.24 633.04
Segment Liabilities 183.07 20.05 101.45 304.57 179.17 15.29 90.50 284.96
Capital Expenditure
(Including Capital
Work-in-progress) 8.37 1.55 — 9.92 12.25 0.68 — 12.93
Depreciation
(Refer Note 3 of Schedule M) 20.59 4.29 — 24.88 10.23 4.08 — 14.31
Impairment of Fixed Assets 3.00 0.55 — 3.55 0.20 0.04 — 0.24

Geographical Segment
Revenue
India 1304.48 1170.99
Outside India 0.64 0.16
1305.12 1171.15

Assets
India 659.15 628.57
Outside India 5.49 4.47
664.64 633.04

Capital Expenditure
(including Capital
Work-in-Progress)
India 9.92 12.93
Outside India — —
9.92 12.93

9. Related Party Disclosures :

A. Name of the related party and nature of relationship where control exists
(a) Holding Castrol Ltd., U.K. (Holding Company of Castrol India Ltd.)
Companies Burmah Castrol Holdings Ltd. (Holding Company of Castrol Ltd., U.K.)
BP PLC (Holding Company of Burmah Castrol Holdings Ltd.)

52
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
(b) Subsidiary Indrol Chemicals & Specialities Private Limited
(c) Fellow Air BP Lubricants BP Mauritius Ltd. Castrol Industrial North America Inc.
Subsidiaries Aspac Oil (Thailand) Ltd. BP Middle East Castrol Industrie GMBH
with which the Aspac Oil Korea BP Oil International Ltd. Castrol International Ltd.
Company has BP Asia Pacific Pte Ltd. BP Oil New Zealand Castrol Italiana SPA
transactions BP Chemicals (Malaysia) BP Oil UK Ltd. Castrol Offshore
BP Chemicals Ltd. BP Petrolleri A.S Castrol PGO UK
BP China BP Shipping Ltd. Castrol SAME
BP Corporation NA Inc. BP Singapore - Lubes Castrol South Africa
BP Exploration (IN DJAZAIR) Ltd. BP Singapore PTE Ltd. Castrol (UK) Ltd.
BP Exploration (IN Salah) Ltd. BP Singapore Spec Ind Lubes Deutsche BP Aktiengesellschaft
BP Gas & Power-Head Office BP Southern Africa Freight Systems Co. Ltd.
BP Gas Marketing Ltd. Burmah Oil Deutschland Lubricants Belgium
BP India Ltd. Burmah Oil TECH’ GMBH Lubricants UK Corporate
BP India Services Pvt. Ltd. Castrol Australia PTY Ltd. Lubricants UK Ltd.
BP International Holdings Oil. Castrol Belgium PT Castrol Indonesia
BP International Ltd. Castrol China Ltd. Tata BP Solar India Ltd.
BP Japan KK Castrol France S A

(d) Associates Castrol India Ltd. Employees’ Provident Fund

Castrol India Ltd. Staff Pension Fund
Castrol India Ltd. Employees’ Gratuity Fund

(e) Key N. K. Kshatriya Managing Director

Management R. Elston-Green Executive Director
Personnel R. Pisharody Executive Director Upto 5th May, 2004
U. DeSousa Executive Director Upto 5th May, 2004
A. S. Ramchander Executive Director Effective from 1st January, 2005

B. Transactions with related parties as per the books of account.

Rupees in Crores

31st December, 2004 31st December, 2003

Holding Sub- Asso- Key Fellow Holding Sub- Asso- Key Fellow
Companies sidiary ciates Manage- Sub- Companies sidiary ciates Manage- Sub-
ment sidiaries ment sidiaries
Personnel Personnel

Purchase of Materials/
Finished Goods — — — — 69.85 — — — — 42.02
Sale of Goods — — — — 2.44 — — — — 0.83
Receiving of Services — — — — 4.28 — — — — 4.87
Rendering of Services &
Deputation of Employees — — — — 17.34 0.06 — — — 10.89
Commission Income — — — — 0.99 — — — — 0.87
Contribution to Funds — — 11.11 — — — — 9.27 — —
Dividend 72.34 — — — 0.11 72.34 — — — 0.11
Dividend Received — — — — — — 0.39 — — —
Royalty 21.70 — — — — 22.71 — — — —
Amounts Payable 57.26 — — — 8.40 60.09 — — — 2.61
Amounts Receivable — — — — 9.79 0.06 — — — 6.15
Remuneration to
Managing Directors — — — 1.27 — — — — 1.13 —
Remuneration to
Executive Directors — — — 1.91 — — — — 2.47 —
Loan Outstanding — — — 0.19 — 0.65 — — 0.20 —
Recovery of Loan &
Interest thereon — — — 0.01 — — — — 0.01 —

C. The information given above, have been reckoned on the basis of information available with the Company.

53
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
10. Operating Lease for assets taken on lease after 1st April, 2001.
31st December, 31st December,
2004 2003
Rupees Rupees
in Crores in Crores
(a) Total of future minimum lease payments
(i) Not later than one year 11.35 9.58
(ii) Later than one year and not later than five years 10.26 15.20
(iii) Later than five years — —
(b) Lease payments recognised in the Profit and Loss account 12.08 10.46

11. Information given under Clause 3(i)(a), 3(ii), 4-C, 4-D of Part II of Schedule VI to the Companies Act, 1956.
31st December, 2004 31st December, 2003
Quantity Value Quantity Value
(KLs/MTs) Rupees (KLs/MTs) Rupees
in Crores in Crores

(a) Turnover (Net Sales)

Class of Goods :
Lubricating Oils, Greases etc. 223583 1280.27 210459 1138.27
Traded Items 621 23.16 1381 31.07
224204 1303.43 211840 1169.34

Old and used Containers 1.69 1.81

1305.12 1171.15

(b) (i) Consumption of Raw Materials, Additives

and Chemicals and Packages : *
Base Oils 195333 449.99 186597 380.22
Additives and Chemicals 33735 234.52 31727 211.22
Packages (Individual items
each being less than 10% of the total) — 76.38 — 73.84
229068 760.89 218324 665.28

* Does not include adjustment for old and used Containers

31st December, 2004 31st December, 2003

Value % of Value % of
Rupees Total Rupees Total
in Crores Consumption in Crores Consumption

(ii) Value of all Imported and Indigenous Raw

Materials consumed during the year :
Imported :
Base Oils 320.93 42.18 255.92 38.47
Additives and Chemicals 53.46 7.03 50.52 7.59
Indigenous :
Base Oils 129.06 16.96 124.30 18.68
Additives and Chemicals 181.06 23.80 160.70 24.16
Packages 76.38 10.04 73.84 11.10
760.89 100.00 665.28 100.00

54
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
31st December, 2004 31st December, 2003
Quantity Value Quantity Value
(KLs/MTs) Rupees (KLs/MTs) Rupees
in Crores in Crores
(c) Opening and Closing Stock of Goods produced :
Manufactured Grades :
Lubricating Oils and Greases
Opening Stock 15868 73.72 13648 57.24
Closing Stock [Excluding
shortages/losses – 612 KLs/MTs
(2003 : 538 KLs/MTs)] 14106 70.71 15868 73.72
(d) Traded Items :
Opening Stock 436 7.53 647 8.65
Purchases 569 10.14 1170 15.14
Closing Stock 382 6.26 436 7.53
(e) Licensed and Installed Capacity :
(i) Licensed Capacity — Not applicable as per legal advice
(ii) Installed Capacity
(Technically evaluated as certified
by the Management and accepted
by Auditors) (Per Year on a single
shift basis)
31st December, 31st December,
2004 2003
(KLs/MTs) (KLs/MTs)
For production of Lubricating Oils, Greases, Brake Fluids,
at Patalganga, Kolkata, Chennai, Ballabgarh and Silvassa. 165764 165764
(f) Production of Lubricating Oils, Greases, etc.
[Including processing done by third parties 15899 KLs/MTs (2003 : 15306 KLs/MTs)] 222433 213217
(g) (i) The relevant information regarding turnover, production, opening and closing stocks is given only in aggregate and no
detailed break-up thereof is given as the items are too numerous to be conveniently grouped.
(ii) Consumption includes adjustments for shortage/excess, etc. and the effects of reduction of inventory to realisable
value.
(iii) Quantities of turnover, consumption, production, opening and closing stocks of additives and chemicals are made up
of Kilolitres and Metric Tons, but the constituent units of measurement of the items have not been separately
identified and indicated.
(iv) As the Company manufactures and trades, the information required by Clause 3(ii)(a) of Schedule VI Part II to the
Companies Act, 1956 is interpreted to require total amounts to be disclosed in respect of opening stock, closing stock
and purchases of traded items.
31st December, 31st December,
2004 2003
Rupees Rupees
in Crores in Crores
12. Directors’ emoluments :
Total Remuneration (excluding sitting fees) [Refer (b) and (c) below] 3.43 3.85
Includes :
(i) Salary and Allowances 1.76 2.00
(ii) Contribution to Provident and other funds 0.30 0.38
(iii) Estimated Value of perquisites * 0.68 0.63
(iv) Performance Linked Incentive to Wholetime Directors 0.43 0.58
(v) Commission to Resident Non-Wholetime Indian Directors [Refer (c) below] 0.26 0.26

* Evaluated as per Income-Tax Rules wherever applicable.

55
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
31st December, 31st December,
2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores
(a) Computation of profit in accordance with
Section 309(5) of the Companies Act, 1956 :
Profit before Taxation as per Profit and Loss Account 195.29 204.36
Add: Depreciation as per Profit and Loss Account 24.88 14.31
Voluntary Retirement Scheme Expenses 0.51 0.72
Exceptional Items - Voluntary Retirement Scheme Expenses -
Plant closure 3.72 —
Exceptional Items - Impairment of Fixed Assets - Plant closure 3.55 —
Directors’ Remuneration 3.43 3.85
Directors’ Sitting Fees 0.03 0.02
36.12 18.90
231.41 223.26
Less: Depreciation u/s 350 of the Companies Act, 1956 13.27 13.69
Profit on sale of Investments (Net) 3.90 6.93
Wealth Tax 0.16 0.21
Excess Provision for Doubtful Debts written back 4.88 3.97
22.21 24.80
Profit under Section 309(5) of the Companies Act, 1956 209.20 198.46

(b) Remuneration payable to Managing and Wholetime Directors

@ 10% on above profits 20.92 19.85
Restricted by the Board of Directors to 3.17 3.59
(c) Commission payable to resident Non-Wholetime Indian Directors
@ 1% on above profits 2.09 1.98
Restricted by the Board of Directors to 0.26 0.26
31st December, 31st December,
2004 2003
Rupees Rupees
in Crores in Crores
13. Miscellaneous Expenses include Auditors’ Remuneration as follows :
(i) Audit Fees — Statutory # 0.25 0.25
(ii) In other capacity : #
Audit Fees — Tax Accounts/Audit 0.11 0.11
Other Services 0.21 0.13
(iii) Reimbursement of out of pocket expenses 0.01 0.01
0.58 0.50

# Excluding Service Tax

14. The Company owes to following Small Scale Industrial Undertakings sums outstanding for more than 30 days :
ABCD Drums & Barrels Industries. Ole Fine Organics Royal Castor Products Pvt. Ltd.
Amantech Chemicals Pvt. Ltd. Pax Enterprises Shah Packwell Industries
Central Oil Industries R. G. Desai Industries Suru Chemicals & Pharmaceuticals Pvt. Ltd.
Himatex Corporation R. K. Metal & Plastics Pvt. Ltd. Vibha Chem Products Pvt. Ltd.
Makwell Plasticizers Pvt. Ltd. Raj Lubricants (Madras) Ltd.
The information regarding Small Scale Industrial Undertakings has been determined to the extent such parties have been
identified on the basis of information available with the Company. This has been relied upon by the auditors.

15. Research and Development expenses amounting to Rs. 7.50 Crores (2003 : Rs. 6.01 Crores) are included under relevant heads
of expense.

56
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
16. The Directors of Indrol Chemicals & Specialties Private Limited, a wholly owned Subsidiary Company, had Resolved to put the
Company in voluntary winding up. A final meeting of the Members of the Company was called by the Liquidator and the paid up
capital refunded to the Parent Company. An application has been made to the Official Liquidator to formally wind up the
Company.
31st December, 31st December,
2004 2003
Rupees Rupees
in Crores in Crores
17. C.I.F. Value of Imports :
Raw Materials 308.47 245.87
Capital Goods 0.66 0.81

18. Expenditure in Foreign Currency (on accrual basis) :

Travel 0.91 0.42
Imports of goods for resale 8.08 9.26
Others (Net of tax where applicable) 6.14 8.02
Royalty (Net of tax) 18.45 19.30

19. Earnings in Foreign Exchange (on accrual basis) :

Supplies to Foreign Vessels 2.09 1.00
Commission & Others 0.99 1.04
FOB value of goods exported 0.64 0.16

20. Details of Dividend remitted during the year, to Two (2003 – Two) non-resident shareholders are as follows :
31st December, 31st December,
2004 2003
Dividend in respect No. of Rupees Rupees
of the year ended Shares in Crores in Crores
31-12-2002 (Final) 87822929 — 37.33
31-12-2002 (Special) 87822929 — 72.45
31-12-2003 (Interim) 87822929 — 35.13
31-12-2003 (Final) 87822929 37.33 —
31-12-2004 (Interim) 87822929 35.13 —

21. Previous year’s figures have been regrouped wherever necessary.

22. Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.

Balance Sheet Abstract and Company’s General Business Profile :

I. Registration Details
Registration No. 2 1 3 5 9 State Code 1 1

Balance Sheet Date 3 1 1 2 2 0 0 4

Date Month Year

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

— —

Bonus Issue Private Placement

— —

57
Schedules
Castrol India Limited

SCHEDULE M (Contd.)
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
6 6 4 2 0 9 9 6 6 4 2 0 9 9

Sources of Funds:
Paid up Capital Reserves & Surplus
1 2 3 6 4 0 3 2 3 6 4 3 7 6

Secured Loans Unsecured Loans

— 3 7 2 5 6

Deferred Tax Liability (Net)

1 7 4 0 7 0

Application of Funds:
Net Fixed Assets Investments
1 4 9 7 7 2 1 1 2 8 9 1 1 5

Net Current Assets Miscellaneous Expenditure

1 0 2 5 2 6 9 —

Accumulated Losses
—

IV. Performance of the Company (Amount in Rs. Thousands)

Turnover Total Expenditure
1 3 0 5 1 2 3 4 1 1 3 1 9 2 3 3

Profit/(Loss) before tax Profit/(Loss) after tax

1 9 5 2 9 4 1 1 2 7 4 6 3 9

Earning per Share (Rs.) Dividend Rate %

1 0 . 3 1 8 2 . 5 0

V. Generic Names of Principal Products/Services of the Company

Item Code No. 2 7 1 0 0 0 . 6 1
(ITC Code)

Product Description L U B R I C A T I N G O I L S

S. M. DATTA Chairman N. K. KSHATRIYA Managing Director

Executive Directors

A. S. RAMCHANDER Director R. ELSTON-GREEN Director

A. H. MODY
Company Secretary Non-Executive Directors
& Head Legal
A. JHAWAR Director R. GOPALAKRISHNAN Director
Mumbai P. HUGHES Director D. S. PAREKH Director
January 17, 2005 R. A. SAVOOR Director L. FREESE Alternate Director

58
Cash Flow
Castrol India Limited

Cash Flow Statement for the year ended 31st December, 2004

2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores
A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 195.29 204.36

Adjustments for:

Depreciation 24.88 14.31

Interest 2.87 2.57

Interest & Dividend Income (3.70) (2.25)

Profit on Sale of Investments (3.90) (6.93)

Unrealised foreign exchange (gain)/losses (0.57) (0.55)

(Profit)/Loss on Disposal/Write off of Fixed Assets (Net) (1.46) 3.16

Provision for Impairment of Fixed Assets 3.55 —

Operating Profit before Working Capital Changes 216.96 214.67

Adjustments for:

Sundry Debtors (0.01) (39.25)

Inventories (10.08) (30.66)

Other Loans & Advances 4.29 16.00

Sundry Creditors 8.17 5.83

Cash generated from Operations 219.33 166.59

Income Tax Paid (56.59) (61.67)

NET CASH FLOW FROM OPERATING ACTIVITIES 162.74 104.92

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (9.92) (12.93)

Sale of Fixed Assets 4.19 7.09

Purchase of Investments (700.88) (630.77)

Sale of Investments 660.66 773.20

Interest received 3.70 1.86

Dividend received — 0.39

NET CASH FLOW FROM INVESTING ACTIVITIES (42.25) 138.84

59
Cash Flow
Castrol India Limited

Cash Flow (Contd.)

2004 2003
Rupees Rupees Rupees
in Crores in Crores in Crores

C. CASH FLOW FROM FINANCING ACTIVITIES

Repayment of long term borrowings (0.48) (0.86)

Interest Paid (2.77) (2.57)

Dividend Paid (102.01) (204.01)

Dividend Tax paid (13.32) (26.14)

NET CASH FLOW FROM FINANCING ACTIVITIES (118.58) (233.58)

D. NET INCREASE/(DECREASE) IN CASH AND

CASH EQUIVALENTS (A) + (B) + (C) 1.91 10.18

CASH AND CASH EQUIVALENTS, beginning of the year 27.78 17.60

CASH AND CASH EQUIVALENTS, end of the year 29.69 27.78

Notes: (1) The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting
Standard-3 on Cash Flow Statement issued by The Institute of Chartered Accountants of India.

(2) Previous year’s figures have been regrouped wherever necessary.

As per our report of even date S. M. DATTA Chairman N. K. KSHATRIYA Managing Director
For S. R. BATLIBOI & COMPANY
Chartered Accountants Executive Directors

A. S. RAMCHANDER Director R. ELSTON-GREEN Director

per HEMAL SHAH A. H. MODY
Partner Company Secretary Non-Executive Directors
Membership No. : 42650 & Head Legal
A. JHAWAR Director R. GOPALAKRISHNAN Director
Mumbai P. HUGHES Director D. S. PAREKH Director
January 17, 2005 R. A. SAVOOR Director L. FREESE Alternate Director

60