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Notes to Accounts of Insilco Ltd.

Mar 31, 2013

1. Corporate Information

Insilco Limited is a subsidiary of Evonik Degussa GmbH, Germany. The Company is a public company and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company is engaged in the manufacturing and selling of precipitated silica. Insilco produces different grades of precipitated silica, catering to the requirements of customers in different industries.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act,1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to vote. Dividend if declared, then paid in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts.

The distribution will be in proportion to the number of equity shares held by the shareholders.

Having regard to the income tax matters for various years settled/pending before the Income tax department/ appellate authorities, the Company as a matter of prudence in the year ending 31st December 2004, had over and above the provision for taxation made in the books of accounts as was considered appropriate and adequate, set apart Rs. 10,000(''000) as ''Reserve for Taxation''. Based on the management assessment, in the previous year ended March 31, 2012 such separate reserve is not required, therefore same has been transferred back to the surplus in statement of Profit & Loss account.

The Company follows Accounting Standard (AS 22) "Account for taxes on Income", as notified by the Companies Accounting Standard Rules, 2006. Due to carried forward losses, the Company has deferred tax asset on unabsorbed depreciation besides on other components. Since the Company has sufficient timing differences, against which such deferred tax assets can be realised in future, hence the deferred tax asset has been recognized to the extent of deferred tax liabilities.

*Sweep fixed deposits with bank have been considered as part of current account balances with banks.

**Deposit of Rs. 115 (''000) [previous year Rs. 106 (''000)] are under lien on account of debenture interest.

The Company has credit facilities amounting to Rs. 5,000 (''000) from a Bank which includes cash credit, export packing credit, export post shipment credit and bill discounting facilities. This limit is secured by hypothecation of stock of finished goods, work in progress, raw materials and book debts both present and future of the Company on first pari passu charge basis.

3. The Company has calculated the various benefits provided to employees as per Accounting Standard-15 (revised 2005) ''Employee Benefits'' as under:

A. Defined Contribution Plans

a. Provident Fund.

b. Superannuation Fund.

c. Employers Contribution to Employee State Insurance.

d. Employers Contribution to Employees'' Pension Scheme 1995.

During the year, the Company has recognized the following amounts in the Profit and Loss account:

* Included in Contribution to Provident, and other funds under Employee Benefit expenses (Refer note 20) Bl Defined Benefit Plans Employees'' Gratuity Fund:

Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The completion of continuous service of 5 years shall not be applicable for an employee who attains the age of superannuation or normal age of retirement before completion for the continuous service of 5 years. The Company has funded the gratuity liability with Life Insurance Corporation of India (LIC). Rate of return is as given by the insurance company. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Investment details of plan assets:

The Plan assets are maintained with Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

Gratuity:

The Company expects to contribute Rs. 3,201 (''000) to gratuity in next year [31 March 2012 Rs.3,445 (''000)].

C. Other Long Term Employee Benefits

a. Leave Encashment.

Under this plan, employees are entitled to encash their leaves at the time of leaving the service. Upto certain level of employees may encash leaves every year subject to the limits specified.

b. Long Service Award

As per the Company policy, every employee is entitled for Long Service Award. The award is payable upon completion of 10 years & 20 years of continuous service.

c. Compensated Absence

Under this plan every employee is entitled to Sick leave, which can be accumulated up to the limit specified. However the same is not encashable.

4. Leases

(i) The Company has taken its corporate office at Gurgaon under non cancelable operating lease for a period of 3 years. The said lease period will be expiring on 13.06.2013. The Company had the option to get the said lease period renewed and has given a notice to vacate the premises, by giving six months prior notice to the lessor. The Company has not opted for such renewal so there will be no future minimum lease payments for the said Gurgaon office after the said date i.e. 13.06.2013.

(ii) The Company has taken a new corporate office at Noida under operating lease for a period of 9 years. The lease agreement is cancellable at the option of the lessee after the lock-in period of 3 years. Accordingly considered as non cancellable by the management.

The lease rental expense recognized in the profit & loss account for the year in respect of lease transaction is Rs. 5,762 (''000) [previous year Rs. 11,520 (''000)] (refer note 23).

5. Segment Information

Disclosure regarding segment reporting as per Accounting Standard 17 ''Segment Reporting'', issued by The Institute of Chartered Accountants of India, have not been provided since the Company has a single business segment namely Precipitated Silica.

The following table shows the distribution of the Company''s consolidated sales by geographical market, regardless of where the goods were produced:

* The future cash flows on account of the same cannot be determined unless the judgement/ decisions are received from the appropriate forums/parties.

** The company has received notice for demand of Rs. 11,250 (''000) from Nagar Panchayat office, Gajraula for payment of House tax including penalty from the year 1995 to 2013. The company believes that the demand notice of Nagar Panchayat is not tenable in law pursuant to Memorandum of Settlement (MoS) between Town Area Committee/ Nagar Panchayat, Gajraula and Gajraula Industries Association, Gajraula. Nagar Panchyat has contended that the waiver of tax as per MoS is not as per UP Municipal Act 1916. The Company has also obtained legal opinion on the matter, based on legal opinion and MoS, the Company do not anticipate any liability in this regard. Pending resolution of above dispute, demand of Rs. 11,250 (''000) has been disclosed under contingent liability.

The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available with the Company.

6. (i) The plant & machinery on which impairment provision amounting to Rs. 4,598 (''000) was created in earlier years has been disposed off in the current year and the difference between the carrying value and net realizable value has been disclosed in profit on sale of fixed assets.

(ii) Some assets (plant and machinery) were shifted from the Company''s erstwhile plant in Patalganga to Gajraula plant at the time of closure of Patalganga Plant in the financial year ended March 31, 2009. At that time it was not evident whether all of these assets would be successfully used in the expansion project. Accordingly, these assets had been tested for impairment and an impairment provision of Rs. 9,320 (''000) was recorded in the financial year ended March 31, 2010. During the previous year, a significant part of such impaired assets have been utilized in the expansion project. The impairment provision related to these amounting to Rs. 4,722 (''000) had accordingly been reversed and disclosed as an exceptional item in the financial statements during previous financial year ended 31st March 2012.

(iii) An impairment provision of Rs.1,980 (''000) was reported in the financial year ended March 31, 2011 on assets held for sale representing idle plant & machinery. The Company has in the previous year awarded tender for sale of these assets and has reversed impairment provision of Rs. 1,980 (''000) as the expected realizable value is higher than written down value of the asset. This reversal of provision had been disclosed as a part of exceptional items in the financial statements during previous financial year ended 31st March 2012. During the current year, idle plant & machinery has been disposed resulting in profit of Rs. 6,974(''000) disclosed under the head profit on sale of fixed assets.

7. a) The Company had received an advance of Rs.12,500 (''000) against a total contract value of Rs. 13,000 (''000) for the transfer of leasehold rights in residential flats at Patalganga, the transfer of said flats in the name of buyer is still pending. The transfer is subject to necessary approvals from the local authorities. These said assets were fully depreciated and recorded under ''Fixed Assets held for Sale'' in the financial statements at nominal value.

b) During the year Company has transferred Gasifier plant to fixed assets held for sale. The Company had made significant efforts to align Gassifier plant in the production line. However it failed to produce adequate results on a consistent and is not likely to result in desired cost saving. Therefore after a detailed technical evaluation, management has decided to discontinue with its operations and has transferred it to fixed assets held for sale. The difference between the carrying amount of Gassifier plant of Rs. 26,419 (''000) at the year end and net realizable value of Rs. 480 (''000) has been disclosed under note 24 exceptional item of the statement of profit & loss.

8. Previous year comparatives:

The Company has reclassified previous year figures to conform to this year''s classification.


Mar 31, 2012

1. Corporate Information

Insilco Limited is a subsidiary of Evonik Degussa GmbH, Germany. The Company is a public company and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company is engaged in the manufacturing and selling of Precipitated Silica. Insilco produces different grades of Precipitated Silica, catering to the requirements of customers in different industries.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted account- ing principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to vote. Dividend if declared, then paid in indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts.

The distribution will be in proportion to the number of equity shares held by the shareholders.

Having regard to the income tax matters for various years settled/pending before the income tax department/appellate authorities, the Company as a matter of prudence in the year ending 31st December, 2004, had over and above the provision for taxation made in the books of accounts as was considered appropriate and adequate, set apart Rs. 10,000('000) as 'Reserve for Taxation'. Based on the management assessment, now such separate reserve is not required, therefore same has been transferred back to the surplus in statement of profit and loss account.

The Company follows Accounting Standard (AS-22) "Account for taxes on Income", as notified by the Companies Accounting Standard Rules, 2006. Due to carried forward losses, the company has deferred tax asset on unab- sorbed depreciation besides on other components. Since the company has sufficient timing differences, the reversal of which will result in sufficient taxable income against which such deferred tax assets can be realised in future, hence the deferred tax asset has been recognized to the extent of deferred tax liabilities.

*Sweep fixed deposits with bank have been considered as part of current account balances with banks.

**Deposit of Rs. 106 ('000) [previous year Rs. 2,407 ('000)] are under lien on account of debenture interest.

The Company has credit facilities amounting to Rs. 5,000 ('000) from a bank which includes cash credit, export packing credit, export post shipment credit and bill discounting facilities. This limit is secured by hypothecation of stock of finished goods, work in progress, raw materials and book debts both present and future of the Company on first pari passu charge basis.

3. The Company has calculated the various benefits provided to employees as per Accounting Standard-15 (revised 2005) 'Employee Benefits' as under:

A. Defined Contribution Plans

a. Provident Fund

b. Superannuation Fund

c. Employers Contribution to Employee State Insurance

d. Employers Contribution to Employees' Pension Scheme 1995

B. Defined Benefit Plans

Employees' Gratuity Fund:

Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service. The completion of continu- ous service of 5 years shall not be applicable for an employee who attains the age of superannuation or normal age of retirement before completion for the continuous service of 5 years. The Company has funded the gratuity liability with Life Insurance Corporation of India (LIC). Rate of return is as given by the insurance company. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Investment details of plan assets:

The Plan assets are maintained with Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

Gratuity:

The Company expects to contribute Rs. 3,445 ('000) to gratuity in next year [31st March, 2011 - Rs.3,920 ('000)].

C. Other Long Term Employee Benefits

a. Leave Encashment

Under this plan, employees are entitled to encash their leaves at the time of leaving the service. Upto certain level of employees may encash leaves every year subject to the limits specified.

b. Long Service Award

As per the Company policy, every employee is entitled for Long Service Award. The award is payable upon completion of 10 years & 20 years of continuous service.

4. Leases

The Company has taken its corporate office under operating lease for a period of 7 years and 6 months. The lease agreement is cancellable at the option of the lessee after the lock in period of 3 years, accordingly, considered as non cancellable by the management. There is an escalation clause for the increase in lease rent at the end of every 3 years. The Company has also taken a residential accommodation on lease, which is cancellable in nature.

The lease rental expense recognized in the profit & loss account for the year in respect of lease transaction is Rs. 11,520 ('000) [previous year Rs. 9,496 ('000)] (refer note 23).

5. Segment Information

Disclosure regarding segment reporting as per Accounting Standard-17 'Segment Reporting', issued by, The Institute of Chartered Accountants of India, have not been provided since the Company has a single business segment namely, Precipitated Silica and the segment revenue from external customers by geographical area is less than the stipulated percentage requiring disclosure under the aforesaid Accounting Standard in both the current and previous year.

Moreover, there are no assets located outside India, hence no disclosure for geographical segments are required.

6. Contingent Liabilities*

(Rupees in '000)

Sl. Particulars 31-March- 2012 31-March- 2011 No.

a Sales tax/Entry tax claims disputed by the Company relating to 2,644 24,356 issues of applicability and determination

b Income tax claims disputed by the Company relating to issues of 15,601 61,068 applicability and determination pertaining to various assessment years

c Other tax matters disputed by the Company relating to availment of 74 74 CENVAT credit on outdoor catering services

d Adjudication order issued under Foreign Trade (Development & 479,066 - Regulation) Act, 1992, disputed by the Company**

e Show cause notice received under Foreign Trade (Development & Amount not Amount not Regulation) Act, 1992*** as certainable ascertainable

f Other claims against the Company not acknowledged as debts 77 256

Total 497,462 85,754

* The future cash flows on account of the same cannot be determined unless the judgment/ decisions are received from the appropriate forums/parties.

** The Company had imported certain capital goods under Export Promotion Capital Goods (EPCG) Scheme during the Financial Year 1999-2000 under the EXIM Policy 1997-2002 ('Policy'). As per the Scheme, the Company had an export obligation of Rs. 369,660 ('000) to be met by 18th July, 2005. The Company has met the export obligations by the said date, however due to certain reasons, the filings of the evidence of fulfillment of the export obligation was delayed. The Zonal Joint Director General of Foreign Trade passed an adjudication order, for non submission of any evidence in the requisite manner with Bank Certificates/ Documents towards fulfillment of Export Obligation attached with an EPCG license amounting to Rs. 61,610 ('000) dated 19th July, 1999 granted to the Company. Said adjudication order has been issued under Foreign Trade (Development & Regulation) Act, 1992. However, management believes that the said adjudication order is likely to be set aside as the Company had fulfilled the export obligation under the EPCG license and suo-motto submitted the evidence of the completion of the export obligation before the receipt of the above said adjudication order.

*** The Company had made certain imports in earlier years under the advance license dated 24th May, 1994 issued under Foreign Trade (Development & Regulation) Act, 1992. A show cause notice was received from Deputy Director General of Foreign Trade seeking submission of documentation within prescribed time in proof of fulfillment of export obligation attached with an advance license amounting to Rs. 44,086 ('000).

7. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at 31st March, 2012. The disclosure pursuant to the said act is as under:

8. (i) Some assets (plant and machinery) were shifted from the Company's erstwhile plant in Patalganga to Gajraula plant at the time of closure of Patalganga plant in the Financial Year ended 31st March, 2009. At that time it was not evident whether all of these assets would be successfully used in the expansion project. Accordingly, these assets had been tested for impairment and an impairment provision of Rs. 9,320 ('000) was recorded in the Financial Year ended 31st March, 2010. During the year, a significant part of such impaired assets have been utilized in the expansion project. The impairment provision related to these amounting to Rs. 4,722 ('000) has accordingly been reversed and disclosed as an exceptional item in the financial statements.

(ii) An impairment provision of Rs.1,980 ('000) was reported in the Financial Year ended 31st March, 2011 on assets held for sale representing idle plant & machinery. The Company has in the current year awarded tender for sale of these assets and has reversed impairment provision of Rs. 1,980 ('000) as the expected realizable value is higher than written down value of the asset. This reversal of provision has been disclosed as a part of exceptional items in the financial statements.

9. The Company had received an advance of Rs.12,500 ('000) against a total contract value of Rs. 13,000 ('000) for the transfer of leasehold rights in residential flats at Patalganga, the transfer of said flats in the name of buyer is still pending. The transfer is subject to necessary approvals from the local authorities. These said assets were fully depreciated and recorded under 'Fixed Assets held for Sale' in the financial statements at nominal value.

The Company has also received another advance of Rs. 2,250 ('000) against a total contract value of Rs.9,380 ('000) for sale of certain idle plant & machinery relating to Gajraula unit. The said assets have been recorded at its written down value of Rs. 5,827 ('000), which is lower than its realizable value as at 31st March, 2012 have been shown as 'Fixed Assets held for Sale' in the financial statements.

10. Previous year comparatives

Till the year ended 31st March, 2011, the Company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 3131 March, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification.

The figures of previous year were audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates.


Mar 31, 2011

1. Background

Insilco Limited, a subsidiary of Evonik Degussa GmbH, Germany is engaged in the manufacturing and selling of precipitated silica. Insilco produces different grades of precipitated silica, catering to the requirements of customers in rubber and non-rubber industries.

1. Contingent Liabilities

A. (Rs. in 000)

Particulars 31.03.11 31.03.10

Bank guarantee outstanding - 1,000

Disputed tax matters :

(a) Sales tax/Entry tax claims disputed by the Company relating to 24,356 68,211 issues of applicability and determination

(b) Income tax claims disputed by the Company relating to issues of 61,068 63,087 applicability and determination

(c) Other tax matters 74 74

Claim against the Company not acknowledged as debts 256 -

TOTAL 85,754 132,372

B. Show cause notice received from Deputy Director General of Foreign Trade seeking submission of documentation within prescribed time in proof of fulfillment of export obligation attached with an advance license amounting to Rs. 44,086 (000) dated May 24, 1994 granted to the Company. Said show cause notice has been issued under Foreign Trade (Development & Regulation) Act, 1992.

The future cash flows on account of A & B above cannot be determined unless the judgment/ decisions are received from the appropriate forums/parties.

3. Related Party Disclosure

Disclosure of related parties / related party transactions

List of Related Parties

Name of Related Party Relationship

1. RAG-Stiftung Ultimate Holding Company

1. Evonik Industries AG Intermediate Holding Company

1. Evonik Degussa GmbH Holding Company (Formerly known as Degussa GmbH)

1. Evonik Degussa Africa PTY Ltd. Fellow Subsidiaries with whom 2. Evonik Degussa India Pvt. Ltd. the Company has transacted

3. Thai Aerosil

4. Evonik Degussa (China) Co. Ltd.

5. Evonik United Silica Industrial Ltd.

6. Evonik Services GmbH

1. Mr. Matthias Hau, Managing Director Key Management Personnel

4. The Company has credit facilities amounting to Rs. 10,000 (000) from a Bank which includes cash credit, export packing credit, export post shipment credit and bill discounting facilities. This limit is secured by hypothecation of stock of finished goods, work in progress, raw materials and book debts both present and future of the Company on first pari passu charge basis.

5. Having regard to the income tax matters for various years settled/pending before the Income tax department/ appellate authorities, the Company as a matter of prudence in the year ending 31st December 2004, had over and above the provision for taxation made in the books of accounts as was considered appropriate and adequate, set apart Rs. 10,000 (000) as Reserve for Taxation. Based on the management assessment of the pending tax matters, no further transfer to/from the said reserve in the current year is considered necessary.

6. Assets held for sale represents certain idle plant and machinery relating to Gajraula unit having net book value of Rs. 7,227 (000) at the year end. Impairment provision created during the year on these assets amounts to Rs. 1,981 (000).

7. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The Company has amounts due to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at March 31, 2011. The disclosure pursuant to the said act is as under:

11. The Company has calculated the various benefits provided to employees as per Accounting Standard-15 (revised 2005) Employee Benefits as under:

A. Defined Contribution Plans

a. Provident Fund.

b. Superannuation Fund.

B. State Plans

a. Employers Contribution to Employee State Insurance.*

b. Employers Contribution to Employees Pension Scheme 1995.*

*Included in Contribution to Provident, Gratuity and other fund under Personnel expenses (Refer schedule 17)

C. Defined Benefit Plans

a. Employees Gratuity Fund.

b. Leave Encashment.

c. Long Service Award.

Investment details of plan assets:

The Plan assets are maintained with Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

Expected Rate of Return:

The enterprise has funded the liability with Life Insurance Corporation of India (LIC). Rate of return is as given by the Insurance Company.

Gratuity:

The company has paid the contribution for Gratuity on May 20, 2011.

13. Disclosure regarding segment reporting as per Accounting Standard 17 Segement Reporting, issued by The Institute of Chartered Accountants of India, have not been provided since the Company has a single business segment namely Precipitated Silica and the segment revenue from external customers by geographical area is less than the stipulated percentage requiring disclosure under the aforesaid Accounting Standard in both the current and previous year.

14. Previous Year figures have been reclassified and regrouped wherever necessary to confirm to the classifi cation adopted in these accounts.


Mar 31, 2010

1. Background

Insilco Limited, a subsidiary of Evonik Degussa GmbH, Germany is engaged in the manufacturing and selling of precipitated silica. Insilco produces different grades of precipitated silica, catering to the requirements of customers in rubber and non-rubber industries.

2. Diluted earnings per share: For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

3. Provisions and contingencies

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.

1. Contingent Liabilities

(Rs. in 000)

Particulars 31.3.10 31.3.09

Bank guarantee outstanding 1,000 3,101

Show cause notice for shortfall in stamp duty / registration charges (including penalty) - 133,640 on debenture trust deed

Disputed tax matters:

(a) Sales tax/ Value added tax 68,211 55,181

(b) Income tax 63,087 31,939

(c) Other tax matters 74 374

TOTAL 132,372 224,235

2. Segment Information

Geographical segments

The following table shows the distribution of the Companys sales by geographical market, regardless of where the goods were produced:

3. Related Party Disclosure

Disclosure of related parties / related party transactions List of Related Parties

Name of Related Party Relationship

Evonik Industries Ultimate holding company

1. Evonik Degussa GmbH (Formerly known as Degussa GmbH) Holding company

1. Evonik Degussa Africa PTY Ltd. Fellow subsidiaries with

2. Evonik Degussa India Pvt. Ltd. whom the company has

3. Thai Aerosil transacted

4. Evonik Degussa (China) Co. Ltd.

1. Mr. Matthias Hau, Managing Director Key management personnel

2. Dr. Florian Bertram Kirschner resigned as Whole Time Director, w.e.f. May 31, 2009. Non executive director from June 01, 2009 till October 15, 2009.

4. The company has credit facilities amounting to Rs. 10,000(000) from a Bank which includes cash credit, export packing credit, export post shipment credit and bill discounting facilities. This limit is secured by hypothecation of stock of finished goods, work in progress, raw materials and book debts both present and future of the company on first pari passu charge basis.

5. Having regard to the income tax matters for various years settled/pending before the Income tax department/ appellate authorities, the company as a matter of prudence in the year ending 31st December 2004, had over and above the provision for taxation made in the books of accounts as was considered appropriate and adequate, set apart Rs. 10,000(O00) as Reserve for Taxation. Based on the management assessment of the pending tax matters, no further transfer to/from the said reserve in the current year is considered necessary.

6. Assets held for sale represents certain-fixed assets ( primarily land, building and plant and machinery) related to the closed Patalganga plant having net book value of Rs. 55,282 (000) [previous year Rs. 78,097 (000)] at the year end. This is net of impairment provision of Rs. 961 (000) [previous year Rs. 24,956 (000)].

7. The company has at the year end tested for impairment the carrying value of certain assets (mainly representing plant and machinery) transferred from Patalganga to Gajraula plant and accordingly created a provision for impairment amounting to Rs. 9,320 (000).

Provision for impairment created in the past amounting to Rs. 659 (000) relating to certain plant & machinery have been written back during the current year on their disposal.

8. Previous Year figures have been reclassified and regrouped wherever necessary to confirm to the classification adopted in these accounts.