South Asian Petrochem Limited Annual Report 2007-08

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Cairo.
Chicago.
MIND OVER
MARKET
Copenhagen.
Canberra.
Coimbatore.

www.aspetindia.com
 Corporate Information
(as on 12th May, 2008)

Board of Directors Executive Director Export-Import Bank of India,

P K Khaitan, Chairman (Corporate) ICICI Bank Limited,
C K Dhanuka, Vice- Chairman B K Biyani
Industrial Development
J P Kundra Bank of India Limited,
Senior Vice President
Dr B Sen (Finance) & CFO International Finance
R K Sharma Corporation, Washington
Y F Lombard
Punjab National Bank,
P Murari
Company Secretary &
State Bank of India,

Contents
S Bagaria Compliance Officer
K V Balan State Bank of Travancore,
Nandini Chakravorty
(Nominee of West Bengal Syndicate Bank,
Industrial Development Auditors
United Bank of India
Corporation Ltd.) Lovelock & Lewes
Our Corporate Visiting Card 2 S Bhattacharyya Bankers & Financial Registered Office
(Nominee of Exim Bank of
Institutions Dhunseri House
From the Vice Chairman’s Desk 4 India)
Arab Banking Corporation, 4A, Woodburn Park
Dr S S Banerjee Egypt Kolkata – 700020, India
What our numbers indicate 8 (Nominee of Industrial
Bank of America,
Development Bank of India
Ltd.) Bank of Baroda, Plant
Directors’ Report 16 JL-126
Bank of India,
Executive Director & CEO Mouza- Basudevpur, Haldia,
Canara Bank,
Financial Highlights for the last 5 years 25 B Chattopadhyay District: Midnapore (East),
Citibank N.A, Pin-721 602
Executive Director West Bengal, India
Management Discussion and Analysis 26 M Dhanuka
Deutsche Bank,

Efficiency drivers 28

Environment compliance 35

Financial Review 36

Risk Management 42

Corporate Governance Report 45

Financial Section 67

A PRODUCT
info@trisyscom.com

Printed at Anderson Printing (info@andersonindia.com)

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Someone is drinking juice out of a
bottle. Someone is taking a
spoonful of cough syrup out of a
bottle. Someone is pouring hair oil
from a bottle. Someone is taking
lotion from a bottle.

Different countries. Different

customers. Different needs.

Except for one similarity.

All using bottles made from PET

resin manufactured and customised
by South Asian Petrochem.

Reflecting mind over market.

 South Asian Petrochem
Limited is one of the largest
manufacturers of PET resin
in South Asia. Through its
products and their varied
applications, SAPL touches
the lives of millions of
people every single
moment of every single
hour of every
single day.
2 | South Asian Petrochem Limited
Our lineage
South Asian Petrochem Limited’s parentage is drawn from
the Kolkata-headquartered Dhunseri Group, a company of
standing in the niche of select teas for more than half a
century. The Dhunseri Group promoted SAPL as a 100%
export-oriented unit in 1996 to manufacture and market
PET resin granules.
Our technology
The Company’s manufacturing plant in Haldia (130 km
from Kolkata) is equipped with world-class technology
from Zimmer AG of Germany. The Company’s fully
automated plant is rated among the most advanced PET
resin manufacturing facilities in the world.
Our footprint
The Company’s products are available across 60
destinations around the globe, including Europe and the
US – the world’s largest PET resin markets.
In 2007-08, the Company contributed Rs. 9.71 crore in a
315,000-TPA greenfield facility in Egypt as initial
equity contribution.
The Company’s shares are actively traded on the National
Stock Exchange and Bombay Stock Exchange apart from
being listed on the Calcutta Stock Exchange. The
Unsecured Foreign Currency Convertible Bonds issued
during the year are listed on the Singapore Exchange
Securities Trading Limited (SGX-ST).
Our value proposition
The Company’s products are customised around varied
customer and application needs. The product range
comprises the finest bottle-grade, sheet-grade and jar-
grade PET resins, reconciling the Company’s commitment
to quality, customisation and value-addition. Over the last
five years, SAPL has continuously developed new and
specialised PET resin grades.
Our recognition
The Company has received quality certifications from
national and international agencies like the USFDA, EEC
and ITRC. It received the ISO 9001: 2000 certification from
TUVNORD in 2006-07.
Our domain
Nearly 64% of the Company’s revenue was derived from
exports in 2007-08. Besides this strong export presence, it
enjoyed a substantial share of the Indian market. Its client
base comprised brand-enhancing multinational giants,
providing it with repeat business.
Our performance
Sales volume increased from 165,727 MT in 2006-07 to
170,077 MT in 2007-08.
EBIDTA grew 11.76% – from Rs. 10,479.32 lakhs to
Rs.11,711.39 lakhs in 2007-08.
EBIDTA margin expanded 139 basis points – from 9.83%
to 11.22% in 2007-08.
Post-tax profit surged 24.25% – from Rs. 4,469.01 lakhs
to Rs. 5,552.86 lakhs in 2007-08.
Annual Report 2007-08 | 3
 Q. Were you pleased with the Company’s
“As a market-focused
performance in 2007-08?
organisation, we will
I was pleased that the Company strengthened its business
from a holistic perspective during the year under review.
capitalise on product
This improvement comprised initiatives taken in the
financial, marketing, product mix and geographic domains
during the previous year.
yield and enhanced quality standards. In 2007-08, we
produced 1.65 lakh tonnes of PET resin despite a one-
month shutdown.
Concurrently, we invested in coal-fired hot oil heaters,
which will result in savings in our fuel cost in the wake of
rising crude oil prices and a two year payback. The
businesses to reduce product, user and cyclical risks. We
are in the process of embarking on a new petrochemical
project to cater to the engineering plastic market for which
we expect to achieve financial closure by the end of 2009.
And, importantly, we strengthened our investment in Egypt
where we expect to commission a PET resin facility by the
end of 2010.

development, process
We successfully entered the long-targeted Middle east
reengineering, capacity
and East European markets. For years, the majority of our
export revenues were derived from the European Union
utilisation, energy
and North America. During the year under review, we
diversified our market presence and while the numbers
from these markets will take some time to scale, we are
conservation, quality
optimistic that our wider presence will de-risk the
Company from a downturn in select markets on the one
control, distribution hand and also give us the confidence to enhance our
installed capacity on the other.
realignment and
At SAPL, our research was not only focused on process
improvement; it was also directed at value addition. The
Company applied for a linkage to procure low-cost coal;
the environment approvals were received from the Ministry
of Environment and Forests and the West Bengal Pollution
Control Board.
Q. How did the Company progressively
de-risk its business model?
There are a number of ways in which we did so but I would
specifically focus on two that transpired during the last
financial year.
One, the direct sales model helped us eliminate the cost of
intermediaries. We delivered directly to the customer’s
Q. Shareholders would need to know why
the Company is investing in Egypt when it
could well have expanded its existing
facility in India.
Permit me to reverse the paradigm and ask: Why not
Egypt? First, Egypt’s consumption of PET resin is expected
to be around 80,000 TPA by 2009, while the consumption
in North Africa will jump to 300,000 TPA by 2011. Our
proposed plant will be the first of its kind in the entire
region. We already possess manufacturing expertise and
established customers in the US, Europe, Middle East and
Africa. This means that our proposed plant in Egypt can

logistical efficiency to
doorstep, leveraging our superior distribution network and
result was that the Company introduced two premium easily reach the markets that I have indicated quicker and
logistic management skills.
grades of PET resin, which will translate into increasing at a lower transportation cost with corresponding

address favourable revenues as we go on from here.

Two, we recognised the need to diversify across different implications – lower inventory and short order-to-dispatch

One of the most significant initiatives that accelerated

market scenarios
proactively.”
In conversation with Mr. C K Dhanuka, Vice Chairman,
on the Company’s performance in 2007-08.
during the year under review was our Egypt facility
obtaining all the necessary major legal and administrative
approvals to implement the 315,000-TPA project, which
will enable the Company to service the under-penetrated
North African and large European market.
Q. What were the operational highlights of
the Company in 2007-08?
The Haldia plant was commissioned in May 2003 and we
gradually enhanced its capacity through progressive de-
bottlenecking, the last one in November 2007, following
which we achieved 100% capacity utilisation by the end of
March 2008. As a result, what was a 140,000-TPA plant in
2003 was scaled up to 200,000 TPA in 2007-08 with
superior output standardisation, value addition, higher

4 | South Asian Petrochem Limited Annual Report 2007-08 | 5

 cycle – for customers. So our Egypt facility will have an
existing market to service from the day one.
Second, it is our understanding that Africa and the Middle
East will emerge as dominant MEG (raw material used in
the manufacture of PET resin) producers, while Asia will
turn into a net importer. In such a scenario, the long-term
advantage will lie in positioning close to MEG sources —
an edge that our Egyptian facility will enjoy.
Besides, in centralised petrochemicals businesses, the key
issue is going to be transportation costs, especially when
oil price remains above US$120 a barrel. In this respect,
Egypt is strategically located. The logistics cost on account
of the inward movement of raw materials and outward
dispatch of finished goods will decline once this plant goes
on stream. It is also close to the PET resin-deficit markets
such as Russia, Ukraine, Morocco, Tunisia, Libya, etc.
The US and European Union are major business
destinations, accounting for 65% of the global demand for
PET resin (bottle grade). The Egypt plant will place us
favourably to leverage our existing brand in these markets
with prompt supplies and after-sales services. This location
will also enable us to seed the rapidly growing African and
Middle Eastern markets with our products.
agency of the Government of Egypt, for promoting the
petrochemical industry in that country and the ENPPI, a
nodal agency of the Government of Egypt. The
manufacturing facility received a private free-zone status
from the government, amounting to duty waiver benefits
on the import of capital goods and raw materials as well as
the export of finished goods. The plant, being located on
the Damietta port in Egypt, will reduce the cost of
transportation and logistics.
Q: Shareholders are concerned about the
financial implications of this huge project.
The Egypt project will cost around USD 100 mn, excluding
working capital. At the Company, we are critically aware
that we will be able to enhance value for our shareowners
if we can enhance our earnings without a corresponding
increase in our equity capital. This understanding was
factored into our funding; we sourced long-term loans
from the IFC and syndication to that effect has already
been received, with the signing of an agreement in June
2008. The loan disbursement is slated to start in July 2008.
As a result, we expect to enhance long-term value for all
those who own equity shares in our Company.
A growing focus on health is helping substitute other the US and Europe, India still lags at a nascent stage of
packaging materials with food-grade, non-toxic PET. growth on account of an infancy in the country’s retail
industry and unfavourable cultural issues. Once the full
There is a visible emergence of new application areas
impact of these changes set in, the packaged food and
for PET resin like alcoholic and non-alcoholic beverages as
beverage markets will expand significantly. To achieve
well as pharmaceuticals.
better value addition, we have proactively prepared for this
There is a growing scope of lifting the anti-dumping duty eventuality through the development of new PET resin
on PET resin in the US. variants (25H and 20HF).
There were several recent innovations in bottle-grade As a market-focused organisation, SAPL will capitalise on
PET recycling technologies that will make it a preferred product development, process reengineering, capacity
utilisation, energy conservation, quality control, distribution
packing material by governments.
realignment and logistical efficiency to address favourable
While bottle-grade PET resin shows buoyant demand in market scenarios proactively.
Global PET supply and demand (kt/pa)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
Capacity 8,234 8,837 9,526 11,045 12,197 12,530 14,272 16,036 17,989 19,240 20,787 23,294 23,644 23,644

Q. Going forward, what is your basis for Capacity growth (%) 11.9 7.3 7.8 15.9 10.4 2.7 13.9 12.4 12.2 7.0 8.0 12.1 1.5 0.0
Q. What is the present status of the Egypt optimism?
project? Let us first consider the macro picture:
Production 6,469 7,204 7,796 8,720 9,465 10,491 11,383 12,450 13,679 14,839 16,159 17,209 18,572 19,475

The project received approvals and clearances from the Production growth (%) 16.3 11.4 8.2 11.9 8.5 10.8 8.5 9.4 9.9 8.5 8.9 6.5 7.9 4.9
Global PET bottle resin demand doubled between 1999
Egyptian government, the Egyptian Environment
and 2005 and is expected to grow at more than 7% every Consumption 6,437 7,186 7,857 8,730 9,581 10,515 11,505 12,566 13,674 14,861 16,031 17,213 18,425 19,475
Accreditation Agency (EEAA) and the local port authorities.
year over the foreseeable future.
The new manufacturing plant is proposed to be set up Consumption growth (%) 15.1 11.6 9.3 11.1 9.7 9.7 9.4 9.2 8.8 8.7 7.9 7.4 7.0 5.7
through a subsidiary called, Egyptian Indian Polyester Around 43% of PET resin consumption will be derived
Operating rate (%) 78.6 81.5 81.8 79.0 77.6 83.7 79.8 77.6 76.0 77.1 77.7 73.9 78.5 82.4
Company S.A.E. Equity stakes of 30% will be vested with from the irreversibly growing carbonated soft drinks and
Egyptian Petrochemicals Holding Company (ECHEM), an mineral water segments. Source: CMAI and Deutsche Bank estimates

6 | South Asian Petrochem Limited Annual Report 2007-08 | 7

 What our numbers indicate
1018.66

1004.66

104.79

117.11

11.22
44.69

55.53

72.00

88.88

14.32

16.44
51.81

74.13
9.83

0.00

0.50
2006-07
2006-07

2006-07

2006-07

2006-07
2006-07

2006-07
2006-07

2007-08
2007-08

2007-08

2007-08

2007-08
2007-08

2007-08
2007-08

Turnover (net of Post-tax profit (Rs. cr) EBIDTA (Rs. cr) EBIDTA margin (%) Cash profit (Rs. cr) Profit before tax Dividend Book value
excise) (Rs. cr) (Rs. cr) per share of a face per share of a face
value of value of Rs. 10 each
Rs. 10 each (Rs.) as at 31st March (Rs.)

8 | South Asian Petrochem Limited Annual Report 2007-08 | 9

 Soft drinks, soft drinks everywhere!
This represents an attractive opportunity for companies Introduction of value-added AS25H hot-fill grade
like South Asian Petrochem on two counts – a large and (microwave-proof) for the developed markets.
growing market and the US decision to call off
Reaching out to customers directly, circumventing trade
countervailing and anti-dumping regulations on imports of
intermediaries leading to a better understanding of the
PET resin from India, Indonesia and Thailand.
market dynamics and stronger relationships.
In South America, the opportunity appears bigger with a
Strengthening the ASPET brand for enhanced visibility,
shortage of 300 kt in Brazil and 500 kt across the region
product recall and sustainable revenues.
being projected by the end-2008 sustained by an annual
continental demand growth for bottle-grade PET resin Implementing a new PET resin manufacturing project in
estimated at 6-8%. Egypt.

South Asian Petrochem expects to capitalise on these With a consolidated post-expansion production in excess
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realities through the following initiatives: of 500,000 TPA, SAPL is expected to compete effectively
Reduced production costs through proactive low-cost in the volume end of the business and carve out an
capacity expansion. attractive market share.
America

%
19

29
%
Industry slowdown or no slowdown, PET resin
End user - 2008E
consumption is growing attractively in North America,

24%
riding a mature retail market and an increasing
28
consumption of packaged food and beverages.
%

Non-food Carbonated
containers soft drinks
Food containers Other drinks

Even as percentage growth in North America is expected
to be modest, the sheer volume of incremental annual
demand makes it the most important market in the world
on the one hand and the most significant product importer
on the other.
Consider this. The carbonated soft drinks market – the
principal user of PET bottles – will sustain its growth due to
stronger promotion together with beverages, an intrinsic
part of everyday living in that part of the world. The FMCG
sector continues to prefer the use of PET bottles due to
usage functionality and a growing preference of consumers
to view the content prior to purchase.

North America PET supply & demand (kt/pa)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
Capacity 2,676 3,012 3,207 3,282 3,643 3,755 3,815 3,941 4,573 5,011 5,674 6,107 6,257 6,257
Capacity growth (%) 2.1 12.6 6.5 2.3 11.0 3.1 1.6 3.3 16.0 9.6 13.2 7.6 2.5 0.0
Production 2,383 2,550 2,711 2,793 2,988 3.413 3,297 3,429 3,660 3,879 4,097 4,265 4,692 4,695
Production growth (%) 8.4 7.0 6.3 3.0 7.0 14.2 -3.4 4.0 6.7 6.0 5.6 4.1 10.0 0.1
Net exports 150 138 125 -31 40 293 -52 -187 -210 -262 -264 -530 -432 -713
Inventory -1 -26 -38 12 -7 -33 7 27 4 0 0 0 0 0
Consumption 2,2234 2,438 2,324 2,812 2,955 3,153 3,342 3,589 3,856 4,141 4,461 4,797 5,124 5,408
Consumption growth (%) 15.5 9.15 7.6 7.2 5.1 6.7 6.0 7.4 7.4 7.4 7.7 7.5 6.8 5.5
Operating rate (%) 89.1 84.7 84.5 85.1 82.0 90.9 86.4 87.05 80.0 77.4 72.2 69.8 75.0 75.0
Source: CMAI and Deutsche Bank estimates

10 | South Asian Petrochem Limited Annual Report 2007-08 | 11

 What is a meal
without a cola?

36˚N/115˚W

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West Europe
The market for PET resin –
especially the value-added variety
– remains buoyant across the
European Union on account of a
bias for pre-cooked food,
beverages, mineral water and
other FMCG products.

Western Europe PET supply and demand (kt/pa)

Carbonated soft drinks constitute around 37% of the Introduced two new variants – 20HF and 25H – of oven- 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
market, processed food packaging 25% and dairy products friendly products, ideal for cooked food. Capacity 2,049 1,980 2,108 2,150 2,120 2,169 2,480 2,572 2,487 2,651 2,709 2,709 2,709 2,709
17%. A large capacity is expected to come up in the Launched a new solid-state poly-condensation line Capacity growth (%) 28.2 -3.4 6.5 2.0 1.4 2.3 14.3 3.7 -3.3 6.6 2.2 0.0 0.0 0.0
Middle East and Central Europe. (capacity 42,000 TPA) for manufacturing speciality-grade Production 1,518 1,537 1,646 1,832 1,945 2,073 2,273 2,284 2,317 2,330 2,362 2,301 2,254 2,301
resins.This will improve the production efficiency by Production growth (%) 40.8 1.3 7.1 11.3 6.2 6.6 9.6 0.5 1.4 0.6 1.4 -2.6 -2.0 2.1
South Asian Petrochem embarked on a number of
matching the capacities of the continuous poly- Net exports -38 -33 -110 -174 -266 -232 -141 -248 -332 -451 -550 -743 -934 -1.017
initiatives to enhance its presence in the large and growing
condensation and SSP lines. These speciality-grade resins
West European market: Inventory -30 0 -1 -10 11 15 10 -38 -0 0 0 0 0 0
are resistant to temperature fluctuations, making them
Consumption 1,538 1,570 1,757 2,016 2,200 2,290 2,404 2,570 2,649 2,781 2,912 3,044 3,188 3,318
Aligned its manufacturing facility to customer needs, suitable for storage under refrigeration.
Consumption growth (%) 12.9 -1.0 11.9 14.7 9.1 4.1 5.0 6.9 3.1 5.0 4.7 4.5 4.7 4.1
rationalising the logistics cost and making superior Strengthened after-sales service, ensuring customer
Operating rate (%) 74.1 77.6 78.1 85.2 91.7 95.6 91.7 88.8 93.2 87.9 87.2 84.9 83.2 84.9
deliveries affordable at reasonable prices. satisfaction and repeat business.
Source: CMAI and Deutsche Bank estimates

12 | South Asian Petrochem Limited Annual Report 2007-08 | 13

 Indians are taking to bottled fruit juice!

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India

SAPL strengthened its

competitiveness in response
The consumption of PET resin is growing in India on account of new
to this favourable industry
customers being created for bottled beverages as well as an increasing environment through the
number of products substituted with PET. following initiatives:

The next time you see an advertisement for natural orange A new report from beverage industry analyst Canadian De-bottlenecked its
juice on television, score a point for PET resin. Even as you estimates that consumption in India leapt by 13% with the plant to enhance
may not be aware, this is not an isolated point. This average summer temperature rising over the last 10 years, capacity and reduce
growing consumption of PET resin is now extending producers will clearly try to capitalise on this rapid advance overheads.
across various sectors and products. The result is that in the years to come.
India is at an inflection point: the country is ramping its Still drinks remain the largest single sector, according to
PET resin capacity to almost 350 ktpa by 2010; Canadian, and while the sale of packaged still drinks grew
reflecting indirectly the latent demand potential in the strongly, the sector as a whole was held back by almost Widened its pan-India
domestic market. flat consumption of unpackaged or loose alternatives. presence to service and
grow the market.
Asia (excluding Japan) Pet supply & demand (kt/pa)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
Capacity 2,384 2,640 2,980 4,222 4,792 4,876 6,069 6,995 7,647 7,847 8,302 9,677 9,677 9,677 Helped by strong sales through roadside vendors, loose or Strengthened its
Capacity Growth (%) 9.9 10.7 12.9 41.7 13.5 1.8 24.5 15.3 8.9 3.0 5.8 16.6 0.0 0.0 unpackaged still drinks account for over 90% of total still technical service
drinks consumption, the report indicated.
Production 1,648 2,015 2,286 2,963 3,395 3,712 4,452 4,948 5,168 5,431 6,026 6,205 6.940 6,856 through pilot scale
Production growth (%) 9.6 22.3 13.4 29.6 14.6 9.3 20.0 11.1 4.4 5.1 11.0 3.0 11.8 -1.2 Enjoying a share of almost 60%, cola dominates the extrusion blow
carbonates market and continues to extend its lead, with a moulding machine.
Net exports 704 963 1,263 1,650 1,976 1,890 2,496 2,715 2,569 2,500 2,767 2,592 2,954 2,511
20% rise in consumption last year. Water is the third most
Inventory 45 38 -103 -66 -166 -27 -127 -50 34 -21 -10 -5 -0 0
popular sector in India with both the packaged and
Consumption 899 1,014 1,126 1,390 1,696 1,848 2,283 2,283 2,565 2,952 3,269 3,618 3,986 4,345 bulk/HOD sub-sectors increasing sharply.
Consumption growth (%) 16.3 12.8 11.0 22.6 14.9 16.5 12.7 9.6 12.4 15.1 10.7 10.7 10.2 9.0 The result: SAPL enhanced revenues from the Indian
Operating rate (%) 69.1 76.3 76.7 70.2 70.8 76.1 73.4 70.7 67.8 69.2 72.6 64.1 71.7 70.8 market as a proportion of its total revenues from 32% of
Source: CMAI and Deutsche Bank estimates its turnover in 2006-07 to more than 36% 2007-08.

14 | South Asian Petrochem Limited Annual Report 2007-08 | 15

 To

Your Directors have pleasure in presenting the Twelfth Annual Report of your Company together with the Audited Statement
of Accounts for the year ended 31st March 2008.

Financial results

Directors’ Report 2007-08

(Rs. in lakhs)
2006-07
Turnover and other income 1,03,501 1,02,283
Profit before interest and depreciation 11,711 10,478
Interest 1,966 3,037
Profit before depreciation 9,745 7,441
Profit for the year 7,413 5,181
Provision for tax
- Current tax 840 218
- Excess provision relating to earlier years written back (10)
- Deferred tax 1,004 470
- Fringe benefit tax 26 24
Profit after tax 5,553 4,469
Amount brought forward from previous year 8,394 3,925
Amount available for appropriation 13,947 8,394
Appropriation proposed:
Dividend proposed on equity shares 1,166 NIL
Tax on dividend 198 NIL
Balance carried to balance sheet 12,583 8,394

Dividend
Your Directors recommend a 5%
dividend (Re. 0.50 per equity share of
Rs. 10 each) for the year ended
31st March 2008, subject to the
approval of the shareholders in the
ensuing Annual General Meeting.
Performance
There was an increase in profit before
tax by around 43% in 2007-08
compared to the previous year. The
Company continues to maintain the
momentum of this improved
performance. The other income for the
year was higher than the previous year
on account of increased foreign
exchange gains of Rs. 23.20 crore. The
Company’s turnover declined
marginally. Sales increased from
1,65,727 MT to 1,70,077 MT.
The capacity of the Haldia plant was
increased from 1,80,000 TPA to
2,00,000 TPA. A planned shutdown
was carried out in November 2007 for
de-bottlenecking the CP plant. A new
SSP plant of 120 MTD was
commissioned to match the increased
capacity of CP plant after de-
bottlenecking. Your Company invested
in coal-based HTM heaters during the
year, which will result in cost savings.

16 | South Asian Petrochem Limited Annual Report 2007-08 | 17

 Prospects
Your Company is looking at product
innovation and developing new
products according to market
requirements. It was able to market its
products in new areas which will be
continued in the coming year. The
Company’s performance for the year
under review was satisfactory. The
positive effect of increased capacity
and cost reduction measures will be
reflected in the current year.
Conservation of energy,
technology absorption,
foreign exchange
earnings/outgo
The particulars as prescribed under
Section 217(1) (e) of the Companies
Act, 1956, read with the Companies
(Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988,
are attached as an annexure to
this Report.
Disclosure under Section
217(2A) of the Companies
Act, 1956
The particulars of employees whose
salary exceed the limits as prescribed
under Section 217(2A) of the
Companies Act, 1956, are given as an
annexure to this Report.
Auditors
Messrs Lovelock & Lewes, Chartered
Accountants, retire on the conclusion
of this Annual General Meeting, and
being eligible, offer themselves for
reappointment.
Directors
Mr. C.K. Dhanuka, Dr. B. Sen and
Mr. P. Murari, Directors of your
Company will retire at this Annual
18 | South Asian Petrochem Limited
General Meeting by rotation, and being
eligible, offer themselves for
reappointment. The Board
recommends their reappointment as
Directors of your Company.
During the year Mr. D. Som ceased to
be a Director of the Company
consequent to the withdrawal of his
nomination by the West Bengal
Industrial Development Corporation
(WBIDC). The Board of Directors wish
to place on record their sincerest
appreciation for the contribution made
by Mr. D. Som during his tenure.
Mrs. Nandini Chakravorty has been
nominated in his place by WBIDC. She
has been in Government Service (IAS)
and is presently the Executive Director
in the WBIDC.
Mr. H.P. Breitenbach resigned from
the Directorship of the Company
consequent to the sale of shares by
the ZIAG Plant Engineering GmbH
(formerly Zimmer AG) to the Dhunseri
Tea and Industries Ltd. Consequently
Dr. S. Kapur’s (alternate Director to Mr.
H.P. Breitenbach) office fell vacant. The
Board of Directors wishes to place on
record their sincerest appreciation for
the contribution made by Mr. H.P.
Breitenbach and Dr. S. Kapur during
their tenure.
Mr. B.K. Biyani is proposed to be
reappointed as the Executive Director
(Corporate) of the Company with effect
from 1st June 2008. Your Directors
recommend the approval of his
reappointment as the Executive
Director (Corporate) of the Company.
The particulars required for
reappointment as the Executive
Director (Corporate) are contained in
the notice for the Annual General
Meeting of the Company.
Mr. M. Dhanuka is proposed to be
reappointed as the Executive Director
of the Company with effect from
12th August 2008. The Directors
recommend approval of his
reappointment as the Executive
Director of the Company. The
particulars required for reappointment
as the Executive Director are
contained in the notice for the Annual
General Meeting.
Subsidiary company
Egyptian Indian Polyester
Company S.A.E.
The Egyptian project of the Company
resulted in the incorporation of the
Egyptian subsidiary company under
the name of “Egyptian Indian Polyester
Company S.A.E.” on 21st February
2008. Your Company contributed to
70% of the equity, while Egyptian
Petrochemical Holding Company
(ECHEM) and Engineering for the
Petroleum and Process Industries
(ENPPI) contributed 23% and 7 % of
the equity respectively.
The Articles of Association were
finalised with the ECHEM and a formal
application for Company formation
was submitted to the General Authority
for Investment and Free Zones (GAFI),
the nodal agency for approval of
foreign investments in the free zone.
GAFI’s final approval for free zone
status of the Company was received
and the approval for gas and electricity
connection has also been received.
The Company has also received the
environment clearance for the project.
The provisional approval of Industrial
Development Authority (IDA) has also
been received. The land lease
agreement will be signed shortly.
The construction is scheduled to begin
in September 2008 when the receipt of
the clearance from the defence
ministry is expected.
The estimated project completion time
is 21 months from the date of
commencement. The total estimated
project cost has been assessed at USD
100 mn approx excluding working
capital requirement.
South Asian Petrochem USA, LLC
Your Company is the sole member of
its wholly owned subsidiary South
Asian Petrochem USA, LLC, in the US.
In view of the change in market
conditions, your Company decided to
market directly in the US market.
Accordingly, steps the US subsidiary
was wound up with effect from 9th
April 2008.
The consolidated financial statement
does not include the operations of
Egyptian Indian Polyester Company
S.A.E. as the first financial year of the
said Company will end only on 31st
December 2009.
Cost audit
Under the provisions of Section 233B
of the Companies Act, 1956, the
central government did not prescribe
any cost audit in respect of companies
manufacturing Poly Ethylene
Terepthalate (PET) Resin.
Directors’ Responsibility
Statement pursuant to
Section 217 (2AA) of the
Companies Act, 1956.
Pursuant to the requirement under
Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors’
Responsibility Statement, it is hereby
confirmed:
(i) That in the preparation of the annual
accounts, the applicable accounting
standards had been followed along
with proper explanation relating to
material departures, if any.
(ii)That the Directors had selected such
accounting policies and applied them
consistently and made judgements
and estimates that are reasonable and
prudent, so as to give a true and fair
view of the state of affairs of the
Company at the end of the financial
year and of the profit and loss of the
Company for that period.
(iii) That the Directors had taken proper
and sufficient care for the maintenance
of adequate accounting records in
accordance with the provisions of this
Act for safeguarding the assets of the
Company and for preventing and
detecting fraud and other irregularities.
(iv) That the Directors had prepared the
annual accounts on a going concern
basis.
Corporate Governance and
Management Discussion
and Analysis Report
Corporate Governance and
Management Discussion and Analysis
Reports are set out as separate
annexure to this Report.
Listing of the equity shares
Your Company’s shares were listed on
the National Stock Exchange in July
2007. The equity shares of your
Company are presently listed on
National Stock Exchange (NSE),
Bombay Stock Exchange (BSE) and the
Calcutta Stock Exchange (CSE). The
Company has got the listing and
trading approval from all the stock
exchanges in January and February
2008, for 4,21,92,819 equity shares
issued during the year.
The Unsecured Foreign Currency
Convertible Bonds issued during the
year were listed on the Singapore
Exchange Securities Trading Limited
(SGX-ST) in January 2008.
In view of your Company’s shares
getting listed on NSE and no trading
for the last two years on the CSE, the
Board of Directors at its meeting held
on 12th May 2008, recommended for
approval of the members the proposal
to voluntarily de-list the Company’s
shares from the CSE. The Company’s
shares, however, will continue to be
listed on NSE and BSE.
A special resolution seeking your
approval to such de-listing is appearing
in the notice convening the 12th
Annual General Meeting of the
Company.
SAPL as a subsidiary of
Dhunseri Tea and
Industries Ltd.
Consequent to the merger of Tezpore
Tea Company Ltd. (as per the order
given in April 2008, by the Honourable
High Court at Kolkata) and Unistock
Pvt. Ltd. (awaiting the order by the
Honourable High Court at Kolkata) with
Dhunseri Tea and Industries Ltd., your
Company will become a subsidiary of
Dhunseri Tea and Industries Ltd.
Environment Excellence
Award
Your Directors have the pleasure to
inform you that based on the
environmental performance of the
Company in the last year, your
Annual Report 2007-08 | 19

Company was selected for the second
position for the Environment
Excellence Award 2007, by
Honourable Minister-in-Charge,
Department of Commerce
Industries, Development and Planning
and Industrial Reconstruction and the
Public Enterprise, Government of West
Bengal.
Preferential allotment of
equity shares and warrants
In terms of the resolution passed by
the shareholders at an Extraordinary
General Meeting held on
December 2007, the Company allotted
on a preferential basis 2,30,86,419 fully
paid up equity shares and 76,95,473
convertible warrants to International
Finance Corporation (IFC) and also
1,91,06,400 fully paid up equity shares
and 63,68,800 convertible warrants to
promoters and promoter groups on
20th December 2007. The warrants are
eligible for conversion at the option of
the warrant holders into equity shares
of the Company at a price of Rs. 17.01
per share within a period of 18 months
from the date of allotment. The
Company received from the allottees
of equity shares an amount of
Rs. 71.77 crore. and from the allottees
of warrants, an amount of Rs. 2.39
crore. (being 10% of the
consideration payable for warrants).
Preferential allotment of
FCCBs
During January 2008, the Company
raised USD 20,000,000 from the
international market through
20 | South Asian Petrochem Limited
issue of 200 Zero Coupon Unsecured
Foreign Currency Convertible
the Bonds (FCCBs).
The Zero Coupon Convertible Bonds
and
have a tenure of five years and are
convertible into equity shares at an
initial conversion price of INR 22.50,
subject to the terms and conditions
specified in the Offering Circular. The
bonds are listed on the Singapore
Exchange Securities Trading
Limited (SGX-ST).
Utilisation of proceeds from
8th the preferential allotment of
equity shares, warrants and
FCCBs
The money raised out of the
preferential allotment of equity shares,
warrants and FCCBs would be
utilised for:
i) Equity participation in overseas
subsidiaries,
ii) Retirement of high cost
borrowings, and
iii) Other business purposes including
working capital requirements.
Employees
The Company’s employees represent
a resource around which all plans and
profitability estimates are based. Our
strong talent pool has shaped our
total
growth trajectory and spearheaded our
move into new domains. Your
Directors wish to acknowledge the
support and valuable contribution by
the employees at all levels. The
Company had 220 employees as on
31st March 2008.
the
Acknowledgement
The Directors wish to place on record
their sincere appreciation for the
whole-hearted support received from
Arab Banking Corporation – Egypt,
Bank of America, Bank of Baroda,
Bank of India, Canara Bank, Citibank
N.A, Deutsche Bank, Export-Import
Bank of India, ICICI Bank Limited,
Industrial Development Bank of India
Limited, International Finance
Corporation, Punjab National Bank,
State Bank of India, State Bank of
Travancore, Syndicate Bank, United
Bank of India, West Bengal Industrial
Development Corporation Ltd., Haldia
Development Authority, Office of the
District Magistrate of East Midnapore,
West Bengal Pollution Control Board,
West Bengal State Electricity Board,
Ministry of Environment and Forest,
Government of West Bengal, the
Federal and State Governments in the
United States of America, Government
of Egypt, General Authority for
Investment and Free Zones (GAFI),
Egyptian Petrochemicals Holding
Company (ECHEM), Engineering for
the Petroleum and Process Industries
(ENPPI), Egypt, and all others
associated with the Company.
For and on behalf of
the Board of Directors
Place: Kolkata P.K. Khaitan
Date: 12th May 2008 Chairman
Annexure to Director’s Report
Information pursuant to Section 217(1)(e) of the Companies Act, 1966, read with the
Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988,
and forming part of the Directors’ Report for the year ended 31st March 2008.
A. CONSERVATION OF
ENERGY:
Your Company attaches highest
priority to the conservation of energy.
The activities of the Company in this
direction are:
a. Energy conservation measures
taken:
1. Purchased and installed 2 nos.
inverter drives for air-cooled condenser
motors in the annual shutdown to save
electrical energy due to varying plant
throughputs/ambient conditions.
2. Installed and commissioned 2 nos.
coal fired HTM heaters to supply hot
oil to the process plant in parallel to the
existing furnace oil fired HTM heaters.
Coal fired heaters will be used
continuously and the furnace oil fired
heaters will be kept as standby. This
will result substantial reduction in
operating cost (fuel) as compared to
furnace oil. They will be taken in to
continuous operation after getting
necessary statutory clearances.
3. Installed 3 nos. steam heaters for
heating furnace oil in the DG power
plant. L.P steam generated from the
exhaust gas of coal fired HTM heaters
will be used for this purpose. Presently
electrical energy is being used to heat
the furnace oil.
4. Preheating of standby engine is
being done by circulation of HT water
from the running engine in DG power
plant. Earlier the preheating was done
through electrical heaters.
b. Additional investments and
proposals, if any, being
implemented for reduction of
consumption of energy:
Investments and proposals presently
under consideration by
Company are:
1. Eco-friendly roof extractor will be
installed at Finish Goods Store to
improve air ventilation. Presently
electrical operated exhaust fans and
man cooler fans are being used for
ventilation system. This will result in
substantial reduction in
consumption.
2. Installation of smaller capacity
centrifugal pump for re-circulation of
DM water in the polymer cutter system
in place of existing
capacity pump.
3. Modification of control circuit for
ventilation fan at DG Hall. Presently
total ventilation fans are continuously
running for dissipation of the running
engine heat from inside to outside.
After modification of control circuit, the
fan will be started automatically
through bearing temperature sensor of
the DG engine.
c. Impact of the measures at (a)
and (b) above for reduction of
energy consumption and
consequent impact on the cost of
production of goods:
Through the energy conservation
measures like installation of 2 nos.
inverter in air cooled condensers
system, 3 nos. steam heaters for
furnace oil heating in DG power plant
and pre-heating the standby DG by hot
your
water from running DG, your Company
is reducing power consumption. The
annual cost savings is estimated
around Rs. 24.15 lakhs. Also, we
expect saving on fuel cost to the tune
of Rs. 750.0 lakhs per annum by
operating coal fired hot oil heaters
instead of the oil fired ones.
power
The proposed energy conservation
measures are expected to yield an
annual cost savings of:
1. Rs. 20.5 lakhs on account of eco-
friendly roof exhaust fan in place of
higher
electrical fans.
2. Rs. 6.5 lakhs on account of using 15
KW pump in place of 55 KW pump for
DM water circulation system.
3. Rs. 1.6 lakhs on account of control
circuit modification at DG Hall
ventilation fan.
The actual impact on the cost of
production, of the measures
undertaken/proposed to be undertaken
by your Company to reduce energy
consumption, can be felt during the
year 2008-09.
Annual Report 2007-08 | 21
 FORM A FORM B 4. Expenditure on R&D: given to import substitution as a part
Form for Disclosure of Particulars with respect to conservation of energy Form for Disclosure of Particulars with a. Capital of economic development strategies.
respect to absorption Import substitution is being done by
Power and Fuel Consumption: b. Recurring
keeping in view the quality, the
Current year 2006~07 Previous year Research and Development (R&D) c. Total performance and its criticality in the
(Apr 2007~Mar 2008) (2006-07) 1. Specific areas in which R&D d. Total R&D expenditure as a system.
1. Electricity carried out by the Company percentage of total turnover
3. In case of imported technology
(a) Purchased The following R&D activities were
The R&D is integrated to the (imported during the last five years,
Units (KWH) 1,00,931 3,70,698 conducted during the financial year
production and quality control process reckoned from the beginning of the
Total amount (Rs.) 15,60,757 25,30,976 2007-08 to strengthen the unique
of the Company and as a result cannot financial year), the following
specialised application of PET Resin.
Rate/unit (Rs. /KWH)* 15.46 6.83 be segregated. information may be furnished:
(b) Own generation a. CPET application:
The benefits are consequently (a) Technology imported – PET Resin
(i) Through F.O. generator To cater to customers, SAPL
synergised and not allocated in terms manufacturing technology.
Unit (KWH) 3,99,13,143 4,00,79,681 undertook a project for manufacturing
of financial heads.
Units per ltr. of furnace oil (KWH) 4.12 4.12 ovenable CPET trays, a promising, (b) Year of import - since inception.
Cost per unit (Rs.) 4.45 3.66 ever-growing field,. The process Technology absorption, adaptation
(c) Has technology been fully
(considering only fuel cost) conditions were studied and Resin, and innovation
absorbed- fully absorbed.
with desired properties, was 1. Efforts, in brief, made towards
(ii) Through steam turbine /generator
successfully developed and technology absorption, adaptation and (d) If not fully absorbed, areas where
Unit (KWH)
commercialised innovation. The Company’s plant is this has not taken place, reasons
Units per ltr. of fuel oil/gas
based on the technology from Zimmer therefore and future plans of action-
Cost/unit (Rs.) b. Molding grade PET Resin: AG, Germany. The Company started NA.
2. Coal The SAPL worked for introducing the commercial production in September
Foreign exchange earnings and
(a) Purchased new grade for electrical appliances. 2003. All efforts were made towards
outgo:
Quantity (Tonnes) Product with slow crystallising technology absorption and adaptation
1. Earnings in foreign exchange-
Total cost (Rs.) characteristics and superior stability and achieved the required quality of
Rs. 60,068.27 lakhs
Average rate was produced. product within a very short duration.
3. Furnace oil: (for heating) 2. Foreign exchange outgo-
Extensive trials had been conducted at 2. Benefits derived as a result of
(a Purchased Rs. 35,275.18 lakhs
various injection molders and found to the above efforts e.g., product
quantity (K ltrs) 10,135.04 10,126.12 improvement, cost reduction, product
be successful. Information on foreign exchange
Total amount (Rs.) 18,60,06,257 15,28,76,095 development, import substitution etc.
2. Benefits derived as a result of earnings and outgo is contained in
Average rate (Rs.) 19.94/kg 16.41/kg Subsequently a lot of modifications
the above R&D Schedule 19 of the Notes to Accounts.
4. Others/internal generation were carried out in the process to
Newer markets and substitution for The Company being a 100% Export
(a) Purchased improve productivity, reduce the cost
engineering plastic. Oriented Unit (EOU), all its activities are
Quantity of production and also to facilitate new
geared mainly towards exports, the
Total cost (Rs.) 3. Future plan of action product development. As all process
earnings of which are in foreign
Rate/unit SAPL is planning the development of plant equipments were imported, we
have lot of scope for import exchange.
B.Consumption per unit of production: specialty product intended for
Standards Current year Previous year engineering application. substitution. More priority has been
(if any) 2007-08 2006-07
Product: PET Resin
Electricity (KWH/MT) 273.00 241.87 243.77
Furnace oil (Kg/MT) 86.00 56.36 55.71

*Note: The rate per unit of electricity (purchased) is higher in the current year due to lower consumption of the same and
the fact that fixed demand charges are not connected to consumption.

22 | South Asian Petrochem Limited Annual Report 2007-08 | 23

 Annexure to Director’s Report Financial Highlights for the last five years
Information as per Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employee) Rules, 1975, and forming part of the Directors’
Report for the year ended 31st March 2008.

Name Age Qualification Date of Designation/ Remuneration Experience Last Particulars 2007-08 2006-07 2005-06 2004-05 2003-04
(yrs.) employment nature of duties received employment
gross (Rs.) Turnover (Net) Rs./Lakhs 100,466.11 101,865.76 92,318.50 79,402.88 38,109.67

Mr. Biswanath 51 B. Tech 19/10/99 Executive 43,95,607 27 years Tech. Profit/(Loss) Before Tax Rs./Lakhs 7,413.12 5,181.44 2,409.38 1,885.27 71.32
Chattopadhyay (Chem) Director Director,
and CEO Elque Profit/(Loss) After Tax Rs./Lakhs 5,552.86 4,469.01 2,023.31 1,832.39 69.22
Polyester
Dividend Rs./Lakhs 1,165.69 Nil Nil Nil Nil
Mr. Mrigank 27 B.Com 12/08/05 Executive 45,64,846 7 years First
Dividend Per Equity Share Rs. 0.50 Nil Nil Nil Nil
Dhanuka Director employment

Mr. Brijesh 56 B.Tech (H) 01/06/06 Executive 38,39,267 30 years Managing Earnings Per Share Rs. *2.59 2.34 1.06 0.96 *0.04
Kumar Biyani in Chemical Director Director,
*Diluted EPS
Engineering (Corporate) Sicpa India
from IIT, Ltd.
Post Graduate
Diploma in
Industrial
Engineering

Notes:
1. Remuneration received includes salary, bonus, allowances, commission, taxable value of perquisites and the Company’s
contribution to provident fund.

2. Nature of employment is contractual. Other terms and conditions are as per their respective agreement/Board resolution
and as per the Rules of the Company.

3. Mr. M. Dhanuka is a relative of Mr. C.K. Dhanuka. None of the other employees mentioned above is related to any of the
Directors of the Company.

4. Mr. M. Dhanuka holds 100 shares in the Company. None of the other employees mentioned above hold any shares in the
Company.

24 | South Asian Petrochem Limited Annual Report 2007-08 | 25

 Industry structure and
developments
South Asian Petrochem Ltd. is engaged
in the manufacture of Poly-Ethylene
Terepthalate (PET) Resin, which is one of
the most effective packaging materials
Management Discussion
used today. The Company is the second
largest contributor to the PET industry in
and Analysis Report
India. With an increase use of PET for
bottled drinks, beverage, liquor, FMCG
and the pharmaceutical sectors, the
demand for PET resin will continue
to rise.
Opportunities and threats
The increasing population, the growing
proportion of the young population in
India, urbanisation, increasing
deposable urban incomes, growth in
the FMCG sector, conversion to
packaging using PET compared to
other materials used traditionally, are
various opportunities for the
PET industry.
Some of the main threats to the PET
industry include a sharp increase in
crude and PTA/MEG prices, which are
the primary raw materials for the PET
resin industry. Further, stiff
competition from the polycarbonates,
tetrapack and glass bottles as well as
an increase in the production capacity
of PET resin are other major threats. Nil
duty imports consequent upon signing
of FTAs are also a concern. The
Company continues to reconfigure its
existing capability and maintain a high
quality to overcome these threats.
Segmentwise or productwise
performance
The Company has two geographical
segments – domestic and exports.
During the year, the Company earned
66% of its revenues from overseas
sales spread across 60 countries. The
balance was derived from the
domestic sales. Margins differed from
26 | South Asian Petrochem Limited
country to country depending on the The reports are placed before the Audit
competitive position. Committee and comments and
suggestions made by the Internal
Outlook
Auditors are noted and implemented.
The consumption of PET is likely to
increase in view of its wide use as Material development in human
packaging in various sectors. With an resources, industrial relation
increase in capacity through de- front
bottlenecking exercise in the existing Employee relations in the organisation
plant at Haldia, the Company’s were cordial and peaceful. Since
flexibility in producing different grades inception, the Company successfully
including speciality grades is possible, recruited the right personnel as per its
resulting in a higher yield. This, designed employment plan. Trained
together with cost reduction measures personnel managed operations at
planned by the Company, will result in various levels. The number of
an improved performance in the personnel employed by the Company
coming years. as on 31st March 2008 was 220.
Risks and concerns Cautionary statement
Risks and prospects are inseparable Statements in this Management
components of the Company’s Discussion and Analysis Report may
business. The Company has identified be ‘forward looking statements’ within
various risks and constituted a Risk the meaning of applicable securities,
Management Committee, comprising laws and regulations. These
of heads of department, which meets statements are based on certain
assumptions and expectations of
regularly to assess risks and minimise
future events. Actual results could
their incidence with the objective to
differ materially from those expressed
maximise returns.
or implied. Important facts that could
Internal control system and their make a difference to the Company’s
adequacy operations include economic
The Company possesses an internal conditions affecting global and
control system to ensure that all assets domestic demand-supply, raw-material
are safe-guarded and protected costs and availability, changes in
against loss and that the transactions government regulations, tax regimes,
are authorised, recorded and reported economic developments within India
correctly. The Executive Director, and other factors such as litigation and
Sr. V.P (Finance) and CFO of your industrial relations. The Company
Company oversee the internal control assumes no responsibility to publicly
system. To ensure state-of-the-art amend, modify or revise any forward
monitoring and control, the Company looking statement, on the basis of any
is maintaining its system through subsequent developments,
Oracle, E-Business Suit and information or events.
ERP software.
For and on behalf of
Further, the Company uses the the Board of Directors
services of an external chartered
accountant firm as Internal Auditors to Place: Kolkata P.K. Khaitan
submit reports on a quarterly basis. Date: 12th May 2008 Chairman
Annual Report 2007-08 | 27
 Efficiency driver

Efficiency driver
01 Superior technology Raw material management 02

Will the raw material arrive at the right time? Will it be priced just right? Will it be
Will the plant run with a high uptime? Will it use the lowest amount of raw
of the right quality? In a process-intensive business of PET resin manufacture,
material? Will it deliver products of the highest quality? In the capital-intensive
these are not trifling issues because of the prohibitive cost of downtime and
business of PET resin manufacture, these are critical margin-affecting questions.
quality error.

At SAPL, we invested in a cutting-edge technology
leading to optimal capacity utilisation, high
manufacturing efficiency, environmentally responsible
processes and stringent quality standards. The result
is that SAPL’s EBIDTA margin of 11.22% in 2007-08
was among the best in its industry
We dovetailed proactive maintenance leading to an
enhanced uptime of 100% in 2007-08.
We increased the production capacity from
180,000 TPA to 200,000 TPA through efficient
de-bottlenecking.
We commissioned one more solid state
polycondensation plant to produce value-added PET
for the premium segment; engineered two new
variants of PET resin, AS25H and AS20HF, extending
the product portfolio into retail segments.
We carried out process optimisation to minimise
non-standard transition material that strengthened
yields.
The Company extended this technology advantage
through proactive engineering support. This
facilitated smooth operational transition from a
furnace-oil fired heater to coal-fired hot oil heaters.
At SAPL, we combined raw material and logistics
management to achieve a low delivered cost of raw
material, resulting in a formidable competitive edge.
We eliminated the generation of process waste and
consequent production cost escalation involved with
restarting processes through timely and proactive raw
material sourcing.
We strengthened our vendor appraisal system,
facilitating the development of multiple vendor
sources.
We entered into long-term contracts to ensure a
smooth supply of raw materials like purified
terephthalic acid, mono-ethylene glycol and
isophthalic acid. We leveraged our proximity to PTA
source, saving on shipping costs.
We reported a substantial reduction in holding
costs through the optimal utilisation of storage space
and reordering quantity.
The ERP platform strengthened raw material
inventory management.
Going ahead, the Company will set up its next plant in
Egypt on the Damieta port, close to raw material
resources and end-users, reducing logistic costs.

28 | South Asian Petrochem Limited Annual Report 2007-08 | 29

 Efficiency driver

Efficiency driver
03 Quality focus Marketing excellence 04

Will the product be of the right quality? Will it be compatible with food contents?
Will it be environmentally safe for recycling? Will it adapt to the varied quality
requirements across different markets? In a business of sensitive products which
are either ingested or applied on the skin, the container needs to be safe, stable
and durable.
Will we achieve scale? Will our products be visible to buyers across markets? Will
we be able to present an attractive price-value across diverse geographies? In a
business where we manufacture large volumes, the critical need is to achieve
large sales as well – across diverse regions.

At SAPL, the quality of our products is reflected in
their rich endorsements and customer profile.
Our products have been certified by national and
international agencies like the USFDA, EEC and ITRC.
We received the ISO 9001:2000 certifications from
the TUVNORD in 2006-07.
The Company’s quality sensitivity was aligned with
emerging market opportunities and the need for
product customisation.
At SAPL, we reached out to 60 markets across the
world. Our every international venture followed an
exhaustive analytical study on possibilities in the
target market.
We ventured into the growing markets of North
America, Latin America, European Union, Middle
East, Eastern Europe and Africa.
We generated around 64% of our revenues from
the foreign markets; we selected markets on the
basis of size and potential demand.
We entered the rapidly growing markets of Eastern
European countries and North America; we procured
22% of our revenues from these regions in 2007-08.
We responded with a direct distribution approach
that maximised disintermediation in established
markets and reduced distribution costs; as a result,
the proportion of our direct sales increased from 44%
in 2005-06 to 52% in 2007-08.

The Company’s near-zero per cent rejection of end-

products reflected its quality culture.

30 | South Asian Petrochem Limited Annual Report 2007-08 | 31

 Efficiency driver
05 Service orientation
Will we be able to delight our customers? Will we be able to delight them enough
so that they return? Will we be able to extend beyond the tangible to the
intangible? In a business where we must work with hundreds of customers in a
large number of countries on a sustainable basis, the key lies in not just managing
the transaction but growing the relationship.
At SAPL, our service mindset translated into
approximately 75% of our income being derived from
repeat business from existing customers.
The Company accelerated product delivery and
value addition to drive the customer’s business and
fulfil delivery schedules.
The Company delivered products to the customer’s
doorstep within the scheduled time (98% delivery
accuracy), resulting in enhanced trust.
The elimination of dealers and intermediaries
resulted in a better understanding of customer
preferences, leading to enhanced satisfaction.
An institutionalised customer feedback mechanism
strengthened the Company’s service orientation.
32 | South Asian Petrochem Limited
Efficiency driver
IT strategy 06
Will we be able to analyse sales and production data in an instant? Will we be able
to review our country-wise performance on an ongoing basis? Will we be able to
ascertain our profits and profitability in real time? In a business where informed
decisions must be taken at all times, there is a growing need for an IT system to
capture that information and make it available on tap.
In a Rs. 1,004.66-cr revenue business with around We invested in qualified experienced engineers for
350 customers, information represents the our IT department.
organisation’s lifeblood. At SAPL, we invested in an IT
We migrated to a Linux platform along with Oracle
foundation to make all our growth scalable and
11i for ERP modules.
profitable.
We developed in-house application software,
We invested in highly efficient MIS as well as ERP
enabling the sharing of information on raw materials
modules that strengthened knowledge sharing and
with consignment and shipment details.
informed decision-making.
We invested in a multi-node server, along with node
clustering, that accelerated data retrieval for efficient
disaster management system.
Annual Report 2007-08 | 33
 Efficiency driver

07 People approach Environment compliance at SAPL

For companies in petrochemical manufacture, the everyday business is no better
than tightrope walking when it comes to a concern for the environment. At SAPL,
environment conservation is as crucial as managing its core business.
Will we be able to report rising productivity? Will we be able to create a culture of
innovation? Will we be able to attract skilled professionals? In a competitive SAPL is a respected member of the community in the generation of ETP sludge is zero. Lubricant oils are
location of its presence for its commitment to the collected in drums for onward disposal by re-
business marked by thin margins, it is the ability to find extra margins that makes
environment. The Company institutionalised a review processors. A number of tests are carried out to
the difference. of discharge processes, water consumption, waste ensure that the level of various chemicals in the
generation, air and water quality, etc. to minimise its disposed effluent do not breach the limits set by the
impact on the environment. PCB.

At SAPL, our per-person productivity declined
marginally on account of a planned shutdown for a
month in 2007-08. We have lined up a number of
initiatives to ensure better productivity in 2008-09.
We created a knowledge-driven 220-people
workforce.
We recruited industry experts with attractive
packages to accelerate organisational effectiveness.
We documented HR policies that facilitated
training, performance appraisal and management.
We trained our employees extensively in core skills,
behavioural aspects and morale management.
Regular checks are in place at every step for
measuring the levels of SPM, RSPM, SO2 and NO2 in
the exhaust and in the surrounding environment to
ensure a complete compliance with the Pollution
Control Board-prescribed methods. Stack analysis is
conducted internally and externally to comply with
the SPM limit set by the Pollution Control Board.
The Company embarked on several initiatives to
reduce the generation of solid and hazardous wastes.
The ETP sludge generated in the PET resin
manufacturing process is stored in HDPE lined
storage pit. After developing the common hazardous
waste facility in Haldia the sludge will be dispatched
to this facility. Presently the generated ETP sludge is
totally recycled as a source of bio-organism i.e.
The Company proactively invested in developing a
greenbelt of nearly 30,000 sq mt around its Haldia
plant by planting 1,500 trees. It used two-stage
aerobic and two-stage anaerobic ETP plants to treat
the effluents.
SAPL is a member of the West Bengal Waste
Management System and adhered to the
Environmental Control Board and the Ministry of
Environment and Forest. It was also a part of the
Rajya Paribesh Mela organised by the West Bengal
Pollution Control Board in 2006-07.
Recently SAPL was awarded with the second prize of
Environment Excellence Award- 2007, by West
Bengal Pollution Control Board, an endorsement of
the Company’s environment commitment.

34 | South Asian Petrochem Limited Annual Report 2007-08 | 35

 Margins vendors on the other. The repeat customers were
associated with the Company for two years or higher.
Particulars 2006-07 2007-08

EBIDTA margin (%) 9.83 11.22 Operational expenses

The Company’s operational expenses declined 1.04% due
Net margin (%) 4.19 5.32
to enhanced operational efficiency: from Rs. 97,100.94 in
The Company strengthened its margins in 2007-08 through 2006-07 to Rs. 96,087.89 in 2007-08; total operational
low-cost capacity increase, value-addition and wider expenses as a proportion of revenues declined from
product portfolio. The Company managed its raw material 94.93% to 92.84%.
cost through long-term contracts and efficient negotiations
Cost break-up (percentage of total expenditure)
with suppliers, despite rising raw material prices.
Segment 2006-07 2007-08 (+/-)
The Company generated Rs. 12,386.06 lakhs in cash flow
Raw material 82.22 78.97 (3.25)
and Rs. 8,579.29 lakhs in free cash flow (depreciation plus
profit before tax less dividend) in 2007-08. Manufacturing,

Financial review Particulars 2006-07 2007-08

administrative and
other expenses 14.00 13.76 (0.24)
Cash ploughed back in
business (Rs. lakhs) 7,199.67 7524.48 Raw material: During 2007-08, MEG prices rose from
Basis of accounting US$950 a tonne to US$1,600 a tonne, PTA appreciated
The Company abided by the accrual basis of accounting unless otherwise stated. It prepared its Revenues from US$910 a tonne to US$972 a tonne and crude oil by
The Company’s turnover (without the impact of the
accounts according to the applicable accounting principles issued by the Institute of Chartered 66%. Raw material cost as a proportion of total expenses
exchange rate fluctuation was Rs. 106,569 lakhs in 2006-07 decreased nearly 325 basis points from 82.22% in 2006-07
Accountants of India and the relevant provisions of the Companies Act, 1956. The Company’s
and Rs. 104,429 lakhs in 2007-08. The Company’s exports to 78.97 % in 2007-08. As the Company entered into
performance during the year under review is reflected in the following numbers: as a proportion of the turnover stood at 64% or Rs. 63,847 forward contracts with customers and partly neutralised
lakhs during the year. The Company added two new the impact of raw material costs.
variants to its product portfolio and reinforced its presence
as a manufacturer of value-added PET resin which were PTA
(Rs./lakhs) well-received, enjoying a higher demand in developed
markets with a mature retail presence. Global supply/demand (kt/pa)
Particulars 2006-07 2007-08 Growth (%)
The Company reported an increase in its other income as a
Sales and processing (net of excise) 101,865.76 100,466.11 (1.37) 60,000 100%
proportion of total revenue by 261 basis points from 0.41%
50,000 95%
EBIDTA 10,479.32 11,711.39 11.76 in 2006-07 to 3.02% in 2007-08. The non-manufacturing
40,000 90%
income comprised Rs. 3,034.90 lakhs and accounted for
Profit after tax 4,469.01 5,552.86 24.25 30,000 85%
41% of the Company’s profit before tax during the year
20,000 80%
Cash profit 7,199.67 8,888.28 23.45 under review. 10,000 75%
Diluted cash EPS (Rs.) 3.77 4.15 10.08 Proportion of revenues from repeat customers 0 70%

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008E
2009E
2010E
1011E
1012E
Net worth 27,339.06 38,560.13 41.04 Nearly 75% of the Company’s revenues was derived from
longstanding customers in 2007-08, an index of the Operating Rate
Capacity
Fixed assets (with CWIP) 35,291.23 35,933.53 1.82
Company’s ability to customise products on the one hand
Source: Doutsche Bank and CMAI
Net current assets 25,547.05 31,591.88 23.66 and the propensity of the customers to work with trusted

36 | South Asian Petrochem Limited Annual Report 2007-08 | 37

 Global PTA supply & demand (kt/pa) Raw material volatility The Company used forward contracts to hedge its
The PTA situation in 2007-08 experienced demand-side exposure to movements in foreign exchange rates. The
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
pressures and escalation of cost partly due to high premium or discount arising at the inception of a forward
Capacity 23,060 24,065 25,270 26,320 30,288 31,360 33,625 37,514 42,205 45,077 48,095 53,375 55,525 55,525 exchange contract was amortised as expense or income
paraxylene prices (raw material for PTA). Prices are
Capacity growth (%) 6.1% 4.4% 5.0% 4.2% 15.1% 3.5% 7.2% 11.6% 12.5% 6.8% 6.7% 11.0% 4.0% 0.0% over the life of the contract. Exchange differences on such
expected to stabilise in 2009 following large capacity
a contract are recognised in the profit and loss account in
Production 19,886 21,634 22,719 24,778 26,774 29,254 30,667 33,222 36,412 30,221 42,281 45,291 48,899 51,120 additions in the Middle East. Mitsubishi Chemicals is
the reporting period in which the exchange rates change.
Production growth (%) 9.5% 8.8% 5.0% 9.1% 8.1% 9.3% 4.8% 8.3% 9.6% 7.7% 7.8% 7.1% 8.0% 4.5% increasing its capacity in Haldia from 475,000 TPA to
Any profit or loss arising on cancellation or renewal of such
1,275,000 TPA, strengthening SAPL’s raw material
Consumption 19,861 21,605 22,647 24,898 26,621 29,234 31,231 33,497 36,431 39,219 42,415 45,586 48,842 51,353 a forward exchange contract is recognised as income or
security. The Company sourced additional requirements
Consumption growth 12.8% 8.8% 4.8% 9.9% 6.9% 9.8% 6.8% 7.3% 8.8% 7.7% 8.1% 7.5% 7.1% 5.1% expense for the period. The foreign exchange losses, if
from the IOC and the rest through imports.
any, arising on marking to market forward exchange
Operating rate (%) 86.2% 89.9% 89.9% 94.1% 88.4% 93.3% 91.2% 88.6% 86.3% 87.0% 87.9% 84.9% 88.1% 92.1%
SAPL entered into a long-term contract with ME Global, a contract entered to hedge the foreign currency risks of a
Source: CMAI and Deutsche Bank estimates major MEG supplier in the world. The supply of MEG was firm commitment or a highly probable forecast transaction
globally secure, though its price was influenced by rising are provided in the profit and loss account.
crude prices. The Company is attractively positioned to
PTA PTA MEG Other incomes for the year under review increased from
source MEG for its Egypt plant from the Middle East. Rs. 4.17 cr in 2006-07 to Rs. 30.35 cr in 2007-08 primarily
Major expansions (kt/pa) Top producers (kt/pa) 2008E Global supply/demand (kt/pa)
on account of Rs. 17.13 crs being the exchange gain on
Manufacturing, administrative and other
Capacity (000 metric tonnes)

30,000 95% foreign currency loans on the Company’s books. The

expenses
% share of global capacity

9,000 20%
2,500 8,000 18% 25,000 foreign exchange gain was Rs. 25.32 cr in 2007-08,
2,000 16% 90%
7,000 The manufacturing and operational expenses of the
1,500 6,000 14% 20,000 compared to Rs. 2.12 cr in 2006-07, primarily on account of
12%
85%
1,000
500
5,000
10%
15,000 Company reduced by 2.72% from Rs. 13,592.07 lakhs in the strengthening of the rupee.
4,000 80%
0 8% 10,000 2006-07 to Rs. 13,221.88 lakhs in 2007-08.
3,000
MCC PTA India

Tae Kwang

BP

Xianglu PC

Dalian

Pengwel

Yizheng

Artenius
PetroquimicaSu

6% 75%
2,000
1,000
4%
2%
5,000
Major expenses as a proportion of total expenses (%)
Sources of funds
ape

0 70%
0 0% Net worth: Through enhanced reinvestment of surplus funds,
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008E
2009E
2010E
1011E
1012E
BP
Formosa
SINOPEC
Mitsub
Grupo
Reliance
Mitsui
Tuntex
Tae
CNPC

2006-07 2007-08 the Company increased its net worth from Rs. 27,339.07
2008 2009 2010 Capacity Operating Rate Manpower costs / total cost 0.66 0.76 lakhs in 2006-07 to Rs. 38,560.13 lakhs in 2007-08. This
Source: Deutsche Bank and CMAI Source: Deutsche Bank and CMAI Source: Deutsche Bank and CMAI
Manufacturing reinvestment amounted to the lowest cost of funds for the
expenses / total cost 4.35 4.37 Company. The book value per share of the Company
increased from Rs. 14.32 in 2006-07 to Rs.16.44 in 2007-08.
Selling expenses / total cost 8.22 7.54
Global ethylene glycol supply & demand (kt/pa)

18.07

17.00
Other costs / total cost 1.57 1.73
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E

Capacity 13,464 14,682 15,534 15,809 15,826 16,682 17,488 18,806 20,025 21,958 24,296 25,946 26,624 27,334 Treatment of foreign currency exchange
Capacity growth (%) 4.2 9.0 5.8 1.8 0.1 5.4 4.8 8.1 5.9 9.7 10.6 6.8 2.6 2.7 gains
Production 11,458 12,496 12,620 13,271 13,859 15,092 15,672 16,829 17,582 19,171 20,486 21,704 23,473 24,008 Forward exchange contracts were recorded at the contract
rate. Exchange differences arising out of the settlement of
Production growth (%) 3.5 9.0 1.1 5.2 4.4 8.9 3.8 7.4 4.5 9.0 6.9 5.9 6.35 4.1
transactions or on reporting at year-end rates were
Consumption 11,615 12,336 12,649 13,534 14,197 15,330 16,064 17,031 18,118 19,347 20,585 21,785 23,080 24,194 recognised as income or expenditure in the period in
Consumption growth (%) 7.8 6.2 2.5 7.0 4.9 8.0 4.8 5.9 6.5 6.8 6.4 5.8 5.9 4.8 which they arose except with respect to fixed assets

2006-07

2007-08
Operating rate (%) 95.1 85.0 81.2 83.9 87.6 90.5 89.6 89.0 87.8 87.3 84.3 83.7 86.7 87.8 acquired from outside India up to 31st March 2007, where
exchange variations were adjusted to the carrying amount
Source: CMAI and Deutsche Bank estimates
of respective assets. Return on net worth (%)

38 | South Asian Petrochem Limited Annual Report 2007-08 | 39

 The Company covered itself against a probable rise in raw material costs through
upfront payments and larger stocking
Composition of net worth
Share (Rs. in lakhs)
Share capital 23,313.86
Equity share warrants 140.64
Reserves and surplus 15,165.88
Equity: The equity share capital was Rs. 23,313.86 lakhs,
comprising 2,33,138,594 equity shares of Rs.10 each, fully
paid up as on 31st March 2008. The Company did not
dilute its equity capital during the year under review. The
Company raised capital to the extent of Rs. 7,416.23 lakhs
for equity participation in overseas subsidiaries, retirement
of high-cost borrowings and other business purposes,
including working capital requirements.
Reserves: The Company’s reserves indicated its cash
richness and low-cost financial resources. Its reserves
increased from Rs. 8,449.35 lakhs in 2006-07 to
Rs. 15,165.88 lakhs in 2007-08 on account of reinvestment
of a high portion of retained earnings, together and
premium derived from the preferential issue of equity
shares and warrants. The Company’s diligent reinvestment
of profits coupled with operational enhancement, helped
scale the business.
The Company’s reserves accounted for Rs. 15,165.88
lakhs, an 80% increase over the previous year. Free
reserves accounted for 100% of the Company’s reserves in
2007-08, as they were in 2006-07, indicating an aggressive
profit plough back. The Company did not have any
revaluation reserves on its books at the close of the
financial year under review.
40 | South Asian Petrochem Limited
Debt: The debt profile of a company determines the
degree of financial leverage. The Company’s loan funds
were mainly in the form of secured loans. The debt-equity
ratio strengthened from 1.21 in 2006-07 to 0.93 in 2007-08
and interest cover strengthened from 3.45 to 5.96.
Capital employed: This parameter also measures business
viability in terms of return on capital employed. The
Company’s capital employed increased from Rs. 60,445.45
lakhs in 2006-07 to Rs. 74,222.64 lakhs in 2007-08, while
ROACE improved from 16.83% to 17.39% in 2007-08,
indicating fiscal efficiency.
Gross block
As on 31.03.2008, the Company had Rs. 45,216.10 lakhs of
gross block, compared to Rs. 42,701.29 lakhs in 31.03.07.
This was a result of the following additions:
Items Rs. in lakhs
Non-factory building 392.64
Plant and machinery 2039.85
Furniture 8.44
Motor vehicles 80.10
Computer software 1.10
The Company efficiently used its invested assets by fully
utilising the installed capacity. The assets remained
technologically robust, obviating the need for replacement.
Should the Company expect to invest in its gross block, its
present earnings are attractive enough to cover such an
investment.
Working capital
The Company’s business requires an adequate working
capital outlay on account of a proactive and adequate
purchase of raw materials and cover ongoing expenses
like salaries and other production overheads. The
Company’s working capital outlay increased from
Rs. 25,547.05 in 2006-07 to Rs. 31591.88 lakhs in 2007-08.
As a proportion of the total employed capital, the working
capital outlay was 42.27% in 2006-07 and 42.56% in 2007-
08. In the Company’s opinion, these numbers fared
favourably compared to industry peers.
The Company’s working capital management strengthened
for the following reasons:
Replacement of extensive raw material stocking with
just-in-time delivery through better supplier relationships.
Prudent investment of its cash surplus in liquid secured
funds.
Evolution of the product mix from low-margin to high-
margin PET resin grades.
During the year under review, the Company funded its
working capital requirements through short-term lending
by commercial banks and discounting bills of exchange.
Inventory: The higher off-take of material resulted in
inventories declining during the year under review. The
Company maintained around a month’s inventory of all raw
material (purified terephthalic acid, mono ethylene glycol
and isophthalic acid).
Debtors: The Company’s debtors in absolute terms
reduced from Rs. 13,555.28 lakhs in 2006-07 to
Rs. 10,726.56 lakhs in 2007-08. Its receivables as a
proportion of current assets was 20% in 2007-08,
indicating brand strength. In terms of equivalent days of
turnover, the Company’s debtors’ cycle shrank from 49
days to 39 days. It maintained an ongoing ageing analysis
for debtors to monitor probable defaults with speed.
Cash and bank balances: The Company’s cash and bank
balance strengthened from Rs. 10,381.90 lakhs in 2006-07
to Rs. 20,854.95 lakhs in 2007-08. As a proportion of
working capital, the increase was significant: from 40.64%
to 66.01% during the period. The surplus cash will be
ploughed back into working capital outlay and other
business needs.
Creditors: The nature of the Company’s business
warranted a highly efficient supplier network capable of
delivering material promptly when needed. The creditors’
cycle declined from 114 days (as on 31st March 2007) to
78 days (as on 31st March 2008) as the Company covered
itself against a probable rise in raw material costs through
upfront payments and larger stocking.
Annual Report 2007-08 | 41
 02 Competition risk
The emergence of global players with larger
organisational scale and effectiveness.

Mitigation measurement
capacities could escalate competition in the industry.

Risk management
Risk mitigation
The Company expanded its installed capacity from
140,000 TPA to 180,000 TPA and then to 200,000 TPA
The Company reduced its capital cost per tonne
through modest incremental investments in capacity
expansion. However, the expansion from 1,40,000
TPA to 2,00,000 TPA was made through an

At SAPL, risk management is a comprehensive exercise supported by an understanding of the through de-bottlenecking initiatives, entailing a investment of only Rs. 35 cr.
nominal increase in project cost.
relationship between the organisation and the external environment leading to the identification, 2004-05 2007-08
The capital cost per incremental tonne was funded
analysis and quantification of risks. SAPL has a Risk Management Committee comprising three Capital cost per tonne (Rs.) 26990.71 17436.00
through borrowings at reasonable rates and internal
Executive Directors, Senior Vice President (Finance)-cum-CFO and Asstt. Vice President (Works). funding. The Company’s EBIDTA margin expanded from
9.83% in 2006-07 to 11.22% in 2007-08 (without the
The Executive Director (Corporate) acted as the Chief Risk Management Officer (CRMO). The The new manufacturing plant in Egypt with an
impact of exchange rate fluctuation).
installed capacity of 315,000 TPA will enhance
Company’s various risk mitigating initiatives are presented below.

01 Geographical risk Mitigation measurement 03 Technology obsolescence risk

Overdependence on a specific market could lead to a
loss of prospective business in growing markets.
Risk mitigation
The Company is 100% export-oriented with a
presence in around 60 international destinations,
In a technology-intensive business, new
seems as a hedge against new technology
obsolescence.
No country accounted for more than 14% of the
Company’s turnover in 2007-08. developments could pose a threat of technology The Company manufactured different grades of PET
obsolescence, leading to a high replacement cost. resin, introducing two new grades in 2007-08.
Regional distribution of sales
0% Europe Risk mitigation The addition to gross block was Rs. 2,522.13 lakhs
The Company strengthened its cutting-edge five- in 2007-08 compared to Rs. 613.68 lakhs in 2006-07.
26

Middle East & Africa

%

eliminating the risk of over-dependence. reactor technology, a more sophisticated version of

36%

N. America
the usual three-reactor process. Mitigation measurement
The new manufacturing plant in Egypt will make it S. America
The Company continued to remain profitable; it
possible to reach deeper inside the European Union, SAARC
The Company achieved its capacity fully and
declared a maiden dividend in 2007-2008. The
17

reduced in energy cost with robust maintenance

%

North America and other under-penetrated African India

8% Company is optimistic of maintaining its profitability.
markets. 1% 12% mechanism, and zero down time. These initiatives
CIS & Russia

42 | South Asian Petrochem Limited Annual Report 2007-08 | 43

 04 Regulatory risk
The Company might face financial and regulatory
censure due to product and process non-compliance
with prevailing environment norms.
Risk mitigation
The Company invested in environment-friendly
technology, minimising gaseous emissions.
Its installed equipment for treating and neutralising
effluents were at par with industry peers.
The Zimmer technology comprised in-built
processes optimally consuming energy and water,
contributing to sustainability and waste minimisation.
The Company subjected itself to a periodic
environmental audit to demonstrate and measure the
effectiveness of its waste management.
Mitigation measurement
The Company adheres to environment protection
norms, occupational health and safety norms and will
receive ISO: 14001, ISO: 18001 certification shortly.

05 Industry risk
In the absence of diverse product lines, a sudden
downturn in PET resin demand could adversely affect
long-term sustainability.
Risk mitigation
The demand for PET resin in Europe and North
America is slated to increase over the next few years
due to a boom in the FMCG sector.
The global soft drinks market is expected to ride
robust volume growth through 2010.
The Company is diversifying into new business
propositions and alternative uses of PET resin,
extending its client base.
Mitigation measurement
By diversifying into Egypt the market of North Africa Corporate Governance Report
and Asia where maximum growth can be captured.
(As required by Clause 49 of the Listing Agreement with the stock exchanges)

06 Quality risk
The Company’s products cater to the food and
beverage industry with a significant exposure to the
soft drinks and personal care sectors demanding
stringent quality standards. Any deviation could lead
to a loss of market share.
Risk mitigation
SAPL is an ISO 9001:2000-certified Company. It
developed a stringent process discipline mechanism,
ensuring quality raw materials and finished products
through random sampling, benchmarking and
physical inspection.
An ongoing collaboration among the quality,
research and development teams guaranteed the
development of new products with high intrinsic
viscosity materials.
The Company instituted a vendor appraisal process,
selecting vendors capable of complying with
demanding quality standards.
Mitigation measurement
The Company’s management system and
processes received the ISO 9001:2000 certification
from the TUVNORD.
The Company’s processes were also certified by
national and international agencies like the USFDA,
EEC and ITRC.
1. Company’s Philosophy
At South Asian Petrochem Limited, the core set of values of
transparency, accountability and integrity, guide the
principles and policies of Corporate Governance. Since its
inception, South Asian Petrochem Limited remained
committed to the highest standards of Corporate
Governance which could not be possible without the
emotional conviction of walking the right path. This has
formed the foundation of our Corporate Governance. South
Asian Petrochem Limited complies with the Corporate
Governance Code enshrined in Clause 49 of the Listing
Agreement. During 2007-08, the Corporate Governance
committee of the Company met once to review the
performance of the Company officials, in complying with
Corporate Governance requirements.
2. Board of Directors
As on 31st March 2008, the Board comprises a Non-
Executive Chairman, a Non-Executive Vice Chairman and
eleven other Directors including three Nominee- Directors.
The Nominee-Directors are nominated by the Public Financial
Institutions on the Board of the Company. The day to day
affairs of the Company are being managed by three
Executive Directors, one of whom is also designated as the
Chief Executive Officer (CEO) of the Company.

44 | South Asian Petrochem Limited Annual Report 2007-08 | 45

 The composition of the Board:
Name of the Director Category The membership of the Directors in various Board Committees of the Company and also the number of Directorships and
committee memberships in other companies as on 31st March 2008, is given hereunder:
P. K. Khaitan Chairman.
Non-Executive & Independent Director Name of the Director Board Committee memberships Number of Board Committee Board Committee
Liable to retirement by rotation in the Company Directorships memberships Chairmanships in
C.K. Dhanuka Vice Chairman in other companies in other companies other companies.
Non-Executive Director & Promoter
P.K. Khaitan Remuneration Committee 14 6 1
Liable to retirement by rotation
Special Committee for purchase
B. Chattopadhyay Executive Director & CEO
of office space
Executive & Non-Independent Director
Not liable to retire by rotation. C.K. Dhanuka Audit Committee 7 3 None
M. Dhanuka Executive Director & Promoter Remuneration Committee
Executive & Non-Independent Director Shareholders’ Grievance Committee
Not liable to retire by rotation Share Transfer Committee
B.K. Biyani Executive Director (Corporate) Corporate Governance Committee
Executive & Non-Independent Director Share/Bond Allotment Committee
Not liable to retire by rotation
B. Chattopadhyay Shareholders’ Grievance Committee None N.A N.A
J.P. Kundra Non-Executive & Independent Director
Share Transfer Committee
Liable to retirement by rotation
Share/Bond Allotment Committee
Dr. B. Sen Non-Executive & Independent Director
Liable to retirement by rotation M. Dhanuka Share/Bond Allotment Committee 5 None None

P. Murari Non-Executive & Independent Director
Liable to retirement by rotation
Y.F. Lombard Non-Executive & Independent Director
Liable to retirement by rotation
S. Bagaria Non-Executive & Independent Director
(Appointed as Additional Director w.e.f. 24th May 2007) Liable to retirement by rotation
S. Bhattacharyya Non-Executive & Independent Director
Nominee of Exim Bank of India.
Not liable to retire by rotation
Dr. S.S. Banerjee Non-Executive & Independent Director
Nominee of IDBI Ltd.
Not liable to retire by rotation
B.K. Biyani Share/Bond Allotment Committee 3 None None
J.P. Kundra Audit Committee 5 5 1
Remuneration Committee
Shareholders’ Grievance Committee
Dr. B. Sen Audit Committee 5 3 2
Shareholders’ Grievance Committee
Share Transfer Committee
Corporate Governance Committee
Remuneration Committee
Share/Bond Allotment Committee
Special Committee for purchase of

Nandini Chakravorty Non-Executive & Independent Director office space

(Nominated by WBIDC on the Board w.e.f. Nominee of WBIDC Ltd. P. Murari Special Committee for purchase 10 7 2
20th December 2007) Not liable to retire by rotation of office space
D. Som Non-Executive & Independent Director
Y.F. Lombard None None N.A N.A
(Nomination withdrawn by WBIDC Nominee of WBIDC Ltd.
w.e.f. 20th December 2007) Not liable to retire by rotation S. Bagaria None 2 None None
H.P. Breitenbach Non-Executive & Non-Independent Director (Appointed as
(resigned w.e.f. 26th December 2007) Liable to retirement by rotation Additional Director
Dr. S. Kapur Non-Executive & Non-Independent Director w.e.f. 24th May 2007)
Alternate to H.P. Breitenbach (office vacated upon
S. Bhattacharyya Audit Committee 2 1 None
resignation of H.P. Breitenbach)

46 | South Asian Petrochem Limited Annual Report 2007-08 | 47

 The Board met six times during the financial year 2007-08. The attendance of Directors at the Board Meetings, the last two
Name of the Director Board Committee memberships Number of Board Committee Board Committee
Annual General Meetings and at the Extraordinary General Meeting:
in the Company Directorships memberships Chairmanships in
in other companies in other companies other companies. BOARD MEETINGS HELD ON AGM HELD ON EGM HELD ON
24.05.07 31.07.07 27.10.07 08.11.07 20.12.07 24.01.08 25.07.06 31.07.07 08.12.07
Dr. S.S. Banerjee Audit Committee
P.K. Khaitan Yes Yes Yes No Yes Yes Yes Yes No
Remuneration Committee 1 None None
C.K. Dhanuka Yes Yes Yes Yes Yes Yes Yes Yes Yes
Nandini Chakravorty None 5 None None
B. Chattopadhyay Yes Yes Yes Yes Yes Yes Yes Yes Yes
(Nominated by
WBIDC on M. Dhanuka Yes Yes Yes Yes Yes No Yes Yes Yes
the Board w.e.f. B.K. Biyani Yes Yes Yes Yes Yes Yes Yes Yes Yes
20th December 2007) J.P. Kundra Yes Yes Yes Yes No Yes Yes Yes No
D. Som Dr. B. Sen Yes Yes Yes Yes No Yes Yes Yes Yes
(Nomination None 9 None None P. Murari No Yes No No No Yes Yes Yes No
withdrawn by Y.F. Lombard No No Yes No No No Yes No No
WBIDC w.e.f. S. Bagaria Yes Yes No No Yes No N.A. Yes No
20th December 2007) (Appointed as Additional
H.P. Breitenbach None None N.A N.A Director w.e.f. 24th May 2007)
(resigned w.e.f.. S. Bhattacharyya Yes Yes Yes Yes Yes Yes Yes Yes Yes
26th December 2007) Dr. S.S. Banerjee Yes Yes Yes Yes Yes Yes No Yes No
Dr. S. Kapur None 1 None None Nandini Chakravorty N.A. N.A. N.A. N.A. N0 N0 N.A. N.A. N.A.
Alternate to H.P. (Nominated by WBIDC on
Breitenbach the Board w.e.f.
(office vacated upon 20th December 2007)
resignation of H.P. D. Som No No No No N.A. N.A. No No No
Breitenbach) (Nomination withdrawn
by WBIDC w.e.f.
Note 1: Number of Directorships in other companies excludes Directorships in private limited companies, foreign companies and
20th December 2007)
companies incorporated under section 25 of the Companies Act, 1956.
H.P. Breitenbach No No No No No N.A. No No No
Note 2: Board Committee Chairmanships/memberships in other companies includes only Chairmanships/memberships of Audit (Resigned w.e.f. 20th
Committees and Shareholders’ Grievance Committees. December 2007)
Dr. S. Kapur Yes Yes Yes Yes Yes N.A. Yes Yes No
Note 3: Board Committee memberships in other companies include Chairmanships in other companies.
Alternate to H.P. Breitenbach
Note 4: Mr. M. Dhanuka, Executive Director, is related to Mr. C.K. Dhanuka, Vice Chairman, as per Section 6 of the Companies (office vacated upon resignation
Act, 1956. Mr. M. Dhanuka is the son of Mr. C.K. Dhanuka. of H.P. Breitenbach)

Note: During 2007-08, the Board Meetings, the Annual General Meeting and the Extraordinary General Meeting were held at
Kolkata.

48 | South Asian Petrochem Limited Annual Report 2007-08 | 49


3. Audit Committee
The Audit Committee of the Company comprises five Non-
Executive Directors of whom four are Independent Directors.
The Audit Committee has been vested with the following
powers:
a) To investigate any activity within its terms of reference.
b) To seek information from any employee.
c) To obtain outside legal or other professional advice.
d) To secure attendance of outsiders with relevant expertise,
if it considers necessary.
Role of Audit Committee
The role of the Audit Committee includes:
1. Oversight of the Company’s financial reporting process
and the disclosure of its financial information to ensure that
the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-
appointment and, if required, the replacement or removal of
the statutory auditor and the fixation of audit fees.
3. Approval of payment to statutory auditors for any other
services rendered by the statutory auditors.
4. Reviewing, with the management, the annual financial
statements before submission to the Board for approval,
with particular reference to:
a. Matters required to be included in the Director’s
Responsibility Statement and therefore to be included in the
Board’s report in terms of clause (2AA) of section 217 of the
Companies Act, 1956
b. Changes, if any, in accounting policies and practices and
reasons for the same
c. Major accounting entries involving estimates based on the
exercise of judgment by management
d. Significant adjustments made in the financial statements
arising out of audit findings
e. Compliance with listing and other legal requirements
relating to financial statements
50 | South Asian Petrochem Limited
Review of information by Audit Committee the Chief Internal Auditor shall be subject to review by the
f. Disclosure of any related-party transactions The Audit Committee mandatorily reviews the following Audit Committee.
g. Qualifications in the draft audit report. information:
As reviewed by the Audit Committee there was no deviation
1. Management discussion and analysis of financial from any of the Accounting Standards as issued by the
5. Reviewing, with the management, the quarterly financial
statements before submission to the board for approval condition and results of operations Institute of Chartered Accountants of India in the preparation
of the financial statements of the Company.
6. Reviewing, with the management, performance of 2. Statement of significant related-party transactions (as
statutory and internal auditors, and adequacy of the internal defined by the Audit Committee), submitted by management The Company has constituted the Risk Management
control systems Committee comprising all the Executive Directors of the
3. Management letters/letters of internal control weaknesses
Company and the Senior Management Officials to assess the
7. Reviewing the adequacy of internal audit function, if any, issued by the statutory auditors
risks and concerns affecting the Company. The minutes of
including the structure of the internal audit department, 4. Internal audit reports relating to internal control the meetings of the Committee are placed before the Board
staffing and seniority of the official heading the department, weaknesses and who take note of the same and initiate deliberations,
reporting structure coverage and frequency of internal audit
5. The appointment, removal and terms of remuneration of if required.
8. Discussion with internal auditors on any significant
findings and follow up there on
9. Reviewing the findings of any internal investigations by The Committee met four times during the financial year 2007-08. The attendance of the Directors at the said meetings was:
the internal auditors into matters where there is suspected
Committee Committee Committee Committee
fraud or irregularity or a failure of internal control systems of Members of the Audit Committee meeting held on meeting held on meeting held on meeting held on
a material nature and reporting the matter to the Board. 24.05.2007 31.07.2007 27.10.2007 24.01.2008
10. Discussion with statutory auditors before the audit J.P. Kundra, Independent Director Yes Yes Yes Yes
commences, about the nature and scope of audit as well as Retired Banker Chairman, Audit Committee
post-audit discussion, to ascertain any area of concern. C.K. Dhanuka, Promoter-Director Industrialist Yes Yes Yes Yes
11. To look into the reasons for substantial defaults in the S. Bhattacharyya, Independent Director Yes Yes Yes Yes
Nominee of EXIM Bank Limited
payment to the depositors, debenture holders, shareholders
(in case of non payment of declared dividends) and creditors Dr. S.S. Banerjee, Independent Director Yes Yes Yes Yes
Nominee of IDBI Ltd.
12. To review the functioning of the Whistle Blower
Dr. B. Sen, Independent Director Retired Yes Yes Yes Yes
mechanism, in case the same exists
Banker, Management Professional and
13. Carrying out any other function as is mentioned in the Business Economist.
terms of reference of the Audit Committee.
Explanation 1: The term "related-party transactions" shall
have the same meaning as contained in the Accounting 4. Remuneration Committee
Standard 18, Related-Party Transactions, issued by The The Remuneration Committee comprises five Non-Executive Directors of whom four are Independent Directors.
Institute of Chartered Accountants of India.
The Remuneration Committee has been vested with the following powers:
Explanation 2: If the Company has set up an Audit
a) To determine on behalf of the Board, the agreed terms of reference, remuneration packages for Executive Directors
Committee, pursuant to the provision of the Companies Act,
including pension rights and any commission and compensation payment
the said Audit Committee shall have such additional
functions/features as is contained in this clause. b) To decide on the remuneration policy of the Company
Annual Report 2007-08 | 51
 The Committee met twice during the financial year 2007-08. The attendance of the Directors at the said Meeting was: During the financial year 2007-08 the following were the remuneration paid to the Non-Executive Directors:

Members of the Remuneration Committee Committee meeting Committee meeting Name of the Director Board Committee memberships in the Company Total sitting fees received (Rs.)
held on 24.05.2007 held on 31.07.2007 P.K. Khaitan Remuneration Committee
P.K. Khaitan – Chairman, Remuneration Committee Yes Yes Special Committee for purchase of office space 1,15,000
C.K. Dhanuka Yes Yes C.K. Dhanuka Audit Committee
Remuneration Committee
J.P. Kundra Yes Yes
Shareholders’ Grievance Committee
Dr. B. Sen Yes Yes
Share Transfer Committee
Dr. S.S. Banerjee Yes Yes Corporate Governance Committee
Share/Bond Allotment Committee 2,00,000
J.P. Kundra Audit Committee
Remuneration Committee
5. Details of remuneration for the year ended 31st March 2008 Shareholders’ Grievance Committee 1,70,000
(i) Executive Directors Dr. B. Sen Audit Committee
Sl. no. Name Perquisites Company’s Total Shareholders’ Grievance Committee
Salary etc. contribution to P.F. Incentive remuneration Share Transfer Committee
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Corporate Governance Committee
Remuneration Committee
1 Mr. B. Chattopadhyay 2401713.50 871778.60 122115 1000000 4395607.1
Share/Bond Allotment Committee
Executive Director & CEO
Special Committee for purchase of office space 1,90,000
2 Mr. M. Dhanuka 2126437.50 1316293.06 122115 1000000 4564845.56
P. Murari Special Committee for purchase of office space 40,000
Executive Director
Y.F. Lombard None 20,000
3 Mr. B.K. Biyani, 2660000 260066.65 319200 600000 3839266.65
S. Bagaria
Executive Director (Corporate)
(Appointed as Additional Director
w.e.f. 24th May 2007) None 60,000
S. Bhattacharyya Audit Committee 1,60,000
Dr. S.S. Banerjee Audit Committee
The agreements with the Executive Directors are contractual Executive Directors. The Non-Executive Directors are not
Remuneration Committee 1,70,000
in nature and are executed to cover the tenure of two to paid any commission or any other form of remuneration. The
Nandini Chakravorty
three years. The agreements do not provide for the payment criteria for remuneration, payable to Non-Executive Directors,
(Nominated by WBIDC on the
of any severance fee. There are no stock options are as contained in the Articles of Association of the Board w.e.f. 20th December 2007) None –
available/issued to any of the Executive Directors and it does Company. The Company pays Rs. 20,000 to each Director
D. Som
not form a part of their contract with the Company. Payment as remuneration by way of sitting fees for Board Meetings.
(Nomination withdrawn by WBIDC
of incentives to the Executive Directors is based on the It pays Rs. 10,000 to each member attending the meeting of w.e.f. 20th December 2007) None –
performance of the person in contributing towards the the Audit Committee and Rs. 5,000 to each member
H.P. Breitenbach
performance and growth of the Company. attending any meeting of any Committee of the Board unless
(resigned w.e.f. 26th December 2007) None –
Mr. M. Dhanuka, Executive Director, holds 100 shares in the such Committee has waived the sitting fees.
Dr. S. Kapur
Company. Alternate to H.P. Breitenbach
Mr C.K. Dhanuka, Vice Chairman, holds 200 shares in the
(ii) Non-Executive Directors Company. (office vacated upon resignation
Sitting fees for attending Board Meeting are paid to the Non- of H.P. Breitenbach) None 1,00,000

52 | South Asian Petrochem Limited Annual Report 2007-08 | 53

 6. Share Transfer Committee 8. Corporate Governance Committee
The shares of the Company are traded compulsorily in dematerialised form. In accordance with Clause 49 IV (G) (iv) of the A Corporate Governance Committee of the Board was constituted to advise the Board on Corporate Governance issues and
Listing Agreement of the stock exchanges, the Board has unanimously delegated the powers of share transfers to MCS practices. The Committee comprises Dr. B. Sen, Independent Director, who is the Chairman of the Committee and Mr. C.K.
Limited, Registrar and Share Transfer Agent. The Company has a Share Transfer Committee to consider requests for transfer Dhanuka, Promoter-Director, who is a member of the Committee. The Committee met once during the financial year 2007-
of shares in physical form, rematerialisation of shares and consolidation/sub-division of shares. The Committee meets as and 08. The attendance of the Directors at the said meeting was:
when required in order to attend to any such requests within 10 days. The Committee met seven times during the financial
Members of the Corporate Governance Committee Committee meeting held on 28.01.2008
year 2007-08.
Dr B. Sen – Chairman Corporate Governance Committee YES
Members of the Share Committee Committee Committee Committee Committee Committee Committee C.K. Dhanuka YES
Transfer Committee meeting held meeting held meeting held meeting held meeting held meeting held meeting held
on 16.05.2007 on 15.06.2007 on 14.08.2007 on 10.09.2007 on 14.09.2007 on 28.12.2007 on 31.03.2008 No sitting fees are paid for the above mentioned committee meetings as the same has been waived by the committee
members.
C.K. Dhanuka Yes Yes Yes No Yes Yes Yes
B. Chattopadhyay Yes Yes Yes Yes Yes Yes Yes 9. Share/Bond Allotment Committee
Dr. B. Sen Yes Yes Yes Yes Yes Yes Yes A Share/Bond Allotment Committee was formed on 8th December 2007, to allot the shares to IFC and promoters within 15
days of passing of the resolution by the shareholders and FCCB’s to investors. The Committee comprises Mr. C.K. Dhanuka,
No sitting fees are paid for the above mentioned committee meetings as the same has been waived by the committee
Vice Chairman, Mr. M. Dhanuka, Executive Director, Mr. B. Chattopadhyay, Executive Director and CEO, Mr. B.K. Biyani,
members.
Executive Director (Corporate) and Dr. B. Sen, Director. The Committee met thrice during the financial year 2007-08. The
attendance of the Directors at the said meeting was:

7. Shareholders’/Investors’ Grievance Committee Members of the Share/Bond Committee meeting Committee meeting Committee meeting
The Board has reconstituted the Shareholders’/Investors’ Grievance Committee during the year comprising four Directors, Allotment Committee held on 09.01.2008 held on 12.01.2008 held on 16.01.2008
two of whom are Independent Directors. This committee specifically looks into the redressing of shareholder and investor
C.K. Dhanuka Yes No Yes
complaints. The Committee met four times during the financial year 2007-08. The attendance of the Directors at the said
meetings was: Dr. B. Sen Yes Yes Yes

Members of the Shareholders’ Committee meeting Committee meeting Committee meeting Committee meeting B.K. Biyani Yes Yes Yes
Grievance Committee held on 24.05.2007 held on 31.07.2007 held on 27.10.2007 held on 24.01.2008
B. Chattopadhyay No No No
J.P. Kundra
M. Dhanuka No Yes Yes
Chairman Shareholders’
Grievance Committee Yes Yes Yes Yes
C.K. Dhanuka Yes Yes Yes Yes 10. Special Committee For purchase of office space
Dr. B. Sen Yes Yes Yes Yes A special committee for purchase of office space was formed on 27th October 2007, for assessing the rate at which purchase
of office space would be made. The Committee comprises Mr. P.K. Khaitan, Independent Director and Chairman of the
B. Chattopadhyay
Committee, Mr. P. Murari, Independent Director and Dr. B. Sen, Independent Director, the members of the committee. The
[Included as a member of the
Committee met once during the financial year 2007-08. The attendance of the Directors at the said meeting was:
committee at its Board meeting
held on May 24, 2007] N.A. Yes Yes Yes Members of the Special Committee for purchase of office space Committee meeting held on 30.11.2007

Mr. K.V. Balan, Company Secretary of the Company, is the designated Compliance Officer. P.K. Khaitan Yes
Dr. B. Sen Yes
The Company has received one investor complaint during the year ended 31st March 2008. The same was resolved within
five days. There were also no pending investor complaints either at the beginning or at the end of the year. P. Murari No

54 | South Asian Petrochem Limited Annual Report 2007-08 | 55

 11. General Body Meetings The Company has not adopted any Whistle Blower Policy. Adoption of un-audited Adoption on
The last three Annual General Meetings and the Extraordinary General Meeting were held as under:
The Company has adopted and fulfilled all mandatory quarterly results and
Year Date & Time Venue requirements laid down by Clause 49, of the Listing annual results

2007 (EGM) 08.12.2007 Kala Kunj (Kala Mandir premises), Agreement. The Board has voluntarily constituted a Un-audited 1st quarter results Last week of July 2008
11:00 A.M. 48, Shakespeare Sarani, Kolkata 700017 Remuneration Committee. None of the other non-mandatory Un-audited 2nd quarter results Last week of October 2008
2007 (AGM) 31.07.2007 Kala Kunj (Kala Mandir premises), requirements have been adopted by the Company. Un-audited 3rd Quarter Results Last week of January 2009
9:30 A.M. 48, Shakespeare Sarani, Kolkata 700017
13. Means of Communication Audited 4th quarterly results Last week of May 2009
2006 (AGM) 25.07.2006 Gorky Sadan, 3, Gorky Terrace, and annual results
The quarterly results/Annual Results/Notices are
9:30 A.M Kolkata-700017
published in The Business Standard and/or Economic
2005 (AGM) 30.07.2005 Gorky Sadan, 3, Gorky Terrace, c) Registrar and Share Transfer Agent
Times and in Kalantar, which is a Bengali Daily.
11:00 A.M Kolkata-700017 MCS Ltd.
Official news releases are given directly to the press and 77/2A, Hazra Road, Kolkata– 700 029
No resolutions were put through postal ballot last year. No resolutions are placed for shareholders’ approval at this Annual to the Bombay Stock Exchange Limited, National Stock Phone : (033) 2476-7350/54
General Meeting which requires to be conducted through postal ballot. Exchange of India Limited and Calcutta Stock Exchange Fax : (033) 2474-7674
Association Limited. E-mail : mcscal@cal2.vsnl.net.in
The Special Resolutions were passed for the following items in the previous three Annual General Meetings and at the
Extraordinary General Meeting: Management’s Discussions and Analysis forms part of
d) Investors’ Correspondence
the Annual Report of the Company.
AGM/EGM Date Items Passed Under Special Resolution All queries of investors regarding the Company’s shares in
08.12.2007 (EGM) Issue of equity shares and convertible warrants on preferential basis to IFC The Company’s website is www.aspetindia.com. physical/demat form may be sent to the Registrar and Share
Quarterly and annual results as well as quarter end Transfer Agent of the Company.
08.12.2007 (EGM) Issue of equity shares and convertible warrants on preferential basis to
shareholding pattern is posted at the end of every quarter
Promoters/Promoter Group
on the website. e) Listing on stock exchanges and Stock Code
08.12.2007 (EGM) Issue of foreign currency convertible bonds to banks, multilateral and bilateral
As per SEBI requirements, quarterly and annual results Stock exchanges Code
financial institutions, foreign collaborators (investors) on private placement basis
as well as quarter end shareholding pattern is also posted The Calcutta Stock Exchange
31.07.2007 (AGM) Reappointment of the Statutory Auditors (M/s Lovelock & Lewes) of the Company
immediately after the same is approved by the Board on Association Ltd. 10029995
25.07.2006 (AGM) Reappointment of the Statutory Auditors (M/s Lovelock & Lewes) of the Company www.sebiedifar.nic.in. Bombay Stock Exchange Limited 532452
30.07.2005 (AGM) Reappointment of the Statutory Auditors (M/s Lovelock & Lewes) of the Company
National Stock Exchange of
30.07.2005 (AGM) Amendment of Articles of Association of the Company 14. General Shareholder Information
India Limited SAPL
30.07.2005 (AGM) Issue and allotment of equity shares upon conversion of OFCD’s to a) Annual General Meeting
ISIN No. INE801C01019
Industrial Finance Corporation of India Ltd. (IFCI Ltd.) Date and time : 26th July 2008 at 10.30 a.m.
Venue : Kala Kunj, 48, Shakespeare Sarani, The shares of the Company have been listed with the

12. Disclosures interests of the Company at large. All related-party Kolkata-700017 National Stock Exchange w.e.f. 23th July 2007. Listing fees

There has been no non-compliance by the Company,
penalties/strictures imposed on the Company by stock
exchange(s) or SEBI or any other statutory authority, on any
matter related to capital markets during the last three years.
There are no materially significant, related-party
transactions which may have potential conflict with the
transactions have been spelt out in Schedule 18 (9), of the for the financial year 2008-09 have been paid to Bombay
Book closure date : 15th July 2008 to 26th July 2008
Financial Statement. There are no related-party transactions Stock Exchange Limited, National Stock Exchange of India
(Both days inclusive)
which were not transactions at “arms length” distance. Limited and Calcutta Stock Exchange Association Limited.
Financial year : April 2007- March 2008
There are no pecuniary relationships or transactions with The Unsecured Foreign Currency Convertible Bonds issued
b) Financial Calendar: 2008-09 (Tentative)
Non-Executive Independent Directors other than those during the year were listed on the Singapore Exchange
disclosed in this report. Securities Trading Limited (SGX-ST) w.e.f. 22nd January 2008.

56 | South Asian Petrochem Limited Annual Report 2007-08 | 57

 f) Market Price Data (I)(a) Shareholding Pattern As On 31st March 2008
Stock Market Data (equity shares of Rs. 10 each) Total shareholding as a
percentage of total
Calcutta Stock Exchange National Stock Exchange Mumbai Stock Exchange BSE Sensex
No. of shares number of shares
Month High Low High Low High Low High Low Category Category of shareholder No of Total No. held in As a As a
Apr-07 N.A N.A N.A N.A 10.39 9.60 14,383.72 12,425.52 shareholders of shares dematerialised percentage of percentage of
form (A+B) (A+B+C)
May-07 N.A N.A N.A N.A 13.50 10.00 14,576.37 13,554.34
(A) Shareholding of Promoter and
Jun-07 N.A N.A N.A N.A 13.00 10.90 14,683.36 13,946.99 Promoter Group
Jul-07 N.A N.A 17.60 12.50 17.50 12.41 15,868.85 14,638.88 (1) Indian
Aug-07 N.A N.A 18.00 13.50 20.10 14.55 15,542.40 13,779.88 (a) Individuals/Hindu undivided family 3 400 400 – –
Sep-07 N.A N.A 20.50 15.50 20.40 15.65 17,361.47 15,323.05 (b) Central Government/State
Government(s) − − − − −
Oct-07 N.A N.A 20.00 15.10 20.10 15.80 20,238.16 17,144.58
(c) Bodies Corporate 7 127,456,500 108,577,607 54.67 54.67
Nov-07 N.A N.A 28.65 15.30 28.55 15.40 20,204.21 18,182.83
(d) Financial institutions/banks − − − − −
Dec-07 N.A N.A 31.25 21.30 31.30 21.05 20,498.11 18,886.40
(e) Any other (specify) − − − − −
Jan-08 N.A N.A 40.05 19.90 39.80 19.90 21,206.77 15,332.42
Sub total (A)(1) 10 127,456,900 108,578,007 54.67 54.67
Feb-08 N.A N.A 24.85 17.30 24.70 17.20 18,895.34 16,457.74
(2) Foreign
Mar-08 N.A N.A 17.45 12.40 17.60 12.25 17,227.56 14,677.24 (a) Individuals (Non resident
individuals/Foreign individuals) – – – – –
(b) Bodies Corporate − − − − −
(c) Institutions − − − − −
g) Share Transfer System (d) Any other (specify) − − − − −
Your Company’s shares are traded in the compulsorily demat mode. Physical transfer of shares is processed by the Registrar
Sub total (A)(2) – – – – –
and Share Transfer Agents of the Company and is approved by the Share Transfer Committee of the Board.
Total Shareholding of Promoter
and Promoter Group
h) Distribution of Shareholding
(A) = (A)(1) + (A)(2) 10 127,456,900 108,578,007 54.67 54.67
Category Shareholders Shares
(B) Public shareholding
Numbers %of shareholders Numbers %of shares
(1) Institutions
Up to 500 17124 64.8096 4346705 1.8644 (a) Mutual Funds/UTI − − − − −
501 - 1000 4616 17.4703 4218951 1.8096 (b) Financial institutions/banks 6 7,325,286 7,325,286 3.14 3.14
1001 - 2000 2135 8.0804 3568199 1.5305 (c) Central Government/State
2001 - 3000 734 2.7780 1955100 0.8386 Government(s) 1 10,000 10,000 – –

3001 - 4000 361 1.3663 1343409 0.5762 (d) Venture Capital Funds − − − − −
(e) Insurance companies 4 23,529,277 23,529,277 10.09 10.09
4001 - 5000 426 1.6123 2078227 0.8914
(f) Foreign institutional investors − − − − −
5001 - 10000 554 2.0967 4309477 1.8485
(g) Foreign Venture Capital Investors − − − − −
10001 - 50000 387 1.4647 8219392 3.5255
(h) Any other (specify) Bodies
50001 - 100000 35 0.1325 2405389 1.0317 Corporate (Foreign Body) (IFC) 1 23,086,419 23,086,419 9.90 9.90
And above 50 0.1892 200693745 86.0835 Sub total (B)(1) 12 53,950,982 53,950,982 23.14 23.14

58 | South Asian Petrochem Limited Annual Report 2007-08 | 59

 (I)(a) Shareholding Pattern As On 31st March 2008 Note 1:
Total shareholding as a As per the Disclosure received from M/s Dhunseri Tea & Industries Limited in terms of Regulation 7(1A), of SEBI (Substantial
percentage of total Acquisition of Shares and Takeovers) Regulations, 1997, the shares of Mint Investments Limited and Plenty Valley Intra
No. of shares number of shares Limited have been acquired on 31st March 2008, but the transfer of the same were completed in April, 2008, since the shares
Category Category of shareholder No of Total No. held in As a As a
were locked-in/pledged.
shareholders of shares dematerialised percentage of percentage of
form (A+B) (A+B+C) Note 2:
(2) Non-institutions Scheme of Amalgamation pending with the Honorable High Court (Kolkata) of the said Companies with Dhunseri Tea &
(a) Bodies Corporate 840 20,018,215 20,018,215 8.59 8.59 Industries Limited. The shareholding has been shown in the names of the respective Companies.
(b) Individuals -
(I)(c) Statement showing shareholding of persons belonging to the category "Public" and
i. Individual shareholders holding holding more than 1% of the total number of shares
nominal share capital up to
Sl No. Name of the shareholder Number of shares Shares as a percentage of total
Rs. 1 lakh 25,079 19,900,649 19,895,355 8.54 8.54
number of shares {i.e. grand total
ii. Individual shareholders holding (A)+(B)+(C) indicated in statement
nominal share capital in excess at para (I)(a) above}
of Rs. 1 lakh 293 10,540,202 10,540,202 4.52 4.52
1 Life Insurance Corporation of India` 7,104,277 3.05
(c) Individuals (non resident
individuals/foreign non individuals) 179 716,306 716,306 0.31 0.31 2 General Insurance Corporation of India 10,000,000 4.29
(d) Trusts and foundations 7 555,340 555,340 0.24 0.24 3 United India Insurance Company Limited 4,925,000 2.11
Sub total (B)(2) 26,398 51,730,712 51,725,418 22.19 22.19 4 Export Import Bank of India 3,441,000 1.48
Total public shareholding
5 IFC 23,086,419 9.90
(B) = (B)(1) + (B)(2) 26,410 105,681,694 105,676,400 45.33 45.33
6 West Bengal Industrial Development Corporation 9,150,000 3.92
Total (A) + (B) 26,420 233,138,594 214,254,407 100.00 100.00
(C) Shares held by custodians and Total 57,706,696 24.75
against which depository receipts
(I)(d) Statement showing details of Locked-in-Shares
have been issued
Sl No. Name of the shareholder Number of Locked-in-shares as a percentage
Grand total (A)+(B)+(C) 26,420 233,138,594 214,254,407 100.00 100.00
locked-in-shares of total number of shares {i.e. grand
total (A)+(B)+(C) indicated in
(I)(b) Statement showing shareholding of persons belonging to the category "Promoter and Promoter Group" statement at para (I)(a) above}
Sl No. Name of the shareholder Number of shares Shares as a percentage of total 1 Unistock Private Limited* 33,378,893 14.32
number of shares {i.e. grand total
2 IFC 23,086,419 9.90
(A)+(B)+(C) indicated in statement
at para (I)(a) above} 3 Naga Dhunseri Group Ltd. 9,112,284 3.91

1 Dhunseri Tea and Industries Ltd. (Note 1&2) 60,850,100 26.10 4 Mayfair India Ltd. 1,763,667 0.76

2 Mint Investments Limited (Note 1) 12,351,556 5.30 5 Mint Investments Limited* 2,351,556 1.01

3 Plenty Valley Intra Limited (Note 1) 5,000,000 2.14 Total 69,692,819 29.89

4 Tezpore Tea Co. Ltd (Note 2) 5,000,000 2.14 * Refer Note 1 and 2 mentioned below para (1) (b) above.

5 Shri C.K. Dhanuka 200 0.00 (II)(a) Statement showing details of Depository Receipts (DR’s)
6 Shri M. Dhanuka 100 0.00 Sl No. Type of outstanding DR Number of Number of shares Shares underlying outstanding DR’s
7 Smt. Aruna Dhanuka 100 0.00 (ADR’s, GDR’s, SDR’s, etc.) outstanding DR’s underlying as a percentage of total number
outstanding DR’s of shares {i.e. grand total
8 Unistock Private Limited (Note 2) 33,378,893 14.32
(A)+(B)+(C) indicated in statement
9 Naga Dhunseri Group Ltd. 9,112,284 3.91 at para (I)(a) above}
10 Mayfair India Ltd. 1,763,667 0.76 Nil
Total 127,456,900 54.67 Total

60 | South Asian Petrochem Limited Annual Report 2007-08 | 61

 Auditors’ Certificate regarding
(II)(b) Statement showing holding of Depository Receipts (DR’s), where underlying shares are in excess of compliance of conditions of
Corporate Governance
1% of the total number of shares
Sl No. Name of the DR holder Type of Number of shares Shares underlying outstanding DR’s
outstanding DR underlying as a percentage of total number
(ADR’s, GDR’s, outstanding DR’s of shares {i.e. grand total
SDR’s, etc.) (A)+(B)+(C) indicated in statement
at para (I)(a) above}
Nil
Total

i) Dematerialisation of shares and liquidity

Your Company’s shares are enlisted with National Securities Depository Limited (NSDL) and Central Depository Services To the members of South Asian Petrochem Limited
Limited (CDSL). As on 31st March 2008, 82% of the shares of the Company were held in dematerialised mode. We have examined the compliance of conditions of Corporate Governance by South Asian Petrochem
j) Outstanding convertible instruments, conversion date and likely impact on equity Limited for the year ended 31st March, 2008 as stipulated in Clause 49 of the Listing Agreements of
Particulars of outstanding warrants: the said company with stock exchanges in India.

Subscribed by No. of warrants Face value Amount* Conversion date The compliance of conditions of Corporate Governance is the responsibility of the Company’s
International Finance Corporation 23086419 Rs. 10 230864190 At the option of allottee management. Our examination was carried out in accordance with the Guidance Note on Certification

Mint Investments Ltd. 2351556 Rs. 10 23515560 At the option of allottee of Corporate Governance (as stipulated in Clause 49 of the Listing Agreement), issued by the Institute
of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted
Unistock Pvt. Ltd. 5878893 Rs. 10 58788930 At the option of allottee
by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither
Naga Dhunseri Group Ltd. 9112284 Rs. 10 91122840 At the option of allottee
an audit nor an expression of opinion on the financial statements of the Company.
Mayfair India Ltd. 1763667 Rs. 10 17636670 At the option of allottee
In our opinion and to the best of our information and according to the explanations given to us we
* Paid-up Value 10%.
certify that the Company has complied with the conditions of Corporate Governance as stipulated in
One equity share would be allotted on conversion of one warrant.
the above mentioned Listing Agreements.
k) Outstanding Foreign Currency Convertible Bonds m) Address of the Wholly-Owned Subsidiary We state that such compliance is neither an assurance as to the future viability of the Company nor
(FCCB) South Asian Petrochem USA, LLC
the efficiency or effectiveness with which the management has conducted the affairs of the Company.
a) The Company has issued 200, 0% Unsecured Foreign 180 Cherokee Street Ne, Marietta, Georgia - 30060
Currency Convertible Bonds (FCCB) (considered as a non-
monetary liability) of US$ 100,000 each aggregating to US$ n) Address and contact details of the Compliance
20 million. The bonds are redeemable on 23rd January 2013 Officer Prabal Kr. Sarkar
at 130% of their principal amount. The bond holders have an Mr. K.V. Balan Partner
option to convert these bonds into equity shares at an initial Company Secretary and Compliance Officer Membership No: 52340
conversion price of Rs. 22.50 per share, with a fixed rate of South Asian Petrochem Ltd.
“Dhunseri House”, 4A, Woodburn Park, Kolkata - 700 020 For and on behalf of
exchange on conversion of Rs. 39.32 (US$ 1). The conversion
Phone - (033) 2283-6128 (6 lines) Place: Kolkata Lovelock & Lewes
price will be subject to certain adjustments. Further, the
Fax - (033) 2280-1956 Date: 12th May, 2008 Chartered Accountants
bonds may be redeemed in whole and not part at any time
on or after 16th January 2011 and up to 14th January 2013, E-mail: aspet@cal2.vsnl.net.in
subject to certain conditions. For and on Behalf of
l) Plant Location the Board of Directors
JL126, Mouza - Basudevpur, Haldia
Dist. - Midnapore, West Bengal
Place: Kolkata P.K. Khaitan
Phone : 953224 - 275947/48
Date : May 12, 2008 Chairman
Fax : 953224 - 273740

62 | South Asian Petrochem Limited Annual Report 2007-08 | 63

 Certificate in respect of compliance
with the Code of Conduct of the
CEO and CFO certification Company *

We in our official capacity do hereby confirm and certify that: I, Biswanath Chattopadhyay in my capacity as the Executive Director and the CEO of the Company, do hereby
certify that during the financial year 2007-08, all Directors and Senior Executives of the Company have complied
(a) We have reviewed the financial statements and the cash flow statement for the year ended 31st March 2008, and that
with and adhered to the Code of Conduct of the Company as approved and prescribed by the Board of Directors
to the best of our knowledge and belief:
of the Company.
(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements
that might be misleading;

(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with
existing accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the financial For South Asian Petrochem Limited
year 2007-08 which are fraudulent, illegal or violative of the Company’s Code of Conduct.

(c) We accept the responsibility for establishing and maintaining internal controls and state that we have evaluated the
effectiveness of the internal control systems of the Company and we have disclosed to the Auditors and the Audit Biswanath Chattopadhyay
Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and steps have Executive Director and CEO
been taken or proposed to rectify these deficiencies.

(d) We have indicated to the Auditors and the Audit Committee

(i) Significant changes in the internal control during the year ended 31st March 2008; Place: Kolkata
(ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to Date: 29th April 2008
the financial statements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the *The Code of Conduct can be viewed on the Company’s website www.aspetindia.com
management or an employee having a significant role in the Company’s internal control system.

For South Asian Petrochem Ltd.

B. Chattopadhyay R.K. Sharma

Date: 29th April 2008 Executive Director and CEO Senior Vice President (Finance) and CFO

64 | South Asian Petrochem Limited Annual Report 2007-08 | 65

 Auditors’ Report
To
The Members of
South Asian Petrochem Limited
1. We have audited the attached Balance Sheet of South
Asian Petrochem Limited, as at 31st March 2008, and
the related Profit and Loss Account and Cash Flow
Statement for the year ended on that date annexed
thereto, which we have signed under reference to this
report. 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 the auditing
standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence
Financial Section
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 by the Companies (Auditor’s Report)
(Amendment) Order, 2004, issued by the Central
Government of India in terms of sub-section (4A) of
Section 227 of ‘The Companies Act, 1956’ of India (the
‘Act’) and on the basis of such checks of the books and
records of the company as we considered appropriate
and according to the information and explanations given
to us, we give 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:
a) We have obtained all the information and
explanations, which to the best of our knowledge
and belief were necessary for the purposes of our
audit;
Place : Kolkata
b) In our opinion, proper books of account as required
Date : 12th May 2008
by law have been kept by the company so far as
66 | South Asian Petrochem Limited
appears from our examination of those books;
c) The Balance Sheet, Profit and Loss Account and
Cash Flow Statement dealt with by this report are in
agreement with the books of account;
d) In our opinion, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement dealt with by this
report comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the
Act;
e) On the basis of written representations received
from the directors, as on 31st March 2008 and taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March 2008 from
being appointed as a director in terms of clause (g)
of sub-section (1) of Section 274 of the Act;
f) In our opinion and to the best of our information and
according to the explanations given to us, the said
financial statements together with the notes thereon
and attached thereto give in the prescribed manner
the information required by the Act and give a true
and fair view in conformity with the accounting
principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of
affairs of the company as at 31st March 2008;
ii) in the case of the Profit and Loss Account, of the
profit for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the
cash flows for the year ended on that date.
Prabal Kr. Sarkar
Partner
Membership No.: 52340
For and on behalf of
Lovelock & Lewes
Chartered Accountants
Annual Report 2007-08 | 67
 SOUTH ASIAN PETROCHEM LIMITED
Annexure to Auditors’ Report
[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of South Asian Petrochem Limited on
the financial statements for the year ended 31st March 2008]
1. a) The company is maintaining proper records
showing full particulars including quantitative
details and situation of fixed assets.
b) The fixed assets are physically verified by the
management every two years, which in our
opinion, is reasonable having regard to the size of
the company and the nature of its assets. Pursuant
to such schedule no physical verification was
carried out during the year.
c) In our opinion and according to the information
and explanations given to us, a substantial part of
fixed assets has not been disposed of by the
company during the year.
2. a) The inventory (excluding those in transit) have
been physically verified by the management during
the year. Stock in transit have been verified with
relevant documents. In our opinion, the frequency
of verification is reasonable.
b) In our opinion, 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) On the basis of our examination of the inventory
records, in our opinion, the company is maintaining
proper records of inventory. The discrepancies
noted on physical verification of inventory as
compared to book records were not material.
3. The company has neither granted nor taken any loans,
secured or unsecured, to/from companies, firms or
other parties covered in the register maintained under
Section 301 of the Act. Consequently clause (iii) (b) to
(d), (f) and (g) of paragraph 4 of the Companies
(Auditor’s Report) Order, 2003 as amended by the
Companies (Auditors’ Report) (Amendment Order),
2004 are not applicable.
4. In our opinion and according to the information and
explanations given to us, having regard to the
68 | South Asian Petrochem Limited
explanation that certain items purchased are of special
nature for which suitable alternative sources do not
exist for obtaining comparative quotations, 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, fixed assets and for the
sale of goods. Further, on the basis of our examination
of the books and records of the company, and
according to the information and explanations given to
us, we have neither come across nor have been
informed of any continuing failure to correct major
weaknesses in the aforesaid internal control system.
The company does not have any sale of services.
5. a) In our opinion and according to the information
and explanations given to us, particulars of
contracts and arrangements referred to in Section
301 of the Act have been entered in the register
required to be maintained under that section.
b) In our opinion and according to the information
and explanations given to us, the transactions
made in pursuance of such contracts or
arrangements and exceeding the value of Rupees
Five Lacs in respect of any party during the year,
have been made at prices which are reasonable
having regard to the prevailing market prices at the
relevant time.
6. The company has not accepted any deposits from the
public within the meaning of Sections 58A and 58AA
of the Act and the rules framed there under.
7. In our opinion, the company has an internal audit
system commensurate with its size and nature of its
business.
8. The Central Government of India has not prescribed the
maintenance of cost records under clause (d) of sub-
section (1) of Section 209 of the Act for any of the
products of the company.
9. a) According to the information and explanations
given to us and the records of the company
examined by us, in our opinion, the company is
Annexure to Auditors’ Report (Contd.)
generally regular in depositing undisputed
statutory dues including provident fund, investor
education and protection fund, employees’ state
insurance, income-tax, sales tax, wealth tax,
customs duty, excise duty, cess and other material
statutory dues as applicable, with the appropriate
authorities except certain dues in respect of
service tax and works contract tax. Further, since
the Central Government has till date not prescribed
the amount of cess payable under section 441A of
the Companies Act, 1956, we are not in a position
to comment upon the regularity or otherwise of the
company in depositing the same. There are no
arrear statutory dues outstanding as at 31st March
2008, for a period of more than six months from
the date they became payable.
b) According to the information and explanations
given to us and the records of the company
examined by us, there are no dues of income-tax,
sales tax, wealth-tax, service tax, customs duty,
excise duty and cess which have not been
deposited on account of any dispute.
10. The company has no accumulated losses as at 31st
March 2008 and it has not incurred any cash losses in
the financial year ended on that date or in the
immediately preceding financial year.
11. According to the records of the company examined by
us and the information and explanation given to us, the
company has not defaulted in repayment of dues to
any financial institution or bank or debenture holders
as at the balance sheet date.
12. The company has not granted any loans and advances
on the basis of security by way of pledge of shares,
debentures and other securities.
13. The provisions of any special statute applicable to chit
fund/ nidhi / mutual benefit fund/societies are not
applicable to the company.
14. In our opinion, the company is not a dealer or trader in
shares, securities, debentures and other investments.
15. In our opinion, and according to the information and
explanations given to us, the company has not given
any guarantee for loans taken by others from banks or
financial institutions during the year.
16. No term loan has been taken or applied during the year.
17. On the basis of an overall examination of the balance
sheet of the company, in our opinion and according to
the information and explanations given to us, there are
no funds raised on a short-term basis which have been
used for long-term investment.
18. The company has made preferential allotment of
shares to parties and companies covered in the register
maintained under Section 301 of the Act during the
year. In our opinion and according to the information
and explanations given to us, the price at which such
shares have been issued is not prejudicial to the
interest of the company.
19. The company has not issued any debenture and there
are no debentures outstanding at the year-end.
20. The company has not raised any money by public
issues during the year.
21. During the course of our examination of the books and
records of the company, carried out in accordance with
the generally accepted auditing practices in India, and
according to the information and explanations given to
us, we have neither come across any instance of fraud
on or by the company, noticed or reported during the
year, nor have we been informed of such case by the
management.
Prabal Kr. Sarkar
Partner
Membership No.: 52340
For and on behalf of
Place : Kolkata Lovelock & Lewes
Date : 12th May 2008 Chartered Accountants
Annual Report 2007-08 | 69
 SOUTH ASIAN PETROCHEM LIMITED

Balance Sheet Profit and Loss Account

(Rupees in Lacs) (Rupees in Lacs)
As at Schedule 31.03.2008 31.03.2007 For the year ended Schedule 31.03.2008 31.03.2007
SOURCES OF FUNDS INCOME
Shareholder's Funds Turnover (Gross) 1,04,428.77 1,06,569.12
Share Capital 1 23,313.86 19,094.58 Less : Excise duty 3,962.66 4,703.36
Equity Share Warrants (Refer Note 2 Sch 19) 140.64 – Turnover (Net) 1,00,466.11 1,01,865.76
Reserves and Surplus 2 15,165.88 8,449.35 Other income 15 3,034.90 416.62
Loan Funds
1,03,501.01 1,02,282.38
Secured Loan 3 27,798.51 33,106.38
EXPENDITURE
Unsecured Loans 4 7,864.00 –
(Increase) / Decrease in Stock 16 2,684.47 (1,627.93)
Deferred Tax Liability 5 1,855.02 851.46
Raw material consumed 75,883.27 79,838.92
76,137.91 61,501.77
Manufacturing,Administrative and Other Expenses 17 13,221.88 13,592.07
APPLICATION OF FUND
Interest and Finance Charges 18 1,966.41 3,037.37
Fixed Asset 6
Gross Block 45,216.10 42,701.29 Depreciation 2,331.86 2,260.51

Less: Depreciation (10,343.17) (8,014.15) 96,087.89 97,100.94

Net Block 34,872.93 34,687.14 Profit before Tax 7,413.12 5,181.44
Capital Work-in-progress 1,060.60 604.09 Provision for Taxation
Investments 7 8,552.25 458.63 Current Tax (Including tax for earlier year Rs. 3.36 lacs) 840.29 218.30
Current Assets, Loans and Advances Excess Provision relating to earlier years written back (9.83) –
Inventories 8 12,784.09 11,252.60 Deferred Tax 1,003.56 470.15
Sundry Debtors 9 10,726.56 13,555.28 Fringe Benefit Tax 26.24 23.98
Cash and Bank Balances 10 20,854.95 10,381.90 Profit after Tax 5,552.86 4,469.01
Other Current Assets 11 25.94 27.60 Balance brought forward from previous year 8,393.93 3,924.92
Loans and Advances 12 7,967.40 15,855.64 Amount Available for Appropriations 13,946.79 8,393.93
52,358.94 51,073.02 APPROPRIATIONS
Less: Current Liabilities and Provisions 13
Proposed Dividend 1,165.69 –
Current Liabilities 19,354.44 25,470.82
Tax on Dividend 198.11 –
Provisions 1,412.62 55.15
Balance carried to Balance Sheet 12,582.99 8,393.93
20,767.06 25,525.97
13,946.79 8,393.93
Net Current Asset 31,591.88 25,547.05
Basic Earnings per share (in Rupees) 2.74 2.34
Miscellaneous Expenditure 14 60.25 204.86
Diluted Earnings per share (in Rupees) 2.59 2.34
(To the extent not written off or adjusted)
76,137.91 61,501.77 (Equity Shares of Face Value of Rs.10 each)
Significant Accounting Policies and Notes to Accounts 19 Significant Accounting Policies and Notes to Accounts 19

Schedules referred to above form an integral part of the Balance Sheet. Schedules referred to above form an integral part of the Profit and Loss Account.
This is the Balance Sheet referred to in our Report of even date. This is the Profit and Loss Account referred to in our Report of even date.
For and on behalf of the Board For and on behalf of the Board
Prabal Kr. Sarkar Prabal Kr. Sarkar
Partner Partner
Membership No: 52340 P. K. Khaitan Membership No: 52340 P. K. Khaitan
C. K. Dhanuka C. K. Dhanuka
For and on behalf of J. P. Kundra For and on behalf of J. P. Kundra
Lovelock & Lewes B. Chattopadhyay Lovelock & Lewes B. Chattopadhyay
Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka
Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Place : Kolkata Compliance Officer Directors Place : Kolkata Compliance Officer Directors
Date : 12th May 2008 Date : 12th May 2008

70 | South Asian Petrochem Limited Annual Report 2007-08 | 71

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
(Rupees in Lacs) (Rupees in Lacs)
As at 31.03.2008 31.03.2007 As at 31.03.2008 31.03.2007

1 SHARE CAPITAL 4 UNSECURED LOANS

Authorised From Bank

29,00,00,000 (Previous Year 19,30,00,000) Equity Shares of Rs. 10/- each 29,000.00 19,300.00 Zero Percent Foreign Currency Convertible Bonds (Refer Note 3 Sch 19) 7,864.00 –
Issued, Subscribed and Paid up 7,864.00 –
23,31,38,594 (Previous Year 19,09,45,775) Equity Shares of Rs. 10/- each fully paid up 23,313.86 19,094.58
(Out of the above 9,45,775 Equity Shares were issued for consideration other than cash) 5 DEFERRED TAXATION

Liability
2 RESERVES AND SURPLUS
Depreciation 5,852.66 5,759.30
Share Premium Account Others 11.40 –
Balance as per last Balance Sheet 55.42 55.42 Less : Asset
Add : Premium received on Preferential issue of Equity Shares 2,957.72 – Unabsorbed Depreciation 4,009.04 4,907.84
Add : Premium received on Preferential issue of Equity Share Warrants 98.59 – 1,855.02 851.46
Less : Foreign Currency Convertible Bonds (FCCBs) issue expenses (392.63) –
Less : Preferential Issue Expenses (157.60) –
2,561.50 55.42
Profit and Loss Account
Balance as per last Balance Sheet 8,393.93 3,924.92 6 FIXED ASSETS
Add : Credit on account of transitional provisions under Revised AS-15 21.39 – DESCRIPTION GROSS BLOCK DEPRECIATION NET BLOCK
Add : Additions during the year 4,189.06 4,469.01 As at Additions Sale or As at Upto For the Sale or Upto As at As at
12,604.38 8,393.93 01.04.07 Adjust- 31.03.08 31.03.07 Year Adjust- 31.03.08 31.03.08 31.03.07
Total 15,165.88 8,449.35 ment ment
Leasehold Land 463.34 463.34 20.53 11.25 31.78 431.56 442.81
Freehold Land 2.96 2.96 0.00 0.00 0.00 2.96
3 SECURED LOANS
Non Factory Building 2,329.43 392.64 2,722.07 113.19 39.70 152.89 2,569.18 2,216.24
Notes Factory Building 2,636.09 2,636.09 316.35 88.05 404.40 2,231.69 2,319.74
Term Loans 1,2,3 & 4 Plant & Machinery 34,551.56 2,039.85 4.32 36,587.09 6,585.09 1,908.12 2.81 8,490.40 28,096.69 27,966.47
From Financial Institutions Furniture & Fixture 48.76 8.44 0.04 57.16 18.07 5.00 0.03 23.04 34.12 30.69
In Foreign Currency 6,048.44 8,400.18 Motor Vehicle 209.92 80.10 290.02 55.34 26.99 82.33 207.69 154.58
From Bank Intangibles : (Other than
In Foreign Currency 9,469.68 12,484.25 internally generated)
Working Capital Facility 1,3 & 4 Technical Knowhow 2,391.26 2,391.26 860.71 239.13 1,099.84 1,291.42 1,530.55
From Banks 12,198.31 12,125.49 Computer Software 67.97 1.10 69.07 44.87 13.62 58.49 10.58 23.10
[Includes Rs. 6,202.93 Lacs (Previous year Rs. 10,961.58 Lacs 42,701.29 2,522.13 7.32 45,216.10 8,014.15 2,331.86 2.84 10,343.17 34,872.93 34,687.14
on account of bills discounted with Banks)] Previous Year 42,531.79 613.68 444.18 42,701.29 5,759.86 2,260.51 6.22 8,014.15 34,687.14 36,771.93
Car Loan Capital Work in progress 1,060.60 604.09
From Bank 5 82.08 96.46
27,798.51 33,106.38 Notes
1. Sale or adjustment column include Gross Block and Accumulated Depreciation of assets written off worth Rs. 2.82 lacs
1. Secured by joint mortgage on pari-passu first charge basis for all term lenders and on pari-passu second charge basis (Previous year Rs. 8.89 lacs) & Rs. 2.42 lacs (Previous Year Rs. 2.37 lacs) respectively.
for all working capital bankers, by deposit of title deeds with IDBI Trusteeship Services Limited (ITSL), in respect of all
2. Capital Work in Progress includes Capital Stores & Spares worth Rs. 200.47 lacs (Previous Year Rs. 473.12 Lacs).
the immovable properties, of the Company situated at JL 126 Mouza Basudevpur, P.S. Sutahata, Haldia, District
Midnapore (East) in the State of West Bengal (except pieces and parcels of land which were not allowed to be
mortgaged by the said Government) together with all the buildings and structures thereon including fixed plant and
machinery and fixtures and fittings permanently fastened to the earth or fastened to anything attached to the earth.
2. Pledge of shares in the Company held by group companies.
3. Secured by personal Guarantee of two of the Promoter Directors of the Company.
4. First charge by way of hypothecation ranking pari-passu over all present and future inventories, consumables, stores
and spares, book- debts and all other moveables for all working capital bankers and second charge on the same for all
term lenders.
5. Car Loans are secured by hypothecation of respective vehicles.

72 | South Asian Petrochem Limited Annual Report 2007-08 | 73

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
7 INVESTMENTS 7 INVESTMENTS (Contd..)
Particulars As at 31.03.2007 Additions Sold As at 31.03.2008 Particulars As at 31.03.2007 Additions Sold As at 31.03.2008
No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount
Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs)
CURRENT INVESTMENTS (Contd..)
LONG TERM INVESTMENTS
CRISIL Ltd. – – 2,049 69.76 2,049 69.76 – –
Trade, Unquoted at Cost
Gateway Distriparks Ltd. – – 25,000 36.29 25,000 36.29 – –
In Subsidiary Company
National Thermal Power Corporation Ltd. – – 97,000 213.45 97,000 213.45 – –
Fully Paid up units of Limited Liability Company 100 0.05 – – – – 100 0.05
Punj Llyod Ltd. – – 7,600 39.70 7,600 39.70 – –
Interest in South Asian Petrochem USA, LLC#
Reliance Energy Ltd . – – 6,685 150.51 6,685 150.51 – –
In Others
SREI Infrastructure Finance Ltd. – – 59,700 141.43 59,700 141.43 – –
*Fully Paid up Common Stock of Tectura Corporation 2,48,845 149.59 2,48,845 149.59
Sterlite Industries India Ltd. – – 10,500 101.36 10,500 101.36 – –
Fully Paid up Equity Shares of Haldia Integrated 10,000 1.00 – – – – 10,000 1.00
Tata Motors Ltd. – – 5,500 39.84 5,500 39.84 – –
Development Agency Limited
Tata Steel Ltd. – – 4,500 38.14 4,500 38.14 – –
Sub Total 150.64 – – 150.64
Tata Tea Ltd. – – 7,750 55.23 7,750 55.23 – –
Non Trade, Quoted at cost
UTV Software Communications Ltd. – – 11,000 100.30 11,000 100.30 – –
Equity Shares fully paid up
Mutual Funds
Aditya Birla Nuvo Ltd. – – 11,150 219.02 – – 11,150 219.02
DSP Merrill Lynch Liquid Plus Growth – – 2,013.13 22.50 – – 2,013.13 22.50
Adlabs Films Ltd. – – 8,000 113.62 – – 8,000 113.62
Standard Chartered Liquidity Manager
Alstom Projects India Ltd. – – 9,450 88.42 1,000 9.41 8,450 79.01
Plus Growth Scheme – – 528,963.02 6,000.00 447,729.42 5,078.57 81,233.60 921.43
Balrampur Chini Mills Ltd. – – 1,35,000 146.90 – – 1,35,000 146.90
**Less:Change in Carrying Value of
Cairn India Ltd. – – 20,300 50.07 – – 20,300 50.07
Current Investments – 40.84 40.84 –
Emami Ltd. – – 20,120 67.71 48 0.16 20,072 67.54
Sub Total 307.99 7,289.51 6,653.57 943.93
GAIL India Ltd. – – 46,100 215.04 – – 46,100 215.04
Total – 458.63 14,757.29 6,663.67 – 8,552.25
Hindustan Petroleum Corporation Ltd. – – 20,000 64.03 – – 20,000 64.03
Aggregate unquoted Investments 150.64 150.64
ICICI Bank Ltd. – 16,500 217.69 – – 16,500 217.69
Aggregate quoted Investments 307.99 8,401.60
ICRA Ltd. – – 6,580 64.34 – – 6,580 64.34
Market value of Quoted Investments 307.99 7,084.65
Infrastructure Development Finance Co. Ltd. – – 84,500 181.59 – – 84,500 181.59
Indiabulls Real Estate Ltd. – – 24,700 190.39 – – 24,700 190.39 # Represents shares in 100% subsidiary acquired by way of adjustment against trade receivables for which prior intimation to Reserve Bank of
Kotak Mahindra Bank Ltd. – – 19,000 196.72 – – 19,000 196.72 India has not been considered.
Larsen & Toubro Ltd. – – 6,000 148.79 – – 6,000 148.79 * Pursuant to an agreement dated 6th November 2006 between (i) the Company along with other Companies (collectively the Sellers), (ii) Euroinfo
Maharastra Seamless Ltd. – – 40,000 203.14 – – 40,000 203.14 Systems Pvt. Ltd. and (iii) Tectura Corporation, USA (the Buyer), 103000 shares of Euroinfo Systems Pvt. Ltd. held by the Company were sold
Mahindra & Mahindra Ltd. – – 18,200 148.14 – – 18,200 148.14 to Tectura Corporation subject to certain terms and conditions as mentioned in the agreement at the following aggregate purchase price
Mundra Port & Special Economic Zone Ltd. – – 25,172 219.63 – – 25,172 219.63 subject to point ‘c’
Nagarjuna Fertilisers Ltd. – – 1,74,000 143.47 – – 1,74,000 143.47 a) 248845 common stock of Tectura Corporation-these stocks are held in escrow and shall be released after 3 years commencing from the
Ramkrishna Forgings Ltd. – – 26,093 96.28 – – 26,093 96.28 closing date i.e. 22nd March 2007, thereafter the Company may elect to exercise their redemption option anytime at an agreed price and
Reliance Communications Ltd – – 25,400 173.60 100 0.53 25,300 173.07 b) annual stock dividend in the form of Tectura Corporation’s common stock after 24 and 36 months post closing.
Reliance Industries Ltd. – – 21,400 579.87 – – 21,400 579.87 c) a price adjustment in the form of Tectura Corporation’s common stock, if tangible net worth of Euroinfo Systems Pvt. Ltd. as on the date
Reliance Power Ltd. – – 13,625 61.31 – – 13,625 61.31 preceding the closing date is less than USD 0.4 million.
(Rupees in Lacs)
Religare Enterprises Ltd – – 24,500 150.32 – – 24,500 150.32
State Bank Of India – – 6,000 118.61 – – 6,000 118.61 As at 31.03.2008 31.03.2007
Tata Chemicals Ltd. – – 36,500 147.53 – – 36,500 147.53
Torrent Power Ltd. – – 1,29,913 260.28 – – 1,29,913 260.28
8 INVENTORIES (Including Those in Transit)
Television Eighteen India Ltd. – – 14,700 76.27 – – 14,700 76.27
Stores and Spares 801.83 588.80
Mutual Funds
Packing Materials 100.14 69.80
ICICI Prudential Flexible Income Plan–Growth – – 42,32,008.88 625.00 – – 42,32,008.88 625.00
Raw Materials 8,285.17 4,312.58
ICICI Prudential Income Plan–Growth – – 20,57,647.04 500.00 – – 20,57,647.04 500.00
Reliance Banking Fund–Growth Plan–Growth Option – – 7,47,952.01 500.00 – – 7,47,952.01 500.00
Finished Goods 3,466.24 6,147.86
Standard Chartered Arbitrage Fund Plan B Growth – – 46,86,386.98 500.00 – – 46,86,386.98 500.00 Work in Progress 130.71 133.56
Birla Income Plus–Growth – – 14,13,335.67 500.00 – – 14,13,335.67 500.00 12,784.09 11,252.60
Birla Sun Life Income Fund–Growth – – 16,60,467.59 500.00 – – 16,60,467.59 500.00
Sub Total – 7,467.78 10.10 7,457.68 9 SUNDRY DEBTORS (Unsecured, Considered good)
CURRENT INVESTMENTS
Non Trade, Quoted at lower of cost and fair value
Debts outstanding for a period exceeding six months 18.72 8.22
Equity Shares fully paid up
Other Debts
**Indian Hotels Ltd. 67,000 100.62 – – 67,000 100.62 – – South Asian Petrochem USA, LLC (Subsidiary) – 2,635.31
**ITC Ltd 1,40,000 248.21 – – 1,40,000 248.21 – – Others 10,707.84 10,911.75
Bajaj Hindusthan Ltd – – 80,000 242.11 80,000 242.11 – – [Includes Rs. 6,246.04 lacs (Previous year Rs. 10,934.68 lacs on account of
CESC Ltd. – – 6,500 38.89 6,500 38.89 – – bills discounted with banks)]
10,726.56 13,555.28

74 | South Asian Petrochem Limited Annual Report 2007-08 | 75

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
(Rupees in Lacs) (Rupees in Lacs)
As at 31.03.2008 31.03.2007 For the year ended 31.03.2008 31.03.2007

10 CASH AND BANK BALANCES 15 OTHER INCOME

Cash Balance on hand 1.47 0.28 Scrap Sales 55.29 59.21

Cheques/Drafts in hand 171.22 313.79 Insurance Claim Received 119.49 47.76
Balance with Scheduled Banks Profit on Sale of Current Non Trade Investment 62.93 13.04
On Current Accounts Dividend Income from Long Term Non Trade Investment 6.17 2.42
Foreign Exchange Gain 2,531.63 211.93
Export Earners Foreign Currency Account 199.79 662.52
Miscellaneous Income 259.39 82.26
Others 1,466.05 1,287.48
3,034.90 416.62
On Deposits Accounts 18,677.41 7,189.31
On Cash Credit Accounts 333.33 928.52 16 (INCREASE) / DECREASE IN STOCK
(For Security refer note 1, 3 & 4 in Schedule 3)
Balance with Other Banks in Foreign Currency Opening Stock
ABC Bank, Egypt - Current Account 5.68 – Finished Goods 6,147.86 4,532.07
Work-in-Progress 133.56 121.42
[Maximum balance outstanding during the year Rs. 7.62 lacs (Previous year Nil)]
6,281.42 4,653.49
20,854.95 10,381.90
Closing Stock
Finished Goods 3,466.24 6,147.86
11 OTHER CURRENT ASSETS Work-in-Progress 130.71 133.56
3,596.95 6,281.42
Interest Accrued on deposits 25.94 27.60 Net (Increase) / Decrease in Stock 2,684.47 (1,627.93)
25.94 27.60
For the year ended 31.03.2008 31.03.2007
12 LOANS AND ADVANCES (Unsecured, Considered good)
17 MANUFACTURING, ADMINISTRATIVE AND OTHER EXPENSES
Advance to Subsidiary – 402.18 Salaries and Wages 608.21 503.65
Advances recoverable in cash or in kind or for value to be received 7,654.00 15,172.33 Contribution to Provident and Other Funds 37.91 35.15
Advance Tax (net of provision) 58.62 227.87 Staff Welfare 54.95 66.94
Deposits with Government Authorities and Others 254.78 53.26 Power and Fuel 3,234.68 3,220.58
7,967.40 15,855.64 Stores and Spare Parts Consumed 244.46 224.09
Packing Materials Consumed 637.50 642.54
Rent 100.11 89.56
13 CURRENT LIABILITIES AND PROVISIONS
Rates and Taxes 44.18 52.37
A. Current Liabilities Repairs and Maintenance
Sundry Creditors Plant and Machinery 22.53 16.01
Micro & Small Enterprises 0.45 – Buildings 1.15 6.21
Others 18,942.95 24,828.85 Others 121.93 145.61 144.90 167.12
Subsidiary Company 18.94 – Insurance 242.07 239.93
Director's Fees 12.25 4.95
Advance from Customers/Agents 273.54 457.31
Excise Duty on Stock 25.81 (238.65)
Hire Purchase Liability – 0.38
Freight, delivery and shipping charges 5,373.81 6,163.46
Interest Accrued but not due on loans 118.56 184.28
Commission on sales 881.57 981.02
19,354.44 25,470.82 Miscellaneous Expenditure Written off 144.61 144.61
B. Provisions Loss on sale of Fixed Assets 0.22 1.03
Provision for Assets Written Off 0.40 6.53
Proposed Dividend 1,165.69 – Change in Carrying Value of Current Investments – 40.84
Tax on Dividend 198.11 – Advances Written off 1.71 –
Gratuity 18.53 27.77 Others 1,431.82 1,246.35
Leave encashment 30.29 27.38
1,412.62 55.15 13,221.88 13,592.07
20,767.06 25,525.97
18 INTEREST AND FINANCE CHARGES

14 MISCELLANEOUS EXPENDITURE On Term Loan 1,360.24 1,861.65

On Others 1,573.60 1,279.99
Preliminary Expenditure 60.25 204.86 Interest Received on Deposits (Gross) (967.43) (104.27)
60.25 204.86 [Tax deducted at source Rs. 204.46 Lacs (Previous Year Rs. 20.58 Lacs)]
1,966.41 3,037.37

76 | South Asian Petrochem Limited Annual Report 2007-08 | 77

 SOUTH ASIAN PETROCHEM LIMITED
Schedules forming part of the Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
1. Significant accounting policies
a) Basis for preparation of Accounts
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the
applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and other relevant provisions
of the said Act.
b) Fixed Assets and Depreciation
Tangible fixed assets are stated at cost less depreciation.
Leasehold land is amortised over the period of lease. Depreciation on assets is provided on the straight-line method at
the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.
With effect from 1st April 2007 computer accessories and mobile phones are written off over a period of 3 years and 2
years respectively as per straight line method. The changes have been made perceiving their useful life.
Intangible asset is recognised if it is probable that future economic benefits will flow to the Company. Such asset is
initially recognised at cost. Subsequent expenditure on such asset is recognised as expense when incurred unless it is
probable that the expenditure will enhance its future economic benefits. Depreciable amount of an intangible asset is
allocated on straight line method over the best estimate of its useful life as given below:
Computer software is amortised over 5 years.
Other Intangible assets over 10 years.
An impairment loss is recognised, where applicable, when the recoverable amount of an asset is less than its carrying
amount.
c) Investments
Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision
is recorded to recognise, any decline, other than temporary, in the carrying value of such investment. Investment acquired
in exchange of another is carried at a cost determined with reference to the fair value of investment given up.
d) Inventories
Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value.
Provision is made for obsolescence and other anticipated losses, wherever considered necessary. Finished goods and
work-in-progress include cost of conversion and other costs incurred in bringing the inventories to their present location
and condition.
e) Employee Benefits
Contribution to Defined Contribution Provident Fund scheme (administered by Government) is made based on current
salary and is recognised in the Profit and Loss account on accrual basis.
Liabilities in respect of Defined Benefits plans namely retirement gratuities and encashment of unavailed leave are
unfunded and calculated by an independent actuary at the year-end and provided for. Actuarial gain and losses are
recognised in the statement of Profit and Loss Account.
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account
of the year in which the related service is rendered. Part of the leave accrued during the year are accounted for on accrual
basis and charged to Profit and Loss Account as short term benefit.
f) Foreign currency transactions
Transactions in foreign currency are recorded as follows:
i) Up to 31st October 2006, at the average rate of exchange prevailing in a month and
ii) there after, at the rate of exchange prevalent on the previous day.
Forward Exchange Contracts are recorded at the contract rate.
Exchange differences arising on the settlement of transactions or on reporting at year end rates, are recognised as income
or as expense in the period in which they arise except in respect of fixed assets acquired from outside India upto 31st
March 2007, where exchange variance was adjusted to the carrying amount of respective assets.
The Company uses forward contracts to hedge its exposure to movements in foreign exchange rates. The premium or
discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the
contract. Exchange differences on such a contract are recognised in the profit and loss account in the reporting period
78 | South Asian Petrochem Limited
Schedules forming part of the Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange
contract is recognised as income or as expense for the period. The foreign exchange losses, if any, arising on marking to
market forward exchange contract entered to hedge the foreign currency risks of a firm commitment or a highly probable
forecast transaction are provided for in the profit and loss account.
g) Revenue recognition
Sale in Domestic Tariff Area is recognised on dispatch of goods and is net of trade discounts and excise duties. Export
sales are recognised on the basis of Bill of Lading.
Other income, together with related tax credits & expenditure, are accounted for on accrual basis.
h) Government Grants
Duty Drawbacks are recognised as deduction in reporting the related expenditure.
i) Borrowing costs
Borrowing costs attributable to qualifying assets are capitalised upto the date when such assets are ready for their
intended use. Other borrowing costs are recognised as expense in the period in which they are incurred.
j) Taxes on income
Current tax represents the amount that would be payable based on computation of tax as per prevailing taxation laws
under the Income Tax Act, 1961.
Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between
taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent
periods. Deferred Tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognised only
when it is virtually certain and in respect of other assets where there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realised.
k) Leases
Assets acquired on finance lease/ hire purchase are capitalised at the fair value of the leased asset. Equated monthly
payments are apportioned between the finance charge and repayment of principal amount. Lease payments under
operating lease are recognised as an expense in the profit and loss account on a straight line basis over the lease term.
l) Miscellaneous Expenditure
Miscellaneous Expenditure represents preliminary expenses which are amortised over a period of 5 years.
2. Preferential Issue of Equity Shares and Warrants :
During the year to meet the company’s fund requirement for its expansion including equity participation in overseas subsidiary,
retirement of high cost borrowings and other business purposes the company raised Rs. 7,416.23 lacs by preferential
allotment of equity shares and equity share warrants.
International Finance Corporation and Promoters have subscribed to 76,95,473 and 63,68,800 partly paid equity share warrants
respectively, on a preferential basis, with an option to subscribe to the Equity shares of Rs. 10/- each of the Company at a
price of Rs. 17.01 per share within 18 months from the date of allotment, i.e. 20th December 2007. 10% of the total
consideration i.e. Rs. 239.23 lacs has been paid on allotment of the warrants and the balance shall be paid on the warrant
holders exercising option to convert the warrants into equity shares.
Balance Rs. 7,177.00 lacs has been raised by allotting 2,30,86,419 and 1,91,06,400 fully paid up Equity Shares to International
Finance Corporation and Promoters respectively on a preferential basis at Rs.17.01per share. Out of the net proceeds
Rs. 971.14 lacs has been utilised as an advance towards equity participation in new overseas project.
The balance unutilised money either stands invested in securities or remains with banks.
3. Foreign Currency Convertible Bonds (FCCB):
a) The Company has issued 200 Zero Percent Unsecured Foreign Currency Convertible Bonds (FCCB) of US$ 100,000 each
aggregating to US$ 20 million. The bonds are redeemable on 23rd January 2013 at 136.86% of their principal amount. The
bond holders have an option to convert these bonds into equity shares at an initial conversion price of Rs. 22.50 per
share, with a fixed rate of exchange on conversion of Rs. 39.32 (US$ 1), subject to certain adjustments. The Bonds may
also be redeemed, in whole but not in part, at the option of the Company at any time, subject to certain conditions, Also
the company has an option requiring mandatory conversion of all the outstanding bonds on or after 16th January 2011
and up to 14th January 2013.
Annual Report 2007-08 | 79
 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..) 19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
The future cash flows if any cannot be determined at this stage. The present value of obligation for gratuity and leave encashment is determined based on actuarial valuation using the
Projected Unit Credit Method.
b) The net proceeds of Rs. 7,864.00 lacs from the issue of the FCCB, pending utilisation has been included in Cash and Bank
Balances. The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion
and other relevant factors including supply and demand in the employment market.
c) Expenses on issue of FCCB Rs. 392.63 lacs have been adjusted against securities premium as per Section 78 of the
The above information is certified by the actuary. This being first year of implementation, previous years’ figures have not been
Companies Act, 1956.
given.
4. Change in Accounting Policy :
7. Segment reporting:
a) Resultant from the change in accounting policy for depreciating computer accessories and mobile phones over a period
The Company has one business segment, i.e. manufacture of Pet Resins. Geographical segments being primary segments
of 3 years and 2 years respectively as per straight line method, the profit before tax has decreased by Rs. 22.00 lacs.
are organised as Domestic and Exports, based on location of customers.
b) In order to comply with the Companies (Accounting Standards) Rules, 2006 exchange fluctuation on translation of foreign
currency loans taken to acquire fixed assets from outside India is credited to the P & L Account instead of adjusting the (Rupees in Lacs)
same with the value of respective assets. This change in policy has led to increase in profit before tax by Rs. 1622.18 lacs. Export Domestic Total Segment Unallocable Total Enterprise

5. a) Estimated amount of contracts remaining to be executed on capital account Rs. 5.18 lacs. (Previous year Rs. 911.56 lacs). 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07

b) The company has received a show cause notice, from the ESI Authorities, which includes a claim of Rs. 245.40 lacs. It Segment Revenue -
may be noted that the company has not fully accepted the said claim, and the amount of final liability cannot be Sales (External Revenue) 63,847.10 69,150.00 36,619.01 32,715.76 1,00,466.11 1,01,865.76 – – 1,00,466.11 1,01,865.76
ascertained since the matter is pending settlement. Segment Results 4,334.45 6,377.83 5,826.33 4,727.54 10,160.78 11,105.37 (4,607.92) (6,636.36) 5,552.86 4,469.01
Depreciation &
6. Retirement Benefits: Amortisation 1,527.26 1,543.57 804.60 716.94 2,331.86 2,260.51 – – 2,331.86 2,260.51
The company has adopted Accounting Standard 15 (Revised 2005) on Employee Benefits during the year. The incremental Non cash expenses other
net savings on account of Employee Benefits as at the beginning of the year amounting to Rs. 21.39 lacs has been added to than Depreciation &
the opening balance of the Profit and Loss Account in terms of the transitional provision of the said accounting standard. Amortisation – – – 144.61 144.61 144.61 144.61
Defined Contribution Plan Segment Assets 10,000.36 13,714.64 726.20 (159.36) 10,726.56 13,555.28 – – 10,726.56 13,555.28
Contribution to Defined Contribution Plan namely Provident Fund is made by both the employer and employees. Capital Assets – – – 35,933.53 35,291.23 35,933.53 35,291.23
Total Employer Contribution recognised as expense for the year amounts to Rs. 34.17 lacs. Other Assets – – – 50,244.88 38,181.23 50,244.88 38,181.23
Total Assets 10,000.36 13,714.64 726.20 (159.36) 10.726.56 13,555.28 86,178.41 73,472.46 96,904.97 87,027.74
Defined Benefit Plan Segment Liabilities 200.90 336.24 283.50 164.82 484.40 501.06 – – 484.40 501.06
Reconciliation of opening and closing balances of Defined Benefit obligation (Rupees in Lacs) Total Liabilities 200.90 336.24 283.50 164.82 484.40 501.06 96,420.57 86,526.68 96,904.97 87,027.74
Leave Cost to acquire tangible
Gratuity Encashment & intangible assets – – – – – – 2,522.13 613.68 2,522.13 613.68
(Unfunded) (Unfunded)
Defined Benefit obligation at beginning of the year 14.30 19.46 8. Earning per share
Current Service Cost 5.07 5.85 Particulars 2007-08 2006-07
Interest Cost 1.23 1.47
a) Earnings Basic (Rs. in Lacs) 5,552.86 4,469.01
Actuarial (gain)/loss (1.96) 8.30
b) Adjustments for Dilutive Earnings net of tax – –
Benefits paid (0.11) (4.79)
c) Earnings Diluted (Rs. in Lacs) 5,552.86 4,469.01
Defined Benefit obligation at year end 18.53 30.29
d) Weighted Average number of Ordinary Shares outstanding 20,28,19,711 19,09,45,775
Amount as per Balance Sheet:
e) Adjustment for Potential Ordinary Shares 1,12,15,586 –
Present value of Defined Benefits obligation as at 31st March 2008 18.53 30.29
f) Weighted Average number of Ordinary shares in computing
Amount recognised in Profit and Loss Account against Salaries and
Diluted Earnings Per Share 21,40,35,297 19,09,45,775
Wages are as follows:
- Basic (a/d) (in Rs.) 2.74 2.34
Current Service Cost 5.07 5.85
- Diluted (c/f) (In Rs.) 2.59 2.34
Interest Cost 1.23 1.47
Actuarial (gain)/loss (1.96) 8.30
Settlement 2.45 9. Disclosure of related parties and related party transactions:
Total 4.34 18.07 Names of related parties and description of relationship:
A. Subsidiary Company.
Actuarial assumptions 1. South Asian Petrochem, USA, LLC.
Mortality Table (LIC) 1994-96 1994-96 2. Egyptian Indian Polyester Company S.A.E.
(Ultimate) (Ultimate)
Discount rate (per annum) 8.75% 8.75%
Rate of escalation in salary (per annum) 5% 5%

80 | South Asian Petrochem Limited Annual Report 2007-08 | 81

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..) 19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
B. Associate / Group Companies 11. a) Lease Obligation
3. Dhunseri Tea & Industries Ltd. The company has taken vehicles under Hire Purchase Scheme. The minimum rentals as at 31st March 2008 and the
4. Tezpore Tea Co. Ltd. present value as at 31st March 2008 of minimum rentals in respect of assets acquired under Hire Purchase are as follows:
5. Naga Dhunseri Group Ltd.
6. Mint Investments Ltd. (Rupees in Lacs)
7. Mayfair India Ltd. Particulars Minimum Hire Purchase Present Value of Minimum Finance
8. Plenty Valley Intra Ltd. Payments Hire Purchase Payments Charges
9. Trimplex Investments Pvt. Ltd.
2007-2008 2006-2007 2007-2008 2006-2007 2007-2008 2006-2007
10. Madhuting Tea Company Ltd.
Payable not later than one year 0.00 0.39 0.00 0.38 0.00 0.01
C. Key Management Personnel:
Payable later than one year but not
11. Mr. M. Dhanuka (Executive Director)
12. Mr. B. Chattopadhyay (ED and Chief Executive Officer) later than five years 0.00 0.00 0.00 0.00 0.00 0.00
13. Mr. B. K. Biyani (Executive Director, Corporate) Payable later than five years 0.00 0.00 0.00 0.00 0.00 0.00
D. Relative of Key Managerial Personnel: Total 0.00 0.39 0.00 0.38 0.00 0.01
14. Mr. C. K. Dhanuka (Vice Chairman)
b) Operating Lease
E. Trust over which Key Management Personnel and their relatives have significant influence:
The company has taken various office premises under operating lease having tenures of 11 months / 5 years. There is no
15. Ram Kishen Dhanuka Charity Trust.
specific obligation for renewal of these agreements. Lease rent for the year amounts to Rs. 89.31 Lacs (Previous year
Disclosure of Related Party Transactions. (Rupees in Lacs) Rs. 84.51 Lacs).
Nature of Transaction Year ended Year ended
Apart from above the company has taken a motor vehicle on non-cancellable operating lease and lease rent amounting
31.03.2008 31.03.2007
to Rs. 6.92 lacs (previous year Rs. 0.58 lacs) has been charged to Profit and Loss Account. The future minimum lease
A. Subsidiary Company payments as on 31st March 2008 are as under:
1. South Asian Petrochem USA, LLC (Rupees in Lacs)
- Sale of Goods 1917.34 5,741.41
Particulars 2007-2008 2006-2007
- Reimbursement of Expenses 198.71 672.14
- Receivable/(Payable) (18.94) 3,037.49 Not later than one year 6.92 6.92
- Service charges paid 205.32 75.93 Later than one year and not later than five years 19.60 26.52
2. Egyptian Indian Polyester Company S.A.E. Later than five years 0.00 0.00
- Advance against equity 971.14 0.00
B. Associate Companies
12. Payment to Auditors
Reimbursements of Expenses
Other Expenditure in Schedule-17 includes Auditor’s Remuneration as follows:
- Trimplex Investments Private Limited 7.55 7.46 (Rupees in Lacs)
Rent Sl. No. Particulars 31.03.2008 31.03.2007
- Trimplex Investments Private Limited 38.59 38.59
1 Audit Fees 16.00 12.00
- Mint Investments Limited. 21.80 21.80
- Naga Dhunseri Group Limited 6.75 5.10 2 Tax Audit Fees 1.90 1.50
67.14 65.49 3 Other Works 9.90 11.23
C. Key Management Personnel 4 Out of pocket Expense 0.27 1.33
Remuneration and Retirement benefits Total 28.07 26.06
- Mr. Mrigank Dhanuka (Executive Director) 45.65 26.94
- Mr. B. Chattopadhyay (ED and Chief Executive Officer) 43.96 31.76 13. Licensed capacity, installed capacity and production:
- Mr. B. K. Biyani (Executive Director, Corporate) 38.39 28.80
128.00 87.50 Product Installed Capacity Production
D. Relative of Key Managerial Personnel: 2007-2008 2006-2007 2007-2008 2006-2007
Payment of Sitting Fee PET Resin (in MT) 200,000 180,000 165,008.93 168,950.24
- Mr. C. K. Dhanuka (Vice Chairman) 2.00 1.00

Note:
10. Remuneration to whole time directors (Rupees in Lacs) Licensed Capacity is not applicable. Installed Capacity is as certified by the Executive Director and CEO, being a technical
Particulars 31.03.2008 31.03.2007 matter.
Salary 71.88 54.23 Production Includes
Perquisites 24.48 17.04 1039.53 MT (previous year 773.87 MT) of Lumps generated in the process of manufacturing.
Contribution to Provident Fund and Other Welfare Funds etc. 5.64 4.23
Performance Incentive 26.00 12.00
Total 128.00 87.50

82 | South Asian Petrochem Limited Annual Report 2007-08 | 83

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Accounts Schedules forming part of the Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..) 19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
14. Particulars of sale and stock: 18. Expenditure in foreign currency: (Rupees in Lacs)
Particulars 2007-2008 2006-2007 Sl. No. Particulars 31.03.2008 31.03.2007
Quantity Value Quantity Value 1 Travelling 78.01 96.18
(in MT) (Rs. in Lacs) (in MT) (Rs. in Lacs) 2 Commission on Sales 272.55 496.54
Opening Stock: 3 Others 963.61 1,737.12
4 Interest paid in rupee to financial Institution towards interest
PET Resin 11,738.67 6,114.62 8,972.00 4,398.09
on Foreign Currency Loan 1,348.31 1,814.82
Lumps 103.99 33.24 260.00 133.98 Total 2662.48 4,144.66
Sales:
19. Earnings in Foreign exchange: (Rupees in Lacs)
PET Resin 1,69,264.57 1,04,138.00 1,65,409.70 1,06,205.27
Lumps 812.35 290.77 929.88 363.85 Particulars Year ended Year ended
31.03.2008 31.03.2007
Closing Stock:
Exports on FOB Basis 60,016.35 64,533.77
PET resin 6,443.49 3,354.02 11,738.67 6,114.62
Interest income on FD 51.92 Nil
Lumps 331.18 112.22 103.99 33.24
20. a) Foreign Currency Exposures that are not hedged by a derivative instrument or otherwise is Rs. 33,120.38 Lacs (Previous
15. Raw material consumed during the year. year Rs. 33,038.76 Lacs).

Sl. No. Particulars 31.03.2008 31.03.2007 b) Outstanding Forward Contracts as on 31st March 2008 taken to hedge various foreign currency Receivables is
Rs. 3809.23 Lacs (Previous Year Rs. 12,418.78 Lacs).
Quantity Value Quantity Value
21. Duty Drawback shown as deduction from power and fuel is Rs. 230.42 Lacs.(Previous year Rs. 160.68 Lacs)
(in MT) (Rs. in Lacs) (in MT) (Rs. in Lacs)
22. Haldia plant went for a planned shutdown from 1st November 2007 to 28th November 2007 for de-bottlenecking and
1 PTA 1,39,109.36 49,004.93 1,41,999.63 55,626.91
maintenance. The capacity of CP and SSP Plant has been increased from 180000 TPA to 200000 TPA.
2 MEG 55,479.53 23,822.53 56,515.69 21,432.99
23. In order to proactively penetrate the European and American markets and have a visible global presence the company is in
3 Others – 3,055.81 – 2779.02 advance stages to form a manufacturing subsidiary Egyptian Indian Polyester Company S.A.E in association with Egyptian
Total – 75,883.27 – 79,838.92 Petro Chemicals Holding Company (ECHEM). The greenfield PET project with installed capacity of 315,000 TPA will be located
in Egypt.
16. Details of imported and indigenous raw material, spare parts and stores consumed. 24. During the year the company has decided to wind up South Asian Petrochem USA LLC its 100% subsidiary in United States
and The Georgia Secretary of State has completed the termination effective from 9th April 2008.
Particulars 31.03.2008 31.03.2007
25. Based on intimation from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act,
Value % Value % 2006 (MSMED Act) disclosures as required under section 22 of the said Act are as follows:
(Rs. in Lacs) Consumed (Rs. in Lacs) Consumed
i) The principal amount and the interest due thereon remaining unpaid to any supplier as at 31st March 2008 is Rs. 0.45
Raw materials: lacs and Rs. Nil respectively;
Imported 26,719.16 35.21 37,612.42 47.11 ii) No interests was paid by the company in terms of section 16 of MSMED Act during the year.
Indigenous 49,164.11 64.79 42,226.50 52.89 iii) There was no interest for delay in making payment beyond the appointed day.
Total 75,883.27 100.00 79,838.92 100.00 iv) There is no interest accrued and remaining unpaid as on 31st March 2008; and
Spare parts & Stores: v) No interest is remaining due and payable even in the succeeding years, until such date when the interest dues as above
Imported 77.92 31.88 39.12 17.28 are actually paid to the micro, small and medium enterprise, for the purpose of disallowance as a deductible expenditure
under section 23 of the aforesaid Act.
Indigenous 166.54 68.12 184.97 82.72
This information has been determined to the extent such parties have been identified on the basis of information available
Total 244.46 100.00 224.09 100.00
with the Company.
26. Previous year’s figures have been rearranged / regrouped wherever necessary.
17. C.I.F. Value of Imports. (Rupees in Lacs)
For and on behalf of the Board
Particulars Year ended Year ended
31.03.2008 31.03.2007
P. K. Khaitan
Raw Material 31,465.51 38,363.87 C. K. Dhanuka
Capital Goods 999.49 455.54 J. P. Kundra
Stores & Spares 147.70 165.88 B. Chattopadhyay
Total 32,612.70 38,985.29 K. V. Balan R. K. Sharma M. Dhanuka
Place : Kolkata Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Date : 12th May 2008 Compliance Officer Directors

84 | South Asian Petrochem Limited Annual Report 2007-08 | 85

 SOUTH ASIAN PETROCHEM LIMITED

Balance Sheet Abstract and Company’s General Business Profile Cash Flow Statement (Rupees in Lacs)
1. Registration Details For the year ended 31.03.2008 31.03.2007
7 9 9 3 2 A. CASH FLOW FROM OPERATING ACTIVITIES
Registration No. State Code 2 1
Net Profit before Tax 7,413.12 5,181.44
Balance Sheet Date 3 1 0 3 2 0 0 8 Adjustments for :
Depreciation 2,331.86 2,260.51
2. Capital Raised during the year (Amount in Rs. Lacs) Interest Expense 2,933.84 3,141.64
Public Issue Rights Issue Interest Received (967.43) (104.27)
N I L N I L Provision for Wealth tax 1.36 1.25
Dividend Income (6.17) (2.42)
Bonus Issue Private Placement
Provision for Dimunation in value of Investments – 40.84
N I L 4 2 1 9 . 2 8 Profit on Sale of Investment (62.93) (13.04)
Promoter’s Contribution Subscriber’s Contribution Assets Written Off 0.40 6.53
N I L N I L Advances Written Off 1.71 –
Loss/ (Profit) on sale of Fixed Assets 0.22 1.03
3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Lacs) Preliminary Expenditure Written Off 144.61 144.61
Total Liabilities Total Assets Transitional provisions under Revised AS-15 21.39 –
9 6 9 0 4 . 9 7 9 6 9 0 4 . 9 8 Foreign Exchange Loss/ (Gain) (2,707.55) 1,691.31 (211.93) 5,264.75
Operating Profit before Working Capital Changes 9,104.43 10,446.19
Sources of Funds Adjustments for :
Paid-up Capital Reserves and Surplus Inventories (1,531.49) (1,696.04)
2 3 4 5 4 . 5 0 1 5 1 6 5 . 8 8 Sundry Debtors 2,778.22 6,054.58
Secured Loans Unsecured Loans Loans and Advances 7,718.16 (12,844.12)
Trade Payables (6,126.61) 11,593.32
2 7 7 9 8 . 5 1 7 8 6 4 . 0 0 Other Current Liabilities (6.33) (0.24)
Deferred Tax Liabilities Foreign Exchange Gain/ (Loss) 1,121.48 437.83
1 8 5 5 . 0 2 Taxes Paid (689.80) 3,263.63 (225.62) 3,319.71
Net Cash from Operating Activities 12,368.06 13,765.90
Application of Funds
B. CASH FLOW FROM INVESTING ACTIVITIES
Net Fixed Assets Purchase of Fixed Assets (2,522.13) (613.68)
3 4 8 7 2 . 9 3 1 0 6 0 . 6 0 Sale of Fixed Asset 3.86 8.55
Investments Net Current Assets Increase in Capital Work in Progress (456.51) (139.92)
8 5 5 2 . 2 5 3 1 5 9 1 . 8 8 Purchase of Investments (14,757.29) (2,267.47)
Sale of Investments 6,726.60 2,209.30
Miscellaneous Expenditure
Dividend Income 6.17 2.42
6 0 . 2 5 Interest Received 969.09 97.44
Net Cash used in Investing Activities (10,030.21) (703.36)
4. Performance of Company (Amount in Rs. Lacs)
C CASH FLOW FROM FINANCING ACTIVITIES
Turnover Other Income
Foreign Exchange Gain 359.01
1 0 0 4 6 6 . 1 1 3 0 3 4 . 9 0 Interest paid (2,999.56) (3,161.37)
Total Income Total Expenditure Payment of Loans (4,012.69) (4,054.27)
1 0 3 5 0 1 . 0 1 9 6 0 8 7 . 8 9 FCCB Issue 7,864.00 –
Proceeds from Short Term Borrowings 58.44 (3,715.98)
Profit/ Loss before Tax Profit/ Loss after Tax Share Premium 2,506.08 –
7 4 1 3 . 1 2 5 5 5 2 . 8 6 Increase in Share Capital 4,359.92 –
Earnings Per Share (Basic) (Rs.) Earnings Per Share (Diluted) (Rs.) Net Cash used in Financing Activities 8,135.20 (10,931.62)
2 . 7 4 2 . 5 9 Net Increase/ (Decrease) in Cash and Cash Equivalents 10,473.05 2,130.92
Opening Cash and Cash Equivalents 10,381.90 8,250.98
Dividend (%)
Closing Cash and Cash Equivalents 20,854.95 10,381.90
5
Notes
5. Generic Names of Principal Products/Services of the Company 1. Cash and Cash Equivalents represents cash and bank balances only.
Item Code No. (ITC code) Product Descriptions 2. Bank overdrafts and short term loans have been treated as part of financing activities.
3. The Cash Flow Statement has been prepared under the indirect method as given in the Accounting Standards on Cash Flow Statement
3 9 0 7 6 0 P O L Y E T H Y L E N E
(AS-3) issued by The Institute of Chartered Accountants of India.
T E R E P T H A L A T E 4. Closing Cash and Cash Equivalents includes foreign exchange loss of Rs. 146.11 lacs (Previous Year Rs. 1.61 lacs)
5. Previous year figures have been regrouped/rearranged wherever necessary.
For and on behalf of the Board
This is the cash flow statement referred to in our report of even date.
P. K. Khaitan Prabal Kr. Sarkar For and on behalf of the Board
C. K. Dhanuka Partner
Membership No: 52340 P. K. Khaitan
J. P. Kundra
C. K. Dhanuka
B. Chattopadhyay For and on behalf of J. P. Kundra
K. V. Balan R. K. Sharma M. Dhanuka Lovelock & Lewes B. Chattopadhyay
Place : Kolkata Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka
Date : 12th May 2008 Compliance Officer Directors Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Place : Kolkata Compliance Officer Directors
Date : 12th May 2008
86 | South Asian Petrochem Limited Annual Report 2007-08 | 87
 SOUTH ASIAN PETROCHEM LIMITED

Section 212 Management’s Report on South Asian Petrochem USA, LLC

Statement pursuant to Section 212 of the Companies Act, 1956 relating to the Subsidiary South Asian Petrochem Ltd. is the sole member of its wholly to wind up the US subsidiary and it has been wound up w.e.f.
owned subsidiary, South Asian Petrochem USA, LLC in the US. 9th April 2008.
Company
The Company’s turnover has come down to Rs. 3,325.75 lacs
1) Name of the Subsidiary Company South Asian Petrochem USA LLC as compared to Rs. 10,411.52 lacs in the previous year.
Mrigank Dhanuka Biswanath Chattopadhyay
2) Financial period of the Subsidiary ended on 31st December 2007 The Company has been involved in selling the products of Directors of the Sole Member of the Company
3) Holding Company’s Interest in the Subsidiary Company 100% of Equity Share Capital of USD 100 South Asian Petrochem Ltd. in the US. However in view of the
change in the market conditions, the Company has decided to Place: Kolkata
4) Net aggregate amount of the Profit/(Loss) of the Subsidiary sell directly in the US market. Accordingly steps were initiated Date: 12th May 2008
Company (concerning the members of South Asian Petrochem
Limited) not dealt with or provided for in the accounts of South Asian
Petrochem Limited Auditors’ Report
a) For the current year USD 1,30,988
The Board of Directors
Rs. 55,46,145 South Asian Petrochem Limited
b) For the previous years (USD 67,074.29) Dhunseri House
4A Woodburn Park
(Rs. 29,03,805)
Kolkata 700 020.
5) Net aggregate amount of the Profit/(Loss) of the Subsidiary
Company (concerning the members of South Asian Petrochem South Asian Petrochem USA, LLC
Dhunseri House
Limited) dealt with or provided for in the accounts of South Asian
4A, Woodburn Park
Petrochem Limited. Kolkata- 700 020.
a) For the current year Nil Re: Auditors’ Report on the financial statements of South Asian Petrochem USA, LLC, for the year ended 31st March 2008.
b) For the previous years Nil 1. We have audited the attached Balance Sheet of South Flow Statement dealt with by this report are in
Asian Petrochem USA, LLC, as at 31st March 2008, and the agreement with the books of account;
related Profit and Loss Account and Cash Flow Statement d) In our opinion, the Balance Sheet, Profit and Loss
For and on behalf of the Board for the year ended on that date annexed thereto, which we Account and Cash Flow Statement dealt with by this
have signed under reference to this report. These financial report comply with the accounting standards referred
statements are the responsibility of the Company’s to in sub-section (3C) of Section 211 of the Companies
P. K. Khaitan management. Our responsibility is to express an opinion Act, 1956 of India;
C. K. Dhanuka on these financial statements based on our audit.
e) In our opinion and to the best of our information and
J. P. Kundra 2. We conducted our audit in accordance with the auditing according to the explanations given to us, the said
B. Chattopadhyay standards generally accepted in India. Those Standards financial statements together with the notes thereon
K. V. Balan R. K. Sharma M. Dhanuka require that we plan and perform the audit to obtain and attached thereto give in the prescribed manner the
Place : Kolkata Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani reasonable assurance about whether the financial information required by the Act and give a true and fair
statements are free of material misstatement. An audit view in conformity with the accounting principles
Date : 12th May 2008 Compliance Officer Directors
includes examining, on a test basis, evidence supporting generally accepted in India:
the amounts and disclosures in the financial statements.
i) in the case of the Balance Sheet, of the state of
An audit also includes assessing the accounting principles
affairs of the Company as at 31st March 2008;
used and significant estimates made by management, as
well as evaluating the overall financial statement ii) in the case of the Profit and Loss Account, of the
presentation. We believe that our audit provides a profit for the year ended on that date; and
reasonable basis for our opinion. iii) in the case of the Cash Flow Statement, of the
3. We report that: cash flows for the year ended on that date.

a) We have obtained all the information and explanations, Prabal Kr. Sarkar
which to the best of our knowledge and belief were Partner
necessary for the purposes of our audit; Membership No.: 52340
b) In our opinion, proper books of account have been kept
by the Company so far as appears from our For and on behalf of
examination of those books; Place : Kolkata Lovelock & Lewes
c) The Balance Sheet, Profit and Loss Account and Cash Date : 12th May 2008 Chartered Accountants

88 | South Asian Petrochem Limited Annual Report 2007-08 | 89

 SOUTH ASIAN PETROCHEM USA, LLC

Balance Sheet Profit and Loss Account

(Rupees in Lacs) (Rupees in Lacs)
As at Schedule 31.03.2008 31.03.2007 For the year ended Schedule 31.03.2008 31.03.2007
SOURCES OF FUNDS INCOME
Shareholder's Funds Turnover 3,325.75 10,411.52
Share Capital 1 0.05 0.05 Other Income 9 398.95 95.78
Reserve & Surplus 2 18.03 Total 3,724.70 10,507.30
Total 18.08 0.05 EXPENDITURE
APPLICATION OF FUND
(Increase)/Decrease in Stock 10 1,538.25 4,135.03
Current Assets, Loans and Advances
Purchases 1,917.34 5,741.40
Inventories 3 – 1,538.25
Trading and Other Expenses 11 210.80 657.72
Sundry Debtors 4 – 559.90
Total 3,666.39 10,534.15
Bank Balance 5 0.82 934.47
Profit before tax 58.31 (26.85)
Loans and Advances 6 18.94 37.52
Provision for Current tax 2.85 2.18
19.76 3,070.14
Less: Current Liabilities & Provisions Profit after tax 55.46 (29.03)

Current Liabilities 7 – 3,105.34 Balance brought forward from previous period (37.43) (8.40)
Provision for Tax 1.68 2.18 Balance carried to Balance Sheet 18.03 (37.43)
1.68 3,107.52 Basic and Diluted Earnings per unit (in Rs.) 55,461 (29,030)
Net Current Asset 18.08 (37.38) Face value per unit of Limited Liability Company Interest (Rs.) 45.94 45.94
Profit & Loss Account 8 – 37.43 Significant Accounting Policies and Notes to Accounts 12
Total 18.08 0.05
Significant Accounting Policies and Notes to Accounts 12

Schedules referred to above form an integral part of the Balance Sheet. Schedules referred to above form an integral part of the Profit and Loss Account.
This is the Balance Sheet referred to in our Report of even date. This is the Profit and Loss Account referred to in our Report of even date.

Prabal Kr. Sarkar Prabal Kr. Sarkar

Partner Partner
Membership No: 52340 Membership No: 52340

For and on behalf of For and on behalf of

Lovelock & Lewes Mrigank Dhanuka Biswanath Chattopadhayay Lovelock & Lewes Mrigank Dhanuka Biswanath Chattopadhayay
Chartered Accountants Directors of the Sole Member of the Company Chartered Accountants Directors of the Sole Member of the Company

Place : Kolkata Place : Kolkata

Date : 12th May 2008 Date : 12th May 2008

90 | South Asian Petrochem Limited Annual Report 2007-08 | 91

 SOUTH ASIAN PETROCHEM USA, LLC

Schedules forming part of the Accounts Schedules forming part of the Accounts
(Rupees in Lacs) (Rupees in Lacs)
As at 31.03.2008 31.03.2007 As at 31.03.2008 31.03.2007

1 SHARE CAPITAL 7 CURRENT LIABILITIES

Authorised South Asian Petrochem Ltd, India – 3,037.49

100 Units of Limited Liability Company Interest of USD 1 each 0.05 0.05 Sundry Creditors
Issued, Subscribed and Paid up - Dues of other than Small Scale Industrial Undertakings – 22.15
100 Units of Limited Liability Company Interest of USD 1 each fully paid up 0.05 0.05 Advances received from Customers – 45.70
0.05 0.05 –
All Units are held by the Holding Company South Asian Petrochem Limited – 3,105.34

8 PROFIT & LOSS ACCOUNT

2 RESERVES AND SURPLUS Opening Balance – 8.40

Loss during the year – 29.03
Opening Balance (37.43) –
– 37.43
Add: Profit during the year 55.46 –
18.03 –

(Rupees in Lacs)
3 INVENTORIES
For the year ended 31.03.2008 31.03.2007
Finished Goods (Including those in Transit) – 1,538.25
– 1,538.25 9 OTHER INCOME

Service charges from South Asian Petrochem Limited 205.32 75.93

Foreign Exchange Gain 180.97 19.85
Other Income 12.66 –
398.95 95.78
4 SUNDRY DEBTORS (Unsecured, considered good)

Debts outstanding for less than six months – 559.90

– 559.90 10 (INCREASE)/ DECREASE IN STOCK

Opening stock of Finished Goods 1,538.25 5,673.28

Closing Stock of Finished Goods – 1,538.25
Net (Increase)/ Decrease 1,538.25 4,135.03
5 BANK BALANCES

Balances with other banks on current accounts

11 TRADING AND OTHER EXPENSES
Bank Of America 0.81 238.34
CITI Bank 0.01 696.13 Custom Duty – 4.76
0.82 934.47 Custom Clearance Expenses 6.92 15.13
Storage Charges 71.80 107.29
Inward Freight 35.08 160.73
Bank Charges 0.44 0.33
Outward Transportation Charges 32.23 294.87
6 LOANS AND ADVANCES (Unsecured, considered good)
Insurance 20.39 41.62
Advances recoverable in cash or in kind or for value to be received Professional Fees 6.37 29.72
South Asian Petrochem Limited 18.94 – Sales Promotion Expenses 37.53 1.94
Others – 37.52 Bad Debts 0.04 1.33
18.94 37.52 210.80 657.72

92 | South Asian Petrochem Limited Annual Report 2007-08 | 93

 SOUTH ASIAN PETROCHEM USA, LLC

Schedules forming part of the Accounts
12 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
1. Significant Accounting Policies
a) Basis for preparation of accounts
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the
accounting standards issued by the Institute of Chartered Accountants of India.
b) Inventories
Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value.
Provision is made for obsolescence and other anticipated losses, wherever considered necessary. Cost includes cost of
purchase and other costs incurred in bringing the inventories to their present location & condition.
Schedules forming part of the Accounts
12 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
5. The company is incorporated in the United States of America and the currency of that country is US Dollars. The reporting
currency used in these financial statements is Indian National Rupee (INR), as these financial statements are prepared for the
purpose of consolidation with that of the Indian Holding Company.
6. The company is winding up and The Georgia Secretary of State has completed the termination with effective from 9th April
2008. Therefore, these financial statements have been prepared considering the fact that the company is not a going concern.
7. Previous year’s figures are rearranged / regrouped wherever necessary.

c) Foreign currency transactions

Transactions in foreign currency are recorded as follows:

i) upto 31st October 2006, at the average rate of exchange prevailing in a month and

ii) Thereafter, at the rate of exchange prevalent on the previous day.

Exchange differences arising on the settlement of transactions or on reporting at year end rates, are recognised as income
or as expenses in the period in which they arise. Mrigank Dhanuka Biswanath Chattopadhayay

d) Revenue recognition Directors of the Sole Member of the Company

Sales are recognised on the basis of Bill of Lading. Place : Kolkata
e) Taxes on Income Date : 12th May 2008
Current tax represents the amount that would be payable on computation of tax as per prevailing taxation laws in the
country of incorporation.

2. Segment Reporting
The Company is engaged in trading of PET resins in the United States. There is no business or geographical segments within
the meaning of Accounting Standard -17.

3. Disclosure of Related Parties and Related Party Transactions/Balances:

Names of related parties and description of relationship: (Rupees in Lacs)
Nature of Transaction/Balances 2007-2008 2006-2007
Holding Company
South Asian Petrochem Ltd.
Purchase of Goods 1917.34 5741.40
Reimbursement of Expenses 198.71 672.14
Payable/(Receivable) (18.94) 3037.49
Service Charges Received 205.32 75.93

4. Earnings per unit of Limited Liability Company Interest:

Particulars 2007-2008 2006-2007
a) Profit after taxation (Rs. In lac) 55.46 (29.03)
b) Weighted average number of units outstanding 100 100
c) Weighted Average number of units in computing Diluted Earnings Per unit. 100 100
- Basic (a / b) (in Rs.) 55,461 (29,030)
- Diluted (a / c) (in Rs.) 55,461 (29,030)

94 | South Asian Petrochem Limited Annual Report 2007-08 | 95

 SOUTH ASIAN PETROCHEM USA, LLC

Cash Flow Statement Auditors’ Report

(Rupees in Lacs)
For the year ended 31.03.2008 31.03.2007 Report of the Auditors to the Board of Directors of South Asian Petrochem Limited on the Consolidated Financial
A. CASH FLOW FROM OPERATING ACTIVITIES Statements of South Asian Petrochem Limited and its Subsidiary Company
Net Profit before Tax 58.31 (26.85)
Adjustments for :
Bad Debts Written Off 0.04 – We have audited the attached consolidated balance sheet (AS) 21, Consolidated Financial Statements, issued by the

Foreign Exchange Loss/( Gain) (180.97) (19.85) of South Asian Petrochem Limited as at 31st March 2008, Institute of Chartered Accountants of India.

Operating Profit before Working Capital Changes (122.62) (46.70) and also the consolidated profit and loss account and the
In our opinion and to the best of our information and
Adjustments for : consolidated cash flow statement for the year ended on
according to the explanations given to us, the consolidated
Inventories 1,538.25 4,135.03 that date annexed thereto. These financial statements are
financial statements give a true and fair view in conformity
Sundry Debtors 559.86 100.67 the responsibility of the company’s management. Our
with the accounting principles generally accepted in India:
Loans & Advances 18.58 (37.52) responsibility is to express an opinion on these financial

Trade Payables (3,105.34) (3,236.86) statements based on our audit. a) in the case of the consolidated balance sheet, of the
Foreign Exchange Gain 180.97 19.85 state of affairs of South Asian Petrochem Limited and
We conducted our audit in accordance with the auditing
Taxes Paid (3.35) (811.03) – 981.17 its subsidiary as at 31st March 2008;
standards generally accepted in India. Those Standards
Net Cash flow from Operating Activities (933.65) 934.47 require that we plan and perform the audit to obtain b) in the case of the consolidated profit and loss account,
Net Increase/ (Decrease) in Cash and Cash Equivalents (933.65) 934.47 reasonable assurance about whether the financial of the profit for the year ended on that date; and
Opening Cash and Cash Equivalents 934.47 – statements are free of material misstatement. An audit
Closing Cash and Cash Equivalents 0.82 934.47 includes examining, on a test basis, evidence supporting c) in the case of the consolidated cash flow statement, of
the amounts and disclosures in the financial statements. the cash flows for the year ended on that date.
Note
An audit also includes assessing the accounting principles
Cash and Cash Equivalents represents cash and bank balances only.
used and significant estimates made by management, as Prabal Kr. Sarkar
well as evaluating the overall financial statement Partner
This is the cash flow statement referred to in our report of even date. presentation. We believe that our audit provides a Membership No.: 52340
Prabal Kr. Sarkar reasonable basis of our opinion.
Partner
Membership No: 52340 We report that the consolidated financial statements have For and on behalf of
been prepared by the Company’s management in Place : Kolkata Lovelock & Lewes
For and on behalf of accordance with the requirements of Accounting Standard Date : 12th May 2008 Chartered Accountants
Lovelock & Lewes Mrigank Dhanuka Biswanath Chattopadhayay
Chartered Accountants Directors of the Sole Member of the Company

Place : Kolkata
Date : 12th May 2008

96 | South Asian Petrochem Limited Annual Report 2007-08 | 97

 SOUTH ASIAN PETROCHEM LIMITED

Consolidated Balance Sheet Consolidated Profit and Loss Account

(Rupees in Lacs) (Rupees in Lacs)
As at Schedule 31.03.2008 31.03.2007 For the year ended Schedule 31.03.2008 31.03.2007
SOURCES OF FUNDS INCOME
Shareholder's Funds Turnover (Gross) 1,05,837.18 1,11,239.23
Share Capital 1 23,313.86 19,094.58 Less : Excise duty 3,962.66 4,703.36
Equity Share Warrants 140.64 – Turnover (Net) 1,01,874.52 1,06,535.87
Reserves and Surplus 2 15,183.91 8,265.12 Other income 15 3,228.53 436.47
Loan Funds
1,05,103.05 1,06,972.34
Secured Loan 3 27,798.51 33,106.38
EXPENDITURE
Unsecured Loans 4 7,864.00 –
(Increase) / Decrease in Stock 16 4,075.92 1,994.66
Deferred Tax Liability 5 1,855.02 851.46
Raw material consumed 75,883.27 79,838.92
76,155.94 61,317.54
Manufacturing, Administrative and Other Expenses 17 13,226.92 14,173.86
APPLICATION OF FUND
Interest and Finance Charges 18 1,966.85 3,037.37
Fixed Asset 6
Gross Block 45,216.10 42,701.29 Depreciation/Amortisation 2,331.86 2,260.51

Less: Depreciation (10,343.17) (8,014.15) 97,484.82 1,01,305.32

Net Block 34,872.93 34,687.14 Profit before Tax 7,618.23 5,667.02
Capital Work-in-progress 1,060.60 604.09 Provision for Taxation
Investments 7 8,552.20 458.58 Current Tax (Including tax for earlier year Rs. 3.36 lacs) 843.14 220.48
Current Assets, Loans and Advances Excess Provision relating to earlier years written back (9.83) –
Inventories 8 12,784.09 12,644.05 Deferred Tax 1,003.56 470.15
Sundry Debtors 9 10,726.56 11,479.87 Fringe Benefit Tax 26.24 23.98
Cash and Bank Balances 10 20,855.77 11,316.37 Profit after Tax 5,755.12 4,952.41
Other Current Assets 11 25.94 27.60 Balance brought forward from previous year 8,209.70 3,257.29
Loans and Advances 12 7,965.72 15,488.80 Amount Available for Appropriations 13,964.82 8,209.70
52,358.08 50,956.69 APPROPRIATIONS
Less: Current Liabilities and Provisions 13
Proposed Dividend 1,165.69 –
Current Liabilities 19,335.50 25,538.67
Tax on Dividend 198.11 –
Provisions 1,412.62 55.15
Balance carried to Balance Sheet 12,601.02 8,209.70
20,748.12 25,593.82
13,964.82 8,209.70
Net Current Asset 31,609.96 25,362.87
Basic Earnings per share (in Rs.) 2.84 2.59
Miscellaneous Expenditure 14 60.25 204.86
Diluted Earnings per share (in Rs.) 2.69 2.59
(To the extent not written off or adjusted)
76,155.94 61,317.54 (Equity Shares of Face Value of Rs. 10 each)
Significant Accounting Policies and Notes to Accounts 19 Significant Accounting Policies and Notes to Accounts 19

Schedules referred to above form an integral part of the Balance Sheet. Schedules referred to above form an integral part of the Profit and Loss Account.
This is the Balance Sheet referred to in our Report of even date. This is the Profit and Loss Account referred to in our Report of even date.
For and on behalf of the Board For and on behalf of the Board
Prabal Kr. Sarkar Prabal Kr. Sarkar
Partner Partner
Membership No: 52340 P. K. Khaitan Membership No: 52340 P. K. Khaitan
C. K. Dhanuka C. K. Dhanuka
For and on behalf of J. P. Kundra For and on behalf of J. P. Kundra
Lovelock & Lewes B. Chattopadhyay Lovelock & Lewes B. Chattopadhyay
Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka
Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Place : Kolkata Compliance Officer Directors Place : Kolkata Compliance Officer Directors
Date : 12th May 2008 Date : 12th May 2008

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 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Consolidated Accounts Schedules forming part of the Consolidated Accounts
(Rupees in Lacs) (Rupees in Lacs)
As at 31.03.2008 31.03.2007 As at 31.03.2008 31.03.2007

1 SHARE CAPITAL 4 UNSECURED LOANS

Authorised From Bank

29,00,00,000 (Previous Year 19,30,00,000) Equity Shares of Rs. 10/- each 29,000.00 19,300.00 Zero Percent Foreign Currency Convertible Bonds 7,864.00 –
Issued, Subscribed and Paid up 7,864.00 –
23,31,38,594 (Previous Year 19,09,45,775) Equity Shares of Rs. 10/- each fully paid up 23,313.86 19,094.58
(Out of the above 9,45,775 Equity Shares were issued for consideration other than cash) 5 DEFERRED TAXATION

Liability
2 RESERVES AND SURPLUS
Depreciation 5,852.66 5,759.30
Share Premium Account Others 11.40 –
Balance as per last Balance Sheet 55.42 55.42 Less : Asset
Add : Premium received on Preferential issue of Equity Shares 2,957.72 – Unabsorbed Depreciation 4,009.04 4,907.84
Add : Premium received on Preferential issue of Equity Share Warrants 98.59 – 1,855.02 851.46
Less : Foreign Currency Convertible Bonds (FCCBs) issue expenses (392.63) –
Less : Preferential issue expenses (157.60) –
2,561.50 55.42
Profit and Loss Account
Balance as per last Balance Sheet 8,209.70 3,257.29 6 FIXED ASSETS
Add : Credit on account of transitional provisions under Revised AS-15 21.39 – DESCRIPTION GROSS BLOCK DEPRECIATION NET BLOCK
Add : Additions during the year 4,391.32 4,952.41 As at Additions Sale or As at Upto For the Sale or Upto As at As at
12,622.41 8,209.70 01.04.07 Adjust- 31.03.08 31.03.07 Year Adjust- 31.03.08 31.03.08 31.03.07
Total 15,183.91 8,265.12 ment ment
Leasehold Land 463.34 463.34 20.53 11.25 31.78 431.56 442.81
Freehold Land 2.96 2.96 0.00 0.00 0.00 2.96
3 SECURED LOANS
Non Factory Building 2,329.43 392.64 2,722.07 113.19 39.70 152.89 2,569.18 2,216.24
Notes Factory Building 2,636.09 2,636.09 316.35 88.05 404.40 2,231.69 2,319.74
Term Loans 1, 2, 3 & 4 Plant & Machinery 34,551.56 2,039.85 4.32 36,587.09 6,585.09 1,908.12 2.81 8,490.40 28,096.69 27,966.47
From Financial Institutions Furniture & Fixture 48.76 8.44 0.04 57.16 18.07 5.00 0.03 23.04 34.12 30.69
In Foreign Currency 6,048.44 8,400.18 Motor Vehicle 209.92 80.10 290.02 55.34 26.99 82.33 207.69 154.58
From Bank Intangibles: (Other than
In Foreign Currency 9,469.68 12,484.25 internally generated)
Working Capital Facility 1, 3 & 4 Technical Knowhow 2,391.26 2,391.26 860.71 239.13 1,099.84 1291.42 1,530.55
From Banks 12,198.31 12,125.49 Computer Software 67.97 1.10 69.07 44.87 13.62 58.49 10.58 23.10
[Includes Rs. 6,202.93 Lacs (Previous year Rs. 10,961.58 Lacs 42,701.29 2,522.13 7.32 45,216.10 8,014.15 2,331.86 2.84 10,343.17 34,872.93 34,687.14
on account of bills discounted with Banks)] Previous Year 42,531.79 613.68 444.18 42,701.29 5,759.86 2,260.51 6.22 8,014.15 34,687.14 36,771.93
Car Loan Capital Work in progress 1,060.60 604.09
From Bank 5 82.08 96.46
27,798.51 33,106.38 Notes
1. Sale or adjustment column include Gross Block and Accumulated Depreciation of assets written off worth Rs. 2.82 lacs,
1. Secured by joint mortgage on pari-passu first charge basis for all term lenders and on pari-passu second charge basis Previous year Rs. 8.89 lacs & Rs. 2.42 lacs (Previous Year Rs. 2.37 lacs) respectively.
for all working capital bankers, by deposit of title deeds with IDBI Trusteeship Services Limited ( ITSL), in respect of all
2. Capital Work in Progress includes Capital Stores & Spares worth Rs. 200.47 lacs (Previous Year Rs. 473.12 Lacs).
the immovable properties, of the Company situated at JL 126 Mouza Basudevpur, P.S. Sutahata, Haldia, District
Midnapore in the State of West Bengal (except pieces and parcels of land which were not allowed to be mortgaged
by the said Government) together with all the buildings and structures thereon including fixed plant and machinery and
fixtures and fittings permanently fastened to the earth or fastened to anything attached to the earth.
2. Pledge of shares in the Company held by group companies
3. Secured by personal Guarantee of two of the Promoter Directors of the Company.
4. First charge by way of hypothecation ranking pari-passu over all present and future inventories, consumables, stores
and spares, book- debts and all other moveables for all working capital bankers and second charge on the same for all
term lenders.
5. Car Loans are secured by hypothecation of respective vehicles.

100 | South Asian Petrochem Limited Annual Report 2007-08 | 101

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Consolidated Accounts Schedules forming part of the Consolidated Accounts
7 INVESTMENTS 7 INVESTMENTS (Contd..)
Particulars As at 31.03.2007 Additions Sold As at 31.03.2008 Particulars As at 31.03.2007 Additions Sold As at 31.03.2008
No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount
Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs) Shares /Units (Rs. In Lacs)

LONG TERM INVESTMENTS CURRENT INVESTMENTS (Contd..)

Trade, Unquoted at Cost Punj Llyod Ltd. – – 7,600 39.70 7,600 39.70 – –
In Others Reliance Energy Ltd. – – 6,685 150.51 6,685 150.51 – –
* Fully Paid up Common Stock of Tectura Corporation 2,48,845 149.59 2,48,845 149.59 SREI Infrastructure Finance Ltd. – – 59,700 141.43 59,700 141.43 – –
Fully Paid up Equity Shares of Haldia Integrated 10,000 1.00 – – – – 10,000 1.00 Sterlite Industries India Ltd. – – 10,500 101.36 10,500 101.36 – –
Development Agency Limited Tata Motors Ltd. – – 5,500 39.84 5,500 39.84 – –
Sub Total 150.59 – – 150.59 Tata Steel Ltd. – – 4,500 38.14 4,500 38.14 – –
Non Trade,Quoted at cost Tata Tea Ltd. – – 7,750 55.23 7,750 55.23 – –
Equity Shares fully paid up UTV Software Communications Ltd. – – 11,000 100.30 11,000 100.30 – –
Aditya Birla Nuvo Ltd. – – 11,150 219.02 – – 11,150 219.02 Mutual Funds
Adlabs Films Ltd. – – 8,000 113.62 – – 8,000 113.62 DSP Merrill Lynch Liquid Plus Growth – – 2,013.13 22.50 – – 2,013.13 22.50
Alstom Projects India Ltd. – – 9,450 88.42 1,000 9.41 8,450 79.01 Standard Chartered Liquidity Manager
Balrampur Chini Mills Ltd. – – 1,35,000 146.90 – – 1,35,000 146.90 Plus Growth Scheme – – 528,963.02 6,000.00 447,729.42 5,078.57 81,233.60 921.43
Cairn India Ltd. – – 20,300 50.07 – – 20,300 50.07 **Less:Change in Carrying Value of
Emami Ltd. – – 20,120 67.71 48 0.16 20,072 67.54 Current Investments – 40.84 40.84 –
GAIL India Ltd. – – 46,100 215.04 – – 46,100 215.04 Sub Total 307.99 7,289.51 6,653.57 943.93
Hindustan Petroleum Corporation Ltd. – – 20,000 64.03 – – 20,000 64.03 Total 458.58 14,757.29 6,663.67 8,552.20
ICICI Bank Ltd. – – 16,500 217.69 – – 16,500 217.69 Aggregate unquoted Investments 150.59 150.59
ICRA Ltd. – – 6,580 64.34 – – 6,580 64.34 Aggregate quoted Investments 307.99 8,401.60
Infrastructure Development Finance Co. Ltd. – – 84,500 181.59 – – 84,500 181.59 Market value of Quoted Investments 307.99 7,084.65
Indiabulls Real Estate Ltd. – – 24,700 190.39 – – 24,700 190.39
* Pursuant to an agreement dated 6th November 2006 between (i) the Company along with other Companies (collectively the Sellers), (ii) Euroinfo
Kotak Mahindra Bank Ltd. – – 19,000 196.72 – – 19,000 196.72
Systems Pvt. Ltd. and (iii) Tectura Corporation, USA (the Buyer), 103000 shares of Euroinfo Systems Pvt. Ltd. held by the Company were sold
Larsen & Toubro Ltd. – – 6,000 148.79 – – 6,000 148.79
Maharastra Seamless Ltd. – – 40,000 203.14 – – 40,000 203.14
to Tectura Corporation subject to certain terms and conditions as mentioned in the agreement at the following aggregate purchase price
Mahindra & Mahindra Ltd. – – 18,200 148.14 – – 18,200 148.14 subject to point ‘c’
Mundra Port & Special Economic Zone Ltd. – – 25,172 219.63 – – 25,172 219.63 a) 248845 common stock of Tectura Corporation-these stocks are held in escrow and shall be released after 3 years commencing from the
Nagarjuna Fertilisers Ltd. – – 1,74,000 143.47 – – 1,74,000 143.47 closing date i.e. 22nd March 2007, thereafter the company may elect to exercise their redemption option anytime at an agreed price and
Ramkrishna Forgings Ltd. – – 26,093 96.28 – – 26,093 96.28 b) annual stock dividend in the form of Tectura Corporation’s common stock after 24 and 36 months post closing.
Reliance Communications Ltd – – 25,400 173.60 100 0.53 25,300 173.07
c) a price adjustment in the form of Tectura Corporation’s common stock, if tangible net worth of Euroinfo Systems Pvt. Ltd. as on the date
Reliance Industries Ltd. – – 21,400 579.87 – – 21,400 579.87
preceding the closing date is less than USD 0.4 million.
Reliance Power Ltd. – – 13,625 61.31 – – 13,625 61.31
Religare Enterprises Ltd – – 24,500 150.32 – – 24,500 150.32
State Bank Of India – – 6,000 118.61 – – 6,000 118.61
Tata Chemicals Ltd. – – 36,500 147.53 – – 36,500 147.53 (Rupees in Lacs)
Torrent Power Ltd. – – 1,29,913 260.28 – – 1,29,913 260.28
Television Eighteen India Ltd. – – 14,700 76.27 – – 14,700 76.27
As at 31.03.2008 31.03.2007
Mutual Funds
8 INVENTORIES (Including Those in Transit)
ICICI Prudential Flexible Income Plan–Growth – – 42,32,008.88 625.00 – – 42,32,008.88 625.00
ICICI Prudential Income Plan–Growth – – 20,57,647.04 500.00 – – 20,57,647.04 500.00 Stores and Spares 801.83 588.80
Reliance Banking Fund–Growth Plan–Growth Option – – 7,47,952.01 500.00 – – 7,47,952.01 500.00 Packing Materials 100.14 69.80
Standard Chartered Arbitrage Fund Plan B Growth – – 46,86,386.98 500.00 – – 46,86,386.98 500.00 Raw Materials 8,285.17 4,312.58
Birla Income Plus–Growth – – 14,13,335.67 500.00 – – 14,13,335.67 500.00
Finished Goods 3,466.24 7,539.31
Birla Sun life Income Fund–Growth – – 16,60,467.59 500.00 – – 16,60,467.59 500.00
Work in Progress 130.71 133.56
Sub Total – 7,467.78 10.10 7,457.68
12,784.09 12,644.05
CURRENT INVESTMENTS
Non Trade, Quoted at lower of cost and fair value
Equity Shares fully paid up 9 SUNDRY DEBTORS (Unsecured, Considered good)
**Indian Hotels Ltd. 67,000 100.62 – – 67,000 100.62 – –
**ITC Ltd. 1,40,000 248.21 – – 1,40,000 248.21 – – Debts outstanding for a period exceeding six months 18.72 8.22
Bajaj Hindusthan Ltd – – 80,000 242.11 80,000 242.11 – – Other Debts
CESC Ltd. – – 6,500 38.89 6,500 38.89 – – Others 10,707.84 11,471.65
CRISIL Ltd. – – 2,049 69.76 2,049 69.76 – – [Includes Rs. 6246.04 Lacs (Previous year Rs. 10934.68 Lacs on
Gateway Distriparks Ltd. – – 25,000 36.29 25,000 36.29 – – account of bills discounted with Banks)]
National Thermal Power Corporation Ltd. – – 97,000 213.45 97,000 213.45 – –
10,726.56 11,479.87

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 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Consolidated Accounts Schedules forming part of the Consolidated Accounts
(Rupees in Lacs) (Rupees in Lacs)
As at 31.03.2008 31.03.2007 For the year ended 31.03.2008 31.03.2007

10 CASH AND BANK BALANCES 15 OTHER INCOME

Cash Balance on hand 1.47 0.28 Scrap Sales 55.29 59.21

Cheques/Drafts in hand 171.22 313.79 Insurance Claim Received 119.49 47.76
Balance with Scheduled Banks Profit on Sale of Current Non Trade Investment 62.93 13.04
On Current Accounts Dividend Income from Long Term Non Trade Investment 6.17 2.42
Foreign Exchange Gain 2,712.60 231.78
Export Earners Foreign Currency Account 199.79 662.52
Miscellaneous Income 272.05 82.26
Others 1,466.05 1,287.48
3,228.53 436.47
On Deposits Accounts 18,677.41 7,189.31
On Cash Credit Accounts (For Security refer note 1, 3 & 4 in Schedule 3) 333.33 928.52 16 (INCREASE) / DECREASE IN STOCK
Balance with Other Banks in Foreign Currency
Opening Stock
ABC Bank, Egypt - Current Account 5.68 –
Finished Goods 7,539.31 9,546.11
Bank of America 0.81 238.34
Work-in-Progress 133.56 121.42
CITI Bank 0.01 696.13 7,672.87 9,667.53
20,855.77 11,316.37 Closing Stock
Finished Goods 3,466.24 7,539.31
Work-in-Progress 130.71 133.56
11 OTHER CURRENT ASSETS 3,596.95 7,672.87
Net (Increase) / Decrease in Stock 4,075.92 1,994.66
Interest Accrued on deposits 25.94 27.60
25.94 27.60 For the year ended 31.03.2008 31.03.2007

17 MANUFACTURING, ADMINISTRATIVE AND OTHER EXPENSES

12 LOANS AND ADVANCES (Unsecured, Considered good) Salaries and Wages 608.21 503.65
Contribution to Provident and Other Funds 37.91 35.15
Advances recoverable in cash or in kind or for value to be received 7,654.00 15,209.85 Staff Welfare 54.95 66.94
Advance Tax (net of provision) 56.94 225.69 Power and Fuel 3,234.68 3,220.58
Deposits with Government Authorities and Others 254.78 53.26 Stores and Spare Parts Consumed 244.46 224.09
7,965.72 15,488.80 Packing Materials Consumed 637.50 642.54
Rent 100.11 89.56
Rates and Taxes 44.18 52.37
Repairs and Maintenance
13 CURRENT LIABILITIES AND PROVISIONS
Plant and Machinery 22.53 16.01
A. Current Liabilities Buildings 1.15 6.21
Sundry Creditors 18,943.40 24,828.85 Others 121.93 145.61 144.90 167.12
Advance from Customers/Agents 273.54 525.16 Insurance 262.46 281.55
Hire Purchase Liability – 0.38 Director's Fees 12.25 4.95
Excise Duty on Stock 25.81 (238.65)
Interest Accrued but not due on loans 118.56 184.28
Freight, delivery and shipping charges 5,519.84 6,585.84
19,335.50 25,538.67
Commission on sales 881.57 981.02
B. Provisions
Miscellaneous Expenditure Written off 144.61 144.61
Provision for
Loss on sale of Fixed Assets 0.22 1.03
Proposed Dividend 1,165.69 Assets Written Off 0.40 6.53
Tax on Dividend 198.11 Change in Carrying Value of Current Investments – 40.84
Gratuity 18.53 27.77 Advances Written off 1.71 –
Leave encashment 30.29 27.38 Bad Debts 0.04 –
1,412.62 55.15 Others 1,270.40 1,364.14
20,748.12 25,593.82 13,226.92 14,173.86

18 INTEREST AND FINANCE CHARGES

On Term Loan 1,360.24 1,861.65
14 MISCELLANEOUS EXPENDITURE On Others 1,574.04 1,279.99
Preliminary Expenditure 60.25 204.86 Interest Received on Deposits (Gross) (967.43) (104.27)
[Tax deducted at source Rs. 204.46 Lacs (Previous Year Rs. 20.58 Lacs)]
60.25 204.86
1,966.85 3,037.37

104 | South Asian Petrochem Limited Annual Report 2007-08 | 105

 SOUTH ASIAN PETROCHEM LIMITED
Schedules forming part of the Consolidated Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
1. Principal of consolidation
a) The consolidated financial statements pertain to South Asian Petrochem Limited and its wholly owned subsidiary
(percentage of voting power held at 31st March 2008 is 100% South Asian Petrochem USA, LLC having its registered
office at Georgia, USA, incorporated on 1st December 2005.
b) The financial statements of South Asian Petrochem Limited and its subsidiary have been compiled by adding together on
a line by line basis the book value of like items of assets, liabilities, income and expenses after eliminating intragroup
balances and intragroup transactions
2. Significant accounting policies
The consolidated financial statements have been prepared using the same accounting policies as that of South Asian
Petrochem Limited, which are as follows:
a) Basis for preparation of Accounts
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the
applicable accounting standards issued by the Institute of Chartered Accountants of India.
b) Fixed Assets and Depreciation
Tangible fixed assets are stated at cost less depreciation.
Leasehold land is amortised over the period of lease. Depreciation on assets is provided on the straight-line method at
the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.
With effect from 1st April 2007 computer accessories and mobile phones are written off over a period of 3 years and 2
years respectively as per straight line method. The changes have been made perceiving their useful life.
Intangible asset is recognised if it is probable that future economic benefits will flow to the Company. Such asset is
initially recognised at cost. Subsequent expenditure on such asset is recognised as expense when incurred unless it is
probable that the expenditure will enhance its future economic benefits. Depreciable amount of an intangible asset is
allocated on straight line method over the best estimate of its useful life as given below:
Computer software is amortised over 5 years.
Other Intangible assets over 10 years.
An impairment loss is recognised, where applicable, when the recoverable amount of an asset is less than its carrying
amount.
c) Investments
Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision
is recorded to recognise, any decline, other than temporary, in the carrying value of such investment. Investment acquired
in exchange of another is carried at a cost determined with reference to the fair value of investment given up.
d) Inventories
Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value.
Provision is made for obsolescence and other anticipated losses, wherever considered necessary. Finished goods and
work-in-progress include cost of conversion and other costs incurred in bringing the inventories to their present location
and condition.
e) Employee Benefits
Contribution to Defined Contribution Provident Fund scheme (administered by Government) is made based on current
salary and is recognised in the Profit and Loss account on accrual basis.
Liabilities in respect of Defined Benefits plans namely retirement gratuities and encashment of unavailed leave are
unfunded and calculated by an independent actuary at the year-end and provided for. Actuarial gain and losses are
recognised in the statement of Profit and Loss Account.
Short term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account
of the year in which the related service is rendered. Part of the leave accrued during the year are accounted for on accrual
basis and charged to Profit and Loss Account as short term benefit.
f) Foreign currency transactions
Transactions in foreign currency are recorded as follows:
i) Up to 31st October 2006, at the average rate of exchange prevailing in a month and
ii) there after, at the rate of exchange prevalent on the previous day.
Forward Exchange Contracts are recorded at the contract rate.
106 | South Asian Petrochem Limited
Schedules forming part of the Consolidated Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
Exchange differences arising on the settlement of transactions or on reporting at year end rates, are recognised as income
or as expense in the period in which they arise except in respect of fixed assets acquired from outside India upto 31st
March 2007, where exchange variance was adjusted to the carrying amount of respective assets.
The Company uses forward contracts to hedge its exposure to movements in foreign exchange rates. The premium or
discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the
contract. Exchange differences on such a contract are recognised in the profit and loss account in the reporting period
in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange
contract is recognised as income or as expense for the period. The foreign exchange losses, if any, arising on marking to
market forward exchange contract entered to hedge the foreign currency risks of a firm commitment or a highly probable
forecast transaction are provided for in the profit and loss account.
g) Revenue recognition
Sale in Domestic Tariff Area is recognised on dispatch of goods and is net of trade discounts and excise duties. Export
sales are recognised on the basis of Bill of Lading.
Other income, together with related tax credits & expenditure, are accounted for on accrual basis.
h) Government Grants
Duty Drawbacks are recognised as deduction in reporting the related expenditure.
i) Borrowing costs
Borrowing costs attributable to qualifying assets are capitalised upto the date when such assets are ready for their
intended use. Other borrowing costs are recognised as expense in the period in which they are incurred.
j) Taxes on income
Current tax represents the amount that would be payable based on computation of tax as per prevailing taxation laws
under the Income Tax Act, 1961.
Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between
taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent
periods. Deferred Tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognised only
when it is virtually certain and in respect of other assets where there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be realised.
k) Leases
Assets acquired on finance lease/ hire purchase are capitalised at the fair value of the leased asset. Equated monthly
payments are apportioned between the finance charge and repayment of principal amount. Lease payments under
operating lease are recognised as an expense in the profit and loss account on a straight line basis over the lease term.
l) Miscellaneous Expenditure
Miscellaneous Expenditure represents preliminary expenses which are amortised over a period of 5 years.
2. Preferential Issue of Equity Shares and Warrants :
During the year to meet the company’s fund requirement for its expansion including equity participation in overseas subsidiary,
retirement of high cost borrowings and other business purposes the company raised Rs. 7,416.23 lacs by preferential
allotment of equity shares and equity share warrants.
International Finance Corporation and Promoters have subscribed to 76,95,473 and 63,68,800 partly paid equity share warrants
respectively, on a preferential basis, with an option to subscribe to the Equity shares of Rs. 10/- each of the Company at a
price of Rs. 17.01 per share within 18 months from the date of allotment, i.e. 20th December 2007. 10% of the total
consideration i.e. Rs. 239.23 lacs has been paid on allotment of the warrants and the balance shall be paid on the warrant
holders exercising option to convert the warrants into equity shares.
Balance Rs. 7,177.00 lacs has been raised by allotting 2,30,86,419 and 1,91,06,400 fully paid up Equity Shares to International
Finance Corporation and Promoters respectively on a preferential basis at Rs.17.01per share. Out of the net proceeds
Rs. 971.14 lacs has been utilised as an advance towards equity participation in new overseas project.
The balance unutilised money either stands invested in securities or remains with banks.
3. Foreign Currency Convertible Bonds (FCCB):
a) The Company has issued 200 Zero Percent Unsecured Foreign Currency Convertible Bonds (FCCB) of US$ 1,00,000 each
aggregating to US$ 20 million. The bonds are redeemable on 23rd January 2013 at 136.86% of their principal amount. The
bond holders have an option to convert these bonds into equity shares at an initial conversion price of Rs. 22.50 per
share, with a fixed rate of exchange on conversion of Rs. 39.32 (US$ 1), subject to certain adjustments. The Bonds may
Annual Report 2007-08 | 107
 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Consolidated Accounts Schedules forming part of the Consolidated Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..) 19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO
(Contd..)
ACCOUNTS (Contd..)
also be redeemed, in whole but not in part, at the option of the Company at any time, subject to certain conditions, Also The present value of obligation for gratuity and leave encashment is determined based on actuarial valuation using the
the company has an option requiring mandatory conversion of all the outstanding bonds on or after 16th January 2011 Projected Unit Credit Method.
and up to 14th January 2013.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion
The future cash flows if any cannot be determined at this stage.
and other relevant factors including supply and demand in the employment market.
b) The net proceeds of Rs. 7,864.00 lacs from the issue of the FCCB, pending utilisation has been included in Cash and Bank
Balances. The above information is certified by the actuary. This being first year of implementation, previous years’ figures have not been
c) Expenses on issue of FCCB Rs. 392.63 lacs have been adjusted against securities premium as per Section 78 of the given.
Companies Act, 1956. 7. Segment reporting:
4. Change in Accounting Policy : The Company has one business segment, i.e. manufacture of Pet Resins. Geographical segments being primary segments
a) Resultant from the change in accounting policy for depreciating computer accessories and mobile phones over a period are organised as Domestic and Exports, based on location of customers.
of 3 years and 2 years respectively as per straight line method, the profit before tax has decreased by Rs. 22.00 lacs. (Rupees in Lacs)
b) In order to comply with the Companies (Accounting Standards) Rules, 2006 exchange fluctuation on translation of foreign Export Domestic Total Segment Unallocable Total Enterprise
currency loans taken to acquire fixed assets from outside India is credited to the P & L Account instead of adjusting the
31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07
same with the value of respective assets. This change in policy has led to increase in profit before tax by Rs. 1622.18 lacs.
Segment Revenue -
5. a) Estimated amount of contracts remaining to be executed on capital account Rs. 5.18 lacs. (Previous year Rs. 911.56 lacs). Sales (External Revenue) 65,255.51 73,820.10 36,619.01 32,715.77 1,01,874.52 1,06,535.87 – – 1,01,874.52 1,06,535.87
b) The company has received a show cause notice, from the ESI Authorities, which includes a claim of Rs. 245.40 lacs. It Segment Results 4,536.71 6,767.64 5,826.33 4,727.54 10,363.04 11,495.18 (4,607.92) (6,542.77) 5,755.12 4,952.41
may be noted that the company has not fully accepted the said claim, and the amount of final liability cannot be Depreciation &
ascertained since the matter is pending settlement. Amortisation 1,527.26 1,543.57 804.60 716.94 2,331.86 2,260.51 – – 2,331.86 2,260.51
6. Retirement Benefits: Non cash expenses
The company has adopted Accounting Standard 15 (Revised 2005) on Employee Benefits during the year. The incremental other than Depreciation
net savings on account of Employee Benefits as at the beginning of the year amounting to Rs. 21.39 lacs has been added to & Amortisation – – – – – – 144.61 144.61 144.61 144.61
the opening balance of the Profit and Loss Account in terms of the transitional provision of the said accounting standard. Segment Assets 10,000.36 11,639.23 726.20 (159.36) 10,726.56 11,479.87 – – 10,726.56 11,479.87
Defined Contribution Plan Capital Assets – – – – – – 35,933.53 35,291.23 35,933.53 35,291.23
Contribution to Defined Contribution Plan namely Provident Fund is made by both the employer and employees. Other Assets (0.86) 2,363.44 – – (0.86) 2,363.44 50,244.83 37,776.82 50,243.97 40,140.26
Total Employer Contribution recognised as expense for the year amounts to Rs. 34.17 lacs. Total Assets 9,999.50 14,002.67 726.20 (159.36) 10,725.70 13,843.31 86,178.36 73,068.05 96,904.06 86,911.36
Segment Liabilities 218.93 213.88 283.50 164.82 502.43 378.70 – – 502.43 378.70
Defined Benefit Plan
Reconciliation of opening and closing balances of Defined Benefit obligation (Rupees in Lacs) Total Liabilities 218.93 213.88 283.50 164.82 502.43 378.70 96,401.63 86,532.66 96,904.06 86,911.36
Cost to acquire tangible
Leave
& intangible assets – – – – 2,522.13 613.68 2,522.13 613.68
Gratuity Encashment
(Unfunded) (Unfunded)
8. Earning per share
Defined Benefit obligation at beginning of the year 14.30 19.46
Current Service Cost 5.07 5.85 Particulars 2007-08 2006-07
Interest Cost 1.23 1.47 a) Earnings Basic (Rs. in Lacs) 5,755.12 4,952.41
Actuarial (gain)/loss (1.96) 8.30 b) Adjustments for Dilutive Earnings net of tax – –
Benefits paid (0.11) (4.79) c) Earnings Diluted (Rs. in Lacs) 5,755.12 4,952.41
Defined Benefit obligation at year end 18.53 30.29 d) Weighted Average number of Ordinary Shares outstanding 20,28,19,711 19,09,45,775
Amount as per Balance Sheet : e) Adjustment for Potential Ordinary Shares 1,12,15,586 –
Present value of Defined Benefits obligation as at 31st March 2008 18.53 30.29 f) Weighted Average number of Ordinary shares in computing
Amount recognised in Profit and Loss Account against Salaries and Diluted Earnings Per Share. 21,40,35,297 19,09,45,775
Wages are as follows: - Basic (a / d) (in Rs.) 2.84 2.59
Current Service Cost 5.07 5.85 - Diluted (c / f) (In Rs.) 2.69 2.59
Interest Cost 1.23 1.47
Actuarial (gain)/loss (1.96) 8.30
9. Disclosure of related parties and related party transactions:
Settlement 2.45
Names of related parties and description of relationship:
Total 4.34 18.07
A. Subsidiary Company.
Actuarial assumptions 1. Egyptian Indian Polyester Company S.A.E.
Mortality Table (LIC) 1994-96 1994-96
(Ultimate) (Ultimate)
Discount rate (per annum) 8.75% 8.75%
Rate of escalation in salary (per annum) 5% 5%

108 | South Asian Petrochem Limited Annual Report 2007-08 | 109

 SOUTH ASIAN PETROCHEM LIMITED

Schedules forming part of the Consolidated Accounts Schedules forming part of the Consolidated Accounts
19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..) 19 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd..)
B. Associate / Group Companies b) Operating Lease
2. Dhunseri Tea & Industries Ltd. The company has taken various office premises under operating lease having tenures of 11 months / 5 years. There is no
3. Tezpore Tea Co. Ltd. specific obligation for renewal of these agreements. Lease rent for the year amounts to Rs. 89.31 Lacs (Previous year
4. Naga Dhunseri Group Ltd. Rs. 84.51 Lacs).
5. Mint Investments Ltd.
6. Mayfair India Ltd. Apart from above the company has taken a motor vehicle on non-cancellable operating lease and lease rent amounting
7. Plenty Valley Intra Ltd. to Rs. 6.92 lacs (previous year Rs. 0.58 lacs) has been charged to Profit and Loss Account. The future minimum lease
8. Trimplex Investments Pvt. Ltd. payments as on 31st March 2008 are as under:
(Rupees in Lacs)
9. Madhuting Tea Company Ltd.
Particulars 2007-2008 2006-2007
C. Key Management Personnel:
Not later than one year 6.92 6.92
10. Mr. M. Dhanuka (Executive Director)
11. Mr. B. Chattopadhyay (ED and Chief Executive Officer) Later than one year and not later than five years 19.60 26.52
12. Mr. B. K. Biyani (Executive Director, Corporate) Later than five years 0.00 0.00

D. Relative of Key Managerial Personnel: 11. a) Foreign Currency Exposures that are not hedged by a derivative instrument or otherwise is Rs. 33,120.38 Lacs (Previous
13. Mr. C. K. Dhanuka (Vice Chairman) year Rs. 33,038.76 Lacs).
E. Trust over which Key Management Personnel and their relatives have significant influence:
b) Outstanding Forward Contracts as on 31st March 2008 taken to hedge various foreign currency Receivables is Rs. 3809.23
14. Ram Kishen Dhanuka Charity Trust.
Lacs (Previous Year Rs. 12,418.78 Lacs).
Disclosure of Related Party Transactions. (Rupees in Lacs)
12. Duty Drawback shown as deduction from power and fuel is Rs. 230.42 Lacs.(Previous year Rs. 160.68 Lacs)
Nature of Transaction Year ended Year ended
31.03.2008 31.03.2007 13. Haldia plant went for a planned shutdown from 1st November 2007 to 28th November 2007 for de-bottlenecking and
A. Subsidiary Company maintenance. The capacity of CP and SSP Plant has been increased from 180000 TPA to 200000 TPA.
1. Egyptian Indian Polyester Company S.A.E.
14. In order to proactively penetrate the European and American markets and have a visible global presence the company is in
- Advance against equity 971.14 0.00
advance stages to form a manufacturing subsidiary Egyptian Indian Polyester Company S.A.E in association with Egyptian
B. Associate Companies
Petro Chemical Holding Company (ECHEM).The greenfield PET project with installed capacity of 315,000 TPA will be located
Reimbursements of Expenses
in Egypt.
- Trimplex Investments Private Limited 7.55 7.46
Rent 15. During the year the company has decided to wind up South Asian Petrochem USA LLC its 100% subsidiary in United States
- Trimplex Investments Private Limited 38.59 38.59 and The Georgia Secretary of State has completed the termination effective from 9th April 2008.
- Mint Investments Limited. 21.80 21.80
- Naga Dhunseri Group Limited 6.75 5.10 16. Previous year’s figures have been rearranged / regrouped wherever necessary.
67.14 65.49
C. Key Management Personnel
Remuneration and Retirement benefits
- Mr. Mrigank Dhanuka (Executive Director) 45.65 26.94
- Mr. B. Chattopadhyay (ED and Chief Executive Officer) 43.96 31.76
- Mr. B. K. Biyani (Executive Director, Corporate) 38.39 28.80
128.00 87.50
D. Relative of Key Managerial Personnel
For and on behalf of the Board
Payment of Sitting Fee
- Mr. C. K. Dhanuka. (Vice Chairman) 2.00 1.00
P. K. Khaitan
10. a) Lease Obligation C. K. Dhanuka
The company has taken vehicles under Hire Purchase Scheme. The minimum rentals as at 31st March 2008 and the
J. P. Kundra
present value as at 31st March 2008 of minimum rentals in respect of assets acquired under Hire Purchase are as follows:
B. Chattopadhyay
(Rupees in Lacs) K. V. Balan R. K. Sharma M. Dhanuka
Particulars Minimum Hire Purchase Present Value of Minimum Finance Place : Kolkata Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Payments Hire Purchase Payments Charges
Date : 12th May 2008 Compliance Officer Directors
2007-2008 2006-2007 2007-2008 2006-2007 2007-2008 2006-2007
Payable not later than one year 0.00 0.39 0.00 0.38 0.00 0.01
Payable later than one year but
not later than five years 0.00 0.00 0.00 0.00 0.00 0.00
Payable later than five years 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.39 0.00 0.38 0.00 0.01

110 | South Asian Petrochem Limited Annual Report 2007-08 | 111

 SOUTH ASIAN PETROCHEM LIMITED

Consolidated Cash Flow Statement (Rupees in Lacs)

For the year ended 31.03.2008 31.03.2007
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Tax 7,618.23 5,667.02
Adjustments for :
Depreciation 2,331.86 2,260.51
Interest Expense 2,934.28 3,141.64
Interest Received (967.43) (104.27)
Provision for Wealth tax 1.36 1.25
Dividend Income (6.17) (2.42)
Provision for Dimunation in value of Investments – 40.84
Profit on Sale of Investment (62.93) (13.04)
Assets Written Off 0.40 6.53
Advances Written Off 1.71 –
Loss / (Profit) on sale of Fixed Assets 0.22 1.03
Bad Debts 0.04 –
Preliminary Expenditure Written Off 144.61 144.61
Transitional provisions under Revised AS-15 21.39 –
Foreign Exchange Loss / (Gain) (2,888.52) 1,510.82 (231.78) 5,244.90
Operating Profit before Working Capital Changes 9,129.05 10,911.92
Adjustments for :
Inventories (140.04) 1,926.55
Sundry Debtors 702.77 2,499.45
Loans and Advances 7,353.56 (12,516.00)
Trade Payables (6,213.46) 11,646.63
Other Current Liabilities (6.33) (0.24)
Foreign Exchange Gain/ (Loss) 1,302.45 457.68
Taxes Paid (693.15) 2,305.80 (225.62) 3,788.45
Net Cash from Operating Activities 11,434.85 14,700.37
B CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (2,522.13) (613.68)
Sale of Fixed Asset 3.86 8.55
Increase in Capital Work in Progress (456.51) (139.92)
Purchase of Investments (14,757.29) (2,267.47)
Sale of Investments 6,726.60 2,209.30
Dividend Income 6.17 2.42
Interest Received 969.09 97.44
Net Cash used in Investing Activities (10,030.21) (703.36)
C CASH FLOW FROM FINANCING ACTIVITIES
Foreign Exchange Gain 359.01 –
Interest paid (3,000.01) (3,161.37)
Payment of Loans (4,012.69) (4,054.27)
FCCB Issue 7,864.00 –
Proceeds from Short Term Borrowings 58.44 (3,715.98)
Share Premium 2,506.08 –
Increase in Share Capital 4,359.92 –
Net Cash used in Financing Activities 8,134.76 (10,931.62)
Net Increase / (Decrease) in Cash and Cash Equivalents 9,539.40 3,065.39
Opening Cash and Cash Equivalents 11,316.37 8,250.98
Closing Cash and Cash Equivalents 20,855.77 11,316.37
Notes
1. Cash and Cash Equivalents represents cash and bank balances only.
2. Bank overdrafts and short term loans have been treated as part of financing activities.
3. The Cash Flow Statement has been prepared under the indirect method as given in the Accounting Standards on Cash Flow Statement ( AS-3)
issued by The Institute of Chartered Accountants of India.
4. Closing Cash and Cash Equivalents includes foreign exchange loss of Rs 146.11 lacs (Previous Year Rs 1.61 lacs)
5. Previous year figures have been regrouped/rearranged wherever necessary.

This is the cash flow statement referred to in our report of even date.
Prabal Kr. Sarkar For and on behalf of the Board
Partner
Membership No: 52340 P. K. Khaitan
C. K. Dhanuka
For and on behalf of J. P. Kundra
Lovelock & Lewes B. Chattopadhyay
Chartered Accountants K. V. Balan R. K. Sharma M. Dhanuka
Company Secretary & Sr. V. P. (Finance) & CFO B. K. Biyani
Place : Kolkata Compliance Officer Directors
Date : 12th May 2008
112 | South Asian Petrochem Limited