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Directors Report of Dhunseri Petrochem Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Ninety Eight Annual Report of your Company together with the Audited Statement of Accounts for the year ended March 31, 2014.

Restructuring

Your Company has undertaken restructuring initiatives for (i) demerger of the Tea Division of your Company to Dhunseri Tea & Industries Ltd. (DTIL) (formerly known as Dhunseri Services Limited) and (ii) reorganisation of IT SEZ Division of your Company by its transfer to Dhunseri Infrastructure Limited (DID (formerly known as Dhanurveda Infrastructure Private Limited) under a Scheme of Arrangement.

In consideration of the demerger, DTIL will issue and allot to the shareholders of your Company, 1 Equity Share of Rs. 10/- each in DTIL credited as fully paid up for every 5 Equity Shares of Rs. 10/- each fully paid-up held by them in the capital of your Company. The existing 50,000 Equity shares of Rs. 10/- each in DSL shal stand cancelled upon issue and allotment of such new shares in DSL to the shareholders of your Company.

In consideration of the reorganisation, DIL will (i) issue and allot 50,00,000 Equity Shares of Rs. 10/- each credited as fully paid up in DIL to your Company and (ii) pay to your Company in cash within a period of five years from the Effective Date, in terms of the Scheme, the net asset value (book value of assets less liabilities) of the IT SEZ Division as on the Appointed Date (i.e. April 1, 2014) as reduced by the aggregate face value of the said shares to be issued and allotted to your Company.

The appointed date in respect of the Scheme being April 1, 2014, the report and accounts for the year ended March 31, 2014 contains the merged figures for all the Divisions of the Company.

The aforesaid Scheme of Arrangement has obtained the approval of the Stock Exchanges (both NSE & BSE). Further on an application being made, the Hon''ble High Court at Calcutta has ordered for holding the Company''s shareholders meeting (to be convened by Court appointed Chairman) on June 16, 2014 for their consent to the Scheme of Arrangement.

Accordingly, the Scheme is subject to approval of the requisite majorities of the members of DPTL, DTIL and DIL and sanction by the Hon''ble High Court at Calcutta and other relevant authorities.

Financial Results

2013-14 2012-13

Turnover and other income 4082.78 2,452.84

Profit before interest and depreciation 214.49 182.25

Interest 65.10 43.81

Profit before depreciation 149.39 138.44

Profit for the year 100.64 99.85

Provision for tax

-Current tax 15.15 13.06

-Deferred tax 13.71 11.80

- Adjustments of earlier years (2.93) (1.95)

Profit after tax 74.71 76.94

Amount brought forward from previous year 126.17 75.25

Amount available for appropriation 200.88 152.19

Appropriation proposed:

Transfer to General Reserve 7.49 7.70

Dividend proposed on equity shares 15.76 15.76

(Current year @ Rs.4.50/- and previous year @ Rs.4.50/- per share of Rs. 10/- each)

Tax on dividend 2.75 2.56

Balance carried to Balance Sheet 174.88 126.17

Note: The figures in the above financial results have been given on a consolidated basis (i.e. taking into account both Petrochem and Tea Divisions) for a consistent comparison with the previous year.

Dividend

Your Directors recommended a dividend @ Rs.4.50/- per equity share of Rs. 10 /- each for the year ended March 31, 2014, maintaining the last year''s rate, subject to the approval of the shareholders at the ensuing Annual General Meeting.

Performance

Petrochem Division

With the commissioning of Plant II at Haldiathe production of PET resin increased from 2,69,249 MT in 2012-13 to 4,12,038 MT in 2013-14 thus achieving more than 100% capacity utilization for both the plants taken on a combined basis.

The domestic sales volume increased from 138553 MT in 2012-13 to 172732 MT in 2013-14 i.e. an increase by 25%.

The export sales volume increased from 113087 MT in 2012- 13 to 241454 MT in 2013-14 i.e. an increase by 113%.

The margins remained under pressure in the 2nd half of the year in case of exports in view of price pressure due to competition from certain countries coupled with the decrease in the export ncentive effective September, 2013.

Further the MEG pipeline from the port to the plant for transferring imported MEG from the vessel to the MEG tank inside the Plant was commissioned in March, 2014.

The 10MW Captive Power Plant (CPP) of the Company at Haldia was commissioned in May, 2014.

The commissioning of the MEG pipeline and the 10MW CPP are expected to result in cost savings.

Tea Division

Sporadic attack of pests likes looper, helopeltis, red slug and thrips, which were evident in most of the gardens, have been controlled by timely spraying of insecticides. Irrigation was used in all four North Bank gardens and continued till first week of May, 2014 to mitigate the ill effects of drought.

The current year''s protracted winter as well as pre-monsoon dry spell for almost six months may be termed as unprecedented. It has left the bushes to survive in stressful conditions in the Upper Assam where there was no irrigation facility barring small young tea areas to be covered.

Due to radiation and temperature stress, scorching of tea

leaves have been reported in small patches of some of the tea estates. However, prolonged rainless period coupled with 40°C temperature, 20% to 50% humidity against a normal of 50% to 90% has severely affected the bushes with virtually no leaf for plucking towards the end of April. The visual symptoms of wilting of tea leaves were also noticed in several patches. Dill and Khagorijan Tea Estates suffered more due to severe drought, as there was less rainfall since October, 2013. Your Company is considering irrigation at Dilli T.E for the coming season due to continuous drought in the area for the past two years.

The overall production has decreased from 109.12 lac kgs in the FY 2012-13 to 100.98 lac kgs in the FY 2013-14 due to sale of Bought Leaf Factories. Overall sale price increased by Rs.5.35 per kg as compared to previous year due to overall improvement in quality of teas produced.

Prospects

Petrochem Division

With the commissioning of the Pet Resin plant of the subsidiary in Egypt, the consolidated Pet Resin manufacturing capacity of your Company with its subsidiary Egyptian Indian Polyester Company S.A.E. (ElPET) has become 8,30,000 TPA.

In view of EC''s review of Antidumping and subsequent withdrawal of Antidumping duty on PET Resin, exports from your Company to Europe suffered because of withdrawal of price undertaking from February, 2014. Exports to Europe from your Company has thus stopped. Your Company is required to sell PET Resin in alternative markets and faces surmountable challenges. However with the commissioning of the Egypt plant, the supplies to Europe are being made through your Company''s subsidiary EIPET.

We are having pressure on margins in both domestic and nternational fronts. In the international front the capacity increase in certain countries has resulted in price pressure. Further this has also led to imports of PET Resin into India which has also resulted in pressure on margins in the domestic market.

The domestic PTA producers have initiated antidumping procedures against the entire polyester industry. The polyester and textile industry have represented the matter before appropriate authority and the decision thereof is in abeyance.

Going forward the FY 2014-15 will be a challengingyear in view of the increase in the market competition and price realisation.

Tea Division

The crop prospect appears to be good this year after long spel of drought broken by well-distributed and continuous rainfall from end of April, 2014. Your Company mitigated the ill effect of drought to a large extent in North Bank gardens by continuous rrigation.

Your Company''s branded teas got good response from consumers due to its quality and helped in achieving marginal increase in sale quantity as compared to previous year and it is expected that there should be at least 4-5% increase in overall sale of packet teas in Rajasthan.

The tea market is expected to remain good in the coming years especially for quality teas. Your Company''s current tea production is 10 million kgs and is expected to increase by 5-6%.

Continued emphasis is being given on manufacturing quality teas, which have yielded favourable results in some gardens. Now all the gardens have been brought under similar manufacturing process to improve the quality as well as grade mix and there should be substantial improvement in overall quality of teas to be produced by your Company in the Season 2014.

The factories have been renovated by installing new machineries with increased output. However, the production will depend on availability of green leaf at competitive price in the area.

Barring unforeseen circumstances, the performance of the Tea Division in the coming year is expected to be satisfactory.

IT SEZ Division

As was informed in the last Year''s report, the civil construction of the first phase of ''Dhunseri IT Park'' at Bantala having a built up area of 3,70,000 sq. ft., had been completed and it was ready for MEP and other Exterior works. However the work has been kept on hold and would be taken up only once some favourable response was received.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings/Outgo

The particulars as prescribed under Section 217(l)(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

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(l)(b) (iv) of the said Act, the Annual Report excluding the aforesaid nformation is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Auditors

M/s Lovelock & Lewes, Chartered Accountants, are the present Statutory Auditors of your Company and shall hold office till the end of this Annual General Meeting. They have already completed the term of ten years of appointment as the Statutory auditors of your Company. Hence in terms of the Companies Act, 2013 they can now be re-appointed as auditors for another term of 3 years only (which is the transition phase). Hence M/s Lovelock & Lewes, Chartered Accountants, who retire on the conclusion of this Annual General Meeting, being eligible, offer themselves for reappointment for a period of three years.

Directors

Mr. R.K.Sharma, Director of your Company will retire at this Annual General Meeting by rotation, and being eligible, offer himself for reappointment. Your Directors recommends his reappointment as Director of your Company.

During the year Mr.B.Bajoria ceased to be a Director of your Company consequent to his resignation. Your Board of Directors wishes to place on record their sincerest appreciation for the contribution made by him during his tenure.

In terms of the requirement of the Companies Act, 2013 the ndependent Directors of the Company, namely Mr. P.K.Khaitan, Mr. J.P. Kundra, Dr. B.Sen, Mr. A. Bagaria, Mr. R.N.Bhardwaj, Mr. D.P.Jindal will be appointed for a term of five years w.e.f the date of this Annual General Meeting once the approval of the shareholders at this Annual General Meeting is obtained. All these Directors will not be liable to retire by rotation. Your Directors recommend approval of their appointment.

In view of the enactment of the Companies Act, 2013 the changes in the Independent Directors and the Directors liable to retire by rotation has been reflected in the table under the Composition of Board in the Corporate Governance report which is set out as separate annexure to this report.

Mr. C.K.Dhanuka will be re-appointed as the Executive Chairman of the Company w.e.f. January 1, 2015, based on the approva of the Board at its meeting held on May 22, 2014, subject to the approval of the members at this Annual General Meeting. Your Directors recommend approval of his reappointment as the Executive Chairman of the Company.

Fixed Deposits

The Company has not accepted any deposits from the public. There were no outstanding balances relating to FDs as at the beginning and end of the FY 2013-14.

Subsidiary Company

1) Egyptian Indian Polyester Company S.A.E (EIPET):

Production commenced in Line-1 and Line-2 of EIPET''s plant in January, 2014 and May''2014 respectively and quality product had been achieved immediately.

The cost of EIPET''s project in Egypt increased by USD 9 million, i.e. from USD 160 million to USD 169 million due to delay in implementation of the project on account of force majeure situations a number of times in Egypt.

Your Company''s share in increased project cost of EIPET of USD 9 million was USD 6.3 million. All the shareholders of EIPET have contributed towards additional equity participation.

2) Dowamara Tea Company Private Ltd. (DTCPL):

During the year your Company had sold its investment in Dowamara Tea Company Pvt. Ltd. (DTCPL), subsequent to which it had ceased to be a Wholly Owned Subsidiary (WOS) of your Company.

3) Dhunseri Tea & Industries Ltd. and Dhunseri Infrastructure Ltd.

In view of the Scheme of Arrangement, during the year ended March 31, 2014, the Company has acquired 50,000 equity shares @ Rs. 10/- each in both M/s Dhunseri Infrastructure Ltd. (formerly M/s Dhanurveda Infrastructure Pvt. Ltd.) and M/s Dhunseri Tea & Industries Ltd. (formerly M/s Dhunseri Services Ltd.) i.e. at a total cost of Rs.5,00,000/- each.

Accordingly the M/s Dhunseri Infrastructure Ltd. and M/s Dhunseri Tea & Industries Ltd. have become the Wholly Owned Subsidiaries of the Company.

4) Dhunseri Petrochem & Tea Pte Ltd. (DPTPL):

It was informed in the last report that the Company''s investment in Egyptian Indian Polyester Company S.A.E. (EIPET) would be transferred to DPTPL. However in view of the proposed restructuring, post demerger of the Tea Division of your Company, the said subsidiary along with its investment in Makandi Tea and Coffee Estates Ltd. & Kawalazi Estate Company Ltd. will be transferred to Dhunseri Tea & Industries Ltd. and the investment in EIPET will be held by your Company itself.

5) Makandi Tea and Coffee Estates Ltd. (MTCEL) & Kawalazi Estate Company Ltd. (KECL):

MTCEL which is the subsidiary of the Company, (being the subsidiary of DPTPL), accounted for a net profit after tax of USD 3.09 million during the year ended December 31, 2013. MTCEL produced 5.21 million kgs of Tea and 1.43 lac kgs of Macadamia kernel during the year ended December 31, 2013.

KECL which is the subsidiary of the Company, (being the subsidiary of DPTPL), accounted for a net profit after tax of USD 0.55 million during the year ended December 31, 2013. KECL produced 3.6 million kgs of Tea and 1.78 lac kgs of Macadamia kernel during the year ended December 31, 2013.

Subsidiary Accounts

Ministry of Corporate Affairs, in accordance with the Genera Circular issued by it, has granted exemption to the companies, from attaching the reports and accounts of the subsidiary company, subject to fulfillment of certain conditions, which amongst others include the consent of the Board of Directors for not attaching the annual accounts of the subsidiary. Accordingly, the Board of Directors of the Company, at its meeting held on May 22, 2014, has consented for not attaching the annua accounts of the subsidiaries with the accounts of the Company.

Accordingly, the Audited Statements of Accounts, the reports of Board of Directors and Auditors of the subsidiary companies have not been annexed. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. Shareholders who wish to have a hard copy of the full reports and accounts of the subsidiaries will be provided the same on receipt of written request from them. These documents will also be available for inspection by any shareholder at the registered office of the Company and that of the subsidiaries on any working day during business hours, except on Saturdays.

As required under the listing agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Company''s annual report.

The financial year end of Egyptian Indian Polyester Company S.A.E. is 31st December. Accordingly, though the said subsidiary''s operations have commenced in the quarter ended March, 2014, the revenues derived therefrom are not included in the Consolidated Financial Statements of the Company.

Cost Audit

Your Company is under the purview of Cost Audit in respect of manufacture of Tea and Poly Ethylene Terephthalate (PET) resin. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company.

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 took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Company''s assets and for preventing and detecting fraud and other irregularities;

(iv) That the Directors prepared the annual accounts on a going concern basis.

Corporate Governance and Management Discussion and Analysis Reports

Corporate Governance and Management Discussion and Analysis Reports are set out as separate annexure to this report.

Committees of Directors

The Board of Directors have aligned the existing Committee of the Board with the provisions of Companies Act, 2013 (Act). Accordingly, the Company has renamed its existing Remuneration Committee as Nomination and Remuneration Committee and have delegated to it powers as required under Section 178 of the Act. The existing Shareholders'' Grievance Committee has been renamed as "Stakeholders'' Relationship Committee".

The scope of Audit Committee has also been widened so as to bring it in accordance with the requirement of the Section 177 of the Companies Act, 2013.

The Company has also constituted a Corporate Socia Responsibility (CSR) Committee as required under Section 135 of the Companies Act, 2013.

Corporate Social Responsibility

Your Company recognises the needs and expectations of its internal and external stakeholders. It strives at fulfilling its corporate responsibilities towards community development. It has continued with its welfare activities for development in the fields of education, health, culture and other welfare measures and to improve the general standard of living.

In pursuance of the Companies Act, 2013, as mentioned above, your Company has already constituted a CSR Committee and has made its Corporate Social Responsibility Policy.

As reported in the last year''s report your Company would be routing its CSR activities through Dhanuka Dhunseri Foundation (DDF) and will contribute in accordance with the CSR policy of the Company.

DDF acts as the vehicle through which the CSR activities of the Company are carried out across the various parts of the country. DDF was formed in 1972 for various charitable objectives. It is nvolved in various philanthropic activities like building schools, colleges and girls hostel, providing free medicines through dispensaries and grants to charitable institutes.

Certifications

Petrochem Division

The Petrochem division of the Company holds quality certifications from renowned national and international agencies ike the USFDA, EC, Japanese and Canadian Food and Health Bodies and ITRC and is also ISO 9001:2008, ISO 14001: 2004, BS OHSAS 18001: 2007 and SA 8000: 2008 certified.

Tea Division

Your Directors wish to inform you that the ISO 22000:2005 certification for Hatijan Tea Estate had also been received. Accordingly all the Tea Estates of the Company with factories are ISO 22000:2005 certified.

Environment, Health and Safety

Environmental, health and safety is of great importance to your Company. Your Company continuously strives to ensure environment sustainable practices and provide a safe and healthy workplace for its employees. It aims at proper waste management and disposal to ensure healthy and safe environment.

Credit Rating by Credit Analysis & Research Ltd. (CARE)

Your Directors inform that CARE has reaffirmed the Credit rating of CARE A (Single A plus) assigned to long term bank facilities of the Company and CARE Al (CARE A One plus) assigned to short term facilities of the Company. At the same time CARE has reaffirmed the Credit rating of CARE A1 (CARE A One plus) assigned to the Short Term Debt (STD) programme (including Commercial Paper) of the Company of Rs. 100 crores. for a maturity upto six months.

Further CARE has assigned Credit rating of CARE A (Single A plus) to Non Convertible Debenture (NCD) issue of Rs. 100 crores of the Company for a maturity of 10 years.

Further at the request of your Company, CARE has withdrawn the ratings assigned to the Non-Convertible Debenture issue of Rs. 100 crores, which your Company had earlier proposed to issue.

Crisil Equities Grading

Your Directors inform that CRISIL Equities vide its Independent

Equity Research report has assigned a CRISIL IER fundamenta grade of 3/5 (pronounced three on five) to the Company. The grade indicated that the Company''s fundamentals were ''good'' relative to other listed equity securities in India. CRISIL Equities has assigned a valuation grade of 5/5 (pronounced five on five).

Employees

Your Company believes that ''employees'' are the most valuable assets of any organization. Your Directors wish to place on record their deep sense of appreciation for the co-operation, dedication and committed services by all the employees of your Company which plays a pivotal role in the growth of your Company.

Acknowledgement

The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Allahabad Bank, Axis Bank Limited, Bank of Baroda, Canara Bank, DBS Bank Limited, Deutsche Bank AG, Development Credit Bank Limited, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited, nternational Finance Corporation, Washington, Punjab Nationa Bank, Standard Chartered Bank, State Bank of India, The Hongkong and Shanghai Banking Corporation Limited, The Ratnakar Bank Limited, UCO Bank, United Bank of India, West Bengal Industrial Development Corporation Limited, Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the Petroleum and Process Industries (ENPPI), Ahli United Bank (Egypt) S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, Dubai Multi Commodities Centre, the customers, suppliers, shareholders and all others associated with the Company.

For and on Behalf of The Board of Directors

Place: Kolkata C. K. Dhanuka

Date: May 22, 2014 Executive Chairman


Mar 31, 2013

The Directors have pleasure in presenting the Ninety Seventh Annual Report of your Company together with the Audited Statement of Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS (Rs.in Crs.) 2012-13 2011-12

Turnover and other income 2,452.84 2,004.53

Profit before interest and depreciation 182.25 133.26

Interest 43.81 41.22

Profit before depreciation 138.44 92.04

Profit for the year 99.85 59.03

Provision for tax

- Current tax 13.06 7.19

- Deferred tax 11.80 5.26

- Adjustments of earlier years (1.95) (2.91)

Profit after tax 76.94 49.49

Amount brought forward from previous year 75.25 49.03

Amount available for appropriation 152.19 98.52

Appropriation proposed:

Transfer to General Reserve 7.70 4.95

Dividend proposed on equity shares (Current year @ Rs. 4.50/- 15.76 15.76 and previous year @ Rs. 4.50/- per share of Rs. 10/- each)

Tax on dividend 2 .56 2.56

Balance carried to Balance Sheet 126.17 75.25

DIVIDEND

Your Directors recommended a dividend @ Rs. 4.50/- per equity share of Rs. 10 /- each for the year ended 31st March, 2013, maintaining the last year''s rate, subject to the approval of the shareholders at the ensuing Annual General Meeting.

PERFORMANCE

Petrochem Division

The PET resin Plant I at Haldia operated at 107% capacity utilisation.

Your Directors are glad to inform you that the PET resin Plant II has achieved final acceptance as per the contract with the EPC contractor and your Company declared commencement of Commercial Production from 15.11.2012. The Plant II at Haldia operated at full capacity utilization during January- March 2013. The quality of PET Resin produced in Plant II is of International standard and the product is exported to various countries.

The production of PET resin increased from 2,08,975 MT in 2011-12 to 2,69,249 MT in 2012-13.

Although the plant operated in excess of 100% capacity utilisation, the margins remained under pressure throughout the year.

Tea Division

The own crop of your Company suffered due to extreme soil moisture deficit in March resulting in poor first flush crop. Rain was received in 2nd week of April after nearly 7 months of long spell. The water table was down drastically and even all rivers & jhoras dried up. Although some improvement in weather condition appeared in May, the hope of harvesting better crop thereafter vanished due to adverse weather condition in June and remained indifferent till the end of the season.

Your Company achieved the production of 109.12 lac kg tea made. Crop was marginally lower mainly because of sale of Namsang Tea Estate and Four Bought Leaf Factories. South Bank gardens also suffered due to adverse weather condition and crop was 13% lower than previous year.

The market was selectively buoyant for quality teas. Teas from non-quality areas continued to be lower priced with preference for better teas. Your Company''s teas attracted better realisation over the auction averages.

PROSPECTS Petrochem Division

With the commissioning of the Plant II at Haldia, the Company''s total production capacity would be more than double in the FY 2013-14 in comparison to the earlier capacity of the Company of 2,00,000 TPA. The Company has optimised its existing resources, has created international sales team, strategically located in various countries and is all geared up to meet the marketing challenges to sell the added volumes coming out of the expanded capacity.

Both the PET Resin Plant I and Plant II at Haldia are expected to operate at full capacity utilisation in the coming year.

The Domestic PET resin market in India is expected to continue its double-digit growth in the coming years. The demand of FY 2012-13 was 5.85 lac tons and is expected to be 6.70 lac tons in FY 2013-14. With the commissioning of Plant II and a couple of other new capacities underway, the FY 2013-14 will be a challenging year for the PET industry. With our relationship based marketing strategy, we are confident to retain our existing customers and thrive for increase in the customer base in future.

Tea Division

The Tea gardens received some useful rain in the last week of March 2013 in South Bank gardens after a prolonged dry spell since October 2012. It was the longest dry spell recorded in this area of Assam. However, there has been continuous useful rain in April 2013. Bushes have started recovering from the effect of drought. Your Company mitigated the ill effects of drought to a large extent by continuous use of sprinkler irrigation in North Bank gardens, which was supported by some useful rain in March 2013.

Continued emphasis on manufacturing quality teas have yielded favourable response in all our gardens from our buyers. Most of the gardens have been brought under quality manufacturing process for better price realisation and it is expected that all gardens will further improve their quality in 2013.

The production at Hatijan Tea Factory has now stabilised and it is producing good quality teas in this season and will contribute to the overall profitability of your Company.

Your Company''s packet tea brands LAL GHORA and KALA GHORA continued to receive good response from consumers due to consistent quality of tea in the packets. There has been improvement in packaging which has helped in achieving marginally higher sale quantity and it is expected that there should be further increase in sale quantity in 2013-14.

Demand for good quality CTC teas is expected to remain buoyant. The demand at the auctions and private sales has resulted in better prices for your Company''s tea. Barring unforeseen adverse weather conditions, your Company is expected to strengthen its profitability in the coming years.

Your Company has sold and handed over three tea factories in Assam namely Primax Tea Factory, Sona Assam Tea Factory and Shreemoni Tea Factory.

As reported last year your Company has sold one of the tea estates namely Namsang Tea Estate. Further, the possession of the said tea estate has also been handed over.

Your Company''s current tea production is 10.91 million kg and with the acquisition of subsidiaries in Malawi, Africa (as detailed in the Subsidiaries Section), Dhunseri''s consolidated Tea production capacity will be around 22 million kg per annum.

IT-SEZ Division

The construction work of ''Dhunseri IT Park'' at Bantala is progressing gradually. In respect of the first phase having a built up area of 3,70,000 sq. ft., the civil construction has been completed and it is ready for MEP and other Exterior works, which will begin depending on market scenario.

Barring unforeseen circumstances, the Company''s performance for the coming year is expected to be satisfactory.

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 SEC 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

M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion of this Annual General Meeting, and being eligible, offer themselves for reappointment.

DIRECTORS

Mr. J.P.Kundra, Mr. P.K.Khaitan and Dr. B.Sen, Directors of your Company will retire at this Annual General Meeting by rotation, and being eligible, offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

However the Companies (Acceptance of Deposits) Rules, 1975

were complied with in view of the deposits being accepted from the employees of the Company. All the Fixed Deposits (FDs) have been repaid and there is no outstanding balance relating to FDs as at the end of the FY 2012-13.

SUBSIDIARY COMPANY

1) Egyptian Indian Polyester Company S.A.E (EIPET): EIPET''s project in Egypt is progressing satisfactorily. Start up of trial run is expected to commence in September 2013 quarter.

2) Dowamara Tea Company Private Ltd. (DTCPL): Dowamara Tea factory belonging to Dowamara Tea Company Private Limited (DTCPL), which is a wholly-owned subsidiary of the Company, produced 7.87 lac kg during the year ended 31st March, 2013. DTCPL suffered a loss of Rs. 81.55 lacs during the current year.

3) Dhunseri Petrochem & Tea Pte Ltd. (DPTPL):

The Wholly Owned Subsidiary of your Company in Singapore namely Dhunseri Petrochem & Tea Pte Ltd. had been incorporated for transferring the Company''s investment in Egyptian Indian Polyester Company S.A.E.(EIPET) to DPTPL. The said transfer is under progress and would be done once all the necessary formalities are completed. During the year DPTPL has acquired 100% share capital of Makandi Tea and Coffee Estates Limited and Kawalazi Estate Company Limited, both companies based in Malawi, Africa.

4) Makandi Tea and Coffee Estates Ltd. & Kawalazi Estate Company Ltd.:

To have a global reach your Company through its Wholly Owned Subsidiary, Dhunseri Petrochem & Tea Pte Limited (DPTPL) has acquired two tea estates in Malawi, Africa owned by Makandi Tea and Coffee Estates Limited and Kawalazi Estate Company Limited by DPTPL acquiring 100% stake in those Companies. The total consideration paid by DPTPL was US$ 22 million which was funded partly by loan of US$ 12 million and the balance by equity contribution in DPTPL made by your Company, which in turn has been funded by your Company through internal accruals and proceeds from the sale of Namsang Tea Estates/ other Tea factories.

Accordingly, your Company has become the ultimate holding Company of Makandi Tea and Coffee Estates Ltd. & Kawalazi

Estate Company Ltd. (being the subsidiaries of DPTPL).

Makandi Tea and Coffee Estates Ltd. is engaged in the production of Tea, Macadamia & Coffee and Kawalazi Estate Company Ltd. in the production of Tea & Macadamia. The aforesaid two subsidiaries based in Malawi, Africa in totality produce 94.50 lac kg of Tea and 4 lac kg of Macadamia.

SUBSIDIARY ACCOUNTS

Ministry of Corporate Affairs has granted general exemption to the companies under Section 212 of the Companies Act, 1956, from attaching the reports and accounts of the subsidiary company, subject to fulfillment of certain conditions, which amongst others include the consent of the Board of Directors for not attaching the annual accounts of the subsidiary. Accordingly, the Board of Directors of the Company, at its meeting held on 14th May, 2013, has consented for not attaching the annual accounts of the subsidiaries viz, M/s Egyptian Indian Polyester Company S.A.E., Dowamara Tea Company Private Ltd., Dhunseri Petrochem & Tea Pte Ltd., Makandi Tea and Coffee Estates Ltd. and Kawalazi Estate Company Ltd. with the accounts of the Company.

Accordingly, the Audited Statements of Accounts, the reports of Board of Directors and Auditors of the subsidiary companies have not been annexed. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. Shareholders who wish to have a hard copy of the full reports and accounts of the subsidiaries will be provided the same on receipt of written request from them. These documents will also be available for inspection by any shareholder at the registered office of the Company and that of the subsidiaries on any working day during business hours, except on Saturdays.

As required under the listing agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Company''s annual report.

COST AUDIT

Your Company is under the purview of Cost Audit as per Section

233B of the Companies Act, 1956 in respect of manufacture of

Tea and Poly Ethylene Terephthalate (PET) resin. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company.

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 took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Company''s assets and for preventing and detecting fraud and other irregularities;

(iv) That the Directors prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS Corporate Governance and Management Discussion and Analysis Reports are set out as separate annexure to this report.

CORPORATE SOCIAL RESPONSIBILITY Your Company recognises that its operations impact a wide community of people and that appropriate attention to the fulfillment of its corporate responsibilities towards community development can enhance overall performance. It has continued with its welfare activities for development in the fields of education, health, culture and other welfare measures and to improve the general standard of living.

As reported in the last year''s report, your Company contributes 1% of its profits towards CSR activities, with a maximum ceiling

of Rs. 1 crore, including contributions to Dhanuka Dhunseri Foundation Trust (DDFT). As reported in the last year''s report, DDFT acts as the vehicle through which the CSR activities of the Company are carried out across the various parts of the country. The Trust was formed in 1972 for various charitable objectives. It is involved in various philanthropic activities like building schools, colleges and girls hostel, providing free medicines through dispensaries and grants to charitable institutes.

CERTIFICATIONS Petrochem division

The Petrochem division of the Company holds quality certifications from renowned national and international agencies like the USFDA, EC, Japanese and Canadian Food and Health Bodies and ITRC and is also ISO 9001:2008, ISO 14001: 2004, BS OHSAS 18001: 2007 and SA 8000:2008 certified for Plant I at Haldia.

Tea Division

Your Directors wish to inform you that the ISO 22000:2005 certification for Hatijan Tea Estate is under advanced stages and is expected to be received soon, after which all the Tea Estates of the Company with factories will be ISO 22000:2005 certified.

ENVIRONMENT, HEALTH AND SAFETY Environmental stewardship, safety and health continue to be of paramount importance. Your Company follows the practices for environmental sustainability and safety in the way of doing its daily businesses. It continuously strives to aim at energy efficiency, waste management and disposal to protect the environment from negative impacts.

Your Directors inform you that your Company has strengthened various fire safety measures including by way of: equipping itself with a state-of-the-art fire sensing system and fire station, three numbers of fire tenders equipped with full fledged fire fighting equipments, fire hydrant system, etc.

Your Directors inform you that the Department of Environment, Government of West Bengal under the directions of Ministry of Environment & Forests had issued a letter dated 11.3.2013 withdrawing Environment Clearance granted to your Company for the new PET Plant at Haldia alongwith 10 MW Power Plant (which is still under construction). Your Company preferred

an appeal against the said order in front of Hon''ble National Green Tribunal. The Hon''ble Bench upon hearing the plea from all sides, was pleased to set-aside the said withdrawal of Environment Clearance and the Authorities have been directed to consider the matter in accordance with law.

REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS

Your Directors inform that in respect of the Foreign Currency Convertible Bonds (FCCBs) issued by erstwhile South Asian Petrochem Ltd. (since merged with the Company) in 2007- 08, the outstanding FCCBs amounting to US$ 7.5 million were redeemed on 22.01.2013 at a premium of 36.86% on the principal amount, i.e. US$ 10,264,598.25.

CREDIT RATING BY CREDIT ANALYSIS & RESEARCH LTD. (CARE)

Your Directors inform that CARE has reaffirmed the Credit rating of CARE A (Single A plus) assigned to long term bank facilities of the Company and CARE A1 (CARE A One plus) assigned to short term facilities of the Company. At the same time CARE has reaffirmed the Credit rating of CARE A1 (CARE A One plus) assigned to the Short Term Debt (STD) programme (including Commercial Paper) of the Company of Rs. 100 Crs. for a maturity upto six months.

Further CARE has assigned Credit rating of CARE A (Single A plus) to Non Convertible Debenture (NCD) issue of Rs. 100 Crs. of the Company for a maturity of 10 years.

EMPLOYEES

Your Company believes that ''people'' are the biggest strength for the success of any organisation. Your Directors wish to express their appreciation to all the employees for their valuable contributions, excellent team spirit, dedication, enthusiasm and commitment in achieving and sustaining excellence in all areas of the business.

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Axis Bank, Allahabad Bank, Bank of Baroda, Canara Bank, Deutsche Bank, Development Credit Bank, DBS Bank Limited, HSBC

Limited, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited, IndusInd Bank Limited, International Finance Corporation, Washington, Punjab National Bank, State Bank of India, Standard Chartered Bank, United Bank of India, West Bengal Industrial Development Corporation Ltd, Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals

Holding Company (ECHEM), Engineering for the Petroleum and Process Industries (ENPPI), Ahli United Bank (Egypt) S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, Dubai Multi Commodities Centre, the customers, suppliers, shareholders and all others associated with the Company.

For and on behalf of The Board of Directors

Place: Kolkata C. K. Dhanuka

Date: 28th May, 2013 Executive Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Ninety Sixth Annual Report of your Company together with the Audited Statement of Accounts for the year ended 31st March 2012.

FINANCIAL RESULTS (Rs.in lacs)

2011-12 2010-11

Turnover and other income 2,00,453 1,70,306

Profit before interest and depreciation 13,326 25,115

Interest 4,122 2,589

Profit before depreciation 9,204 22,526

Profit for the year 5,903 19,412 Provision for tax

-Current tax 719 3,789

- Deferred tax 526 2,884

- Adjustments of earlier years (291) 8

Profit after tax 4,949 12,731 Amount brought forward from previous year 4,903 20,317 Amount available for appropriation 9,852 33,048 Appropriation proposed:

Transfer to General Reserve 495 26,306 Dividend proposed on equity shares (Current year @ X 4.50/- and previous year

@ X 4.50/- per share of X 10/- each) 1,576 1,577

Tax on dividend 256 262

Balance carried to Balance Sheet 7,525 4,903

Dividend

Your Directors recommended a dividend @ X 4.50/- per equity share of X 10/- each for the year ended 31st March 2012, maintaining the last year's rate, subject to the approval of the shareholders at the ensuing Annual General Meeting.

Performance

Petrochem Division

The PET plant at Haldia operated at 105% capacity utilization. The production of PET resin increased from 2,00,981 MT in 2010-11 to 2,08,975 MT in 2011-12.

Although the plant operated in excess of 100% capacity utilization the margins remained under pressure throughout the year. Further the unexpected and steep decline in the value of Indian Rupee against other foreign currencies also affected the bottom-line.

Your Directors take satisfaction to inform you that all the term loans pertaining to the first PET project of the Company have been fully repaid in the financial year 2011-12. The pledge of 53,04,700 shares in the Company held by Dhunseri Investments Ltd., provided as a security in respect of the aforesaid term loans, have since been released on 3rd April 2012.

As reported in last year's Directors' Report in respect to the unfortunate incidence of fire due to electrical short circuit in the raw materials go down at Haldia plant on 14th March 2011, your Directors wish to inform you that the claims under the "Stock Policy" towards destruction of raw materials & packing materials and reimbursement of expenses aggregating to Rs 51.82 crores have been settled by the insurance company to the tune of Rs 36.26 crores (net of salvage of Rs 5.32 crores) in the current year. The shortfall on this account amounting to Rs 10.24 crores has been charged off in the books of accounts for the year ended 31st March 2012.

Further, during the current year your Company restored to operation some fire damaged fixed assets valuing Rs 2.89 crores in the books and as on 31st March 2012 is carryingRs 9.82 crores in the books of accounts towards amount receivable from insurance company on account of loss incurred on damage/ destruction of fixed assets & spares under "Industrial All Risk" (IAR) policy. Your Company expects to receive the claim amount under IAR policy shortly.

Tea Division

Crop in Assam was affected due to early close of season due to no rain from end September 2011 till first week of April 2012 resulting in severe drought. There was increased pest activity due to very unfavorable weather condition.

The production of your Company increased from 103.03 lac kgs tea made to 134.81 lac kgs tea made mainly due to addition from new bought leaf factories. However, price realization was substantially lower due to poor market condition for medium quality teas especially from new bought leaf factories where quality parameters could not be stabilized in the first year. Orthodox market was also substantially lower by Rs 20/- due to fall in prices of orthodox teas as compared with Rs 17.16 lower for our teas.

Prospects

Petrochem Division

The existing plant is running at full capacity utilization and is expected to operate likewise in the coming year.

The project for expansion of the PET plant capacity in Haldia to 4,10,000 TPA from 2,00,000 TPA is progressing satisfactorily. Mechanical completion is expected to be achieved around middle of May 2012. Start up of trial run is expected around middle of June 2012. Delay in the project completion is due to delay in civil construction caused by heavy rains during construction.

With this the capacity of the Company's total production will increase to around 3,50,000 tonnes for the financial year 2012-13. The Company appointed marketing representatives in various international markets and is gearing up to meet marketing challenges to sell enhanced production.

As already reported in the last report, your Company plans to produce and market barrier resins using M&G's state of the art Bico PET technology, after carrying out necessary modifications in the existing plant. All the equipments for this purpose have been procured. The erection of these equipments will be done after the commissioning of the new plant. After the erection of the plant and machinery, the commissioning will be synchronized with the maintenance shutdown of the existing plant.

Tea Division

Tea garden received some useful rain in the second week of April (after prolonged drought for the past six months) and now crop prospects appears to be good from the month of May 2012 onwards. Your Company mitigated the ill effect of drought to a large extent by continuous use of sprinkler irrigation. Some gardens in South Bank also suffered this year due to less rainfall up to February 2012 where irrigation facilities are provided only for newly planted tea areas.

Continued emphasis given on manufacturing quality teas yielded favorable results in some gardens. However, all the gardens have been brought under similar manufacturing process to improve the quality as well as grade mix and there should be substantial improvement in overall quality of teas to be produced by the Company in the Season 2012.

Company's packet tea brands LAL GHORA and KALA GHORA continued to receive good response from consumers due to overall improvement in quality and also packaging which helped in achieving the targeted sale quantity and it is expected that there should be substantial increase in sale quantity in 2012-13 as the trend shows for the month of April 2012.

The tea market is expected to remain good during the year and difference in prices would be maintained for quality teas.

The Company has sold and handed over one tea factory in Assam and negotiation for another tea factory is under progress and expected to be completed shortly.

The operations of the remaining two bought leaf factories are being stabilized and is expected to achieve the targeted quantity of 3 mn kg tea made depending on availability of quality green leaf at competitive rates in the area. A new factory at Hatijan Tea Estate is being constructed having an annual capacity of 1.5 mn kg production and commercial production will start from the first week of May 2012.

Further subsequent to the end of financial year 2011-12, the Company has entered into an agreement for sale of one of the tea estates namely Namsang Tea Estate, having around 5% of the production of the Company, at a consideration of Rs 28.29 crores.

The Company's current tea production is 13.5 mn kg and is expected to reach 20 mn kg in the next 2/3 years if negotiations to acquire tea gardens abroad fructifies.

IT-SEZ Division

The construction work of 'Dhunseri IT Park' at Bantala is progressing gradually. In respect of the first phase having a built up area of 3,70,000 sq. ft., the construction is expected to be completed in the last quarter of financial year 2012-13.

Barring unforeseen circumstances, the Company's performance for the coming year is expected to be satisfactory.

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 Sec 21 7(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

M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion of this Annual General Meeting, and being eligible, offer themselves for reappointment.

Audit Report

With regard to the observations of the auditors in paragraph 4 of Auditors' Report, the relevant notes to accounts are self explanatory.

Directors

As already informed in the last report, the Central Government had accorded its approval u/s 259 of the Companies Act, 1956 to increase the maximum number of Directors of the Company from 12(Twelve) to 18 (Eighteen), subject to the condition that the increase in the number of Directors had to be effected within 19th September 2011, failing which the approval would lapse.

Since the Company has not affected the increase in the number of Directors by 19th September 2011, the approval lapsed. Hence the maximum number of directors of the Company has come down to 12(Twelve) again.

During the year Mr. S. K. Pai ceased to be a Director of the Company consequent to the withdrawal of nomination by IDBI Bank Limited following the full repayment of its term loan. The Board of Directors wish to place on record their sincerest appreciation for the contribution made by Mr. S. K. Pai during his tenure.

Further, during the year the tenure of Mr. B. K. Biyani as the Executive Director (Corporate) of the Company ended on 31st March 2012 and simultaneously he has resigned from the post of Director with effect from close of 31st March, 2012. The Board of Directors wish to place on record their sincerest appreciation for the contribution made by Mr. B. K. Biyani during his tenure. Mr. R. K. Sharma, has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. B. K. Biyani with effect from 1st April 2012. Mr. R. K. Sharma shall hold office till the term Mr. B. K. Biyani would have held office.

Mr. A. Bagaria, Mr. R. N. Bhardwaj and Mr. Y. F. Lombard, Directors of your Company will retire at this Annual General Meeting by rotation, and being eligible, offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company.

The tenure of Mr. M. Dhanuka as the Vice Chairman & Executive Director has ceased on 31st March 2012. He is proposed to be reappointed as the Vice Chairman & Managing Director of the Company with effect from 1st April 2012. Your Directors recommend approval of his reappointment as the Vice Chairman & Managing Director of the Company. The particulars required for reappointment as the Vice Chairman & Managing Director are contained in the Notice for the Annual General Meeting of the Company.

The tenure of Mr. B.Chattopadhyay as the Executive Director & CEO ceased on 31st March 2012. He is proposed to be reappointed as the Managing Director & CEO of the Company with effect from 1st April 2012. Your Directors recommend approval of his reappointment as the Managing Director & CEO of the Company. The particulars required for reappointment as the Managing Director & CEO are contained in the Notice for the Annual General Meeting of the Company.

Mr. R. K. Sharma is presently the CFO of the Company. He is proposed to be appointed as the Executive Director (Finance) of the Company, liable to retire by rotation, with effect from 1st April 2012. Your Directors recommend the approval of his appointment as the Executive Director (Finance) of the Company, liable to retire by rotation. The particulars required for appointment as the Executive Director (Finance), liable to retire by rotation are contained in the Notice for the Annual General Meeting of the Company.

Mr. D.P.Jindal has been appointed as the Additional Director of your Company with effect from 2nd May, 2012. In terms of Section 260 of the Companies Act, 1956 he shall hold office only upto the date of this Annual General Meeting. The required notice pursuant to provisions of Section 257 of the Companies Act, 1956 has been received from a member proposing his appointment as a Director of your Company, liable to retire by rotation. Your Directors recommend approval of his appointment as a Director of your Company, liable to retire by rotation. The particulars required for appointment as Director are contained in the Notice for the Annual General Meeting of the Company.

Fixed Deposits

The Company has not accepted any deposits from the public. However the Companies (Acceptance of Deposits) Rules, 1975 were complied with in view of the deposits being accepted from the employees of the Company. All deposits which matured during the year were repaid.

Subsidiary Company

1) Egyptian Indian Polyester Company S.A.E (ElPET):

ElPET's project in Egypt is progressing satisfactorily. Start up of trial run is expected to be achieved by fourth quarter of financial year 2012-13.

2) Dowamara Tea Company Private Ltd. (DTCPL):

Dowamara Tea factory belonging to Dowamara Tea Company Private Limited (DTCPL), which is a wholly - owned subsidiary of the Company, produced 5.25 lac kgs during the year ended 31st March 2012. DTCPL suffered a loss ofRs 112.64 lacs during the current year.

3) Dhunseri Petrochem & Tea Pte Ltd. (DPTPL):

Your Directors wish to inform you that a wholly owned subsidiary has been incorporated in Singapore on 28th December, 2011 under the name and style of Dhunseri Petrochem & Tea Pte Ltd. for the purpose of transferring the investment of the Company in Egyptian Indian Polyester Company S.A.E.(EIPET) to the aforesaid subsidiary in Singapore.

Upon receipt of the approvals and other statutory permissions, the investment of the Company in EIPET would be transferred to DPTPL.

Subsidiary Accounts

Ministry of Corporate Affairs has granted general exemption to the companies under Section 212 of the Companies Act, 1956, from attaching the reports and accounts of the subsidiary company, subject to fulfillment of certain conditions, which amongst others include the consent of the Board of Directors for not attaching the annual accounts of the subsidiary. Accordingly, the Board of Directors of the Company, at its meeting held on 2nd May 2012, has consented for not attaching the annual accounts of the subsidiaries viz, M/s Egyptian Indian Polyester Company S.A.E. and Dowamara Tea Company Private Ltd. with the accounts of the Company.

Accordingly, the Audited Statements of Accounts, the reports of Board of Directors and Auditors of the subsidiary companies have not been annexed. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. Shareholders who wish to have a hard copy of the full reports and accounts of the subsidiaries will be provided the same on receipt of written request from them. These documents will also be available for inspection by any shareholder at the registered office of the Company and that of the subsidiaries on any working day during business hours, except on Saturdays.

As required under the listing agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Company's annual report. However, the consolidated financial statements do not include the operations of Dhunseri Petrochem & Tea Pte Ltd. as the first financial year of the said Company will end only on 31st March 2013.

Cost Audit

Your Company is under the purview of Cost Audit as per Section 233B of the Companies Act, 1956 in respect of manufacture of Tea. Further with effect from financial year 2012-13 Poly Ethylene Terephthalate (PET) resin has also been covered for Cost Audit. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company.

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 were followed, except as specified in Para 4 of Auditors' Report. Proper explanation relating to material departures, have been clarified in note no. 35 in the notes to accounts which is self explanatory;

(ii)That the Directors selected such accounting policies and applied them consistently except as specified in note no. 38 in notes to accounts and made judgments and estimates that were 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 took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Company's assets and for preventing and detecting fraud and other irregularities;

(iv) That the Directors prepared the annual accounts on a going concern basis.

Corporate Governance and Management Discussion and Analysis Reports

Corporate Governance and Management Discussion and Analysis Reports are set out as separate annexure to this report.

Corporate Social Responsibility

Your Company understands that the expectations of society from industry is constantly changing and is conscious of its social responsibilities. It has continued with its welfare activities for development in the fields of education, health, culture and other welfare measures and to improve the general standard of living.

Your Directors have decided that 1% of the profits of the Company would be used towards CSR activities, with a maximum ceiling of X 1 crore including contributions to Dhanuka Dhunseri Foundation Trust (DDFT). As reported in the last year's report, DDFT acts as the vehicle through which the CSR activities of the Company are carried out across the various parts of the country. The Trust was formed in 1972 for various charitable objectives. It is involved in various philanthropic activities like building schools, colleges and girls hostel, providing free medicines through dispensaries and grants to charitable institutes.

Certifications

Petrochem Division

As already informed in the last report, the Petrochem division of the Company holds quality certifications from renowned national and international agencies like the USFDA, EC, Japanese and Canadian Food and Health Bodies and ITRC and is also ISO 9001:2008, ISO 14001: 2004 and BS OHSAS 18001: 2007 certified.

Further during the year the Petrochem division of the Company has received SA 8000: 2008 certification (i.e. Certificate of Social Accountability) from TUV NORD for its plant at Haldia in respect of manufacture and sale of PET resin in International and domestic markets.

Tea Division

As informed in the last report, your Company was already having the ISO 22000:2005 certification for Dilli & Santi Tea Estates. Further during the year your Company has also received the ISO 22000:2005 certifications from DNV Business Assurance in respect of Food Safety System for the following Tea Estates:

i) Bahadur Tea Estate

ii) Bahipookri Tea Estate

iii) Bettybari Tea Estate

iv) Dhunseri Tea Estate

v) Khagorijan Tea Estate

vi) Namsang Tea Estate (agreement for sale executed)

vii) Orang Tea Estate

Awards

Your Directors have the pleasure to inform you that the following awards have been received:

Petrochem Division

Second Best Exporter Award: The Company's Petrochem division has received the second best exporter award for the year 2009-10 in the product category of Plastic Polymers by The Plastics Export Promotion Council, Mumbai.

Environment, Health and Safety

Health and safety has always been a matter of major concern and importance. Your Company continuously strives to ensure that our operations are safe. The Company recognizes the importance of managing its environmental impact. These are matters of priority and therefore caring for the environment and responsible disposal of wastes are some of the ongoing initiatives undertaken by the Company.

Utilization of Proceeds from Preferential Issue

Erstwhile SAPL had made an allotment of equity shares, warrants and FCCBs in 2007-08. Consequently, during 2007-08, erstwhile SAPL raised Rs 7,416.23 lacs by preferential allotment of equity shares and equity share warrants and Rs 7,864.00 lacs from the issue of the FCCBs. The FCCB proceeds as at 31st March 2012 (as reduced by redemption in 2009-10) is Rs 2949 lacs.

The money raised out of such issue was to be utilized for:

i) Equity participation in overseas subsidiaries

ii) Retirement of high cost borrowings

iii) Other business purposes, including working capital requirements

The amount raised by issue of equity shares, equity share warrants and FCCB's have been fully utilized towards equity participation/issue related expenses in the overseas project in Egypt.

CRISIL EQUITIES GRADING

Your Directors inform that CRISIL vide its independent equity research report dated 16th February, 2012 has assigned a CRISIL fundamental grade of 3/5 (pronounced three on five) to the Company. The grade indicated that the Company's fundamentals were 'good', relative to other listed equity securities in India. CRISIL has assigned a valuation grade of 5/5, indicating that the stock has a strong upside as compared to the market price of Rs122/- (as on 16th February, 2012). CRISIL's fair value of the Company's stock was Rs 243/-.

Credit Rating by Credit Analysis & Research Ltd. (Care)

Your Directors inform that CARE has reaffirmed the Credit rating of CARE A (Single A plus) assigned to long term bank facilities of the Company and CARE A1 (A One plus) assigned to short term facilities of the Company. At the same time CARE has reaffirmed the Credit rating of CARE A1 (A One plus) assigned to the Short Term Debt (STD) programme (including Commercial Paper) of the Company for a maturity up to six months.

Employees

Your Company believes that 'people' are the most prized asset for the success of any organization. Your Directors wish to express their appreciation to all the employees for their exemplary contributions and excellent team spirit. Their dedicated efforts, enthusiasm and commitment have played a pivotal role in the growth of the Company.

Acknowledgement

The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Axis Bank, Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Deutsche Bank, Development Credit Bank, DBS Bank Limited, Export- Import Bank of India, HSBC Limited, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited, International Finance Corporation, Washington, Punjab National Bank, State Bank of India, State Bank of Travancore, Syndicate Bank, Standard Chartered Bank, United Bank of India, West Bengal Industrial Development Corporation Ltd, Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the Petroleum and Process Industries(ENPPI), Ahli United Bank (Egypt) S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, the customers, suppliers, shareholders and all others associated with the Company.

For and on behalf of

The Board of Directors

Place: Kolkata C. K. Dhanuka

Date: 2nd May, 2012 Executive Chairman


Mar 31, 2011

To The Members

The Directors have pleasure in presenting the Ninety Fifth Annual Report of your Company together with the Audited Statement of Accounts for the year ended 31st March 2011.

Financial results (Rs. in Lacs)

2010-11 2009-10

Turnover and other income 1,70,306 1,20,350

Profit before interest and depreciation 25,115 16,928

Interest 2,589 2,330

Profit before depreciation 22,526 14,598

Profit for the year 19,412 11,811

Provision for tax - Current tax 3,789 1,760

- Deferred tax 2,884 1,143

- Adjustments of earlier years 8 -

- Fringe benefit tax - 3

Profit after tax 12,731 8,905

Amount brought forward from previous year 20,317 849

Balance added pursuant to the scheme of arrangement - 13,087

Amount available for appropriation 33,048 22,841

Appropriation proposed: Transfer to General Reserve 26,306 890

Dividend proposed on equity shares (Current year @ Rs. 4.50/- and previous year @ Rs. 4/- per share of Rs. 10/- each) 1,577 1,401

Tax on dividend 262 233

Balance carried to Balance Sheet 4,903 20,317

Dividend

Your Directors recommended a dividend @ Rs. 4.50/- per equity share of Rs. 10/- each for the year ended 31st March 2011 as against a dividend @ Rs. 4/- per equity share of Rs. 10/- each for the year ended 31st March 2010, subject to the approval of the shareholders at the ensuing Annual General Meeting.

Performance Petrochem division

The PET plant at Haldia is operating at 100% capacity utilisation. The production of PET resin increased from 168179 MT in 2009- 10 to 200981 MT in 2010-11. Production could have been higher if the plant did not shut down due to a fire at its raw material store.

Tea division

As reported last year, the crop in Assam was affected due to incessant rain and increased pest activity. Tea production decreased from 104.77 lac kgs to 103.03 lac kgs. However, the sale price increased by Rs. 11.17 per kg as compared to previous year. Revenue increased by 5.97% i.e from Rs. 129.75 crores in 2009-10 to Rs.137.50 crores in 2010-11 in spite of a decrease in volume by 2.86%.

Prospects Petrochem division

Existing Operations: We expect to operate at full capacity utilisation for the year 2011-12. Thermax HTM Heater (coal based) has been successfully commissioned and operational from January 2011. This together with the commissioning of the captive power plant has resulted in power and fuel cost savings which is expected to continue in the coming years.

New Project: With respect to the expansion of the PET plant capacity in Haldia to 4,10,000 TPA from 2,00,000 TPA, your Company received environmental clearance from State Level Environment Impact Assessment Authority, Ministry of Environment and Forests, Government of West Bengal and consent to establish from the West Bengal Pollution Control Board. The civil construction at site started in November 2010. The plant will be on stream by April 2012.

The project cost is appraised by SBI Capital Markets Limited to be Rs. 371 crs. State Bank of India and Allahabad Bank are funding the project cost upto ECB of USD 51 million and the balance is being funded through internal accruals.

Development of Barrier Resins: Your Company has entered into an Exclusive Technology License Agreement with M&G Finanziaria S.R.L., Italy (M&G), one of the global leaders in PET bottle resin production, to produce and market barrier resins in India and Bangladesh using M&G’s state of the art BicoPET technology. This will enable your Company to capture newer customers/products where this technology would be used for packaging. For the current year 2011-12, the Company will start seed marketing of this product. Necessary modifications in the existing plant are being carried out to produce these new chips. The plant is expected to start production of the aforesaid new chips by 1st quarter of 2012-13 after stabilisation of new plant.

Tea division

The crop prospect appears to be good at present, after a long spell of drought broken by well-distributed rainfall in April & May 2011. The Company mitigated the ill effects of drought to a large extent in the North Bank gardens through continuous irrigation.

Continued focus on manufacturing quality teas, yielded favourable results in some gardens; all other gardens will be brought under

similar manufacturing process.

Your Company's branded teas have received good response from consumers which has helped in achieving substantial increase in sale quantity as compared to previous year and a similar trend is expected to continue in 2011-12. The tea market is expected to remain good in the coming years especially for quality teas.

In the current financial year, the Company purchased four tea factories in Assam and expects to produce 40 lac kgs tea in these factories in 2011-12. These factories are being renovated by installing new machineries with increased output. The production can reach up to 60 lac kgs following the expansion in due course and depending on availability of green leaf at competitive prices in the area. Further, your Company has acquired 100% shares of Dowamara Tea Company Private Limited(DTCPL) in May 2011. DTCPL owns a tea manufacturing factory having capacity of 8 lac kgs per annum. The capacity is planned to be expanded to 15 lac kgs per annum by adding further machineries.

Further, a new factory at Hatijan tea estate is being constructed, having an annual capacity of 15 lac kgs and is expected to be operational in August 2011.

The Company's current tea production is 103 lac kgs & is expected to reach 150 lac kgs in 2011-12 and 200 lac kgs in the next 2/3 years with few more acquisitions.

IT-SEZ Division

The construction work of ‘Dhunseri IT Park’ at Bantala is progressing satisfactorily. The first phase having a built up area of 3,70,000 sq. ft, will be delayed as compared to our earlier target of January 2012, due to unavoidable circumstances.

Barring unforeseen circumstances, the Company’s performance for the coming year is expected to be satisfactory.

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

M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion of this Annual General Meeting, and being eligible, offer themselves for reappointment.

Audit Report

With regard to the observations of the auditors in paragraph 4 of Auditors’ Report, the relevant notes to accounts are self explanatory.

Directors

Your Directors inform that the Central Government has accorded its approval u/s 259 of the Companies Act, 1956 to increase the total number of Directors of the Company from 12(Twelve) to 18 (Eighteen), subject to the condition that the increase in the number of Directors has to be effected within 19th September 2011, failing which the approval shall lapse.

Dr. B. Sen, Mr. B. K. Biyani and Mr. B. Bajoria, Directors of your Company will retire at this Annual General Meeting by rotation, and being eligible, offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company.

Fixed deposits

The Company has not accepted any deposits from the public. However the Companies (Acceptance of Deposits) Rules, 1975 were complied with in view of the deposits being accepted from the employees of the Company. All deposits which matured during the year were either repaid or renewed, excepting the deposits from two depositors totaling to Rs. 14,000/- which were not claimed by the depositors, as at 31st March 2011, and has since been paid.

Subsidiary company

1) Egyptian Indian Polyester Company S.A.E (EIPET):

As informed in the last report, the EIPET’s project in Egypt is being set up at Ain Sokhna. The 25th January Revolution of 2011 in Egypt, delayed the signing of the loan agreements. This has resulted in delay in the project start up date. The IFC loan agreement was signed in May’11 and the loan agreements with the Egyptian lenders is expected to be signed shortly. Once the agreements are signed with the Egyptian lenders, the construction will begin at the project site and the same is expected to be completed by June 2013.

All major clearances have been received. As at 31st March 2011, an amount of Rs. 7,951 Lacs has been paid as equity contribution to M/s Egyptian Indian Polyester Company, S.A.E.

2) Dowamara Tea Company Private Ltd. (DTCPL):

As informed earlier, your Company has acquired 100% shares of Dowamara Tea Company Private Limited (DTCPL) in May 2011. Consequently, DTCPL has become a wholly-owned subsidiary of the Company.

Subsidiary Accounts

Ministry of Corporate Affairs has vide its General Circular No: 2 /2011 dated: 8th February 2011, granted general exemption to the companies under Section 212 of the Companies Act, 1956, from attaching the reports and accounts of the subsidiary company, subject to fulfillment of certain conditions, which amongst others include the consent of the Board of Directors for not attaching the annual accounts of the subsidiary. Accordingly, the Board of Directors of the Company, at its meeting held on 24th May 2011, has consented for not attaching the annual accounts of the subsidiary, M/s Egyptian Indian Polyester Company S.A.E., with the accounts of the Company.

Accordingly, the Audited Statements of Accounts, the reports of Board of Directors and Auditors of the subsidiary company have not been annexed. The annual accounts of the subsidiary company and the related detailed information shall be made available to the shareholders of the Company and subsidiary company seeking such information at any point of time. Shareholders who wish to have a hard copy of the full reports and accounts of the subsidiary will be provided the same on receipt of written request from them. These documents will also be available for inspection by any shareholder at the registered office of the Company and that of the subsidiary on any working day during business hours, except on Saturdays.

As required under the listing agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Company’s annual report.

Cost Audit

Your Company is under the purview of Cost Audit as per Section 233B of the Companies Act, 1956 in respect of manufacture of Tea. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company.

Under the provisions of Section 233B of the Companies Act, 1956 the Central Government did not prescribe any cost audit in respect of manufacture of Poly Ethylene Terephthalate (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 were followed, except as specified in Para 4 of Auditors’ Report. Proper explanation relating to material departures, have been clarified in note no. 8 in the notes to accounts (Schedule 18) which is self explanatory;

(ii) That the Directors selected such accounting policies and applied them consistently except as specified in notes to accounts (Schedule 18) and made judgments and estimates that were 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 took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Company’s assets and for preventing and detecting fraud and other irregularities;

(iv)That the Directors prepared the annual accounts on an ‘on- going’ concern basis.

Corporate Governance and Management Discussion and Analysis reports

Corporate Governance and Management Discussion and Analysis Reports are set out as separate annexure to this report.

Corporate Social Responsibility

Your Company is conscious of its social responsibilities and the environment in which it operates. It has continued with its welfare activities for development in the fields of education, culture and other welfare measures and to improve the general standard of living. The emphasis is on improvement of health, development of education, culture and sports.

Your Directors wish to inform that Dhanuka Dhunseri Foundation Trust acts as the vehicle through which the CSR activities of the Company are carried out across the various parts of the country.

The Trust was formed in 1972 for various charitable objectives. It is involved in various philanthropic activities like building schools, colleges and girls hostel, providing free medicines through dispensaries and grants to charitable institutes.

Certifications Petrochem Division

The Petrochem division of the Company holds quality certifications from renowned national and international agencies like the USFDA, EC, Japanese and Canadian Food and Health Bodies and ITRC. The Petrochem Division is ISO 9001:2008, ISO 14001: 2004 and BS OHSAS 18001: 2007 certified.

Further, the implementation of SA 8000 certification in the Petrochem division of the Company is in process and the same is expected to be received by end of July 2011.

Tea Division

The Santi and Dilli tea estates of the Tea division of the Company are ISO 22000:2005 certified. The same will also be implemented in the remaining gardens having existing factories latest by September 2011.

Awards

Your Directors have the pleasure to inform you that the following awards have been received:

Petrochem Division

Award for Best EOU: The Company’s Petrochem division has received the award for the best EOU (Other than MSME: Plastic Products) for outstanding export performance for the year 2008- 09 from Export Promotion Council for EOUs & SEZs, Ministry of Commerce & Industry, Government of India.

Tea Division

Hatijan Tea Estate has surpassed the earlier record and achieved a yield of 3,806 kgs per hect, the highest yield in Assam and is eligible for the Tea Board award for the same.

Human Resources Management & Environment, Health and Safety

Health and safety of all employees has always been a matter of major concern and importance. Your Company continuously strives to ensure that our operations are safe. The Company recognises the importance of managing its environmental impact. These are matters of priority and therefore caring for the environment and responsible disposal of wastes are some of the ongoing initiatives undertaken by the Company.

There has been an unfortunate incidence of fire due to electrical short circuit in the raw material godown, at Haldia plant on 14th March 2011. However, there has been no loss of life in this incident. Raw material and other assets aggregating to Rs. 64.63 crs was lost in the fire. The stocks and other assets are adequately insured and the comprehensive insurance policies are in full force. An appropriate claim has been lodged with M/s United India nsurance Company Ltd, for reimbursement which is under its consideration. The Directors are reasonably certain about the settlement of the claim. Meanwhile, the Company has also taken appropriate steps to avoid such incidents in future.

Share Capital

During the year under review, your Company allotted 2,33,13,859 equity shares of Rs. 10/- each fully paid up to the members of erstwhile South Asian Petrochem Ltd (SAPL), pursuant to the sanction of the scheme of arrangement, comprising interalia amalgamation of South Asian Petrochem Ltd with the Company. Consequently, the share capital of the Company has increased, to comprise of 3,50,24,754 equity shares of Rs. 10/- each.

Utilisation of Proceeds from Preferential Issue

Erstwhile SAPL had made an allotment of equity shares, warrants and FCCBs in 2007-08. Consequently, during the year 2007- 08, erstwhile SAPL raised Rs. 7,416.23 Lacs by preferential allotment of equity shares and equity share warrants and Rs. 7,864 Lacs from the issue of the FCCBs.

The money raised out of such issue was to be utilised for:

i) Equity participation in overseas subsidiaries

ii) Retirement of high cost borrowings

iii) Other business purposes, including working capital requirements

The amount raised by issue of equity shares and equity share warrants have been fully utilised towards equity participation/other expenses in the overseas project in Egypt.

The net outstanding of FCCB proceeds (after meeting issue expenses) as reduced by redemption in 2009-10, is Rs. 2,517.96 Lacs which remains invested as fixed deposit with banks. The said amount will be utilised towards equity participation in the overseas project in Egypt.

Crisil Equities Grading

Your Directors inform that CRISIL Equities vide its press release dated 8th November 2010 has assigned a CRISIL IER fundamental grade of 3/5 (pronounced three on five) to the Company. The grade indicated that the Company's fundamentals were ‘good’, relative to other listed equity securities in India. CRISIL Equities has assigned a valuation grade of 5/5, indicating that the stock has a strong upside as compared to the market price of Rs. 155/- (as on 21st February, 2011). CRISIL’s one-year fair value of the Company’s stock was Rs. 266/-.

Employees

Your Company believes that ‘people’ are the biggest strength for the success of any organisation. Your Directors wish to express their appreciation to all the employees for their valuable contributions, dedication and commitment, as well as their support in attaining the objectives of the Company.

Acknowledgement

The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Deutsche Bank, Development Credit Bank, Export-Import Bank of India, ICICI Bank Limited, IDBI Bank Limited, International Finance Corporation, Washington, Punjab National Bank, State Bank of ndia, State Bank of Travancore, Syndicate Bank, United Bank of ndia, West Bengal Industrial Development Corporation Ltd, Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the Petroleum and Process Industries(ENPPI), Ahli United Bank (Egypt) S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, the customers, suppliers, shareholders and all others associated with the Company.

For and on behalf of the Board of Directors

C. K. Dhanuka Executive Chairman

Place: Kolkata Date: 24th May 2011


Mar 31, 2010

The Directors take pleasure in presenting the ninety-fourth annual report of your Company, together with the audited statement of accounts for the year ended 31st March 2010.

Restructuring

The Scheme of Arrangement between Dhunseri Tea & Industries Limited (DTIL), DI Marketing Limited (DIML), South Asian Petrochem Limited (SAPL) and Dhunseri Polycarbonate Limited (DPL) and their respective shareholders for demerger of Jaipur Packet Factory and Investment Division (Demerged Undertaking) of DTIL to DIML and amalgamation of SAPL and DPL with DTIL was approved by the Honble High Court at Calcutta, by an order passed on 6th May 2010. The appointed date in respect of the Scheme being 1st April 2009, the report and accounts for the year ended 31st March 2010, are inclusive of the figures relating to the merged companies and exclusive of the figures relating to the demerged undertaking.

The Board will allot 2,33,13,859 equity shares of Rs. 10/- each, fully paid-up to the members of erstwhile SAPL after necessary permission from the concerned authorities are received.

The entire share capital of DPL is held by SAPL. Hence, all shares held by SAPL in the share capital of DPL have been cancelled consequent to the amalgamation and, in lieu thereof, no allotment of any new shares shall be made to any person whatsoever.

All existing shares held by the Company in DIML shall stand cancelled upon the new equity shares being issued by DIML to the Companys shareholders as on the record date for demerger shares in terms of the Scheme and until such cancellation shall continue to be held by the Company.

Pursuant to the Scheme of Arrangement, the name of the Company has been changed from Dhunseri Tea & Industries Ltd. to Dhunseri Petrochem & Tea Ltd. Further, the Company has also received the fresh certificate of incorporation in the new name from the Registrar of Companies, West Bengal.

Financial results (Rs. in lacs)

2009-10 2008-09

Turnover and other income 1,20,350 11,830

Profit before interest and depreciation 16,928 2,849

Interest 2,330 426

Profit before depreciation 14,598 2,423

Profit for the year 11,811 2,164

Provision for tax

- Current tax 1,760 252

- Deferred tax 1,143 232

- Fringe benefit tax 3 14

Profit after tax 8,905 1,666

Amount brought forward from previous year 849 976

Balance added pursuant to the Scheme of Arrangement 13,087 -

Amount available for appropriation 22,841 2,642

Appropriation proposed:

Transfer to general reserve 890 1,500

Dividend proposed on equity shares (Current year @ Rs. 4/- per share and previous year 1,401 293 @ Rs. 2.50 per share of Rs. 10/- each)

Tax on dividend 233 -

Balance carried to balance sheet 20,317 849



As mentioned earlier, SAPL merged with the Company w.e.f. 1st April 2009 and as such the figures for the year under review are not comparable with the figures in the previous year.

Dividend

Your Directors recommended a dividend @ Rs. 4/- per equity share of Rs. 10/- each for the year ended 31st March 2010, as against the dividend @ Rs. 2.50 per equity share of Rs. 10/- each for the year ended 31st March 2009, subject to the approval of the shareholders at the ensuing Annual General Meeting.

Performance

Petrochem division

The production of PET resin of erstwhile SAPL decreased from 1,92,655 MT in 2008-09 to 1,68,179 MT in 2009-10. Th production was low owing to reduced availability of raw material. Consequently, the sales quantity of PET resin decreased.

Tea division

Production increased from 98.58 lac kgs to 104.77 lac kgs, the highest ever production achieved by the Company. The sale price increased by Rs.17/- per kg as compared with last year. Revenue increased by 23% i.e from Rs.105.84 crores in 2008-09 to Rs.129.75 crores in 2009-10.

Prospects Petrochem division

We expect that the capacity utilisation in 2010-11 will be better than that of 2009-10, resulting in improved performance. The captive power plant of 8 MW was commissioned in June 2010, and would result in savings in power and fuel costs from 2010- 11. PTA chain conveyer system has been commissioned successfully. Erection work on coal-based HTM heater from Thermax is under progress. Commissioning of this heater is expected in early September 2010, and is expected to further reduce energy cost.

Further, there is a plan to expand the plant capacity in Haldia to 4,10,000 TPA. The process of obtaining necessary clearances from the concerned authorities for the same is under progress. Financial closure is achieved for the project with the approval of ECB of USD 51 million.

Tea division

The crop in Assam was severely affected owing to incessant rain and increased pest activity. However, the Company gardens mitigated the ill effect of adverse climatic conditions to a large extent and were able to minimise crop loss with modern cultivation practices.

A continuing focus on quality yielded favourable results in some gardens; the same process was initiated in other gardens for quality improvement this season.

Barring unforeseen circumstances, the Companys performance for the coming year is expected to be satisfactory.

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

M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion of this Annual General Meeting and, being eligible, offer themselves for reappointment.

Directors

Your Directors wish to inform you that in view of the amalgamation of erstwhile SAPL with the Company, some Directors of erstwhile SAPL were to be inducted on the Board of the Company. Consequently, the Company has made necessary application to the Central Government to increase the number of Directors to 18. The shareholders approval for the same was received through postal ballot, the results of which were declared on 27th May 2010. The approval of the Central Government is pending.

During the year, Mr. Haigreve Khaitan, Mr. Sitaram Daga, Mr. Ashok Kumar Lohia, Mr. Robindra Nath Deogun, Mr. Purushottam Lal Agarwal, Mr. Basudeo Beriwala ceased to be Directors of the Company, consequent to their resignation. The Board of Directors wishes to place on record its sincerest appreciation for the contribution made by the aforesaid Directors during their tenure.

Mr. Y.F. Lombard has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Basudeo Beriwala. Mr. Y.F. Lombard shall hold office till the term Mr. Basudeo Beriwala would have held office, which is expiring at the ensuing Annual General Meeting. Hence, Mr. Y.F. Lombard will retire at this Annual General Meeting by rotation, and being eligible, offer himself for re-appointment. The Board recommends his re-appointment as Director of your Company.

Mr. J.P. Kundra has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Ashok Kumar Lohia. Mr. J.P. Kundra shall hold office till the term Mr. Ashok Kumar Lohia would have held office, which is expiring at the ensuing Annual General Meeting. Hence Mr. J.P. Kundra will retire at this Annual General Meeting by rotation, and being eligible, offer himself for re-appointment. The Board recommends his re-appointment as Director of your Company.

Mr. P.K. Khaitan has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Haigreve Khaitan. Mr. P.K. Khaitan shall hold office till the term Mr. Haigreve Khaitan would have held office, which is expiring at the ensuing Annual General Meeting. Hence, Mr. P.K. Khaitan will retire at this Annual General Meeting by rotation, and being eligible, offer himself for re-appointment. The Board recommends his re-appointment as Director of your Company.

Dr. B. Sen has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Robindra Nath Deogun. Dr. B. Sen shall hold office till the term Mr. Robindra Nath Deogun would have held office.

Mr. Anurag Bagaria has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Purushottam Lal Agarwal. Mr. Anurag Bagaria shall hold office till the term Mr. Purushottam Lal Agarwal would have held office.

Mr. Raj Narain Bhardwaj has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. Sitaram Daga. Mr. Raj Narain Bhardwaj shall hold office till the term Mr. Sitaram Daga would have held office.

Mr. Sanjay Kumar Pai was the Nominee Director of IDBI Bank Ltd., on the Board of erstwhile SAPL. Mr. Sanjay Kumar Pai has been appointed as the Nominee Director of IDBI Bank Ltd on the Board of the Company. Mr. S.K. Pai has been in service and is presently the Chief General Manager in IDBI Bank Ltd.

Mr. C.K. Dhanuka was appointed as the Managing Director and CEO of the Company w.e.f. 1st January 2010, by the Board, subject to the approval of the members at this Annual General Meeting. The Board, at its meeting held on 3rd July 2010 has redesignated, Mr. C.K. Dhanuka as the Executive Chairman w.e.f. 1st July 2010. Your Directors recommend approval of his reappointment as the Executive Chairman of the Company. The particulars required for reappointment as the Executive Chairman are contained in the Notice for the Annual General Meeting.

Mr. M. Dhanuka is proposed to be appointed as the Vice Chairman & Executive Director of the Company w.e.f. 1st July 2010. Your Directors recommend approval of his appointment as the Vice Chairman & Executive Director of the Company. The particulars required for appointment as the Vice Chairman & Executive Director are contained in the Notice for the Annual General Meeting.

Mr. B.K. Biyani is proposed to be appointed as the Executive Director (Corporate) of the Company, liable to retire by rotation, w.e.f. 1st July 2010. Your Directors recommend the approval of his appointment as the Executive Director (Corporate) of the Company, liable to retire by rotation. The particulars required for appointment as the Executive Director (Corporate), liable to retire by rotation are contained in the Notice for the Annual General Meeting of the Company.

Mr. B. Chattopadhyay has been appointed as the Additional Director of your Company w.e.f. 3rd July 2010. Mr. B. Chattopadhyay was the Executive Director & CEO of erstwhile SAPL. Consequent to the amalgamation of SAPL with the Company, Mr. B. Chattopadhyay has been appointed as the Executive Director & CEO of the Company w.e.f. 1st July 2010. In terms of Section 260 of the Companies Act, 1956, he shall hold office only up to the date of this Annual General Meeting. The required notice pursuant to provisions of Section 257 of the Companies Act, 1956, has been received from a member proposing his appointment as a Director. Your Directors feel that Mr. B. Chattopadhyay, with his vast experience, shall contribute significantly to the achievement of the corporate goal of your Company. Your Directors recommend approval of his appointment as the Executive Director & CEO of the Company. The particulars required for appointment as the Executive Director & CEO are contained in the Notice for the Annual General Meeting.

Change in Chief Finance Officer

Mr. R.K. Sharma was the Senior Vice President (Finance) and Chief Finance Officer of erstwhile SAPL. Consequent to the amalgamation of SAPL with the Company, Mr. R.K. Sharma has been appointed as the Senior Vice President (Finance) and Chief Finance Officer of the Company w.e.f. 1st July 2010.

Change in Company Secretary

Mr. K.V. Balan was the Company Secretary and Compliance Officer of erstwhile SAPL. Consequent to the amalgamation of SAPL with the Company, Mr. K.V. Balan has been appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 1st July 2010.

Fixed deposits

The Company has not accepted any deposits from the public. However, the Companies (Acceptance of Deposits) Rules, 1975, were complied with in view of the deposits being accepted from the employees of the Company. There are no overdue/unclaimed deposits as at 31st March 2010.

Associate Company

Madhuting Tea Private Ltd.

Pursuant to the demerger of Jaipur Packet Factory and Investment Division of the Company to DI Marketing Limited (DIML) from 1 April 2009 as part of the Scheme of Arrangement, the Companys investment in Madhuting Tea Private Ltd. has been transferredto DIML. Hence the said Company is no longer an Associate Company.

Subsidiary company

Egyptian Indian Polyester Company S.A.E. (EIPET):

Your Directors inform that, owing to additional cost towards shifting defense equipment and putting up watch towers, as a precondition to Ministry of Defense (MOD) approval, EIPET rejected the proposal and decided to shift the project to another location at Ain Sokhna, where MOD approval, for heights up to 100 m from sea-level, were available. Land Sale Contract (LSC) and Infrastructure Contracts (Infra.C) were signed for 34.84 acres of land at Ain Sokhna. Advance in respect of the same was paid and registration with the Suez Governorate was done. The site was located very near to the Ain Sokhna Port and on the Sokhna Cairo highway. Hence, the Companys Head Office, legal domicile and place for practicing its activity has been shifted from Port Said to Ain-El Sokhna City, the Economic and Industrial Zone, North- West Suez Gulf.

All major clearances, except two matters which are still pending, were received.

The revised project cost as estimated by the Company is USD 160 million which will be funded on a debt-equity ratio of 2:1. In the project, your Company will hold 70% equity.

As at 31st March 2010, an amount of Rs. 1,319 lacs was paid as an advance against equity contribution to M/s Egyptian Indian Polyester Company, S.A.E. Further, an amount of Rs. 183 lacs was paid as an advance towards expenses to M/s Egyptian Indian Polyester Company, S.A.E. In the current year, an additional amount of Rs. 1,355 lacs has been paid towards equity contribution.

The Company applied to the Central Government seeking exemption under Section 212(8) of the Companies Act, 1956, from attaching the reports and accounts of the subsidiary company. The approval for the same is expected to be received shortly. Accordingly, the audited statement of accounts, the reports of the Board of Directors and Auditors of the subsidiary company will not be annexed if such approval is received. Shareholders who wish to have a copy of the full reports and accounts of the subsidiary will be provided the same on receipt of a written request from them. These documents will also be available for inspection by any shareholder at the Registered Office of the Company on any working day during business hours, except on Saturdays.

As required under the Listing Agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Companys annual report.

Promoters holding in the Company

Consequent to the merger of SAPL with the Company, the Promoters holding in the Company will be reduced from 75% to 62.61%.

Cost audit

Your Company is under the purview of cost audit as per Section 233B of the Companies Act, 1956, in respect of manufacture of tea. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company.

Under the provisions of Section 233B of the Companies Act, 1956, the Central Government did not prescribe any cost audit in respect of manufacture of Poly Ethylene Terephthalate (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 responsiblity statement, it is hereby confirmed:

(i) That in the preparation of the annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures, if any

(ii) That the Directors selected such accounting policies and applied them consistently, except as specified in notes to accounts (Schedule 18) and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of state of affairs of the Company at the end of the financial year and profit and loss of the Company for that period.

(iii) That the Directors took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Companys assets and for preventing and detecting fraud and other irregularities

(iv) That the Directors prepared the annual accounts on an ‘on going concern basis

Corporate Governance and Management discussion and analysis reports

Corporate Governance and Management discussion and analysis reports are set out as a separate annexure to this Report.

Corporate social responsibility

Your Company recognises that its operations impact a wide community of stakeholders including investors, employees, customers, business associates and local communities, and that appropriate attention to the fulfillment of its corporate responsibilities can enhance overall performance. In structuring its approach to the various aspects of corporate social responsibility, the Company takes account of guidelines and statements issued by stakeholder representatives and other regulatory bodies.

Certifications

Petrochem division

Erstwhile SAPL received the ISO 9001:2008 accredition by TUV NORD certification body for manufacture and sale of PET resin in international and domestic markets.

Tea division

Implemented ISO-22000: 2005 in Santi and Dilli Tea Estates. Three other gardens namely, Bahipookri, Bettybari and Orang T.Es – earlier covered under ISO: 9000 – are now in the final stage of upgradation to ISO: 22000. Balance gardens will be covered under ISO: 22000 in 2010-11.

Santi and Dilli Tea Estates were the participants in Ethical Tea Partnership Programme during 2009-10.

Awards

Your Directors take pleasure in informing you that the following awards have been received:

Petrochem division

Award for Best EOU

Based on the outstanding export performance of erstwhile SAPL for the year 2007-08, erstwhile SAPL had been given the award of the best EOU (Non SSI Category: Plastic Products) by the Export Promotion Council for EOUs & SEZs, Ministry of Commerce & Industry, Government of India.

Export Award

Erstwhile SAPL had received the second prize for the Export Award for the years 2007-08 and 2008-09 in the product category of plastic polymers by the Plastics Export Promotion Council, Mumbai.

The National Energy Conservation Award

Erstwhile SAPL had been awarded Commendation Certificate for efforts in energy conservation in the petro chemical sector for the year 2009, by the Ministry of Power, New Delhi.

Tea division

Hatijan Tea Estate achieved a yield of 3,585 kg per hect, the highest yield in Assam, and has applied for the Tea Board Award for the same. Khagorijan and Orang Tea Estates got special appreciation from M/s. J.Thomas & Co. Private Limited for having achieved attractive prices of Rs.1,350 per kg for orthodox teas and Rs.158 per kg for CTC teas in the 2009-10 season.

Human resource management and environment, health and safety

Health and safety of all employees remains of paramount importance. Over the past few years, much work has gone into making our operations safer and managing our environment impact.

These are matters of priority and therefore, caring for the environment and responsible disposal of wastes are some of the ongoing initiatives.

Listing information

The equity shares of your Company are presently listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

The unsecured foreign currency convertible bonds (issued by erstwhile SAPL) are listed on the Singapore Exchange Securities Trading Limited (SGX-ST).

Utilisation of proceeds from preferential issue

Erstwhile SAPL had made an allotment of equity shares, warrants and FCCBs in 2007-08. Consequently, during the year 2007- 08, erstwhile SAPL raised Rs. 7,416.23 lacs by preferential allotment of equity shares and equity share warrants and Rs. 7,864.00 lacs from the issue of the FCCBs.

The money raised out of such issue was to be utilised for:

i) Equity participation in overseas subsidiaries

ii) Retirement of high cost borrowings

iii) Other business purposes including working capital requirements

Out of the net proceeds after meeting issue expenses, Rs. 1,502 lacs was utilised as an advance towards equity participation/other expenses in the overseas project in Egypt. In the current year, an additional amount of Rs. 1,355 lacs was paid towards equity contribution in the overseas project in Egypt.

The balance unutilised money remains in bank deposits.

Redemption of foreign currency convertible bonds

Your Directors inform that erstwhile SAPL (since merged with the Company), had allotted 200 zero coupon unsecured foreign currency convertible bonds (FCCBs) of USD 100,000 each for an aggregate amount of USD 20,000,000 (i.e., Rs. 7,864.00 Lacs) in 2007-08. Out of this, FCCBs amounting to USD 12,500,000 have already been bought back at a discount on the face value. Hence, bonds amounting to USD 7,500,000 are outstanding as on date.

Non-exercise of the option for conversion of convertible warrants to equity

Your Directors inform that erstwhile SAPL had issued 1,40,64,273 convertible warrants on preferential basis. The period for exercising the option for the conversion of the aforesaid convertible warrants expired on 19th June 2009. None of the allottees exercised the option for conversion.

Conversion from a 100% Export Oriented Unit (EOU) to a Domestic Tariff Area (DTA) unit

Erstwhile SAPL was a 100% EOU. Owing to better sales realisation in the domestic market, a decision was taken to convert from a 100% export oriented unit (EOU) to a domestic tariff area (DTA) unit. SAPL finally debonded from the 100% EOU scheme from 1st April 2010 (cut-off date for debonding was 16th October 2009) pursuant to the order received from Development Commissioner, Falta Special Economic Zone.

Credit Analysis & Research Ltd (CARE) rating

Your Directors inform that CARE had issued a Credit rating of CARE A to Dhunseri Tea and Industries Ltd., prior to amalgamation.

Further, CARE had issued a Credit rating of CARE A (Is) [Single A (Issuer Rating)] to erstwhile SAPL. At the same time CARE had also issued the short-term debt rating of PR1+ (PR One Plus) for the short-term debt (STD) programme (including Commercial Paper) of erstwhile SAPL for an amount of Rs. 50 crores (increased from Rs. 25 crores earlier) for a maturity up to six months.

Your Directors further wish to inform that these credit ratings were obtained in the name of erstwhile South Asian Petrochem Ltd. and Dhunseri Tea & Industries Ltd., prior to amalgamation and are

valid as on date. However, credit ratings for the merged entity will be obtained.

Employees

People continue to be the centre of your Companys winning strategy. Your Companys employees constitute the core of what we offer to our customers. Your Directors wish to acknowledge the dedication and commitment of all employees, as well as their support and valuable contributions, in achieving and sustaining excellence in all areas of the business.

Acknowledgements

The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Bank of Baroda, Bank of India, Canara Bank, Deutsche Bank, Development Credit Bank, Export-Import Bank of India, ICICI Bank Limited, IDBI Bank Limited, International Finance Corporation, Washington, Punjab National Bank, State Bank of India, State Bank of Travancore, Syndicate Bank, United Bank of India, West Bengal Industrial Development Corporation Ltd., Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the Petroleum and Process Industries(ENPPI), Egypt, the customers, the suppliers, the shareholders and all others associated with the Company.

For and on behalf of the Board of Directors

Place: Kolkata C. K. Dhanuka

Date: 3rd July 2010 Executive Chairman

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