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GULF OIL Corporation Limited

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GULF OIL Corporation LimitedFORTY SIXTH ANNUAL REPORT 2006-2007

Company Secretary S. Subramanian (w.e.f. 25.05.2007)

Deputy Company Secretary A. Satyanarayana

Bankers State Bank of India ICICI Bank LimitedState Bank of Hyderabad Andhra BankOriental Bank of Commerce

Auditors Deloitte Haskins & Sells, Chartered Accountants, Secunderabad

Shah & Co., Chartered Accountants, Mumbai (Branch Auditors)

Registered/Corporate Office KukatpallyHyderabad 500 072Andhra Pradesh

Executive Team

Corporate: S. Subramanian CFO & Company Secretary V.Satish Kumar Sr. GM (Operational Audit)R. G. Herlekar Sr. GM (Corporate Finance)

Lubricants Division: N.C.Sekharan Head-Lubes S.Vishwanathan Sr. G.M. (Filters)N. Chandrasekaran V.P. Finance & Accounts S.Das G.M. (South)R.Varadarajan V.P. (Sales & Marketing)Y.P. Rao V.P. TechnicalAmrish Kathane Sr. GM - Supply Chain

Explosives Division: S. Chakrabarti Chief Operating Officer A.D.Sao GM (Marketing Area - I)B.Sudhakar Sr. GM (Hyderabad Works) A. M. Kazmi GM (Marketing Area - II)

Speciality Dr.M.V.Rao Vice President (Operations)Chemicals Division: M.V.Balakrishnan Sr.GM (Commercial)

Contracts Division: T.T.Das GM-IDLconsult

Committees of the BoardAudit: P.N.Ghatalia, Chairman H.C.Asher Ashok KiniRemuneration: P.N.Ghatalia, Chairman H.C.AsherShare Transfer & Investor Grievance M.S. Ramachandran, Chairman S.Pramanik Vinod K Dasari

Board of Directors(As on 15th June, 2007)

S.G. Hinduja, ChairmanR.P. Hinduja, Vice ChairmanK.N. VenkatasubramanianP. N. GhataliaH.C. AsherVinoo S HindujaM.S.RamachandranAshok Kini

(w.e.f. 27th September, 2006)A.V. DujeanV. Ramesh RaoVinod K Dasari

(w.e.f. 27th September, 2006)S. Pramanik, Managing DirectorA.K.Das, Alternate to S.G.HindujaCamille Nehme, Alternate to A. V. DujeanI.N. Chatterjee

(Effective till 26th July, 2006)

Ten Year Review .............................................................. 00Notice .............................................................................. 00Directors’ Report ............................................................. 00Corporate Governance Report ....................................... 00Shareholders’ Information ............................................... 00

CONTENTSAuditors’ Report .............................................................. 00Balance Sheet ................................................................. 00Profit and Loss Account .................................................. 00Consolidated Balance Sheet .......................................... 00

Consolidated Profit and Loss Accounts .......................... 00


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A TEN YEAR REVIEW

Notes: Sales figure includes Excise Duty

Year 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98

CAPITAL EMPLOYED

Net Fixed Assets 15647.14 11367.26 10560.95 8215.47 7943.98 8024.33 4196.39 4056.82 3986.85 2977.37

Net Working Capital 14451.81 9597.43 8130.11 9837.19 12593.26 17173.69 10046.86 5306.10 4946.58 5016.84

Other Assets 7980.24 5278.71 4839.49 2394.70 984.10 2211.82 1404.98 1718.79 1126.05 1165.41

Total Capital Employed 38079.19 26243.4 23530.55 20447.36 21521.34 27409.84 15648.23 11081.71 10059.48 9159.62

(Rs. in lakhs)

Year 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98

NETWORTH & LOANS

Share holders’s Funds:

Capital 1387.17 1387.17 1387.17 1387.17 1387.17 1387.17 800.17 800.17 800.17 769.80

Reserves 14388.71 13393.06 12221.67 11246.72 10454.43 12943.00 9317.35 4293.93 4007.68 4038.04

Tangiblel Net Worth 14732.06 13779.78 12827.12 12045.21 11841.60 14330.17 10117.52 5094.10 4807.85 4807.84

SecuredLoans 15547.27 8147.69 8243.71 6224.07 7593.02 11206.99 3965.37 5987.61 5251.63 4351.78

No.of.Shareholders

at year end 43790 43480 45893 47605 48945 46969 47393 48380 4125 4109

(Rs. in lakhs)

(Rs. in lakhs)

Year 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98

INCOME & DIVIDENDS

Sales 66865.64 50724.65 47340.47 41551.04 40534.71 25250.68 19569.69 15191.43 14257.44 14682.85

Profit Before Tax 3183.37 2543.43 2215.07 2798.39 1132.93 978.55 6084.32 568.29 557.48 1203.77

Profit After Tax 2300.59 2278.6 2003.07 2290.80 1531.52 769.55 5464.32 508.29 502.48 959.52

Profit After Tax as

Percentage of Sales 3.44% 4.49% 4.23% 5.51% 3.78% 3.05% 27.92% 3.35% 3.52% 6.53%

Earning Per Share

of Rs.10 (Rupees) 16.58 16.43 14.44 16.51 11.04 8.12 68.29 6.35 6.28 12.46

Dividend per fully paid

Equity Share of Rs.10 (Rupees) 7.50 7.00 6.50 6.00 5.00 3.00 5.00 2.50 2.50 2.50

Dividend 1115.38 971.02 901.66 832.30 693.59 416.15 400.09 200.04 192.47 192.45


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NOTICE OF THE FORTY SIXTH ANNUAL GENERAL MEETING

NOTICE is hereby given that the Forty Sixth Annual General Meeting of the Company will be held at 2.30 p.m. on Friday,the 28th day of September, 2007 at The Emerald - I, Hotel Taj Krishna, Banjara Hills, Hyderabad - 500 034 to transact thefollowing:

ORDINARY BUSINESS

1. To consider and adopt the Directors’ Report, the Auditors’ Report, the Balance Sheet as at 31st March 2007 and theProfit and Loss Account for the year ended 31st March 2007.

2. To declare dividend for the financial year ended 31st March 2007.

3. To appoint a Director in place of Mr.A.V.Dujean, who retires by rotation under Article 122 of the Articles of Associationof the Company and is eligible for re-appointment.

4. To appoint a Director in place of Mr.K.N.Venkatasubramanian, who retires by rotation under Article 122 of the Articlesof Association of the Company and is eligible for re-appointment.

5. To appoint a Director in place of Mr. H.C.Asher, who retires by rotation under Article 122 of the Articles of Associationof the Company and is eligible for re-appointment.

6. To consider, and if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution:

“RESOLVED that M/s Deloitte Haskins & Sells, Chartered Accountants, Secunderabad be and are hereby appointedAuditors of the Company from the conclusion of this meeting until the conclusion of the next Annual General Meetingon a remuneration to be negotiated and fixed by the Audit Committee/Board of Directors of the Company in addition toactual out-of-pocket expenses incurred by them for the purpose of audit.”

7. To consider, and if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED that M/s. Shah & Co., Chartered Accountants, Mumbai be and are hereby appointed as Branch Auditorsof the Company for its Lubricants Division at Mumbai from the conclusion of this meeting until the conclusion of thenext Annual General Meeting on a remuneration to be negotiated and fixed by the Audit Committee / Board of Directorsof the Company in addition to actual out-of-pocket expenses incurred by them for the purpose of audit.”

SPECIAL BUSINESS:


“RESOLVED THAT pursuant to the provisions of Section 257 and all other applicable provisions, if any, of the CompaniesAct, 1956, Mr.Ashok Kini, who was appointed as Additional Director of the Company and who, under Section 260 of theCompanies Act, 1956 holds office only upto the date of this Annual General Meeting and being eligible, offers himselffor appointment and in respect of whom the Company has received notice in writing from a Member, pursuant to theprovisions of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Mr. AshokKini for the office of Director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”


“RESOLVED THAT pursuant to the provisions of Section 257 and all other applicable provisions, if any, of the CompaniesAct, 1956, Mr.Vinod K Dasari, who was appointed as Additional Director of the Company and who, under Section 260of the Companies Act, 1956 holds office only upto the date of this Annual General Meeting and being eligible, offers himselffor appointment and in respect of whom the Company has received notice in writing from a Member, pursuant to theprovisions of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Mr. VinodK Dasari for the office of Director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”

10. To consider, and if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of the Listing Agreement and other provisions, if any, as may beapplicable, the Company be and is hereby authorized to make voluntary delisting of the equity shares of the Companyfrom the Hyderabad Stock Exchange Limited, Hyderabad, without giving an exit option to the shareholders of theregion where the said stock exchange is situated.”


“RESOLVED THAT pursuant to the provisions of Section 81(1A) and all other applicable provisions, if any, of theCompanies Act, 1956, the Foreign Exchange Management Act, 1999 (including any statutory modification(s) or re-enactment thereof for the time being in force), and the applicable laws, Rules, Guidelines, Regulations, Notificationsand Circulars, if any, issued by the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), theGovernment of India (GOI), the Foreign Investment Promotion Board (FIPB), and other concerned and relevantauthorities, and other applicable Indian laws, rules and regulations, if any, and relevant provisions of Memorandumand Articles of Association of the Company and the Listing Agreement entered into by the Company with the StockExchanges where the Shares of the Company are listed and subject to such approval(s), consent(s) permission(s)


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and sanctions(s) as may be required from GOI, FIPB, RBI, SEBI and any other appropriate authorities, institutions orbodies, as may be necessary and subject to such conditions as may be prescribed by any of them while granting anysuch approval, consent, permission or sanction which may be agreed by the Board of Directors of the Company (“theBoard”) (which term shall be deemed to include ‘Offering Committee’ or any other Committee constituted or hereafterbe constituted for the time being exercising the powers conferred on the Board by this Resolution), which the Boardbe and is hereby authorized to accept, if it thinks fit in the interest of the Company, the consent and approval of theCompany be and is hereby accorded to the Board to issue Securities (as defined below) by way of a direct issuanceand allotment of Shares in the form of Equities, Shares, Warrants, Bonds or Debentures, Depository Receipts,(whether Global Depository Receipts (GDRs), American Depository Receipts (ADRs) or any other form of DepositoryReceipts), or any other debt instrument either convertible or nonconvertible into Equity Shares whether optionally orotherwise, including Foreign Currency Convertible Bonds (FCCBs), whether expressed in Foreign Currency or IndianRupees (all of which are hereinafter collectively referred to as “Securities”) whether secured or unsecured, andfurther the Board of Directors be and are authorized, subject to applicable laws and regulations, to issue the Securitiesto investors (including but not limited to Foreign Banks, Financial Institutions, Foreign Institutional Investors, QualifiedInstitutional Buyers, Mutual Funds, Companies, other Corporate Bodies, Non- Resident Indians, Foreign Nationalsand other eligible investors as may be decided by the Board (hereinafter referred to as “Investors”) whether or notsuch Investors are members, promoters, directors or their relatives, of the Company by way of one or more private orpublic offerings (and whether in any domestic or international markets), through a public issue(s), private placement(s),Qualified Institutions Placement(s), preferential issue(s) or a combination thereof in such manner and on such termsand conditions as the Board deems appropriate at their absolute discretion. Provided that the issue size shall notexceed US$100 million or Rs.450 crores inclusive of such premium as may be payable on the Equity Shares, at suchtime or times and at such price or prices and in such tranche or tranches as the Board in its absolute discretiondeems fit.

RESOLVED FURTHER THAT without prejudice to the generality of the above, the aforesaid issuance of the Securitiesmay have to be subject to such terms or conditions as are in accordance with prevalent market practices andapplicable Laws and Regulations, including but not limited to, the terms and conditions relating to payment of interest,dividend, premium on redemption, the terms for issue of additional Shares or variations in the price or period ofconversion of Securities into Equity Shares or terms pertaining to voting rights or options for redemption of Securities.

RESOLVED FURTHER THAT the Board be and is hereby authorised to seek, at their absolute discretion, listing ofSecurities issued and allotted in pursuance of this resolution, listed on any Stock Exchanges in India, and/orLuxembourg/London/Nasdaq/New York Stock Exchanges and/or any other Overseas Stock Exchanges.

RESOLVED FURTHER THAT the Board be and is hereby authorised to issue and allot such number of EquityShares as may be required to be issued and allotted upon conversion of any Securities referred above as may benecessary in accordance with the terms of offering, and that the Equity Shares so allotted shall rank in all respectspari passu with the existing Equity Shares of the Company.

RESOLVED FURTHER THAT subject to the approvals stated above, the Company be also permitted to retainoversubscription upto 25% of the amount issued and the Board of Directors or Committee of Directors constituted forthe purpose be authorised to decide the quantum of oversubscription to be retained.

RESOLVED FURTHER THAT the Board of Directors be and are hereby authorised to do all such acts, deeds,matters and changes as it may at its discretion deem necessary or desirable for such purpose including, if necessary,creation of such mortgages and/or charges in respect of the Securities on the whole or any part of the undertakingof the Company under Section 293(1)(a) of the Companies Act, 1956 and to execute such documents or writing asthey may consider necessary or proper and incidental to this Resolution.

“RESOLVED FURTHER THAT the Board of Directors or any Committee thereof be and is hereby authorised to do allsuch acts, deeds, matters and things as it may at its discretion deem necessary, expedient or desirable for suchpurpose including without limitation to the utilization of issue proceeds, finalizing the pricing, terms and conditionsrelating to the issue of aforesaid Securities including amendments or modifications thereto as may be deemed fit bythem, to sign, execute and issue consolidated receipt/s for the Securities, listing application, various agreementssuch as Subscription Agreement, Depository Agreement, Trustee Agreement, undertakings, deeds, declarations,Letters and all other documents and to do all such acts, deeds, matters and things, and to comply with all theformalities as may be required in connection with and incidental to the aforesaid offering of Securities, including butnot limited to the post issue formalities and with power on behalf of the Company to settle any question, difficulties ordoubts that may arise in regard to any such issue or allotment of the Securities as it may in its absolute discretiondeem fit.

“RESOLVED FURTHER THAT the Board of Directors or any Committee thereof be and are hereby authorized toenter into and execute all such arrangements/agreements as may be required for appointing Managers (includingLead Managers), Merchant Bankers, Underwriters, Financial and/or Legal Advisors, Tax Advisors, Consultants,Depositories, Custodians, Principal Paying/Transfer/Conversion agents, Listing Agents, Registrars, Trustees and all


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such agencies as may be involved or concerned in such offerings of Securities, whether in India or abroad, and toremunerate all such agencies including the payment of commissions, brokerage, fees or the likes, and also to seekthe listing of such Securities or Securities representing the same in one or more stock exchanges whether in India oroutside India, as may be required by applicable laws.”


“RESOLVED THAT pursuant to the provisions of Section 293(1)(a) and all other applicable provisions, if any, of theCompanies Act, 1956, consent of the Company be and is hereby accorded to the Board of Directors of the Company(which term shall include any duly constituted committee of directors thereof) for mortgaging and/or charging on suchterms and conditions for borrowing upto Rs.1000 crores (Rupees one thousand crores) at such time or times andfrom time to time and in such form or manner, as they may think fit, the whole or substantially the whole of theCompany’s any one or more of the undertakings including the present and/or future properties, whether moveable orimmoveable comprised in any or new undertaking(s) of the Company as the case may be, in favour of financialinstitutions, corporations, banks, mutual funds, government / other agencies or any other person(s), entities whichgive, provide or extend loans to the Company or in favour of trustees of such lenders to secure the said amount ofloans / debentures together with interest thereon, commitment charges, liquidated damages, premia on redemptions,trustee remuneration, costs, charges, expenses and all other moneys payable under the agreement(s)/arrangement(s)entered into/to be entered into by the Company in respect of the said loans as the Board may deem fit in the bestinterests of the Company."


“RESOLVED THAT in addition to sitting fees, there shall be paid to such directors who are neither in whole-timeemployment of the company nor the Managing Director and whose remuneration does not include anything by way ofmonthly payment, commission on net profits of the company for the year 31st March, 2008 and four years thereafter, tothe extent permitted under the provisions of Section 309 and other applicable provisions, if any, computed in themanner referred to in Section 198 of the Companies Act, 1956, to be distributed amongst such Directors in the manneras may be decided by the Board of Directors from time to time.”

14. To consider and, if thought fit, to pass with or without modification, the following Resolution as a Special Resolution:

“RESOLVED pursuant to Section 94(1)(d) and all other applicable provisions of the Companies Act, 1956, that eachof 2,50,00,000 equity shares of Rs. 10/- each of the Company be and are hereby sub-divided into 5 equity shares ofRs. 2/- each.

RESOLVED FURTHER THAT Clause V of the Memorandum of Association of the Company be and is hereby alteredto read as follows:

“The Share Capital of the Company shall be Rs. 25,00,00,000/- divided into 12,50,00,000 Equity shares of Rs. 2/-each, subject to the provisions of the Companies Act, 1956 with the rights, privileges and conditions attachingthereto, as are provided by the Articles of Association of the Company for the time being, with power to the Board ofDirectors to divide the shares in the Capital for the time being into several classes and to attach thereto respectivelysuch preferential, qualified or special rights, privileges or conditions as may be determined by or in accordance withthe Articles of Association of the Company for the time being and to vary, modify or abrogate any such rights,privileges or conditions in such manner as may be permitted by the Companies Act, 1956 or provided by the Articlesof Association of the Company for the time being.”

FURTHER RESOLVED THAT Article 3 of the Articles of Association of the Company be and is hereby altered toread as follows:

“The Share Capital of the Company consists of Rs. 25,00,00,000/- (Rupees Twenty Five crores) divided into12,50,00,000 (Twelve crore Fifty lakh) Equity shares of Rs. 2/- each.”

FURTHER RESOLVED THAT the Board of Directors of the Company be and is hereby authorized, in respect ofphysical shares, to issue new Share Certificates in lieu of the existing Share Certificates, in the aforesaid proportionsubject to the Rules as laid down in the Companies (Issue of Share Certificates) Rules, 1960 and the Articles ofAssociation of the Company.

FURTHER RESOLVED THAT the Board of Directors of the Company be and is hereby authorised, in respect ofdemat shares, to sub-divide the existing shares in the aforesaid proportion in consultation with the respectiveDepositories.

FURTHER RESOLVED THAT the Board of Directors of the Company be and is hereby authorized to do all such actsand deeds as may be necessary to give effect to the aforesaid Resolution.”The Board recommends this resolution for your approval.”

By Order of the Board

S.SubramanianHYDERABAD Chief Financial Officer &17th August, 2007 Company Secretary


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Notes:

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELFAND A PROXY NEED NOT BE A MEMBER.

Proxies, in order to be effective, should be duly stamped, completed, signed and deposited at the Registered Office of the Company notless than 48 hours before the meeting.

2. An Explanatory Statement pursuant to Section 173 of the Companies Act, 1956, relating to the Special Business to be transacted at themeeting is annexed hereto.

3. The Register of Members and Share Transfer Books will be closed from 18th September, 2007 to 28th September,2007 (both days inclusive) in connection with the ensuing Annual General Meeting and the payment of Dividend.

4. Dividend recommended by the Board and approved by the Members at the AGM, will be paid on or before October 27, 2007. In respect ofshares held in physical form, the dividend will be payable to those members whose names appear on the Register of Members on September28, 2007. In respect of shares held in electronic form, dividend will be payable to beneficial owners of the shares as on September 28, 2007as per details furnished by the Depositories for this purpose.

5. In terms of Sections 205A and 205C of the Companies Act, 1956, the amount of dividend remaining unpaid or unclaimed for a period ofseven years from the date of transfer to the unpaid dividend account, is required to be transferred to the Investor Education and ProtectionFund. Accordingly, in the year 2007-08, the Company would be transferring the unclaimed dividend for the year 1999-2000 to the InvestorEducation and Protection Fund. Members who have not encashed their dividend warrant for the year ended March 31, 2000 or thereafterare requested to write to the Company/Registrars and Share Transfer Agents.

6. Members holding shares in dematerialized mode are requested to instruct their respective Depository Participants regarding Bank Accountsin which they wish to receive the dividend. However, the Bank details as furnished by the respective Depositories to your Company will be usedfor the purpose of distribution of dividend through Electronic Clearing Service (ECS) as directed by the Stock Exchanges. Your Company/Registrar and Share Transfer Agents will not act on any direct request from Members holding shares in dematerialized form for change/deletionof such Bank details.

7. Members holding shares in physical form are requested to inform the Company of any change in their addresses immediately for futurecommunication at their correct addresses and Members holding shares in demat form are requested to notify to their Depository Participants.

8. Members holding shares in identical order of names in more than one folio are requested to write to the Company’s Share Transfer Agentsto enable them to consolidate their holdings into one folio.

9. As required under Clause 49 of the Listing Agreement, brief information of Directors, being appointed/reappointed, is given in theDirectors’ Report.

10. Members requiring any clarification/information on any report/statement, are requested to send their queries to the Registered Office of theCompany, at least 10 days before the date of the AGM.


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ANNEXURE TO THE NOTICEExplanatory Statement pursuant to Section 173(2) of the Companies Act, 1956.

Item No.8

The Board had appointed Mr.Ashok Kini as an Additional Director on the Board, on 27th September 2006. Pursuant toSection 260 of the Companies Act, 1956, Mr.Ashok Kini ceases to be a Director at this Annual General Meeting.

A notice has been received along with the requisite deposit from a Member signifying his intention to propose Mr.AshokKini as a Director of the Company. Mr.Ashok Kini graduated from Mysore University in 1965 majoring in Science andobtained a Master’s degree in English Literature from Madras Christian College, Chennai before joining State Bank ofIndia (SBI) as Probationary Officer in 1967 and reached the position of Managing Director (National Banking).

During his career with the SBI, Mr.Ashok Kini was responsible for the Bank’s IT plans, from concept and RFP to executionand vendor management, domestic distribution, retail business, consumer banking, marketing/brand management, etc.He had also implemented various projects including core banking, asset-liability management, ATMs, Intranet, IT securitypolicy, trade finance, corporate network, internet banking, corporate mail, data center.

No Director of the Company, except Mr.Ashok Kini, is interested in the resolution.

The Board recommends this Resolution for your approval.

Item No.9

The Board had appointed Mr.Vinod K Dasari as an Additional Director on the Board, on 27th September 2006. Pursuant toSection 260 of the Companies Act, 1956, Mr. Vinod K Dasari ceases to be a Director at this Annual General Meeting.

A notice has been received along with the requisite deposit from a Member signifying his intention to propose Mr.Vinod KDasari as a Director of the Company. Mr. Vinod K Dasari is Chief Operating Officer of Ashok Leyland Ltd., headingmanufacturing, domestic marketing, strategic sourcing and corporate quality engineering divisions.

Mr.Vinod K Dasari commenced his career with General Electric Company in 1986 and worked for companies such asTimken USA, Timken India, Cummins India Limited and is credited with bringing about significant changes in theseorganizations and leading them into profitability after a period of sustained losses.

No Director of the Company, except Mr.Vinod K Dasari, is interested in the resolution.

The Board recommends this resolution for your approval.

Your Directors are of the opinion that the Company will greatly benefit from the association of Mr. Ashok Kini and Mr. VinodK. Dasari on the Board and it would be in the interest of the Company to continue to have them on the Board and accordinglyrecommend the acceptance of the Resolutions set out in the Notice convening the meeting.

Item No.10

The Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 provide for delisting of securities ofa body corporate voluntarily.

At present, the equity shares of the Company are listed on the Bombay Stock Exchange Limited and the Hyderabad StockExchange Limited and can be settled only in demat form for the trades carried on the stock exchanges.

With the extensive network of BSE, investors have access to online trading in equity shares of the Company across thecountry. Further, not many trades in the equity shares of the Company were recorded on the Hyderabad Stock ExchangeLtd. during the last few years.

Accordingly, it is proposed to delist the Company’s equity shares from the Hyderabad Stock Exchange Ltd. Consent of themembers is being sought by a Special Resolution to authorize delisting. The proposed delisting, as and when takes place,will not affect the investors adversely. The Company’s equity shares will continue to be listed on the Bombay StockExchange.

The Company has no intention to give an exit option to those shareholders of the region where the Hyderabad StockExchange is situated, from which delisting is sought.

No Director of the Company, is interested in the resolution.


Item No.11

With a view to augment long term financial resources of the Company and to meet costs in connection with the expansion,diversification projects and other permissible uses, it is proposed to raise an amount not exceeding US$ 100 millions orRs.450 crores through issue of Foreign Currency Convertible Bonds (FCCBs) and / or American Depository Receipts(ADRs) or Global Depository Receipts (GDRs) and/or Qualified Institutions Placement and/or any other suitable financialinstruments as contained in the Resolution.


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The salient features are mentioned in the resolution and will be issued on such terms and conditions as may be appropriateat the time of issue.

The FCCBs/ADRs/GDRs/any other financial instruments including Qualified Institutions Placement, would be listed on theLondon and/or any other Stock Exchange within or outside India.

The Special Resolution gives adequate flexibility and discretion to the Board to finalise the terms of the issue in consultationwith the lead managers, underwriters, legal advisers and experts or such other authorities as need to be consulted includingin relation to the pricing of the issue.

The consent of the shareholders, is therefore, sought to authorise the Board of Directors as set out in the Resolution toissue in one or more tranches, the securities referred to therein in the international market to Foreign Financial Institutions,to Foreign Investors/Collaborators/Companies and/or to Foreign Investment Institutions operating in India, whethershareholders of the Company or not, through a public issue or private placement basis and/or preferential basis or QualifiedInstitutions Placement.

None of the Directors is as such concerned or interested in the resolution.


Item No.12

For the purpose of effective utilisation of the borrowing powers upto Rs.1000 crores approved in the AGM held on 1st

August, 2005 and considering that projects are under finalisation, it may be necessary to pass an enabling resolution tomortgage and/or charge the properties of the Company in favour of the Banks and/or Financial Institutions, etc. for securingthe requisite finance upto the said amount.

Since mortgaging and/or charging of the assets, properties and/or undertakings of the Company may be regarded asdisposal thereof, consent of the Members of the Company is necessary under Section 293 (1)(a) of the Companies Act1956.

No Director of the Company, is interested in the resolution.


Item No. 13

The Company has been paying commission out of net profits to the Directors who are neither in the whole-time employmentof the Company nor the Managing Director and whose remuneration does not include anything by way of monthly paymentnor commission out of net profits of the Company. The Company proposes to continue the payment of this remunerationat a rate as may be decided by the Board of Directors in accordance with the applicable percentages under the lawprevailing from time to time under Section 309, for a further period of five years, commencing from the accounting year ofthe Company from 1st April, 2007.

All Directors of the Company except Mr Subhas S Pramanik, Managing Director, are interested in the resolution.


Item No.14

The present Authorised Share Capital of the Company is Rs.25.00 crores consisting of 2,50,00,000 Equity Shares ofRs.10/- each and the Issued and Paid-up Capital is Rs.14,87,17,470 consisting of 1,48,71,747 Equity Shares of Rs.10/-each.

The market price of the equity shares of the Company has appreciated considerably over the last 5 years. In order tomake the shares of the Company, affordable for small shareholders, the Board of Directors of the Company vide itsResolution passed at its Meeting held on 17th August 2007, has recommended to sub-divide the equity shares of theCompany from the present face value of Rs.10/- each to Rs.2/- each. Consequently, the number of shares will increasefrom the present 1,48,71,747 Equity Shares of Rs.10/- each to 7,43,58,735 Equity Shares of Rs.2/- each. However, thetotal paid-up capital of the Company would remain the same. The Resolution, if passed, will have the effect of entitling theholders of Equity Shares, to receive five Equity Shares of Rs.2/- each against every Equity Share held.

None of the Directors of the Company is interested in this Resolution, except to the extent of their shareholding in theCompany.

The Board recommends this Resolution for your approval.”

By Order of the Board

Hyderabad, S.Subramanian17th August, 2007. Chief Financial Officer &

Company Secretary


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REPORT OF THE BOARD OF DIRECTORS AND MANAGEMENT DISCUSSION AND ANALYSISTO SHAREHOLDERS FOR THE YEAR ENDED 31ST MARCH, 2007

Your Directors have pleasure in presenting their Forty Sixth Annual Report and Audited Accounts for the year ended 31stMarch 2007.

1. FINANCIAL RESULTS

2006-07 2005-06

Rupees Lakhs Rupees Lakhs

Profit after providing for Depreciation of Rs. 1002.14 lakhs

(Rs.701.57 lakhs) and before extraordinary items and taxation 3645.69 2887.78

Extraordinary Items:

Compensation under Voluntary Retirement Scheme 462.32 344.35

Profit Before Taxation 3183.37 2543.43

Taxation:

Current 354.00 135.00

Tax provision of earlier years written back (59.32)

Deferred 468.00 20.00

FBT 120.10 109.83

Profit After Taxation 2300.59 2278.60

Balance brought forward from previous year 3108.07 2436.68

Balance available for appropriation 5408.66 4715.28

Appropriations:

Proposed Dividend 1115.38 971.02

Provision for additional tax on proposed dividend 189.56 136.19

Transfer to General Reserve 250.00 500.00

Balance carried to Balance Sheet 3853.72 3108.07

EPS 16.58 16.43

2. DIVIDEND

The Directors recommend the payment of Dividend of Rs. 7.50 Per share ( Rs. 7.00 per share ) on the paid up capitalof the Company. The dividend of Rs. 11.16 crores ( Rs. 9.71 crores ), if approved by the Shareholders at theForty-sixth Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of theCompany whose names appear on the Register of Members as on date of Book Closure.

The Company has allotted 10,00,000 equity shares subsequent to the date of the balance sheet on conversion ofwarrants allotted in the year 2005 to persons other than promoters on preferential basis. As per the applicable regulations,these additional shares rank pari passu, in all respects, with the existing shares of the Company. Hence, the proposeddividend of Rs. 11.16 crores includes dividend on the additional shares

3. OPERATIONS

The total revenue of the Company increased to Rs. 668.66 crores ( Rs. 507.25 crores ). The profit before extraordinaryitems and taxation was Rs. 36.46 crores ( Rs. 28.88 crores ). The profit before tax was Rs. 31.83 crores ( Rs. 25.43crores ) after making a higher provision for VRS spend in the current year. The profit after the provision of tax ofRs. 2.95 crores, Fringe Benefit Tax of Rs. 1.20 crores and deferred tax of Rs. 4.68 crores, was Rs. 23.01 crores ( Rs.22.79 crores ) resulting in an EPS of Rs. 16.58 for the year ( Rs.16.43 ).


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DIVISIONAL PERFORMANCE

3.1 Business Operations

3.2 Industrial Explosives

The Explosives Division is the leading manufacturer of a full range of commercial explosives and blastingaccessories for mining, infrastructure, space, defence and special applications. The Division manufactures smalland large diameter cartridge slurry explosives, pumpable emulsion explosives, detonators of various types, PETN,detonating fuse of varying core loads, special application initiating devices and pyrotechnic products besidesmetal clads.

The turnover of the Division for the year was Rs. 168.31 crores ( Rs.147.87 crores ) representing a growth of 14%in spite of drastic reduction in orders for the year from Coal India Limited ( CIL ), a major customer of theCompany. The business continued to witness intense competition and prices remained unremunerative for explosiveproducts for the second year in succession.

The Division has restructured its total business mix to achieve the above growth through specific strategies inexpanding non-CIL, defence and metal cladding segments. It has further expanded the bulk explosives businessin the iron ore sector by entering into more intense servicing in certain targeted mining regions.

The electronic detonator ( e-Det ) was evaluated by several discerning customers and the response for changeoverto more precise and accurate blast performance, especially in critical sites close to habitats, has been extremelyencouraging.

The Company is one of the few and leading companies in the world offering EXPLOBOND ( GOCL registeredtrade mark ) clad products for over two decades to the chemical equipment and metal processing in industriesand has recorded constant growth every year. The group posted a turnover of Rs. 7.07 crores ( Rs.6.04 crores )representing a growth of 17%.

The Special Product Group, engaged in manufacturing of special purpose products for space and defenceapplications, executed several prestigious orders meeting the stringent “six-sigma” criteria. The Group has posteda turnover of Rs. 4.71crores ( Rs.2.75 crores ) representing a growth of 71%.

3.3 Mining & Infrastructure (IDLconsult)

The turnover of the Division was Rs 64 cr (Rs 72 cr). The reduction in revenue is due to the Koyagudem projectbeing completed in the middle of the year and three new projects at Manuguru ( for SCCL ), Dudhichua ( for NCLa Coal India subsidiary ) and Donimalai ( for NMDC ) started only at the end of the F 2007.

The Division is growing as per plan and bagged prestigious mining services orders in the coal sector from largemining companies such as Coal India Ltd., Singareni Colleries Co. Ltd., National Mineral Development CorporationLtd. Due to the excellent execution of projects in the iron ore sector, the Company has been able to expand itsoperations to 5 other iron ore mining organisations in Orissa and Jharkhand offering mining services, includingcrushing and screening services.

Besides total mining services, the Division has taken up a few assignments with plans to increase business in thefast growing infrastructure sector based on the successful execution of contract in the Delhi Metro Rail Project.Currently, it has taken up work for Reliance at Jamnagar under its plant expansion program and some structuralworks in the Outer Ring Road of Hyderabad.

3.4 Lubricants

The automotive industry continued to grow during the year 2006-07 with the Commercial Vehicle segment registeringan impressive growth rate. This helped Lubricants Division to realize higher volumes from its key business segmentof Diesel Engine Oils and 4-stroke motorcycle oils.

During the year, the Lubricants Division had embarked on the twin strategies of growing its top-end Diesel EngineOils and obtaining a strong foothold in the Motorcycle Oils segment. A number of new products, which wereintroduced during the year such as the Ashok Leyland-Gulf Oil co-branded oils and Gulf Pride 4T Plus foundexcellent response from the customers. The Division undertook new initiatives in the retail channel resulting in


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substantial expansion of its retail network. In order to further strengthen the Gulf brand, the Division initiated anintensive advertising campaign on television during the ICC World Cup.

The Lubricants Division, in association with Ashok Leyland, launched the country’s first long drain engine oil witha drain period of 36,000 Kms. This trend-setting initiative is expected to produce significant savings in vehicleoperating costs for users and also contribute to environment protection by way of reducing used oil generation.During the year, the Division was able to achieve wide customer acceptance for this new product through variousmarketing initiatives. This helped in enhancing the value of the brand in the heavy duty commercial vehiclesegment.

The Lubricants Division continued to focus on the top-end Diesel Engine Oils, thereby gaining new business offactory fill and service fill from MNC vehicle manufacturers.

Continuing from the previous year, cost of base oils were on the increase till the last quarter of the year. Despitethese significant increases in the cost of base oils and other chemical inputs, the Division was able to effect timelyprice revisions, thereby maintaining the Gross Margins.

Gulf Car Care Product ( CCP ) line continued to grow with the expansion of conventional retail outlets andshopping malls. During the year, the Division entered into an agreement with Indian Oil Corporation Ltd formarketing these products through their retail outlets.

Gulf Filters product line witnessed another year of spectacular growth. A number of new products were introducedand the distribution network expanded during the year.

3.5 Speciality Chemicals

The API plant has been commissioned after carrying out the necessary qualifications for design and installation.Approval from Andhra Pradesh Pollution Control Board was obtained in May, 2006 and commercial productionstarted in June 2006. The API product range includes anti-histamines, cardiovascular, anti-depressants andcephalosporins.

The manufacturing facilities have been inspected and approved by customers both by Indian based MNCs and afew others from the non-regulated markets.

Six Drug Master Files have been prepared and submitted to customers in India and Europe.

3.6 Other Business Groups

The 4 Wind Mills ( 1 MW ) located at Ramagiri in Andhra Pradesh generated 8,82,700 units ( 6,87,400 units ).The Hyderabad factory received the benefit of the generation through the APTRANSCO grid.

3.7 Exports

The Explosives Division exported explosives and accessories to several countries in South East Asia, Gulf andthe Middle East totaling Rs. 16.25 crores ( Rs. 14.74 ) representing a record growth of 10% during the year underreview.

API exports to unregulated markets were Rs. 4.54 crores.

The Lubricants Division exported more value added products of Rs. 18.12 crores ( Rs. 17.20 crores ) to UAE,Philippines, Sierra Leone, Middle East and Africa.

3.8 Property Development

The Company owns several large properties in Bangalore, Hyderabad, and Rourkela and other properties suchas in Begumpet ( Hyderabad ), Malleswaram ( Bangalore ) and Safdarjung Enclave ( New Delhi ) which aresmaller in size but located in fast growing areas. In order to gain a decent development size which would warrantan organised management structure for development, it was decided to give these development rights to asubsidiary of the Company and induct an investor with expertise in property development as a partner. Accordingly,the development rights for the three smaller properties at Begumpet, Malleswaram and Safdarjung Enclave weretransferred during the year to a subsidiary company IDL Arom International Limited, as a focal point for development.Subsequently, on January 1, 2007, 51% of the shareholding of the subsidiary Company has been transferred toa partner Company having the requisite management structure and expertise in handling such propertydevelopment. The approvals for the Begumpet property have been received and the other properties will now behandled by IDL Arom International Limited as an Associate Company.

The larger properties are being dealt directly by your Company with prospective Developers. Option Agreementshave been entered into and development plans will be taking shape during 2007 – 08.


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4. INTERNAL CONTROL SYSTEMS

Your Company’s organizational structure with established authority limits, corporate policies and reporting mechanismssupport the maintenance of strong internal control systems. The Company has a proper and adequate system ofinternal control to ensure that all assets are safeguarded and protected against any loss from unauthorized use ordisposition and that; transactions are authorized, recorded and reported correctly.

Internal controls are evaluated on an ongoing basis by the Internal Audit Department and the Audit Committee basedon reviews at the Audit Committee meetings. Internal Auditors also report on the implementation of recommendationswhich cover all manufacturing and office locations. The scope of internal audit includes internal controls on accountingand for efficiency and economy of operations besides evaluation of systems and procedures.

The Audit Committee consisting of Independent Directors regularly reviews and provides guidance where necessaryon all operational, financial and corporate compliance matters including adequacy of internal controls.

5. FIXED DEPOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2007 amounted to Rs. 470.79 lakhs( Rs. 667.79 lakhs ). At the end of 31st March 2007, 93 deposits amounting to Rs.96.55 lakhs ( Rs. 95.88 lakhs ),which had matured, remained unclaimed. The Company has given intimation to the deposit holders concerned aboutthe maturity of their deposits.

During the year, matured deposits amounting to Rs.17,211 remaining unclaimed for a period of 7 years were transferredto the Investor Education and Protection Fund of the Central Government, under Section 205 C of the Companies Act,1956.

6. TAXATION

Orissa Sales Tax

During the year under review, there was not much progress in the SLP filed in the Supreme Court regarding the OrissaSales Tax case. Counter-statement in the matter from the State of Orissa was awaited.

Deferred Tax Asset

The auditors in their report have mentioned that they were unable to take a view in the absence of sufficient taxableprofit, the appropriateness of carrying deferred tax asset of Rs. 993 lakhs. Management is confident that the Companywill make sufficient profits to absorb the deferred tax asset over the next few years.

7. RESEARCH & DEVELOPMENT

The Explosives Division along with its R&D has launched two versions of the electronic detonators ‘e-Det’ and fieldtrials of both have been successfully completed. The Division has introduced e-Det in Singareni Collieries and inBharat Coking Coal Limited, a Coal India subsidiary, besides other private sector customers in the coal and cementindustries. Development work on catridged emulsion explosives culminated in the receipt of orders from the trademarket and is experiencing good demand.

Laboratory processes have been developed for three cephalosporins, anti-Parkinson’s and anti-epileptic molecules.Plant level trials have been planned in the next year. Further developmental work is in progress on Cephalosporin andCardiovascular molecules.

The Center at Silvassa continued studies and development of specialized lubricants and greases and to meet emergingneeds for environmental friendly norms, besides cost performance.

8. SUBSIDIARIES

IDL Agro Chemicals Limited incurred a loss of Rs. 13.58 lakhs ( against a loss of Rs. 79.50 lakhs).

IDL Buildware Limited, formerly known as IDL Finance Limited incurred a loss of Rs. 82.09 lakhs. ( loss of Rs. 97.39lakhs)

Gulf Carassorie Limited reported a profit of Rs. 1.12 lakhs ( loss of Rs.0.36 lakhs )

Gulf Oil Bangladesh Limited incurred a loss of Rs.13.39 lakhs ( loss of Rs.48.17 lakhs ).

PT. Gulf Oil Lubricants Indonesia incurred a loss of Rs. 120.33 lakhs ( loss of Rs.143.29 lakhs)

The Auditors in their Report on Consolidated Financial Statements, have commented on the recoverability of debtsamounting to Rs. 111.85 lakhs in certain subsidiary companies. Management of the respective subsidiaries haveinitiated appropriate legal proceedings for recovery.


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9. HUMAN RESOURCES / INDUSTRIAL RELATIONS

The total number of employees of the Company was 1784 across all its four major Divisions and industrial relationscontinue to be cordial.

Explosives Division, Hyderabad Works has achieved 1.8 million accident free man-hours without any reportable ornon-reportable accidents. In recognition of the overall safety, maintenance of General Safety Directions (GSDs),industrial relations, productivity and labour welfare over the last 3 years at the Hyderabad Factory, the Government ofAndhra Pradesh conferred the Best Management Award for the year 2006-07 to the Management. Also, one employeeof the Division received the “Best Safety Conscious Workman” award from the Factories Department, Government ofAndhra Pradesh.

Further release of 85 persons under VRS was accepted during the year from Hyderabad and Rourkela factories of theExplosives Division. However, production capacity was unaffected due to streamlining of manpower and certain processbesides outsourcing of activities of non-explosive nature.

10. OUTLOOK FOR THE CURRENT YEAR, OPPORTUNITIES AND THREATS

Robust growth, for the fourth year in a row, and strong macroeconomic fundamentals, characterized developments inthe Indian economy in 2006-07. Economic growth is expected to be more than 9% in the next few years. A notablefeature of the current growth phase is the sharp rise in the rate of investment in the economy especially in theindustrial and infrastructural segments. The Indian economy appears to have decidedly taken off and moved from aphase of moderate growth to a new phase of high growth. Higher growth together with the demographic dividend (from a growing proportion of the population in the working age group ) is likely to lead to a rise in the savings rate tofinance more investments and hence reinforce growth itself.

The high growth of the economy will bring with it, higher demand for basic industries such as automobiles, cement,steel and other metals, mining, power generation, transportation and other infrastructural facilities. Major divisions ofthe Company are connected with a majority of these activities.

In this background, the outlook of the activities of our 4 Divisions is expected to be as follows :

10.1 Explosives

The key driver for growth of the Explosives industry is the demand from the mining and infrastructure sectors.With over 55% of India’s energy needs being met by coal, the long-term volume demand for the explosiveindustry is expected to increase. Moreover, with the growing demand for power, steel and cement, a big surge inthe growth of coal, iron ore and limestone mining is on the cards.

The 11th Five Year Plan Approach paper indicates increase in coal production from the current levels of around432 million tonnes to 670 million tonnes by 2011-2012. Requirement of coal for the power sector alone will go upby 180 million tonnes to 500 million tonnes in 2011-2012. It’s a formidable challenge to the coal industry to meetthe demand for higher coal production. The Planning Commission has indicated that focus on increased domesticmining is necessary since mines in India have an output of about 500 million tonnes annually, whilst the need is1.7 to 2 billion tonnes in the next few years.

Investment in infrastructure - road, rail, air and water transport, power generation, transmission and distributionof telecommunication, water supply, irrigation and storage, is expected to be between 7 and 8% of GDP in the11th Plan period ( 2007-2012 ). In other words, half of total investment needed to achieve 8.5% GDP growth perannum should be in infrastructure.

Your Company sees this as a great opportunity to grow and expand its business in the coming years. TheCompany intends to extend its business to cover the growing coal, non-coal mining and infrastructure markets ina focused manner.

The Company aims to increase the business of the Explosives Division further by concentrating on increasingthe sale of new value added products such as Electronic Detonators, Emulsion explosives/boosters, defenceproducts and metal cladding activities. To this end, we have already expanded our bulk explosives business inthe iron ore sector by entering into more areas in the Orissa / Jharkhand sector. Further capacity enhancementthrough de-bottlenecking and rationalisation of operations at its Hyderabad, Rourkela and bulk explosives locationshave been undertaken.

10.2 Mining & Infrastructure (IDLconsult)

After successfully completing two large coal-mining projects in the Singareni belt, the Division has bagged twomore large contracts in the coal-belt. The first one is at Manuguru of Singareni Collieries. The second one is atDudhichua Project of Northern Coalfields Limited ( a subsidiary of Coal India Ltd. ). The contracts are for Rs. 110crores and Rs. 185 crores respectively. The Division has also bagged the mining contract at Donimalai iron oremine of National Mineral Development Corporation. Overall, the Division has booked orders worth about Rs. 400crores in F 2007 for execution over the next two / three years. The Division is continuing work in the iron oremining sector at Barbil region in Orissa and operating several mines besides undertaking mineral screening andcrushing of ores.


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Infrastructure works contract are also being studied by the Division relating to irrigation, power generation, roadsand tunnels. The Division’s expertise gained over the last five years would be a major factor in increasingbusiness in these areas.

10.3 LubricantsConsidering the general buoyancy in the economy, the automotive industry is expected to grow. However, thereexist concerns on the sustainability of the high growth rate seen in the previous year in some quarters. Longdrain oils are expected to gain wider acceptance by the consumers. These trends may impact the growth inautomotive lubricants in the future.During the last quarter of previous year base oil prices have stabilised in the global market while the local marketwitnessed slight reduction in the prices. Based on current trends it is expected that base oil prices will largelyremain stable with possibility of some softening except for unforseen circumstances.Lubricant technology will be driven by better and emerging low emission engine technologies in which requirementof high quality base oils and additives would be the key. Also, entry of global Original Equipment Manufacturers(OEMs) in the vehicles and car segments would not only increase high end lubricant requirements but alsoincrease competitiveness.The Division’s strategy is to continue its focus on the heavy duty diesel engine oils and 4-stroke motorcycle oils.To increase the volume of heavy duty diesel engine oils the Division plans to introduce new products, increasepenetration of Ashok Leyland-Gulf co-branded oils and work with other OEMs in the same direction. In order totake advantage of the growth in the 4-stroke motorcycle oils segment, the Division plans to launch new productsfor the motorcycle segment and also expand the dealer network for this product line.The Division intends to continue its brand building initiative through multi media advertising, participation inmotor sports and local promotional activities. It also plans to use the GULF brand for further promoting itsgrowing range of car care products.

10.4 Speciality ChemicalsIndia is increasingly becoming a valuable sourcing point for key raw materials for the global pharma industry.The comparatively lower cost of production and availability of skilled manpower makes India a good sourcingpoint for Active Pharma Ingredients ( APIs ) and Research and Development services. Study conducted byASSOCHAM indicates that the domestic Pharma market is poised to accelerate at around 13 – 14% between2006-10 against a current CAGR of 9.5%.The Pharma market in India has more than 20,000 formulators who are either having their own marketing set upor operating as job workers for large and medium Indian companies and a few multinationals operating in India.These formulators form a major customer base for APIs in India.Some Pharma majors have audited the manufacturing facility of the Division. Facilities have also been auditedby some agents / traders for placing our products in the international markets. This would help in opening upnewer markets for our APIs.Apart from the cardiovasculars, anti-histamines and anti-depressants, the Company plans to enter the growingantibiotic segment in a major way, which has a growth potential for the third and fourth generation cephalosporinsand penems. The Company also plans to get into newer cardiovascular and lipid lowering drugs and focusing R& D efforts accordingly.The Division has made its presence felt in the semi regulated markets like Brazil, Mexico and Turkey, bothdirectly and through agents. The Company has also submitted six Drug Master Files to prospective customersin regulated markets. In the meantime, the Division is concentrating on more business opportunities both in thedomestic and in the semi-regulated markets.With some more cephalosporins in the R & D pipeline, the division is expected to increase its portfolio ofcephalosporins for discerning customers. The Division has also planned to introduce a range of formulationsusing the ‘IDL Pharma’ brand which has a good brand recall in the market.The Division has planned marketing of formulations in the East / North East and South. The product rangeincludes gastrointestinal products, analgesics, anti-histamines as tablets, capsules and injectibles. Injectiblescephalosporin antibiotics are also planned to be introduced in the next phase.

10.5 Other Business GroupsThe Company has initiated plans to develop properties owned by it in association with one of its subsidiaries,namely IDL Arom International Ltd. Future plans include development of Technology Parks in IT and Bio Technologysectors.

11. RISKS AND CONCERNS

11.1 Environmental RisksRegular safety audits are carried out by internal safety audit teams and at regular intervals by external teams.General Safety Directions ( GSDs ) are strictly enforced in all factories and plants within the factories to ensureminimisation of risk. During the year, a special safety audit has been carried out by consultants specialising inExplosives units at the Hyderabad Factory. All recommendations have been implemented and confirmed by theConsultants.

In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the


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exposure of adjacent neighbourhoods of the explosives and accessories factory from undue risk. Operations arecarried out to ensure fulfillment of emission, waste water and waste disposal norms of the local authorities of therespective factories.

11.2 Operational Risk

Raw MaterialsMany of the inputs of the three major Divisions are imported, availability of which is affected by global marketsituations. Also, prices of such items are volatile. Timely availability of raw materials is critical for continuousplant operations. The Company seeks to mitigate the risk by entering into long-term relationship with global rawmaterial suppliers, with suitable escalation clauses to ensure regular supplies.

11.3 Market Risks:

Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India playersas well as regional players is high. Of which, two major divisions, namely Industrial Explosives and IDLconsultDivisions operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses.Therefore, there is a risk of cost increases, especially of petro product inputs, not possible to be passed on toultimate consumers. The Company is in direct contact with the industry associations to ensure that there is asuitable consensus on pricing policies by the majority of the producers.

Concentration of Customers

The IDLconsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, isexposed to business risks on account of non-availability of environmental clearances in time and lack of adequateinfrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailedreview of approvals and quality of infrastructure is carried out before undertaking mining service contracts.

The API business may be indirectly affected by Government policy on price control of certain types of drugs fromtime to time. Suitable action in this regard is generally undertaken through the drug manufacturers associationsand similar bodies.

Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated bythe PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tendersmight result in loss of business opportunities.

11.4 Financial Risks:

Currency Value and Interest Rate Fluctuations

Financial risk management is done by the Finance Department at the various business Divisions and at CorporateOffice under policies approved by the Board of Directors. Policies for overall foreign exchange loss risks andliquidity are regularly reviewed based on emerging trends. Interests’ risks arising out of financial debt, are normallydone at fixed rates or linked to LIBOR and appropriate Bank lending rates.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delaysand defaults. To mitigate the risk, a credit risk policy is also in place to ensure that sale of products are made tocustomers after evaluation of their ability to meet financial commitments through allotment of specific credit limitsto respective customers.

Liquidity Risk

All the four major Divisions operate in working capital intensive industries. The Company realizes that its abilityto meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining ahealthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods andreceivables are done regularly by the respective Divisions and Corporate Finance.

11.5 Legal and Statutory Risks:

Contractual Liability

All major contracts are reviewed / vetted by the in-house legal department before the same are executed. Inaddition, the Company engages the services of reputed independent legal counsels, on need basis.

In matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. Hence,appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

11.6 IT Risks

The Company is dependent on intra-office as inter-office networks, as well as several business softwares operatedfrom the Corporate Office and the business Divisions. Failure of system networks and consequential loss ofbusiness is attempted to be minimised by critical systems being operated on secured servers with regularmaintenance, back up of data and selection of suitable firewall and virus protection software.


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11.7 Other Risks

Various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment andcomputer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. TheCompany has taken insurance covers to protect these assets from possible damage / loss.

12. DIRECTORS

Mr. A. V. Dujean, Mr. K. N. Venktasubramanian and Mr. H. C. Asher, in accordance with the provisions of the CompaniesAct, 1956, and the Articles of Association of the Company, retire by rotation at the 46th Annual General Meeting of theCompany and are eligible for reappointment.

Mr. Ashok Kini and Mr. Vinod K. Dasari, were appointed by the Board as Additional Directors of the Company, whoseterm is valid till the next Annual General Meeting. They are eligible for appointment.

Mr. I. N. Chatterjee resigned during the year. The Board has placed on record its appreciation for the valuablecontributions made by him.

Profile of members of the Board of Directors being appointed / reappointed :

A. V. Dujean

Mr. A. V. Dujean is a Ecole Superieure de Commerce et d’Administration, Des Enterprises (Business School) inBordeaux; DEUG de Droit (Law Studies). He has vast experience and held various positions such as Vice Presidentfor Pacific and Indian Ocean countries in Elf Aquitaine Downstream Activities, Director-Marketing Resources, Director-Commercial, Logistics and Marketing in Elf Oil UK Limited, London, International Business Development Director-Downstream South America in Elf Aquitaine, CEO-Refining & Marketing in TotalFinaElf SE. Currently, he is the VicePresident (International) of Gulf Oil International.

K. N. Venkatasubramanian

K. N. Venkatasubramanian is a Chemical Engineer and M.Tech from IIT-Khargpur. He was Executive Director – Marketingand later Director (Operations) in Indian Petrochemicals Corporation Limited (IPCL), a Director on the Board of StateTrading Corporation of India and served as Chairman of Cashew Corporation of India. He was the Chairman of theSub-Committee on “Petrochemicals” constituted by the Department of Chemicals and Petrochemicals for formulatingthe perspective plan of petrochemicals during the 8th & 9th Plans periods. He was also Chairman and MD of EngineersIndia Limited and retired after holding office as Chairman of Indian Oil Corporation.

H. C. Asher

H. C. Asher is a Senior Solicitor and Senior Partner of M/s. Crawford Bayley & Co., a leading firm of Solicitors andAdvocates in Mumbai. He specializes in broad spectrum of Corporate Laws.

Ashok Kini

Mr. Ashok Kini graduated from Mysore University in 1965 majoring in Science and obtained a Master’s degree inEnglish Literature from Madras Christian College, Chennai before joining State Bank of India ( SBI ) as ProbationaryOfficer in 1967 and reached the position of Managing Director (National Banking) of SBI. During his career, Mr. AshokKini was responsible for the Bank’s IT plans, from concept and RFP to execution and vendor management, domesticdistribution, retail business, consumer banking, marketing/brand management, etc.

Vinod K Dasari

Mr. Vinod K Dasari is Chief Operating Officer of Ashok Leyland Ltd., heading manufacturing, domestic marketing,strategic sourcing and corporate quality engineering divisions. Mr. Vinod K. Dasari commenced his career with GeneralElectric Company, USA in 1986 and worked for companies such as Timken USA, Timken India, Cummins IndiaLimited and is credited with bringing about significant changes in these organizations and leading them into profitabilityafter a period of sustained losses.

Names of companies in which the Directors, seeking appointed/reappointed at the ensuing AGM, hold positions ofdirectorship and the membership/chairmanship of committees of the Board, are as per the Annexure to the Report onCorporate Governance.

13. STATUTORY INFORMATION

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo under Section217 (1) (e) of the Companies Act, 1956 read with the Companies ( Disclosure of Particulars in the Report of Board ofDirectors ) Rules, 1988 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies( Particulars of Employees ) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisionsof Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders ofthe Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may writeto the Company.


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14. INFORMATION ON STOCK EXCHANGES

The Company is listed on The Hyderabad Stock Exchange Limited and Bombay Stock Exchange Limited.

The Company has been informed by the promoters NN Investments BV and Gulf Oil International (Mauritius) Inc. thatthey have advised BSE and HSE that there has been an inter se transfer of holding between the promoters and theshareholding of NN Investments BV has been fully transferred to Gulf Oil International (Mauritius) Inc. Therefore, onsuch transfer being affected, Gulf Oil International (Mauritius) Inc. will be holding 45.73% of the shareholding of yourCompany.

15. CORPORATE GOVERNANCE

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined theCompany’s compliance and have certified the same as required under the SEBI Guidelines. Such certificate isreproduced in this report.

16. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors, on the basis of informative documents made available to them, confirm that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along withproper explanation relating to material departures.

b. They have selected such accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the endof the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities.

d. They have prepared the annual accounts on a going concern basis.

17. SUBSIDIARY COMPANIES

The Report and Accounts of the Subsidiary Companies are annexed to this Report along with the statement pursuantto Section 212 of the Companies Act, 1956. However, in the context of mandatory requirement to present consolidatedposition of the Company including subsidiaries, at the first instance, members are being provided with the Report andAccounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act,1956. Members desirous of receiving the full Report and Accounts of the subsidiaries will be provided the same onreceipt of a written request from them.

18. AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible forre-appointment. The Company has received confirmation that their appointment will be within the limits prescribedunder Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank the customers, vendors, business partners, shareholders, bankers andother stakeholders for their faith reposed in the Company and thank the Government of India, State Governments andregulatory authorities and agencies for their support and look forward to their continued encouragement. Your Directorsplace on record their sincere appreciation of the contribution of all employees which has enabled the growth of theCompany’s business in very competitive market conditions and for taking advantage of emerging opportunities.

For and on behalf of the Board of Directors

Mumbai S.G.HINDUJAJune 15, 2007 Chairman

CAUTIONARY STATEMENT

Statement in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations orpredictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results coulddiffer materially from those expressed or implied. Important factors that could make a difference to the Company’s operations includeglobal and Indian demand supply conditions, finished goods prices, raw material availability and prices, cyclical demand and pricing inthe Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countrieswithin which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes noresponsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, informationor events or otherwise.


18

REPORT ON CORPORATE GOVERNANCE

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

The Company will continue to be in the forefront of its diverse interests and sustain growth activities through emphasis onTQM, adoption of emerging technologies, innovation through research, good corporate governance, adherence to fairbusiness practices and effective use of physical, technological, R & D, information and financial resources, thus fulfilling theaspirations of customers, shareholders, employees and financiers.

2. BOARD OF DIRECTORS

(A) Composition: The Board of Directors of the company headed by a Non-executive Chairman consists of the followingDirectors as on 31st March, 2007 categorised as indicated below :

(i) Chairman (Non-executive) Mr. Sanjay G Hinduja

(ii) Non-Executive Directors:

(a) Promoter Group: Mr.Sanjay G HindujaMr. I N Chatterjee #Mr. Alain V DujeanMr. Ramkrishan P HindujaMr. Abin K.Das, Alternate

Director to Mr. Sanjay G HindujaMs. Vinoo S HindujaMr.V.Ramesh RaoMr Vinod K Dasari@Mr Camille A Nehme*, Alternate

Director to Mr. Alain V Dujean

(b) Independent: Mr. K N VenkatasubramanianMr. Pravin N GhataliaMr. H C AsherMr.M.S.RamachandranMr Ashok Kini@

(iii) Managing Director : Mr. Subhas S Pramanik

# Resigned effective from 26th July 2006@ Appointed effective from 27th September, 2006

* Appointed effective from 28th January, 2007

(B) Attendance of each director at the Board Meetings and the last AGM and details of membership of Directors in otherBoards and Board Committees:

Name of the No. of Board Whether No. of No. of No. ofDirector Meetings attended Memberships Memberships Chairmanships

Attended last AGM of other Boards of other in otheras on 31/03/07 Committees Committees

(includes privatecompanies)

Sanjay G Hinduja 4 Yes 5 - -K N Venkatasubramanian 4 Yes 11 2 -Hemraj C Asher 4 Yes 22 7 2I N Chatterjee# 2 NoA K Das 1 No 22 1 -Alain Vincent Dujean 3 Yes - - -Pravin N Ghatalia 5 Yes 8 7 3Ramkrishan P Hinduja 3 Yes 7 - -S Pramanik 5 Yes 4 - -V Ramesh Rao 3 No 3 - -Vinoo S Hinduja 2 No 2 - -M.S.Ramachandran 3 No 1Ashok Kini@ 2 N A 1Vinod K Dasari@ 1 N.A 3Camille A Nehme* 1 N.A - - -

# Resigned effective from 26th July 2006@ Appointed effective from 27th September, 2006* Appointed effective from 28th January, 2007(C) Brief profiles of the Directors appointed/re-appointed have been given in the Directors' Report.


19

(D) Details of Board Meetings held during the Year 2006 – 2007:

Date of the Meeting Board Strength No. of Directors Present

24.05.2006 11 825.07.2006 11 927.09.2006 10 727.10.2006 12 1028.01.2007 12 9

(E) Code of ConductThe Board of Directors has laid down Code of Conduct for all Board Members and Senior Management of theCompany. The text of the Code of Conduct is uploaded on the website of the Company – www.gulfoilcorp.com.The Directors and Senior Management personnel have affirmed compliance with the Code applicable to them,during the year ended March 31, 2007. The Annual Report of the Company contains a Certificate duly signed bythe Managing Director in this regard.

(F) CEO & CFO CertificationThe Managing Director and General Manager (Finance) have certified to the Board of Directors of the Companythat:(a) They have reviewed the financial statements and the cash flow statement for the year and that to the best of

their knowledge and belief:(i) These statements do not contain any materially untrue statement or omit any material fact or contain

statements that might be misleading.(ii) These statements together present a true and fair view of the Company’s affairs, and are in compliance

with the existing accounting standards, applicable laws and regulations.(b) There are, to the best of their knowledge and belief, no transactions entered into by the Company during the

year which are fraudulent, illegal or violative of the Company’s Code of Conduct.(c) They accept responsibility for establishing and maintaining internal controls for financial reporting and that

they have evaluated the effectiveness of internal control systems of the Company pertaining to financialreporting; and that they have disclosed to the Auditors and the Audit Committee, deficiencies in the design oroperation of internal controls, if any, of which they are aware and the steps they have taken or propose totake to rectify these deficiencies.

(d) They have indicated to the Auditors and the Audit Committee:(i) significant changes in internal control over financial reporting during the year;(ii) significant changes in accounting policies during the year and that the same have been disclosed in the

notes to the financial statements: and(iii) instances of significant fraud of which they have become aware and the involvement therein, if any, of

the management or an employee having a significant role in the company’s internal control system overfinancial reporting.

(G) Shares held by non- executive DirectorsMr H C Asher held 750 equity shares of the Company as on 31.03.2007. None of the other non-executive Directorshold any shares in the Company.

3. AUDIT COMMITTEEThe Audit Committee was constituted in February 1987. The current terms of reference are in full conformity with therequirements of Section 292A of the Companies Act, 1956.CompositionChairman: Mr. Pravin N GhataliaMembers: Mr. I N Chatterjee #

Mr. Hemraj C AsherMr Ashok Kini @

# Resigned effective from 26th July 2006@ Appointed effective from 27th September, 2006

Meetings and Attendance:

Audit Committee Meetings held during the year 2006 – 07 and attendance details:

Date of the Meeting Committee Strength No. of Directors present

24.05.2006 3 325.07.2006 3 327.10.2006 3 328.01.2007 3 2

Company Secretary / Deputy Company Secretary / Assistant Company Secretary of the Company is the Secretary tothe Committee.


20

Mr. S Pramanik, Managing Director was invitee for all the Audit Committee Meetings. Vice President (Finance) andSr General Manager (Internal Audit) attended all the meetings.

The Statutory Auditors of the Company were invited to join the Audit Committee in all the meetings for discussing theQuarterly Unaudited results and the Annual Audited Accounts before placing it to the Board of Directors. The AuditCommittee held discussions with the Statutory Auditors on the yearly Audit Plan, matters relating to compliance ofAccounting Standards, their observations arising from the annual audit of the Company’s Accounts and other relatedmatters.

4. SUBSIDIARIES

There are no material non-listed Indian subsidiaries of the Company.

5. REMUNERATION COMMITTEE

The terms of reference are review of the Compensation policy for the Executive Directors. Accordingly, they areauthorised to negotiate, finalise and approve the remuneration for Managing Director/ Whole-time Directors on behalfof the Company.

Composition

Chairman: Mr.Pravin N GhataliaMember: Mr.H C Asher $

Mr.I N Chatterjee $$

$ Appointed w.e.f. 27.9.2006$$ upto the date of his resignation i.e., 26th July 2006

Meetings and Attendance

Date of the Meeting Committee Strength No. of Directors present

25.07.2006 2 2

Remuneration policy

i) For Managing DirectorThe total remuneration subject to shareholders approval consists of:

- a fixed component – consisting of salary and perquisites

- a variable component by way commission as determined by the Board within the limits approved by the shareholders.

ii) (a) For Non– executive Directors

(i) An amount of Rs. 20,000/- for each Board Meeting, Audit Committee Meeting and Meeting of the Committeeof Directors, and Rs.5000/- for each Remuneration Committee Meeting and Rs. 2000/- for each ShareTransfer Committee meeting plus reimbursement of actual travel and incidental expenditure not exceedingRs.2000/- is paid (as per the provisions of Section 309, 310 of the Companies Act, 1956).

Non-executive Directors (Sitting Fees only) Rs. in lakhs

Mr. Sanjay G. Hinduja 0.80Mr. Ramkrishan P. Hinduja 0.60Mr. K N Venkatasubramanian 1.40Mr. Pravin N. Ghatalia 2.47Mr. H C Asher $ 1.60Mr. Alain V. Dujean 0.60Ms. Vinoo S Hinduja 0.40Mr. Abin K. Das 0.20Mr. M.S.Ramachandran 0.84Mr. V.Ramesh Rao 0.60Mr. I N Chatterjee # 0.89Mr. Ashok Kini@ 1.20Mr. Vinod K Dasari@ 0.22Mr. Camille A Nehme* 0.20

Total 12.02

# Resigned effective from 26th July 2006@ Appointed effective from 27th September, 2006* Appointed effective from 28th January, 2007$ Paid in April '07

(ii) 1% Commission on the net profits of the Company will be paid to the non whole-time directors based on thedecision of the Board of Directors for which a provision of Rs 7.97 lakhs has been made in the accounts.


21

(b) For Executive Directors(Rs. in lakhs)

Managing Director

Salaries 30.72Commission 7.97Contribution to Provident Fund and Superannuation Fund 5.18Benefits 3.16

Total 47.03

Having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an individualemployee is not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in theabove computation.

Managing Director is under contract of employment with the company with 6 months’ notice period from eitherside. There is no severance fee payable to the Executive Directors. The Company does not have any stock optionscheme.

6. SHAREHOLDERS / INVESTOR GRIEVANCE COMMITTEEComposition – 3 Directors

Chairman : Mr. M S [email protected]#

Members : Mr. Vinod K Dasari @Mr. S PramanikMs Vinoo S Hinduja*Mr Pravin N Ghatalia*

@ Appointed effective from 27th September, 2006

# Upto the date of his resignation i.e., 26th July 2006

* Appointed on 24th May 2006 and resigned on 27th September 2006

The Shareholders/ Investors Grievance Committee specifically looks into redressing of shareholders/ investorscomplaints in matters such as transfer of shares, non-receipt of declared dividends and ensure expeditious sharetransfer process.

Number of Shareholders Complaints received so far : 100

Not solved to the satisfaction of the shareholders : NIL

7. GENERAL BODY MEETINGS

Location, time and venue where last three AGMs held

Financial Year Location of AGM Date & Time of AGM

2005 - 06 ‘Kohinoor’, Hotel Taj Residency, Banjara Hills, Hyderabad 27.09.2006, 2.30 PM

2004 - 05 Convention Centre,Hotel Viceroy,Tank Bund Road,Hyderabad 1.08.2005, 10.30 AM2003 - 04 Hari Hara Kala Bhavan, Secundrabad 21.07.2004, 4.00 PM

Special Resolutions

Special resolutions were passed at the AGM’s as under: -

i) AGM held on 21st July 2004 - Nil

ii) AGM held on 1st August 2005 – 5 Special resolutions

iii) AGM held on 27th September 2006 – 1 Special resolution

No Special resolution that requires approval through Postal Ballot was passed in the previous year. No Special resolutionwhich requires approval through Postal Ballot is proposed to be conducted at the ensuing AGM.

8. DISCLOSURES

Related Parties

There were no materially significant related party transactions which may have potential conflict with the interests ofthe Company at large. Confirmation has been placed before the Audit Committee and the Board that all related partytransactions during the year under reference were in the ordinary course of business and on arm’s length basis.Transactions with related parties are disclosed in Note.19 of the Schedule 18 to the Accounts in the Annual Report.

BOARD DISCLOSURES - Risk ManagementThe Company has laid down procedures to inform the Board of the Directors about the Risk Management and itsminimization procedures. The Audit Committee and the Board of Directors review these procedures periodically.


22

9. STRICTURES AND PENALTIESThere were no strictures or penalties imposed on the Company by either Stock Exchanges or SEBI or any StatutoryAuthority for non-compliance on any matter related to Capital Market during the last three years.

10. MEANS OF COMMUNICATIONThe quarterly and half yearly reports, are normally published in the Economic Times / Business Standard in twocenters – Mumbai and Hyderabad, in the local newspaper – Andhra Prabha / Andhra Bhoomi and are displayed on theWebsite of the Company www.gulfoilcorp.com. During the year no presentations were made to institutional investorsor to the analysts.

The Management Discussion and Analysis Report forms part of the Directors’ Report.

11. GENERAL SHAREHOLDERS INFORMATIONAGM :

Date - 28th September, 2007

Venue - Hotel Taj Krishna, Banjara Hills, Hyderabad-34

Time - 2.30 p.m.

Financial Calendar :

v Unaudited results for 1st quarter of next Financial Year – by 31.07.2007

v Unaudited results for 2nd quarter of next Financial Year – by 31.10.2007

v Unaudited results for 3rd quarter of next Financial Year – by 31.01.2008

v Audited results for next Financial Year – by 30.06.2008

Date of Book Closure – 18th September 2007 to 28th September, 2007

Date of Dividend Payment – 6th October, 2007

Listing of Equity Shares – Bombay Stock Exchange Limited – Code:506480

The Hyderabad Stock Exchange Limited – Code : 026

Market Price Data(in Rupees): in respect of the Company’s shares on BSE, monthly high and low during the lastFinancial Year

Month & Year High (Rs.) Low (Rs.)

April, 2006 2007.95 975.00May, 2006 2440.55 1400.05June, 2006 1472.00 835.00July, 2006 957.00 660.10August, 2006 1314.80 852.00September, 2006 1287.90 1033.85October, 2006 1574.20 1270.00November, 2006 1772.40 1352.65December, 2006 1549.00 1191.35January, 2007 1449.00 1210.00February, 2007 1400.00 1000.00March, 2007 1061.00 782.00


23

Distribution of Shareholding as on 31.03.2007

No. of Shares Shareholders No. of Shares

No. % No. %

Up to 5000 43313 98.91 688366 4.96

5001 – 10000 231 0.53 171865 1.24

10001 – 20000 107 0.24 150554 1.09

20001 – 30000 28 0.06 71141 0.51

30001 – 40000 20 0.05 69661 0.50

40001 – 50000 19 0.04 86972 0.63

50001 – 100000 20 0.05 151804 1.09

100001 and above 52 0.12 12481384 89.98

Total 43790 100.00 13871747 100.00

Pattern of Shareholding as on 31.03.2007

Category No. of Holders No. of Shares % of Share Holding

Promoters 2 6800980 49.03

Public :

Institutional Investors:

Mutual Funds & UTI, Banks,

Financial Institutions & Others 10 736995 5.31

Private Corporate Bodies 348 2626312 18.93

Indian Public 43360 2005502 14.46

NRIs/ OCBs 62 820854 5.92

FIIs 8 881104 6.35

GRAND TOTAL 43790 13871747 100.00

Dematerialisation of shares and liquidity – 6474609 shares were dematerialized amounting to 46.67% of the total paidup capital. Shares of the Company are listed on the Bombay Stock Exchange Limited and Hyderabad Stock Exchangeand frequently traded on the Bombay Stock Exchange Limited.

Name & Address of Registrar & Transfer Agents:

Sathguru Management Consultants Private Limited, Plot No. 15, Hindi Nagar, Behind Saibaba Temple, Panjagutta,Hyderabad 500034.

Details of Share Transfer System :

The authority relating to Share Transfers has been delegated to the Share Transfer Committee consisting of Mr. M SRamachandran, (Mr.I.N.Chatterjee, till the date of his resignation) Mr. S Pramanik and Mr. Vinod K Dasari. The Committeehas met four times during the year for approving transfers, transmissions, etc. Operations with regard to dematerializationare being complied with, in conformity of the regulations prescribed.

The name and designation of Compliance Officer is Mr. A Satyanarayana, Deputy Company Secretary.

The Registrar and Share Transfer Agents are handling all the Share Transfers and related transactions.

As on March 31, 2007, there were no requests pending for demats / overdue beyond the due dates.

Plant Locations:

A. Explosives : Explosives Division, Hyderabad, APExplosives Division Rourkela, Orissa

B. Lubricants : Lubes Division, Silvassa

C. Speciality Chemicals : Pashamylaram, Hyderabad


24

Details of Addresses for Correspondence:Registered Office GULF OIL Corporation Limited

Kukatpally, Sanathnagar (IE) POHYDERABAD 500 018Ph – 91 40 2381 0671 – 79Fax – 91 40 2381 3860E-mail : [email protected]

Registrar and Share Transfer Agents M/s. Sathguru Management ConsultantsPrivate Limited, Plot no. 15, HindiNagar, Behind Saibaba Temple,Panjagutta, Hyderabad 500 034Ph – 91 40 2335 6507/ 6975Fax – 91 40 2335 [email protected]

ISIN for the Equity Shares IN E 077F01019

Dividend for the last three years 2006 - 07: 75%2005 – 06: 70%2004 – 05: 65%

12. NON MANDATORY REQUIREMENTS

The Board has constituted a Remuneration Committee and the terms of reference of this Committee are given in para5 above.

Whistle Blower Policy

The Company is in the process of establishing a structured mechanism for employees to report to the management,concerns about unethical behaviour or violation of the Code of Conduct.


25

K NVenkatasubramanian

1. Essar Oil Ltd2. Mundra Port & SEZ

Ltd3. East India

Petroleum Ltd4. Imperial Corporate

Finance & ServicesLimited

5. Time TechnoplastLtd

6. E Cube IndiaSolutions Ltd.

7. GULF CarosserieLtd

8. Savi InvestmentsLtd.

9. Royal ChemieCorporation Ltd

10.Rajula Ltd11.Meghmani Organics

Ltd

Alain VincentDujean

-

Hemraj C Asher

1. Allied Pickfords Pvt.Ltd.2. Atchison Casting Corporation

Pvt Ltd3. ARI Consolidated Investment

Limited4. Saurer India Private Limited5. Barmag India Private Limited6. Bimag Machines Pvt.Ltd.7. Delimon Protos India Pvt.Ltd.8. Diamant Boart Marketing

Pvt.Ltd.9. Elof Hansson (India) pvt.ltd10.Grant Investrade Limited11.Hind Filters Limited12.Hinduja TMT Limited13.The Indian Card Clothing

Co.Ltd.14. Ingersoll Rand (India) Ltd.15.KELTECH Energies Ltd.16.Lloyd’ Register Industrial

Services (India) P Ltd17.Lakshmi Synthetic Machinery

Manufacturers Ltd.(in liquid)18.Migatronic India Private Ltd.19.Monsanto India Limited20.PRS Technologies Pvt.Ltd21.TUV India Pvt.Ltd.22.Wisden Data Services Pvt. Ltd.23.Wisden Online India Pvt.Ltd.

Ashok Kini

UTI AssetManagementCompanyLimited

Vinod K Dasari

1. AutomotiveCoaches &ComponentsLtd.

2. Gulf AshleyMotors Ltd.

3. Irizar – TVSLtd

Chairman of the Board of Directors of other Companies

1. Imperial CorporateFinance &Services Limited

2. Time TechnoplastLtd

Gulf AshleyMotors Ltd.

Chairman/Member of the Committees of Directors of other Companies in which he/she is a Director

a) Audit Committee1. Essar Oil Ltd2. Mundra Port &

SEZ Ltd3. East India

Petroleum Ltdb) Investors/

ShareholderGrievanceCommittee—

c) Other Committee—

a) Audit Committee1. Ingersoll-Rand (India) Ltd.2. Indian Card Clothing Co.Ltd.3. Monsanto India Limited4. Hinduja TMT Limitedb) Investors/Shareholder

Grievance Committee1. Ingersoll-Rand (India) Ltd.2. Indian Card Clothing Co.Ltd.3. Monsanto India Limited4. Hinduja TMT Limitedc) Other Committee

ANNEXURE

DIRECTORSHIPS IN OTHER COMPANIES:

List of outside Company Directorships:

—

——

— —

— —

— —


26

AUDITORS’ CERTIFICATE

To The Members of GULF OIL Corporation Limited

1. We have examined the compliance of conditions of Corporate Governance by GULF OIL Corporation Limited for theyear ended 31st March, 2007 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stockexchanges.

2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examinationwas limited to a review of the procedures and implementation thereof, adopted by the Company for ensuringcompliance of the conditions of the Certificate of Corporate Governance as stipulated in the said Clause. It is neitheran audit nor an expression of opinion on the financial statements of the Company.

3. In our opinion and to the best of our information and according to the explanations given to us, the representationsmade by the Directors and the Management, we certify that the Company has complied with conditions of theCorporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

4. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company.

For Deloittee Haskins & Sells.,Chartered Accountants

Place: Hyderabad A.C.GuptaDate: 25th June 2007 Partner

M.No. 8538


27

To the members of GULF OIL Corporation Limited

1. We have audited the attached Balance Sheet of GULF OIL Corporation Limited as at 31st March, 2007 and also the Profitand Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto in which report of branchaudited by branch auditors and forwarded to us, has been appropriately dealt with. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifiedin paragraph 4 and 5 of the said Order.

4 Deferred tax asset include Rs 993 lakhs arising on account of brought forward business losses; we are unable to take aview, in the absence of sufficient taxable profit, on the appropriateness of carrying the aforesaid deferred tax asset. (referNote 16 (ii) in Schedule 18).

5. Further to our comments in the Annexure referred to above, we report that:

a. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purposes of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books and proper returns adequate for the purposes of our audit have been received from thebranch not visited by us.

c. the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement withthe books of account;

d. in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report complywith the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e. On basis of the written representations received from the directors as on 31st March 2007, and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on 31st March 2007 from being appointed asa director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. in our opinion and to the best of our information and according to the explanations given to us, except for our commentin para 4 above, the said accounts give the information required by the Companies Act, 1956 in the manner sorequired give a true and fair view in conformity with the accounting principles generally accepted in India;

i. in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007;

ii. in case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii. in case of Cash Flow Statement, of the cash flows for the year ended on that date.

For Deloitte Haskins & Sells,Chartered Accountants

A.C.GUPTAPartner

M.No.8538

AUDITORS’ REPORT


28

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation ofits fixed assets.

(b) In accordance with the phased programme of verification adopted by the Company, physical verification of assets atsome locations has been carried out during the year by the management and no material discrepancies have beennoticed. The frequency of verification is at reasonable intervals.

(c) There has been no disposal of substantial part of the fixed assets during the year.

(ii) (a) Inventory has been physically verified by the management at reasonable intervals during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verificationof inventory followed by the management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verificationbetween physical stocks and book records.

(iii) (a) According to the information and explanations given to us, the Company during the year has no granted any loans,secured or unsecured to companies, firms or other parties as per the register maintained under Section 301 of theCompanies Act, 1956. Accordingly, paragraph (iii) (b), (c) and (d) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has during the year taken loan from oneparty covered under Section 301 of the Companies Act, 1956 which was repaid during the year. The maximumamount involved during the year is Rs.1200 lakhs.

(c) In our opinion, the rate of interest and other terms and conditions of such loan are not prima-facie prejudicial to theinterest of Company.

(d) The principal and interest has been paid regularly.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systemcommensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixedassets and with regard to the sale of goods and services. Further, on the basis of our examination, and according to theinformation and explanations given to us, we have neither come across nor we have been informed of any instance ofmajor weakness in the aforesaid internal control system.

(v) As explained to us, and according to the information and explanations given to us, there are no transactions that need to beentered in the register maintained in pursuance of Section 301 of the Companies Act, 1956 and exceeding the value of fivelakh rupees in respect of each party during the financial year.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directivesissued by the Reserve Bank of India and the provisions of Section 58A, 58 AA or any other relevant provisions of theCompanies Act, 1956 and the rules framed there under as applicable. As explained to us, the Company has not receivedany order from the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any other Tribunal.

(vii) In our opinion the Company has an adequate internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts, maintained by the Company in respect of products (Lubes and SpecialtyChemicals) where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records hasbeen prescribed under section 209 (1) (d) of the Companies Act, 1956, and are of the opinion that prima-facia, the prescribedaccounts and records have been made and maintained. We have not, however, made a detailed examination of the recordswith a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and according to the books and records as producedand examined by us, in accordance with generally accepted auditing practices in India, the Company is generallyregular in depositing undisputed statutory dues including provident fund, investor education and protection fund,employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess andother material statutory dues as applicable with the appropriate authorities though there have been some delays ina few cases.

(b) As at 31st March, 2007, according to the records of the Company and the information and explanations given to us,the following are the particulars of dues on account of income tax, sales tax, wealth tax, service tax, customs duty,excise duty and cess matters that have not been deposited on account of any dispute :-

ANNEXURE TO THE ADUTIORS’ REPORT TO THE MEMBERS OF GULF OIL CORPORATION LIMITEDON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2007


29

Name of the statute Nature of dues Period to which Amount Forum where the amount relates (Rs lakhs) dispute is pending

1. Lubricants Division

Sales Tax Act Sales Tax 2000-01,2002-03 and 13.22 Deputy Commissioner

2003-04

1999-2000, 20.94 Additional Commissioner2000-01 and Commercial Tax

2003-04

1994-95,1995-96, 51.71 Sales Tax Appellate Tribunal1997-98,1998-99,1999-00, 2000-01

and 2001-02

1994-95 and1999-00 318.21 High court

Central Excise Act Excise duty 1997-98 13.65 Appellate Tribunal

2006-07 106.57 Commissioner(Appeal)

Income Tax Act, 1961 Income Tax 1998-99,1999-00 32.97 ————Do————and 2000-01

2. Other Units

Central Excise Act Excise duty 1980-87 6.12 Asst. CommissionerCentral Excise and Customs

1992-96 1.11 Commissioner Appeals,Central Excise and Customs

Sales Tax Act Sales tax 1992-93, 1994-95, 1304.06 Sales Tax Appellate Tribunal1995-96 and 1998-99

2001-02 5.70 Commercial Tax Officer

2003-04 44.93 ————Do————

1997-98 1.40 Asst. CommissionerCommercial Tax

Income Tax Act, 1961 Income tax 1997-98 64.73 Income Tax AppellateTribunal

1999-00 0.28 ————Do————

2001-02 10.27 ————Do————

2002-03 1.34 ————Do————

2003-04 96.22 Commissioner ofIncome Tax

2093.43

(x) The Company does not have accumulated losses as at 31st March 2007. The Company has not incurred cash losses duringthe financial year covered by our audit.

(xi) The company has defaulted in repayment of dues (including interest) to banks amounting to Rs.189.28 lakhs due forpayment of 30th April, 2006 which were paid by the company on 23rd May, 2006.

(xii) The Company during the year has not granted any loan and advances on the basis of security by way of pledge of shares,debentures and other securities.


30

(xiii) The Company is not a nidhi/mutual benefit fund/society to which the provisions of special statute relating to chit fund areapplicable.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer/trader insecurities.

(xv) According to the information and explanations given to us, in our opinion, the Company has not given any guarantees forloans taken by others from bank or financial institutions which are prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans taken by the Company have been applied for thepurpose for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of theCompany, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties covered under section 301 of the CompaniesAct, 1956.

(xix) According to the information and explanations given to us, the Company has not issued any debentures during the year.

(xx) The Company has not raised any money by way of public issue, during the year.

(xxi) Based on the information and explanations furnished by the management, which have been relied upon by us, there wereno frauds on or by the Company noticed or reported during the year except fraudulent encashment of Company chequesby certain persons in collusion with Courier Company amounting to Rs.71.73 lakhs.

For Deloitte Haskins & Sells, Chartered Accountants

A.C. GuptaPlace:Hyderabad PartnerDate : May 25, 2007 M.No.8538


31

BALANCE SHEET AS AT 31ST MARCH, 2007

As at As at31st March 2007 31st March 2006

Schedule (Rupees Lakhs) (Rupees Lakhs)

I. SOURCES OF FUNDS1. Shareholders’ Funds

(a) Capital 1 1387.17 1387.17(b) Warrants Convertible to Equity Shares 1A 505.00 505.00(c) Reserves & Surplus 2 14388.71 13393.06

16280.88 15285.232. Loan Funds

(a) Secured Loans 3 15547.27 8147.69(b) Unsecured Loans 4 6251.04 2810.48

21798.31 10958.173. Deferred Tax Liability 1563.18 1081.41

TOTAL 39642.37 27324.81II. APPLICATION OF FUNDS

1. Fixed Assets(a) Gross Block 23643.35 14030.07(b) Less : Depreciation 8416.48 7522.85(c) Net Block 5 15226.87 6507.22

(d) Capital Work-in-Progress andadvances on Capital Account 420.27 2463.69

(e) Incidental expenditure during construction 5A - 2396.3515647.14 11367.26

2. Investments 6 6701.94 3575.783. Deferred Tax Asset 1797.66 1783.894. Current Assets, Loans and Advances

(a) Inventories 7 10724.81 8845.55(b) Sundry Debtors 8 14875.88 12483.53(c) Cash and Bank Balances 9 3210.21 2345.91(d) Loans and Advances 10 4977.75 4094.71

33788.65 27769.70Less: Current Liabilities and Provisions(a) Current Liabilities 11 17523.19 16550.35(b) Provisions 12 1813.65 1621.92

19336.84 18172.27Net Current Assets 14451.81 9597.43

5. Miscellaneous Expenditure 13 1043.82 1000.45(to the extent not written off or adjusted)TOTAL 39642.37 27324.81Notes on the Accounts 18

Schedules 1 to 18 annexed hereto form part of these accounts.

Per our report attachedFor Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants

A.C.GUPTA S. SUBRAMANIAN S. PRAMANIK S.G. HINDUJAPartner Company Secretary Managing Director Chairman

A.SATYANARAYANADeputy Company Secretary

Hyderabad,May 25, 2007


32

Year ended Year ended31st March 2007 31st March 2006


INCOME

Income from sales and other operations 66865.64 50724.65

Less: Excise duty 6730.81 4809.84

60134.83 45914.81

Income from Property Development 3337.00 350.00

Other Income 14 317.99 2015.38

63789.82 48280.19

EXPENDITURECost of Materials 15 36312.97 24662.06

Expenses 16 22829.02 20028.78

Depreciation 1002.14 701.57

60144.13 45392.41

PROFIT BEFORE EXTRA ORDINARY ITEMS AND TAXATION 3645.69 2887.78

Extra-ordinary items


PROFIT BEFORE TAXATION 3183.37 2543.43

Provision for Taxation

Current Tax 354.00 135.00

Tax Provision of earlier years written back (59.32)Deferred Tax 468.00 20.00

Fringe Benefit Tax 120.10 109.83

PROFIT AFTER TAXATION 2300.59 2278.60

Balance Brought forward from Previous Year 3108.07 2436.68

BALANCE AVAILABLE FOR APPROPRIATION 5408.66 4715.28

APPROPRIATIONSProposed Dividend 1115.38 971.02

Dividend Tax 189.56 136.19


Balance Carried to Balance Sheet 3853.72 3108.07

Earnings per share (Note 18)

- Basic Rs.16.58 Rs. 16.43

- Diluted Rs.15.84 Rs. 16.21

Notes on the Accounts 18

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007







33

2006-2007 2005-2006Rupees Rupees Rupees Rupees

lakhs lakhs lakhs lakhs

(A) CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary items 3645.69 2887.78

Adjustments for:


Dividend received (1.42) (83.70)

Miscellaneous Expenditure written off 5.10 2.53

Loss / (Profit) on sale of Fixed Assets (76.54) (623.54)

Income from Property Development (3337.00) (350.00)

Interest Received (120.35) (97.32)

Profit on sale of investment - Long Term (27.21) (986.01)

Profit on sale of investment - Current (0.73) -

Interest expenses 1858.98 (697.03) 932.92 (503.55)

Operating Profit before working Capital changes 2948.66 2384.23

Adjustments for:

Trade and other Receivables - (Increase)/ Decrease (3672.83) (4192.12)

Inventories - (Increase)/ Decrease (1817.20) (1450.85)

Trade Payables - Increase/(Decrease) 1008.54 (4481.49) 3178.24 (2464.73)

Misc. Expenditure incurred during the year-

Campsite Expenditure (38.91) -

Cash generated from Operations (1571.74) (80.50)

Direct Taxes paid(net of refunds) (365.00) (200.49)

Fringe Benefit Tax paid (94.86) (109.83)

Interest paid (1852.57) (2312.43) (981.00) (1291.32)

Cash inflow/(outflow) before extraordinary item (3884.17) (1371.82)

Extra ordinary items

Compensation under voluntary retirement Scheme (471.87) (565.61)

NET CASH INFLOW/ (OUTFLOW) FROM OPERATING (4356.04) (1937.43)

ACTIVITIES

(B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5408.20) (2044.04)

Sale of Fixed Assets 140.66 652.19

Income from Property Development 1450.00 175.00

Sale of Investment 33.31 -

Purchase of Investments

- Subsidary Company - (2.00)

- Others (951.31) (1335.70)

Purchase of investments - Current (1000.00) 2344.28

Sale of investments - Current 1000.73 -

Advance to subsidiary Companies (58.92) (12.89)

Loans Realised 162.41 250.00

Interest Received 120.35 84.91

Dividend received 1.42 83.70

NET CASH INFLOW/(USED) IN INVESTING ACTIVITIES (4509.55) 195.45

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007


34

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007.

2006-2007 2005-2006

Rupees Rupees Rupees Rupees


(C) CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from borrowings 11687.99 3516.91

Proceeds from Fixed Deposits (177.03) (242.95)

Repayment of borrowing (5070.82) (2164.02)

Share application money pending allotment - 505.00

Loans from Companies 7100.37 2700.00

Repayment of Loans to Companies (2700.37) (2700.00)

Dividend paid (974.06) (900.09)

Dividend tax paid (136.19) (126.46)

NET CASH INFLOW/(OUTFLOW)

FROM FINANCIAL ACTIVITIES 9729.89 588.39

Net increase/(decrease) in cash and cash equivalents 864.30 (1153.59)

Cash and Cash Equivalents as at the commencement of

the year- Cash and Bank Balances 2345.91 3504.71

Less: Transferred to IDL Buildware Ltd. - (5.21)

2345.91 3499.50

Cash and Cash Equivalents as at the end of the year -

Cash and Bank Balances 3210.21 2345.91

Note:The Company has received Rs. 1450 lakhs in cash and Rs. 1887 lakhs in Preference Share towards sale ofDevelopment rights in property.







35

SCHEDULES TO THE ACCOUNTS

Schedule 1

SHARE CAPITAL

AUTHORISED

2,50,00,000 Equity shares of Rs.10 each 2500.00 2500.00

ISSUED AND SUBSCRIBED

1,38,71,747 Equity shares of Rs.10 each fully paid 1387.17 1387.17

Of the above

(a) 93,005 shares are allotted as fully paid up pursuant to acontract without payment being received in cash

(b) 52,15,025 shares are allotted as fully paid upbonus shares by capitalisation of Reserves.

(c) Pursuant to the merger scheme as approvedby BIFR, 3,03,747 shares have beenallotted effective 31st March,1999 to theshareholders of IDL Salzbau (India) Limited.

(d) 58,70,000 shares allotted effective 1st January, 2002consequent to the amalgamation of erstwhile Gulf Oil IndiaLimited to the shareholders of erstwhile Gulf Oil India Limited

Schedule 1AWARRANTS CONVERTIBLE TO EQUITY SHARES

10,00,000 warrants, Rs. 50.50 paid for each warrant as application money 505.00 505.00Each warrant is convertible into one Equity Share of Rs.10 each at a priceof Rs. 505 (including Rs.10 face value), in one or more trenches on or beforethe expiry of 18 months from the date of allotment i.e. 15 December, 2005 bypaying the balance amount

Schedule 2RESERVES AND SURPLUS

a) CAPITAL RESERVEPer last Balance Sheet 0.75 0.75

b) EXPORT ALLOWANCE RESERVE

Per last Balance Sheet 10.50 10.50

c) DEBENTURE REDEMPTION RESERVE

Per last Balance Sheet - 233.31Less : Transfer to General Reserve - 233.31

- -

d) GENERAL RESERVEPer last Balance Sheet 10273.74 9540.43Add : Transfer from Debenture Redemption Reserve - 233.31Add : Transfer from Profit & Loss Account 250.00 500.00

10523.74 10273.74e) PROFIT & LOSS ACCOUNT

Per Account Annexed 3853.72 3108.07

14388.71 13393.06

As at As at31st March 2007 31st March 2006(Rupees Lakhs) (Rupees Lakhs)


36



Schedule 3

SECURED LOANS

a. From Banks

(i) Cash Credit (includes Working Capital Demand Loan) 6888.61 2879.05

(ii) Overdraft against term deposit receipts 166.94 152.56

(iii) Foreign Currency Working Capital Loan - 929.20

(iv) Term Loans

(a) EXIM Bank 666.67 1,500.00

(b) Bank of Bahrain & Kuwait B.S.C. - 19.75

(c) Syndicate Bank 933.23 1870.88

(d) State Bank of India 2969.61 -

(e) State Bank of Hyderabad 1730.89 -

(f) State Bank of Indore 448.81 750.06

(g) ABN Amro Bank 1352.35 -

b. Other Loans

SREI Infrastructure Finace Limited 387.70 -

Indian Renewable Energy Development Authority 2.46 4.10

c. Interest accrued and due on loans taken over - 42.09

from IDL Salzbau (India) Limited payable to

Housing and Urban Development Corporation

15547.27 8147.69

Schedule 4

UNSECURED LOANS

Fixed Deposits [ See note 13(i)]

(interest accrued and due Rs. 2.44 lakhs;

31.03.06 Rs. 5.76 lakhs) 490.76 667.79

Deferred Hire Purchase Credits 291.11 73.14

ICICI Bank 982.95 -

Short term:

Dealers’ deposits 85.85 69.55

Inter Corporate Loans 4400.37 2000.00

6251.04 2810.48


37


5. FIXED ASSETS:

5A INCIDENTAL EXPENDITURE DURING CONSTRUCTIONPayment to and provisions for Employees :Salaries,Wages & Bonus 264.39 237.16Company Contribution to Provident Fund, Gratuity Fund and Other Funds 39.07 36.38Workmen and Staff Welfare Expenses 16.96 14.15Interest Expenses 435.86 389.71Less : Interest Income (on LC Margin Money) 0.67 435.19 0.67 389.04Raw materials Consumed for trial production 2409.12 2131.87Stores, Spares parts and Loose Tools consumed 197.89 187.46Processing Cost 87.38 87.38Power,Fuel & Water 367.84 334.75Rates & Taxes 7.44 6.57Insurance 38.49 35.07Advertising 18.04 17.90Distribution Expenses 53.21 47.64Repairs Plant & Machinery 213.89 213.44 Building 125.42 124.80 Others 28.96 28.88Depreciation 1.26 1.05Travelling Expenses 35.27 34.73Bank Charges and Other Financial Charges 47.84 46.68Postage,Telephone & Telex 13.56 12.91Legal & Professional 116.18 115.52Transportation Charges 42.18 38.13Subscriptions 0.65 0.65Landscaping 31.74 31.74Maintenance charges 63.77 61.63Other Miscellaneous Expenses 190.74 173.31

4846.48 4408.84Less :

Sale Proceeds from Trial Run Production 1898.47 1632.05Closing stock of Trial Run Production-Finished Goods and Work in process 388.79 359.37

Other Income 21.07 (2308.33) 21.07 (2012.49)Less: Transfered to Fixed assets on capitalisation (2538.15) -

0.00 2396.35

As at 31st March 2007 As at 31st March 2006(Rupees Lakhs) (Rupees Lakhs)

(Rupees Lakhs)

COST DEPRECIATION NET BOOK VALUE

For the On31.03.2006 Additions Deductions/ 31.03.2007 31.03.2006 Year Deductions/ 31.03.2007 31.03.2007 31.03.2006

Adjustments Adjustments

Land-Freehold 413.40 10.88 62.06 362.22 - - - - 362.22 413.40(See note 3

below)

Land-Leasehold 17.48 1.62 - 19.10 4.01 0.22 - 4.23 14.87 13.47

Buildings 2163.86 1,263.53 24.64 3402.75 755.16 79.66 7.57 827.25 2575.50 1408.70

Leasehold Improvements 6.80 - - 6.80 6.80 - - 6.80 - -

Plant & MachineryEquipments etc. 9740.54 8,316.55 19.25 18037.84 5,781.85 787.88 13.44 6556.29 11481.55 3958.69

Furniture, Fixtures& Office appliances 968.69 158.95 14.45 1113.19 574.14 79.54 8.77 644.91 468.28 394.55Vehicles 694.89 96.44 114.29 677.04 376.48 54.84 78.73 352.59 324.45 318.41

Technical Knowhow 24.41 - - 24.41 24.41 - - 24.41 0.00 0.00

14030.07 9847.97 234.69 23643.35 7522.85 1002.14 108.51 8416.48 15226.87 -

31.03.2006 15190.78 558.91 1719.62 14030.07 8004.93 702.62 1184.70 7522.85 - 6507.22

Notes:-1) Assets costing Rs. 346.07 lakhs (previous year Rs.73.56 lakhs) have been acquired on hire purchase, the legal ownership of which will be transferred to the

Company after the final payment.

2) Depreciation for the year includes Rs.Nil (previous year Rs.1.05Lakhs) incurred during construction period

3) Certain land at Hyderabad/Bangalore to be used in future for property development has been reclassified under Inventories


38



Schedule 6

INVESTMENTS

At cost, unless otherwise stated

UNQUOTED - LONG TERMTRADE

Shares in subsidiary companiesIDL Agro Chemicals Limited 2,40,000 Equity shares of Rs.10 each 24.00 24.00

IDL Buildware Limited (formerly IDL Finance Limited)19,70,000 Equity shares of Rs. 10 each 203.41 203.41

2,00,000 8% Redeemable Cum Preference Shares of Rs. 100 each 200.00 200.00

IDL Arom International Limited (Subsidiary upto 31st December 2006)58803 (Previous Year: 1,20,007) Equity Shares of Rs. 10 each 5.90 12.00(61,204 equity shares sold during the year)20,62,000 (Previous year 1,75,000) 10% Redeemable CumulativePreference Shares of Rs. 100 each 2062.00 175.00

Gulf Oil Bangladesh Limited 71.91 71.911,77,939 Equity Shares of Bangladesh Taka 50 each

PT Gulf Oil Lubricants Indonesia 15,000 shares of Indonesia 680.70 680.70Rp.8,61,900 each equivalent to US $ 1,500,000

Gulf Carosserie India Limited 3,80,001 Equity shares ofRs. 10 eachLess: Diminution in value 38.00 38.00

38.00 38.00

SHARES IN OTHER COMPANIES

Gulf Oil (Yantai) Limited2755030 Equity Shares of US $ 1each 1245.26 -

NON-TRADE

500 Shares of Rs.10 each in 0.05 0.05IDL Chemicals Employees’ Co-operativeCredit Society Limited, Hyderabad

500 Shares of Rs.10 each in 0.05 0.05IDL Chemicals Employees’ Co-operativeCredit Society Limited, Rourkela

27,978 units of Rs.10 each in 2.97 2.97UTI Bond Fund of Unit Trust of India

Pachora Peoples Co-operative Bank Limited - -2 shares of Rs. 100 each

Gulf Ashley Motors Limited 114.00 114.001,14,000 Equity Shares of Rs 100 each

Patancheru Enviro-Tech Limited 3.00 3.0058460 Equity Shares of Rs 10 each


39



Schedule 6 (Contd)

QUOTED-LONG TERMNON-TRADE

Ashok Leyland Limited 24.23 24.231,00,000 Equity Shares of Rs. 1 each

Hinduja TMT Limited 0.06 0.0696 Equity shares of Rs. 10 each

Jammu & Kashmir Bank Ltd. 0.91 0.912,400 Equity shares of Rs. 10 each

Indusind Bank Limited 2063.49 2063.4943,14,623 Equity Shares of Rs. 10 each fully paid

6701.94 3575.78Notes:

1. Aggregate Carrying cost of quoted investments 2088.69 2088.692. Aggregate Market Value of quoted investments 1864.44 2072.97

3. Aggregate cost of unquoted investments 4613.25 1487.09

4. The following investment was purchased and sold during the year8650593.93 units in SBI Mutual Fund-Institutional Income Fund- Cost Rs. 1000 lakhs

Schedule 7

INVENTORIES(At lower of cost and net realisable value)

Land for Property development, at cost 62.06 -Stores & Spares 247.05 175.84Packing Materials and Fuel 196.94 242.92Raw Materials 5338.97 4241.13Work-in-Process 679.21 553.29Finished Goods 3703.70 3100.75Excise Duty on Finished Goods 496.88 531.62

10724.81 8845.55

Schedule 8

SUNDRY DEBTORS - UNSECURED

a) Debts outstanding for a period exceeding six months:Considered good 2029.67 2100.84Considered doubtful 1793.24 1780.60

b) Other Debts :Considered good * 12846.21 10382.69

16669.12 14264.13Less : Provision for doubtful debts 1793.24 1780.60

14875.88 12483.53

* includes due from subsidiary Rs. 26.87 lakhs (31-3-06 Rs. 25.91 Lakhs)


40



Schedule 9CASH AND BANK BALANCES

Cash/Cheques on hand 897.34 299.26

With Scheduled Banks:Current Account 1268.25 1023.12Fixed Deposits/Margin account 1044.62 1023.53

3210.21 2345.91Schedule 10LOANS AND ADVANCES

(Unsecured, considered good unless otherwise specified)Loan to Companies - 162.41

Advances to Subsidiary Companies (interest free) *IDL Agro Chemicals Limited 130.14 114.73IDL Arom International Limited - 6.45Gulf Carosserie India Ltd. 3.53 -IDL Buildware Limited 296.32 249.89

Advances recoverable in cash or in kind or for value to be received:

Considered good 3841.07 2715.84Considered doubtful 63.70 63.70

3904.77 2779.54Less: Provision for doubtful advances 63.70 63.79

3841.07 2715.84Share application money (towards equity shares of Gulf OilYantai Limited-pending allotment) - 293.95

Balance with Excise Authorities onCurrent Account 706.69 551.44

4977.75 4094.71

* Maximum amount outstanding during the yearIDL Agro Chemicals Limited-Rs.130.14 Lakhs, 31-03-2006 Rs.113.07 lakhsIDL Arom International Limited (subsidiary till 31st December,2006), 31-03-2006 Rs.9.84 lakhsGulf Carosseire India Limited-Rs.3.53 lakhs, 31-03-2006 Rs.NilIDL Buildware Limited- Rs. 299.98 Lakhs, 31-03-2006 Rs.637.44 lakhs

Schedule 11CURRENT LIABILITIES

Acceptances 4192.96 3146.29Sundry Creditors 13241.14 13318.34Interest accrued but not due 53.12 46.71Unpaid/Unclaimed Dividends 35.97 39.01

17523.19 16550.35Schedule 12PROVISIONS

Provision for Taxation (net of Advance Tax) 0.19 70.51

Provision for Fringe Benefit Tax 25.24 -

Proposed dividend 1,115.38 971.02

Tax on dividend 189.56 136.19Miscellaneous - Leave encashment 124.77 93.59

- Gratuity 358.51 350.61

1813.65 1621.92


41



Year ended Year ended31st March 2007 31st March 2006(Rupees Lakhs) (Rupees Lakhs)

Schedule 13

MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)

Payments under Voluntary Retirement Scheme 1,010.01 1000.45Camp site Expenditure 33.81 -

1043.82 1000.45

Schedule 14

OTHER INCOME

Dividend Income 1.42 83.70Profit on sale of Property - 572.79Profit/(loss) on Sale/Scrap of other Fixed Assets 76.54 50.75Profit on sale of investments - Long term 27.21 986.01

Current 0.73 -Insurance Claims 56.19 52.84Export Incentives (DEPB) 105.07 163.73Miscellaneous 50.83 105.56

317.99 2015.38

Schedule 15

COST OF MATERIALS

Raw Materials Consumed :Opening Stock 3910.31 3280.42Add : Purchase 30628.18 19960.82

34538.49 23241.24Less : Closing Stock 5338.97 3910.31

29199.52 19330.93

Purchase of Finished Goods 5542.09 4044.06(Increase)/Decrease in Finished Goods andWork-in-Process:Closing Stock

Finished Goods 3703.70 2938.95Work-in-Process 679.21 355.72

4382.91 3294.67

Opening Stock :Finished Goods 2938.95 2437.76Work-in-Process 355.72 301.64Closing Stock of trial run production 388.79 -Stocks transferred to IDL Buildware Limited - (43.74)

3683.46 2695.66

(699.45) (599.01)Packing Materials Consumed 2402.52 1987.32

36444.68 24763.30Less: Scrap realisation 131.71 101.24

36312.97 24662.06


42

Schedule 16

EXPENSES

Payments to and provisions for Employees :Salaries, Wages and Bonus 3896.10 3241.57Contribution to Provident Fund, GratuityFund and other Funds 482.22 382.56Workmen and Staff Welfare Expenses 477.86 431.61

4856.18 4055.74Interest Expense:On Debentures and Fixed Loans 959.00 398.18Other 899.98 534.74

1858.98 932.92Less: Interest Income (Gross):(Tax deducted at source Rs. 24.03 Lakhs; 2005-06 Rs.18.35 Lakhs)On deposits, income-tax refunds, loans to employees etc. 120.35 97.32

Net Interest 1738.63 835.60

Stores, Spare Parts and Loose Tools consumed 175.79 89.00Processing Charges 663.11 516.42

Power, Fuel and Water 746.32 482.40

Rent 313.11 163.68

Rates and Taxes 191.12 210.25

Expenses on Operation Contracts 3878.98 5831.63

Insurance 230.04 241.01

Advertising 876.96 568.09

Distribution Expenses 2416.75 1857.02

Commission on sales 136.56 126.91

Discount on sales 3568.68 2,179.11

Repairs to Buildings 39.45 24.58

Repairs to Machinery 112.95 98.39

Travelling Expenses 526.71 499.05

Bank charges and other Financial charges 489.03 326.42

Directors’ Fees 10.42 14.20

Commission to non-wholetime Directors 7.97 6.51

Postage, Telephone and Telex 174.98 173.07

Legal & Professional charges 263.51 262.25

Provision for doubtful debts 320.48 350.87

Bad Debts, advances etc written off 307.84 0.86

Less: Provision for doubtful debts written-back 307.84 - -

Deferred Revenue expenses 5.10 2.53

Software expenditure 4.05 12.18

Royalty 300.01 264.71

Miscellaneous 782.13 836.30

22829.02 20028.78




43

2006-2007 2005-2006 2006-2007 2005-2006 2006-2007 2005-2006

Detonators Millon Nos 192.00 192.00 192.00 192.00 87.69 69.57

Detonating Fuse Millon Metres 45.00 45.00 22.50 22.50 21.99 17.68

Safety Fuse Millon Metres 87.78 # 87.78 # - - - -

Industrial Explosives- Tonnes 123000 123000 118000 118000 46406.67 39741.10Cartridged, Bulk, Emulsion

and ANFO

Boosters Tonnes 190.00 190.00 90.00 90.00 131.68 62.25

Penta Erythritol Tonnes 1440 1440 - - - -

Tetra Nitrate (PETN) @

Exploders Numbers 500 500 500 500 - -

Single or double or Sq.Metres 1804.45 1448.54

Multilayer clad plates ‘$ Corresponding ! ! !! !! 65.82 54.30

to Tonnes

Lubricating Oils KL NA NA 75000 75000 39787 36983

Speciality Chemicals

Formulations-tablets Thousand No’s See note 2 below 1449

Bulk Drugs Tonnes NA - 80 - 66.490 -


* Installed Capacity is as certified by the Managing Director and not verified by the auditors, being a technicalmatter

Notes:

1. Licenced capacity includes letter of intent issued by Government of India.

# As given in the licence, 12 millions coils per annum which is equivalent to 87.78 million metres

@ Only Bhiwandi Plant for which a separate licence has been obtained, however, the plant has since beenclosed.

! 1,00,000 Sq metres corresponding to maximum tonnage of 25,000 tonnes of cladding plates

!! Installed Capacity is not estimatable as production can be increased substantially with the facilities availablemerely by increasing the size/weight of clad plates

$ Excludes product meant for development production of intermediate products captively consumed andproducts ‘for which no separate licence was required, has not been included above.

2 (a) In respect of formulations-tablets,production is carried out at third party manufacturing facilities.

(b) Licensed capacity is not indicated as industrial licenses for all bulk drugs,intermediates and theirformulations. Stands abolished in terms of Press Note No 4( 1994 series) dated 25th October 1994 issuedby the Department of Industrial Development ,Ministry of Industry, Govt of India.

Schedule 17

CAPACITY, PRODUCTION, STOCKS, SALES AND CONSUMPTION:

(a) Quantitative information in respect of goods produced / purchased:

CAPACITY PER ANNUM

Item Unit Licenced Installed* Production

} }


44


(b) Stock of Finished Goods / Sales, including income from other Operations:

(c) Purchase of Finished Goods:

2006-2007 2005-2006

Item Unit Qty Rupees Qty RupeesLakhs Lakhs

Safety Fuse M.Metres 0.56 11.58 0.61 12.37Grease/Unprocessed Oils MT 9274 4972.22 11929.00 3751.98Filters Nos 705016 269.75 526363 166.26Car Care Products KL 65 167.75 21 68.55GRACO Nos 327 48.65 187 16.78D Cord M Metres 2.36 65.16 0.90 28.12Others 6.98

5542.09 4044.06

(d) Raw Materials Consumed:

2006-2007 2005-2006

Item Unit Qty Rupees Qty RupeesLakhs Lakhs

Coating Materials Tonnes 534.28 378.29 445.54 368.48Chemicals for:

Explosives/Detonators Tonnes 41159.69 5851.83 35021.76 4963.10Bulk Drugs/Formulations Tonnes 1389 3004.56

Metals Tonnes 950.46 1343.66 832.18 989.92Yarn & Paper Tonnes 807.88 311.82 389.84 155.24Base Oil Tonnes 32111.84 14706.40 30729.13 9984.86Additives Tonnes 2577.46 3245.74 2453.31 2457.27Miscellaneous 357.22 412.06

29199.52 19330.93

Item Unit Qty Rupees Qty Rupees Qty Rupees Qty Rupees Qty RupeesLakhs Lakhs Lakhs Lakhs Lakhs

Detonators Millon Nos 15.48 968.44 16.75 988.26 21.69 1023.13 89.01 4841.02 74.41 4169.38

Detonating Fuse Millon Metres 1.83 58.42 2.69 84.76 2.62 81.16 25.16 992.12 18.45 799.92

Safety Fuse - Purchased Millon Metres 0.25 7.03 0.11 2.29 - - 0.51 16.90 0.53 16.08

Cartriged ANFO & NCN Tonnes 574.61 105.99 834.74 172.23 736.76 141.32 46657.62 9752.24 39627.17 8719.45(High Explosives)

Boosters Tonnes 24.06 30.68 15.96 24.52 15.12 22.47 122.36 213.97 63.44 113.08

Single or double or Sq.Metres - - - 1804.45 808.44 1448.54 675.91

Multilayer clad plates Corresponding 65.82 54.31to Tonnes

Lubricating Oils KL 2814 1886.70 2506 1525.62 2262 1024.42 48738 39100.69 48679 28336.22

Filters Nos 236115 108.62 99647 40.97 25293 17.08 568548 276.28 452009 202.89

Car Care Products KL 73 170.14 30.00 79.21 42.00 71.14 22.00 116.12 29.00 116.30

GRACO N0’S 154 18.86 137.00 21.09 609.00 25.71 310.00 64.62 239.00 45.18

Bulk Drugs- Chemicals Tonnes 5.60 343.70 - 161.80 - 257.76 78.45 3890.76 - -

Formulations- Tablets Thousand No’s 309 5.12 - - 1140 9.88

Income from Operation- Contracts - - - - - 6443.10 - 7400.31

Income from Property-Rent - - - - - 104.10 - 35.78

Others - - - - 31.32 235.40 - 94.15

3703.70 3100.75 2695.51 66865.64 50724.65

STOCK OF FINISHED GOODS SALES

31.03.2007 31.03.2006 31.03.2005 2006-2007 2005-2006


45

18. NOTES ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007

1. ACCOUNTING POLICIES

The accounts have been prepared primarily on the historical cost convention and in accordance with the mandatory accountingstandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.The significant accounting policies followed by the company are stated below:

I. FIXED ASSETS:

Fixed assets are shown at cost less depreciation. Cost comprises the purchase price and other attributable expenses.

II. DEPRECIATION ON FIXED ASSETS:

(i) The Company follows the straight-line method of charging depreciation on all its fixed assets. The Depreciationhas been provided in the manner and at the rates prescribed in Schedule XIV to the Companies Act, 1956 on allthe assets except certain equipments which are depreciated over their estimated useful life.

(ii) Leasehold land is being amortised in equal installments over the lease period.

(iii) Technical Know-how is being amortised over a period of five to seven years.

III. INVESTMENTS:

Current Investments are valued at lower of cost and fair value; Long Term Investments are valued at cost. Whereapplicable, provision is made if there is a permanent fall in valuation of long term Investments.

IV. INVENTORIES:

Inventories are valued at lower of cost and net realisable value. The method of arriving at cost of various categories ofinventories is as below:

(a) Stores and Spares, Raw and Packing material. First – in – First – out method / Weighted average method.

(b) Finished goods and work- In-process Weighted average cost of production, which comprises directmaterial costs, and appropriate overheads.

V. SUNDRY DEBTORS AND ADVANCES:

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for respectively.

VI. FOREIGN EXCHANGE TRANSACTIONS:

Transactions made during the year in foreign currency are recorded at the exchange rate prevailing at the time oftransaction. Assets and Liabilities related to foreign currency transactions remaining unsettled at the year end aretranslated at the contract rates when covered by forward cover contracts and at year-end rate in other cases. Realisedgains and losses on foreign exchange transactions other than those relating to fixed assets are recognised in the profitand loss account. Gain/loss on transaction of long term liabilities incurred to acquire fixed assets is treated as anadjustment to the carrying cost of fixed assets.

VII. REVENUE RECOGNITION:

(a) Sale of goods is recognised at the point of dispatch of finished goods to customers. Sales include amount recoveredtowards excise duty but exclude sales tax. Export incentive under the Duty Entitlement Pass Book scheme hasbeen recognized on the basis of credits afforded in the passbook.

(b) Income from services is recognised at the time of rendering the services.

(c) Dividend income from investment is recognised when the owner’s right to receive payment is established.

(d) Income from property development is recognised as soon as the contract is entered with the party and theconsideration is received.

VIII. RESEARCH AND DEVELOPMENT EXPENSES:

Research and Development expenditure of revenue nature is written off in the year in which it is incurred and expenditureof a capital nature is added to fixed assets.

IX. RETIREMENT BENEFITS:

Retirement benefits to employees are provided for by means of gratuity, superannuation and provident fund.

The gratuity liability is determined based on the actuarial valuation by an approved actuary.

Payments in respect of superannuation are made to the fund administered by LIC. Provision in respect of leaveencashment is made based on actuarial valuation as at year end.



46

X. TAXES ON INCOME:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences,being the difference between taxable income and accounting income that originate in one period and are capable ofreversal in one or subsequent periods.

XI. SEGMENT REPORTING:

The accounting policy adopted for Segment Reporting is in line with the accounting policy of the Company with thefollowing additional policy for Segment Reporting:-

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities ofthe segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to the segmentson a reasonable basis, have been included under “Unallocated Expenses”. Inter Segment transfers are at cost.

XII. MISCELLANEOUS:

(a) Payments under the Voluntary Retirement Scheme are written off over a period of five years/four years

(b) Camp site expenditure; i.e., Expenditure on setting up camps for execution of Operation contracts are written offover the period of the contract.

2. Managerial Remuneration under Section 198 of the Companies Act, 1956

2006-07 2005-06 Rs. Lakhs Rs. Lakhs

Salaries 30.72 40.99

Commission 7.97 10.45

Contribution to Provident Fund and Super annuation Fund 5.18 7.73

Benefits 3.16 1.29

Commission to non-wholetime Directors 7.97 6.51

55.00 66.97

Note :

Having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an individual employeeis not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in the above computation.

3. Computation of Net Profit and Directors Commission

2006-07 2005-06Rs. Lakhs Rs. Lakhs

Profit before Taxation 3183.37 2543.43

Add:


Directors Remuneration 55.00 1057.14 66.97 768.54

4240.51 3311.97

Less:

Depreciation under Section 350 of the Companies Act , 1956 1002.14 701.57

Profit on sale of Investment 27.94 986.01

Sale of development rights in property (see note 23 (a), schedule 18) 2337.00 350.00

Profit / (loss) on sale of Fixed Assets 76.54 3443.62 623.54 2661.12

796.89 650.85



47


2006-2007 2005-2006Rupees Lakhs Rupees Lakhs

Commission:

(a) Managing Director @ 1% 7.97 6.51

(b) Whole-time Director @1% upto 7-11-05 - 3.94

(c) Non-Wholetime Directors @ 1% 7.97 6.51

4. Payment to Auditors (Excluding Service Tax)

Audit Fees 14.50 11.50

Tax Audit 2.50 2.00

Other Services 7.45 9.10

Reimbursement of Expenses 0.68 0.75

5. Payments to Branch Auditors (Excluding Service Tax)

Audit Fees 6.00 6.00

Tax Audit 2.00 2.00

Other Services 3.80 3.50

Reimbursement of Expenses 1.65 1.25

6. Expenditure in Foreign Currency

Interest 201.15 185.02

Commission on Exports 54.60 40.12

Other- traveling expenses, books & periodicals etc., 12.57 177.43

Royalty 300.01 264.71

7. Earnings in Foreign Exchange

Export on F O B Basis 3893.00 3155.04

8. Amount remitted during the year in foreigncurrency on account of dividend

Number of non-resident Shareholders 2 2

Number of Shares held 6800980 6800980

Dividend remitted (Rs. Lakhs) 476.07 442.07

Dividend on account of year 2005-06 2004-05

9. Value of Imports of C I F Basis

Raw Materials 14849.87 7951.55

Capital Goods 978.85 68.39

Stores & Spares 6.66 0.78

Traded Goods 2803.28 2488.98

10. Capital Commitments

Estimated amount of contracts remaining to

be executed on capital account 0.52 29.96


48


11. Consumption of Material

2006-2007 2005-2006

Rupees Lakhs Percentage Rupees Lakhs Percentage

(a) Raw Material

Imported (Including canalised imports) 16315.60 55.88 9632.95 49.83Indigeneous 12883.92 44.12 9697.98 50.17

29199.52 100.00 19330.93 100

(b) Components and Spare Parts - -

Note : Components and Spare Parts referred to in para 4 D ( c ) of Part II of Schedule VI to the Companies Act,1956 areassumed to be those incorporated in goods produced and not those used for maintenance of Plant and Machinery

12. CONTINGENT LIABILITIES

As at 31st March, 2007 As at 31st March, 2006Rupees Lakhs Rupees Lakhs

(a) Corporate Guarantees 390.00 -

(b) Bills Discounted 77.64 -

(c) Claims against the Company not acknowledgedas debts hence not provided(i) Income Tax Demands 552.99 541.66(ii) Sales Tax Demands (see Note 14) 1783.61 2276.24(iii) Excise Demands 190.93 20.89(iv) Additional Demands towards cost of land 3.81 3.81(v) Claims of workmen/ex-employees 97.13 94.51(vi) Other Matters 340.27 271.73

13. SECURED LOANS:

(a) Loan from banks on Cash Credit account including foreign currency demand loan is secured by hypothecation of allmovable assets of the Company including raw materials, finished goods, work-in-process, Stores and Spares andpresent and future book debts of the Company and by a second charge on all the fixed assets of the Company, bothpresent and future.

(b) Loan from Indian Renewable Energy Development Agency Limited is secured by bank guarantee issued by StateBank of Mysore.

(c) The Term loan from State Bank of India is secured by first charge on the fixed assets created out of the loan rankingpari-passu with other term lenders and by hypothecation of Raw materials, finished goods, stock in process, storesand spares and receivables of the Company ranking pari-passu with other working capital lenders and is furthersecured by second charge on land, buildings and fixed assets of the Company both present and proposed ranking,pari-passu with other working capital lenders.

(d) The Term loan from State Bank of Hyderabad is secured by first charge on the fixed assets created out of the loanranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process,stores and spares and receivables ranking pari-passu with other working capital lenders and further secured by asecond charge on land, buildings and fixed assets of the Company, present and future.

(e) Foreign Currency Term Loan from Bank of Bahrain & Kuwait B.S.C is secured by a pari-passu first charge on all fixedassets of Lubricants division.

(f) The Term loans from State Bank of Indore and Syndicate Bank are secured by first charge on the fixed assets of theCompany.

(g) The Term loans from Export Import Bank of India are secured by exclusive first charge on all the fixed assets ofSpeciality Chemicals Division of the Company.

(h) Interest accrued and due on loans taken over from erstwhile IDL Salzbau (India) Limited amounting to Rs.42.09 lakhsis secured by first charge on all immovable properties and second charge on other assets including raw materials,finished goods, work-in-process, stores and spares and book debts of Building Products Division. Consequent to thetransfer of all the immovable properties and other assets including raw materials, finished goods, work-in-process,stores and spares, and book debts of Building Product Division to a subsidiary of the Company, the Company is in theprocess of obtaining a No Objection certificate from the lender.

(i) Fixed Deposits to the extent of Rs 375.86 Lakhs were secured by a second charge on all tangible movable propertyand fixed assets including all movable machinery and plant, machinery spares and stores, tools and accessories andother movables both present and future as approved by the Controller of Capital Issues vide his letter dated 1st November,1980.


49

(j) Term loans from ABN AMRO Bank N.V and SREI Infrastructure Finance Limited are secured by way of first charge onspecific mining equipment of Consult Division of the Company.

(k) In respect of loans fully repaid during the previous year/current year to the banks and Public Financial Institutions,satisfaction of charge has been obtained.

14. SALES TAX

(a) In respect of taxability under the Central Sales Tax Act, 1956, of stock transfers from Rourkela Unit to its consignmentagents outside the State of Orissa, the amount deposited under protest by the Company with the Orissa Sales Taxauthorities in respect of this matter stands at Rs. 150.17 Lakhs as on 31 March, 2007 and along with interest of Rs.69.30 Lakhs accrued till 1st June, 1998 on the said deposit is included under Loans and Advances (Schedule 10).

The Honourable High Court of Orissa vide it’s order dated 11th April 2006, has held that the Stock Transfers are Inter-State Sales. The Company has filed Special Leave Petition (SLP) in the Honourable Supreme Court of India. The ApexCourt, while hearing SLP, considering the merits of case, ordered, “Issue of Notice” to the State of Orissa and grantedtime to parties, for filing of written statements. Since the matter being sub-judice, status quo has been maintained. Noprovision has been made in respect of disputed deposit (including interest thereon) as the Company is hopeful ofrecovering the same

(b) Further, in the previous years the Company received various demands from Assistant Commissioner, Sales Tax,Rourkela through appeal orders in respect of assessment years 1994-95, 1995-96 and 1998-99 amounting to Rs.1294.08 Lakhs treating the stock transfers to various branches/consignment agents of the Company as sales underCentral Sales Tax. The Company filed petition in the Honourable High Court of Orissa, Cuttack for full stay of thedemand of Asst. Commissioner of Sales Tax Rourkela since in earlier assessment years on the similar cases HonourableHigh Court has decided the matter in favour of the Company. The Honourable High Court of Orissa has granted fullstay for payment of Sales Tax demands till the disposal of Company’s Appeal filed before Orissa Sales Tax Tribunal.

15. FIXED ASSETS

Buildings include:

(i) Rs.7.09 lakhs, which represents the cost of ownership flats Rs.7.08 lakhs and Rs.0.01 lakhs being the value of Sharemoney in Sett Minar Co-operative Housing Society Limited.

(ii) Rs.4.70 lakhs, which, represents the cost of ownership flats Rs. 4.43 lakhs and Rs.0.27 lakhs being the value of 270ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited.

16. TAXATION

(i) Pursuant to the scheme of merger with IDL Salzbau (India) Limited (ISIL) sanctioned by the BIFR, the Company hasconsidered the tax losses of Rs. 1498.36 lakhs allowable upto 31st March, 1999 in computing the Company’s incomefor the year ended 31st March, 1999 giving a tax benefit of Rs. 524.43 lakhs in that year. However, the tax losses andtax benefits thereon do not include funded interest accrued on the loans taken by ISIL from the Financial Institutions asthe tax benefit on such interest shall accrue to the Company as and when the interest is paid to the Financial Institutions.

In the current year the Company has paid an amount of Rs. 42.09 lakhs being the interest due to the Institution.

(ii) Pursuant to the scheme of amalgamation of erstwhile Gulf Oil India Limited with the Company, brought forward lossesof Rs. 3462.77 lakhs as at 31st December, 2001 have been considered in computing the Company’s tax liabilities forthe year 2001 -02 and an amount of Rs. 1236.24 lakhs was considered as deferred tax asset. In view of insufficienttaxable income in subsequent years till 31st March 2007, the Company is not able to utilize the deferred tax asset. Themanagement is confident that the Company would be in a position to make adequate profits in future and would realizethe deferred tax asset of Rs. 993 lakhs being carried forward as on 31st March, 2007.

(iii) Deferred tax

31st March 2007 31st March 2006Rupees Lakhs Rupees Lakhs

(a) Deferred tax assets arising on account of timing differences:-Unabsorbed business loss/depreciation # 993.00 988.63Provision for doubtful debts/advances 625.05 598.83Other timing differences 179.61 196.43

1797.66 1783.89

(b) Deferred tax liabilities arising on account of timing differences:-Depreciation 1563.18 1081.41

# Relates mainly to erstwhile Gulf Oil India Limited, in view of the Company’s future profit projections the Companyexpects to fully realise the deferred tax asset.

17. MISCELLANEOUS:

(a) There are no claims for interest payment from any supplier with reference to Interest on delayed payments to Smalland Ancillary Industrial Undertakings Ordinance, 1992.



50


(b) “Sundry Debtors – Debts outstanding for a period exceeding six months, Considered good”, include Rs. 480.63 lakhs(net of provision) due from certain customers which are outstanding from earlier years against some of whom theCompany has initiated appropriate legal proceedings and is hopeful of recovering the dues in full; pending finalisationin this matter, no provision has been considered necessary for this amount.

(c) The net exchange gain / loss, (i.e., difference between the spot rate on the dates of the transactions and the actual rateat which the transactions are settled/appropriate rates applicable at the year end) credited to Profit & Loss Account isRs. 153.45 Lakhs (Previous Year Rs.231.54 Lakhs Debited to Profit & Loss Account).

(d) Exchange difference in respect of forward exchange contracts to be recognised in the Profit and Loss Account in thesubsequent accounting period is Rs. 1.12 Lakhs Credit (Previous year Rs. 17.57 Lakhs)

(e) (i) The Company has entered into the following derivative instruments:

The following are the outstanding Forward Exchange Contracts entered into by the Company as on 31st March,2007:

As on 31.03.2007 As on 31.03.2006

Currency Amount Buy/ Cross Currency Amount Buy/ CrossSell Currency (Previous Sell Currency

Year)

US Dollar 763476 Sell Indian US Dollar 6366454 Buy IndianRupees Rupees

Euro 143000 Sell IndianRupees - - - -

US Dollar 1750000 Buy IndianRupees - - - -

(ii) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise aregiven below:

Amounts receivable/(payable) in foreign currency on account of the following:

Rs Lakhs Currency Amount

31st March 31st March 31st March 31st March2007 2006 2007 2006

Export of Goods 933.73 1196.30 U S D 2150190 2684882

Export of Goods - 65.89 Euro - 122325

Import of Goods (4891.23) (3796.14) USD (11154771) (8441925)

Import of Goods - (11.01) Euro - (20217)

FCNRB Loan - (19.75) USD - (44446)

Import of Goods 360.20 - JP Yen 34125000 -

(f) (i) Sundry creditors include Rs 500.25 lakhs (31st March, 2006 Rs.257.37 lakhs) due to Small Scale Industrialundertakings (SSIs). Names of SSIs to whom the Company owes sums outstanding for more than 30 days as on31st March 2007: Elite Engineers, High Plastics Pvt Ltd, G.Vittal Rao & Sons, Plasto Craft Industires, UniqueRubber Products, Anukampa Polymers & Technologies (P) Ltd, Industrial Plastics, Krimesh Enterprises, LaraIndustries (P) Ltd, Sankala Industries, Mold-tek Technologies Limited, T.V Super Filter Industries, Trimurthy Polymers,Vikrant Packaging Industries, Webtech Industries Pvt Ltd, Asiatic Enterprises, B.N Khatua,Behara Industries Pvtlimited, Kalinga Wrappers,Kraft Box Pvt Ltd, Chemical Udyog, G.S. Sulphochem, Hindustan Metal and WireProducts, Industrial Packing Industries, Krishna Speciality Chemical Pvt Limited, Maa Tarini Industries, PenguinPaper Plast Pvt Limited, R.P Chemicals, Red Ray Laboratories, Steeeloy Corporation, Timepoly Plast Pvt Limited,Tirupathi Polychem, Tytan Organics Pvt Limited, Vasu-n-Dhara, R.D Chemicals, Ramesh Silicate & ChemicalIndustries, Plastic Craft Industries, Anukar Engineers & Fabricators, Maheswari polymers, Sai Lathe Industries,Mahalakshmi Polymers, Durga Industries.

(ii) The above information has been compiled in respect of parties to the extent to which they could be identified assmall scale and ancillary undertakings on the basis of the information available with the Company.

(iii) The Company has called for confirmations from suppliers under the “ Micro, Small and Medium EnterpriseDevelopment Act, 2006 “. As the Company has not received any confirmation, information under the said act hasnot been compiled.


51

18. EARNINGS PER SHARE

Year ended Year ended31st March, 2007 31st March, 2006

a. Profit after Tax (Rs. Lakhs) 2300.59 2278.60

b. Weighted average number of EquityShares outstanding during the year 13871747 13871747

c. Potential equity shares on conversion of share warrants 649341 183372

d. Weighted Average number of equity sharesin computing diluted earnings per share 14521088 14055119

e. Face value of each Equity Share (Rs.) 10 10

f. Earnings per Share

-Basic (Rs.) 16.58 16.43

-Diluted (Rs.) 15.84 16.21

19. RELATED PARTY DISCLOSURES:Information relating to Related Party transactions as per “ Accounting Standard 18” issued by the Institute of CharteredAccountants of India.

(A) Name of the Related Party Relationship

IDL Agro Chemicals Limited Subsidiary

IDL Arom International Limited Till 31st Dec. 2006

IDL Buildware Limited (formerly IDL Finance Limited)

Gulf Carosserie India Limited

Gulf Oil Bangladesh Limited

PT Gulf Oil Lubricants Indonesia

Gulf Oil International (Mauritius) Inc. Associate

Gulf Oil (Yantai) Limited

IDL Arom International Limited With effect from 1St Jan 2007

N N Investments BV, Netherlands

Mr. S. Pramanik, Managing Director Key Management Personnel

(B) Details of transactions between the Company and Related Parties and the status of Outstanding balances at theyear end:

Rs. Lakhs

Particulars Subsidiaries Associates Key ManagementPersonnel

31.03.07 31.03.06 31.03.07 31.03.06 31.03.07 31.03.06

Sales 42.40 28.91 - - - -Transfer of BuildingProducts Division - 637.44 - - - -Royalty - 300.01 264.71 - -Expenses paid 13.70 76.04 - - - -Purchase & Other Services 2.86 17.93 - 2.50 - -Advances given 43.43 33.67 - - -Investment in Preference Shares 1537.00 375.00 350.00 - - -Investment in Equity shares - 182.00 1245.26 - - -Sale of DevelopmentRights in Property 1987.00 350.00 350.00 - - -Dividend paid - - 476.07 442.07 0.07 0.24Directors’ Remuneration - - - - 47.03 60.46Outstanding balances:(a) Receivables 456.86 396.26 40.12 - - -(b) Payables - - 255.01 218.90 - -(c) Corporate Guarantee given 390.00 - - - - -



52

20. Disclosure as required by Accounting Standard 19, “Leases” issued by the Institute of Chartered Accountants ofIndia are given below:

(a) Operating Lease:

(i) Where the Company is a Lessee:

The Company’s significant leasing arrangements are in respect of operating leases for premises (residences,office, storage godowns for finished goods etc.). The leasing arrangements, which are not non-cancellable rangegenerally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. Theaggregate lease rents payable are charged as rent in the Profit and Loss Account.

(ii) The Company has taken certain Plant and Machinery under non-cancellable leases.Rs. Lakhs

31st March 2007 31st March 2006

Total Payments Payments Total Payments Paymentsnot later later than not later later thanthan one one year than one one year

year but not year but notlater than later thanfive years five years

Total of future minimumpayments at thebalance sheet date 3085.15 638.84 2446.31 116.64 24.34 92.30

Lease Rent charged to Profit & Loss account for the year amounting to Rs. 116.61 lakhs. (Previous year Rs. 2.05 Lakhs)

(b) Where the Company is Lessor:

Details in respect of assets given on operating lease:Rs.Lakhs

Gross Block Accumulated Depreciation forDepreciation as on the year

31-3-2007 31-3-2006 31-3-2007 31-3-2006 2006-07 2005-06

Building 30.17 30.17 9.85 9.40 0.45 0.45

Plant & Machinery 80.32 80.32 43.02 39.20 3.82 5.26

The assets given on lease are not non-cancellable and range between 11 months to 5 years generally and are usuallyrenewable by mutual consent, on mutually agreeable terms. The aggregate lease rentals are recognised as income fromproperty in the Profit & Loss account.

Initial direct costs are recognised as an expense in the year in which these are incurred.

b) Hire Purchase:

(i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which theownership will be transferred to the Company at the end of the hire purchase term.

(ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the presentvalue:


Rs. Lakhs

31st March, 2007 31

st March, 2006



Total of minimum hirepurchase payments at thebalance sheet date 328.04 141.91 186.13 83.20 39.97 43.23

Less: Future FinanceCharges 36.93 22.27 14.66 10.06 5.62 4.44

Present value of minimumhire purchase paymentsat the balance sheet date 291.11 119.64 171.47 73.14 34.35 38.79


53

21. Life Insurance Corporation of India (LIC) fund managers of the Company’s Employees’ Gratuity Fund, have not been able toascertain the total liability towards gratuity as on 31st March 2007. In the absence of such information Company has approachedan independent actuary who has ascertained Company’s liability towards gratuity as on 31st March 2007 as Rs. 700.73lakhs. Company during the year has provided Rs. 107.89 lakhs towards gratuity liability. The Company is of the view thatavailable provision in the books is adequate to meet the total liability in this regard. Adjustment if any, in this regard will bemade when the final liability is ascertained by LIC.

22. SEGMENT INFORMATION FOR THE YEAR ENDED 31st MARCH 2007.

(i) Primary Business Segments


Explosives Mining & Infra- Specialty Property Lubricating Others Unallocated Eliminations Total

structure Contracts Chemicals Development Oils

REVENUE 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

External 14,868.70 13,078.92 6,444.17 7,201.39 3,362.43 3,337.00 350.00 35,596.92 25,958.10 0.04 49.28 180.57 1,642.50 63,789.82 48,280.19

Inter-segment - - - - - - - - 35.62 27.77 - - - - (35.62) (27.77) - -

Total Revenue 14,868.70 13,078.92 6,444.17 7,201.39 3,362.43 3,337.00 350.00 35,632.54 25,985.87 0.04 49.28 180.57 1,642.50 (35.62) (27.77) 63,789.82 48,280.19

RESULT

Segment result (146.32) 85.17 1,402.88 866.77 (334.95) 3,328.10 350.00 1,714.07 1,445.10 (25.68) (344.61) 5,938.10 2,402.43

Unallocated Corporate

Expenses net of

unallocated income (555.18) 1,237.25

Interest Expense (1,858.98) (932.92)

Interest Income 120.35 97.32

Dividend Income 1.42 83.70

Profit before Taxation &

Extraordinary Expenditure 3,645.69 2,887.78

Extraordinary Expenditure 462.32 344.35

Net Profit 3,183.37 2,543.43

OTHER INFORMATION

Segment Assets 14,092.50 12,933.28 8,794.49 2,377.38 9,290.78 6,137.40 81.70 - 14,639.45 15,736.83 209.49 292.10 11,870.80 8,020.09 58,979.21 45,497.08

Segment Liabilities 6,091.44 5,800.63 2,000.77 393.16 1,821.82 725.56 - - 7,177.61 9,735.49 14.78 12.82 25,591.91 13,544.19 42,698.33 30,211.85

Capital Expenditure 299.19 169.21 4,304.57 10.38 574.93 147.45 - - 196.10 312.99 - 0.52 33.41 1,403.30 5,408.20 2,043.85

Depreciation 229.38 241.74 347.48 232.42 182.40 - - - 201.46 187.33 12.54 13.21 28.88 26.87 1,002.14 701.57

Non- cash expenses

other than Depreciation - - - - - - - - - - - - 344.34 231.22 344.34 231.22

( ii ) Information about Secondary Business Segments ( in Rupees Lakhs)

India Outside India Total

2007 2006 2007 2006 2007 2006

Revenue by geographical market on FOB basis 59896.83 45125.15 3893.00 3155.04 63789.83 48280.19

Inter-Segment - - - - - -

TOTAL 59896.83 45125.15 3893.00 3155.04 63789.83 48280.19

Carrying amount of segment assets 57631.33 44247.98 1347.88 1262.19 58979.21 45510.17

Additions to Fixed Assets 5408.20 2043.85 - - 5408.20 2043.85

(iii) Notes :

(a) Business Segment

The Company has considered business segment as the primary segment for disclosure.

Segments have been identified and reported taking into account the Organisation structure, the nature of products andservices, the deferring risks and returns of the segments.

The business segments of the Company are (i) Explosives, (ii) Consult dealing in Minig & Infrastructuring Contracts,

(iii) Specialty Chemicals dealing in Bulk Drugs & Pharma,(iv) Property Development, (v) Lubricating Oils, (vi) Others.Others includes Floriculture.

(b) Geographical Segment

The Geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India and earnings outside India.


54

For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants


A. SATYANARAYANADeputy Company Secretary


STATEMENT UNDER SECTION 212 OF THE COMPANIES ACT, 1956Rs.in Lakhs

Name of the Subsidiary Financial year Number of Extent of For the Financial years For the previous Financial Years since itending of the Shares Holding of the Subsidiary became a Subsidiary

Subsidiary

Profits/(Losses) not Profits/(Losses) Profits/(Losses) not Profits/(Losses)dealt with in the dealt with in the dealt with in the dealt with in the

Books of Accounts Books of Accounts Books of Accounts Books of Accountsof the Holding of the Holding of the Holding of the Holding

Company (Except Company Company (Except Companyto the extent dealt to the extent dealt

with in Col.6) with in Col.6)

(1) (2) (3) (4) (5) (6) (7) (8)

IDL AGRO CHEMICALS LIMITED 31.03.2007 240000 100% (13.58) Nil (104.27) Nil

IDL BUILDWARE LIMITED 31.03.2007 1970000 100% (82.09) Nil (178.30) Nil

GULF CARROSSERIEINDIA LIMITED 31.03.2007 380001 95% (1.06) Nil (109.35) Nil

GULF OIL BANGLADESHLIMITED 31.03.2007 177939 51% (6.83) Nil (148.97) Nil

PT. GULF OIL LUBRICANTSINDONESIA 31.03.2007 15000 75% (90.25) Nil (268.02) Nil

For and on behalf of the Board of Directors

S. SUBRAMANIAN A. SATYANARAYANA S. PRAMANIK S.G. HINDUJACompany Secretary Deputy Company Secretary Managing DirectorChairman

HyderabadMay 25, 2007


23. Income from Property development

(a) The Company during the year entered into “Development Agreements” with IDL Arom International Limited (whollyowned subsidiary till 31st December, 2006) towards sale of development rights in various properties owned by it for aconsideration of Rs. 2337 lakhs, which has been based on valuers report. IDL Arom would undertake constructionson the aforesaid properties. Subsequent to the development of such properties, and at the time IDL Arom enters intoagreements for sale with intending buyers on such terms and conditions as it may deem fit ,the Company shall conveyits right, title and interest in the said properties in favour of the intending buyers without further consideration.

(b) The Company, during the year entered into “Option for Development Rights” with Aasia Property Development Limited(APDL) wherein, APDL has only the right to decide whether or not to exercise the option to acquire the developmentrights in respect of certain properties of the Company located at Hyderabad and Bangalore. The offer of grant of thedevelopment rights in respect of the said properties by the Company is open upto 30th September, 2007. In considerationof the Company agreeing to keep such offer open APDL has paid an amount of Rs. 1000 lakhs as a Non RefundableCommitment Amount. Further, if the option for development is exercised by APDL, a Development Agreement wouldbe entered with the Company wherein, the Company shall be entitled to share of the Gross Sale Proceeds (as determinedin the agreement) realized from the sale of buildings constructed on the said properties.

The consideration received on entering into the above agreements aggregating to Rs. 3337 lakhs has been shownunder “Income from Property Development” in the Profit and Loss Account.

24. Previous year’s figures have been regrouped / recast wherever necessary.


55

SCHEDULE – 1Information pursuant to Part IV of Schedule VI of the Companies Act, 1956

BALANCE SHEET ABSTRACT & COMPANY’S GENERAL BUSINESS PROFILEI. Registration Details

Registration No. State Code8 7 6 0 1

Balance Sheet Date3 1 . 0 3 . 0 7

II. Capital Raised During the Year (Amt in thousands)Public Issue Rights Issue

N I L N I LBonus Issue Private Placement

N I L N I L

III. Position of Mobilisation and Deployment of Funds (Amt in thousands)Total Liabilities Total Assets 5 8 9 7 9 2 1 5 8 9 7 9 2 1Sources of FundsPaid up Capital Reserves Surplus

1 3 8 7 1 7 1 4 3 8 8 7 1Convertible Warrants

5 0 5 0 0Secured Loans Unsecured Loans

1 5 5 4 7 2 7 6 2 5 1 0 4Deferred Tax liablity

1 5 6 3 1 8Application of FundsFixed Assets Investments 1 5 6 4 7 1 4 6 7 0 1 9 4

Deferred Tax Asset 1 7 9 7 6 6

Current Assets Misc. Expenditure 3 3 7 8 8 6 5 1 0 4 3 8 2Accumulated Losses

N I L

IV. Performance of the Company (Amt in thousands)Turnover Total Expenditure

7 0 5 2 0 6 3 6 7 3 3 7 2 6Profit /Loss before Tax Profit /Loss After Tax

3 1 8 3 3 7 2 3 0 0 5 9Earning per Share Dividend Rate %

1 6 . 5 8 7 5

V. Generic Name of three principal products/services of company (As per monetary terms)IDL DIVISION1. Ind. Explosives Permitted Types 3 6 0 2 0 0 . 0 12. Other 3 6 0 2 0 0 . 0 93. Detonating Fuse 3 6 0 3 0 0 . 0 14. Detonators Containing and Explosives Electrically 3 6 0 3 0 0 . 1 1

Ignited, Not-ordinance5. Detonators, Plain Not-Ordinance 3 6 0 3 0 0 . 1 26. Fresh (Cut Flowers) 0 6 0 3 1 3 . 1 1LUBRICANTS DIVISION7. Lubricating Oils 2 7 1 0 . 9 58. Brake Fluids 3 8 1 1 . 0 09. Coolant 3 8 1 9 . 0 010. 2T Oils 3 8 2 4 . 9 0SPECIALITY CHEMICALS DIVISION11. Bulk Drugs and Formulations 2 9 4 0 0 0 . 0 0

Hyderabad, S. SUBRAMANIAN S. PRAMANIK S.G. HINDUJAMay 15, 2007 Company Secretary Managing Director Chairman



56

REPORT OF THE AUDITORS’ TO THE BOARD OF DIRECTORS OFGULF OIL CORPORATION LIMITED

1. We have audited the attached consolidated balance sheet of GULF OIL Corporation Limited and its subsidiaries (‘theGroup’) as at 31st March, 2007 and also the consolidated profit and loss account and the consolidated cash flowstatement for the year ended on that date, annexed thereto, in which are incorporated the returns from the branch,audited by other auditors. These consolidated financial statements are the responsibility of the management of GULFOIL Corporation Limited. Our responsibility is to express an opinion on these consolidated financial statements basedon our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by the Management, as well as evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

3 We did not audit the financial statements of certain subsidiaries, whose financial statements reflect Group’s share oftotal assets of Rs 1576.94 lakhs as at 31st March, 2007 and the Group’s share of total revenues of Rs 1360.67 lakhsand net cash outflows amounting to Rs 128.23 lakhs for the year ended on that date and associates whose financialstatements reflect Group’s share of profit upto 31st March, 2007 of Rs 1.00 lakhs and Group’s share of loss of Rs.3.29 lakhs for the year ended on that date as considered in the consolidated financial statements. These financialstatements and other financial information have been audited by other auditors whose reports have been furnished tous, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries and associates, isbased solely on the reports of the other auditors.

We have relied upon the unaudited financial statements as provided by the management of the associate for thepurpose of our examination of consolidated financial statements (refer note 1(d), Schedule 17);

4. We report that the consolidated financial statements have been prepared by the management of GULF OIL CorporationLimited in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements, AccountingStandard 23, Accounting for Investments in Associates in Consolidated Financial Statements issued by the Institute ofChartered Accountants of India.

5. On the basis of the foregoing and the information and explanations given to us and on the consideration of theseparate audit reports on individual audited financial statements of GULF OIL Corporation Limited, its subsidiariesand associates, in our opinion, the consolidated financial statements, subject to:

(i) our inability to comment on the recoverability of debts outstanding for more than six months considered goodamounting to Rs. 97.45 lakhs ( refer note 9(a) (ii), Schedule 17);

(ii) short provision of Rs. 14.40 lakhs on trade debtors relating to Gulf Oil Bangladesh Limited.

(iii) our inability to take a view, in the absence sufficient taxable profit, on the appropriateness of carrying deferred taxasset of Rs. 993 lakhs arising on account of brought forward business losses( refer note 8(ii) on Schedule 17 );

give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the state of affairs of GULF OIL Corporation Limited Groupas at 31st March, 2007;

(b) in the case of the consolidated profit and loss account, of the profit for the year ended on that date,

and

(c) in the case of the consolidated cash flow statement, of the cash flows for the year ended on that date.

for Deloitte Haskins & SellsChartered Accountants

A.C.GuptaPartner

Membership No.: 8538Place : HyderabadDate :15th June, 2007


57



I. SOURCES OF FUNDS1. Shareholders’ Funds

(a) Capital 1 1387.17 1387.17(b) Warrants Convertible to Equity Shares 505.00 505.00(c) Reserves & Surplus 2 12296.45 12521.72

14188.62 14413.89

2. Minority Interests 128.22 161.31

3. Loan Funds(a) Secured Loans 3 15721.91 8303.74(b) Unsecured Loans 4 6304.69 3152.16

22026.60 11455.90

4. Deferred Tax Liability 1563.18 1081.63

TOTAL 37906.62 27112.73

II. APPLICATION OF FUNDS1. Fixed Assets

(a) Gross Block 25148.44 15552.84(b) Less : Depreciation 9492.98 8549.68

(c) Net Block 5 15655.46 7003.16(d) Less: Lease Terminal Adjustment A/C 0.66 1.97(e) Capital Work-in-Progress and 450.33 2510.97

advances on Capital Account(f) Incidental expenditure during construction 5A - 2394.17

16105.13 11906.33

2. Investments 6 4167.67 2208.94

3. Deferred Tax Asset 1937.06 1891.48

4. Current Assets, Loans and Advances

(a) Inventories 7 11015.28 9082.93(b) Sundry Debtors 8 15309.98 12799.79(c) Cash and Bank Balances 9 3374.19 2670.36(d) Loans and Advances 10 4620.55 3937.77

34320.00 28490.85Less:Current Liabilities and Provisions

(a) Current Liabilities 11 17881.38 16814.50(b) Provisions 12 1824.15 1632.51

19705.53 18447.01Net Current Assets 14614.47 10043.84

5. Miscellaneous Expenditure 13 1082.29 1062.14(to the extent not written off or adjusted)

TOTAL 37906.62 27112.73

Notes on the Accounts 17





Hyderabad,June 15, 2007

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2007


58

INCOME

Income from sales and other operations 68226.01 52207.56

Less: Excise Duty 6742.82 4811.08

Net Income from sales and other operations 61483.19 47396.48

Income from Property Development 1178.54 -

Profit on disinvestment in subsidiary 1226.66 -

Other Income 14 295.09 2050.71

64183.48 49447.19

EXPENDITURE

Cost of Materials 15 37195.51 25662.74

Expenses 16 23492.52 20893.69


61762.02 47333.63

PROFIT BEFORE EXTRA ORDINARY ITEMS AND TAXATION 2421.46 2113.56

Extra-ordinary item


PROFIT BEFORE TAXATION 1959.14 1769.21

TAXATION

Current Tax 356.07 146.28

Tax Provision of earlier years written back (59.32) -

Deferred Tax 435.97 (47.28)

Fringe Benefit Tax 121.07 111.71

PROFIT AFTER TAXATION 1105.35 1558.50

Share of loss from Associates (42.36) -

PROFIT AFTER TAXATION BEFORE MINORITY INTEREST 1062.99 1558.50

Share of Minority Interest 30.08 35.82

PROFIT FOR THE YEAR 1093.07 1594.32

Balance Profit brought forward from previous year 2153.95 2166.84

BALANCE AVAILABLE FOR APPROPRIATION 3247.02 3761.16

APPROPRIATIONS

Proposed Dividend 1115.38 971.02

Dividend Tax 189.56 136.19


Balance Carried to Balance Sheet 1692.08 2153.95

Earnings per share (Note 10)

- Basic Rs. 7.88 Rs. 11.49

- Diluted Rs. 7.52 Rs. 11.34

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006





Hyderabad,June 15, 2007

Year ended Year ended31st March 2007 31st March 2006



59

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007



(A) CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary items 2421.46 2113.56

Adjustments for:


Dividend received (1.42) (83.70)

Miscellaneous Expenditure written off 29.10 33.10

Interest received (132.40) (112.25)

Loss / (Profit) on sale of Fixed Assets (76.54) (622.51)

Profit on sale of current investment (0.73) (986.01)

Profit on disinvestment in subsidiary (1226.66) -

Interest expenses 1883.68 983.44

Lease Equalisation Charge (1.31) (3.50)

Prelimnary Expenses written off 2.09 1549.80 1.18 (13.05)

Operating Profit/(Loss) before working Capital changes 3971.26 2100.51

Adjustments for:

Trade and other Receivables - (Increase)/ Decrease (3671.66) (4301.51)

Inventories - (Increase)/ Decrease (1870.29) (1061.26)

Trade Payables - Increase/(Decrease) 1105.53 (4436.42) 3175.80 (2186.97)

Expenditure incurred during the year towards camp site,compensation under Voluntary Retirement Scheme etc (513.66) (586.68)

Cash generated from Operations (978.82) (673.14)

Direct Taxes paid (net of refunds) (467.54) (314.25)

Interest paid (1922.74) (2,390.28) (1031.46) (1345.71)

Cash inflow/(outflow) before extraordinary / prior period items (3,369.10) (2018.85)

Foreign Currency Translation Reserve

(arising on account of currency translation) (4.89) 38.76

NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES (3,373.99) (1,980.09)

(B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5402.38) (2053.55)

Proceeds from sale of Fixed Assets 145.38 677.29

Purchase of Investments - current (1000.00) (1335.70)

Sale / Redemption of investments - current 1000.73 2344.27

Purchase of interest in a Associate (951.31) -

Proceeds from disinvestment in a subsidiary 483.31 -

Loans realised 162.41 250.00

Interest received 132.40 99.84

Dividend received 1.42 83.70

NET CASH INFLOW/(USED) IN INVESTING ACTIVITIES (5,428.04) 65.85


60

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007

(C) CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from borrowings 11,707.20 3,669.52

Proceeds from Fixed Deposits (173.71) (242.95)

Repayment of borrowing (5,042.75) (2,772.88)

Share application money pending allotment - 505.00

Loans from Companies 7,100.37 2,975.00

Repayment of Loans to Companies (2,975.00) (2,700.00)

Dividend paid (974.06) (900.09)

Dividend tax paid (136.19) (126.46)

Proceeds from issue of Equity share Capital in respect of a subsidiary - -

NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL ACTIVITIES 9,505.86 407.14

Net increase/(decrease) in cash and cash equivalents 703.83 (1,507.10)

Cash and Cash Equivalents as at the commencement of

the year- Cash and Bank Balances 2,670.36 4,177.46

Cash and Cash Equivalents as at the end of the year -

Cash and Bank Balances 3,374.19 2,670.36



Per our report attached






61


SCHEDULES TO THE CONSOLIDATED ACCOUNTS

1. SHARE CAPITALAUTHORISED2,50,00,000 Equity shares of Rs.10 each 2,500.00 2,500.00ISSUED AND SUBSCRIBED1,38,71,747 Equity shares of Rs. 10 each fully paid

of the above 1,387.17 1,387.17(a) 93,005 shares are allotted as fully paid up pursuant to a contract

without payment being received in cash

(b) 52,15,025 shares are allotted as fully paid up bonus sharesby capitalisation of Reserves.

(c) Pursuant to the merger scheme as approved by BIFR, 3,03,747shares have been allotted effective 31st March,1999 to theshareholders of IDL Salzbau (India) Limited.

(d) 58,70,000 shares allotted effective1st January, 2002 consequent to theamalgamation of erstwhile Gulf Oil India Limited to the shareholders oferstwhile Gulf Oil India Limited

1A WARRANTS CONVERTIBLE TO EQUITY SHARES

10,00,000 warrants, Rs.50.50 paid for each warrant as application money 505.00 505.00Each warrant is convertible into one Equity Share of Rs.10 at a priceof Rs.505 (including Rs.10 face value), in one or more trenches on or beforethe expiry of 18 months from the date of allotment i.e. 15th December, 2005 bypaying the balance amount.

2. RESERVES AND SURPLUS

Capital Reserve on Consolidation

At commencement of the year 11.55 9.13Add: On increase in Group’s interest - 2.42Less: On decrease in Group’s interest 11.52 -

0.03 11.55

CAPITAL RESERVE

At commencement of the year 8.25 8.25

EXPORT ALLOWANCE RESERVE

At commencement of the year 10.50 10.50

DEBENTURE REDEMPTION RESERVE

At commencement of the year - 233.31Less: Transfer to General Reserve - 233.31

- -GENERAL RESERVE

At commencement of the year 10,274.21 9,540.90Add: Transer from Debenture Redemption Reserve - 233.31Add: Transfer from Profit and Loss Account 250.00 500.00Less: Transfer to Profit and Loss Account - -

10,524.21 10,274.21

Foreign Currency Translation ReserveAt commencement of the year 63.26 25.91Add: for the year (1.88) 37.35

61.38 63.26

PROFIT AND LOSS ACCOUNT

As Per Account Annexed 1,692.08 2,153.95

12,296.45 12,521.72


62


3. SECURED LOANS

A. From Banks

(i) Cash Credit (includes Working Capital Demand Loan) 6,893.19 2,883.69

(ii) Overdraft against term deposit receipts 337.00 303.97

(iii) Foreign Currency Working Capital Loan - 929.20

(iv) Term Loans

(a) EXIM Bank 666.67 1,500.00

(b) Bank of Bahrain & Kuwait B.S.C. - 19.75

(c) Syndicate Bank 933.23 1,870.88

(d) State Bank India 2,969.61 -

(e) State Bank of Hyderabad 1,730.89 -

(f) State Bank of Indore 448.81 750.06

(g) ABN Amro Bank 1,352.35 -

B. Other Loans

SREI Infrastructure Finance Limited 387.70 -

Indian Renewable Energy Development Authority 2.46 4.10

C. Interest accrued and due on loans taken over - 42.09

from IDL Salzbau(India) Limited payable to

Housing and Urban Development Corporation 15,721.91 8,303.74

4. UNSECURED LOANS

Fixed Deposits [ See note 5(i)]

(interest accrued and due Rs. 2.44 lakhs; 31.03.06 Rs.5.76 lakhs) 490.76 667.79

Deferred Hire Purchase Credits 291.11 73.14

ICICI Bank 982.95 -

Sales Tax deferment 33.19 37.06

Lease Obligations 9.51 19.67

Short term:

Dealers’ deposits 96.80 79.50

Inter Corporate Loans 4,400.37 2,275.00

6,304.69 3,152.16



63


(Rupees Lakhs)

COST DEPRECIATION NET BOOK VALUE

For the On31.03.2006 Additions Deductions 31.03.2007 31.03.2006 Year Deductions 31.03.2007 31.03.2007 31.03.2006

Assets on Own UseLand-Freehold 446.72 18.41 62.06 403.07 - - - - 403.07 446.72

(see note2 below)

Land-Leasehold 17.48 1.62 - 19.10 4.01 0.22 - 4.23 14.87 13.47Buildings 2,372.47 1,263.53 24.64 3,611.36 845.42 86.60 7.54 924.48 2,686.88 1,527.05Leasehold Improvements 6.80 - - 6.80 6.80 - - 6.80 - -Plant & MachineryEquipments etc. 10,763.75 8,316.55 40.34 19,039.96 6,501.94 840.72 31.31 7,311.35 11,728.61 4,261.80Furniture, Fixtures &Office appliances 1,020.19 159.24 19.22 1,160.21 600.14 86.54 5.71 680.97 479.24 420.05Vehicles 694.89 96.44 114.29 677.04 383.78 54.84 86.03 352.59 324.45 311.11Technical Knowhow 165.07 - - 165.07 165.07 - - 165.07 - -Live Stock 6.69 0.44 1.35 5.78 - - - - 5.78 6.69Development Rights - - - - - - - - - -

15,494.06 9,856.23 261.90 25,088.39 8,507.16 1068.92 130.59 9,445.49 15,642.90 6,986.89

Assets given on LeaseVehicles 3.90 - - 3.90 3.33 0.37 - 3.70 0.20 0.57Furniture & Fixtures 33.60 - - 33.60 31.09 0.95 0.03 32.01 1.59 2.51Plant & Machinery - - - - - - - - - -

37.50 - - 37.50 34.42 1.32 0.03 35.71 1.79 3.08

Assets taken on LeaseFurniture & Fixtures 12.68 0.96 (0.19) 13.83 3.68 1.90 (0.45) 6.03 7.80 9.00Vehicles 8.60 - (0.12) 8.72 4.42 1.85 0.52 5.75 2.97 4.18

21.28 0.96 (0.31) 22.55 8.10 3.75 0.07 11.78 10.77 13.18

15,552.84 9,857.19 261.59 25,148.44 8,549.68 1,073.99 130.69 9,492.98 15,655.46

31-03-2006 15,339.05 559.52 345.73 15,552.84 8,062.38 778.25 290.95 8,549.68 7,003.16

5. FIXED ASSETS:

Notes:1. Assets costing Rs. 346.07 lakhs ( previous year Rs.73.56 lakhs) have been acquired on hire purchase, the legal ownership of which will be transferred to the

Company after the final payment.2. Certain land at Hyderabad / Bangalore to be used in future for property development has been reclassifed under inventories.

5A. INCIDENTAL EXPENDITURE DURING CONSTRUCTIONPayment to and provisions for Employees :Salaries,Wages & Bonus 264.39 237.16Company Contribution to Provident Fund, Gratuity Fund and Other Funds 39.07 36.38Workmen and Staff Welfare Expenses 16.96 14.15Interest Expenses 435.86 389.71Less : Interest Income (on LC Margin Money) 0.67 435.19 0.67 389.04Raw materials Consumed for trial production 2409.12 2131.87Stores, Spares parts and Loose Tools consumed 197.89 187.46Processing Cost 87.38 87.38Power,Fuel & Water 367.84 334.75Rates & Taxes 7.44 6.57Insurance 38.49 35.07Advertising 18.04 17.90Distribution Expenses 53.21 47.64Repairs Plant & Machinery 213.89 213.44 Building 125.42 124.80 Others 28.96 28.88Depreciation 1.26 1.05Travelling Expenses 35.27 34.73Bank Charges and Other Financial Charges 47.84 46.68Postage,Telephone & Telex 13.56 12.91Legal & Professional 116.18 115.52Transportation Charges 42.18 38.13Subscriptions 0.65 0.65Landscaping 31.74 31.74Maintenance charges 63.77 61.63Other Miscellaneous Expenses 190.74 171.13Less : 4846.48 4406.66Sale Proceeds from Trial Run Production 1898.47 1632.05Closing stock of Trial Run Production-Finished Goods and Work in process 388.79 359.37Other Income 21.07 (2308.33) 21.07 (2012.49)Less : Transferred to Fixed Assets on capitalisation (2538.15) -

0.00 2394.17

As at 31st March 2007 As at 31st March 2006(Rupees Lakhs) (Rupees Lakhs)


64



6. INVESTMENTSAt cost, unless otherwise stated

LONG TERMQUOTED

NON - TRADE

Ashok Leyland Limited 24.23 24.231,00,000 Equity Shares of Re.1 each

Hinduja TMT Limited 0.06 0.0696 Equity shares of Rs. 10 each

Jammu & Kashmir Bank Ltd. 0.91 0.912,400 Equity Shares of Rs.10 each

Indusind Bank Limited 2,063.67 2,063.6743,15,023 Equity Shares of Rs. 10 each fully paidof Rs.10 each fully paid

UNQUOTED

LONG TERM TRADE - In Associates

IDL Arom International Limited58,803 Equity Shares of Rs. 10 each cost of acquisition 5.90 -

Add: Group’s share of Profit upto 31.03.2007 1.00

6.90

20,62,000 10% Redeemable CumulativePreference Shares of Rs. 100 each 2,062.00

20,62,000(Previous year 1,75,000) 10% RedeemableCum Preference Shares of Rs. 100 each 2,068.90

Less: Unrealised profit on sale ofproperty development rights (1316.36) 752.54 -

Gulf Oil (Yantai) Limited 1,245.26 27,55,030 Equity shares of US $ 1 each cost ofacquisition (including goodwill of Rs.450.55 lakhs)

Less: Group’s share of loss upto 31.03.2007 39.07 1,206.19 -

UNQUOTED

NON - TRADE500 Shares of Rs.10 each in IDL Chemicals 0.05 0.05Employees’ Co-operative Credit Society Limited, Hyderabad

500 Shares of Rs.10 each in IDL Chemicals 0.05 0.05Employees’ Co-operative Credit Society Limited, Rourkela

27,978 units of Rs.10 each in UTI Bond Fund 2.97 2.97of Unit Trust of India

Gulf Ashley Motors Limited 114.00 114.001,14,000 Equity Shares of Rs.100 each

Patancheru Enviro-Tech Limited 3.00 3.0058,460 Equity Shares of 10 each

4,167.67 2,208.94Notes:1. Aggregate Carrying cost of quoted investments 2,088.87 2,088.872. Aggregate Market Value of quoted investments 1,864.61 2,073.173. Aggregate cost of unquoted investments 2,078.80 120.074. The Following Investment was purchased and sold during the year

8650593.93 units in SBI Mutual Fund - Institutional Income Fund - Cost Rs. 1000 lakhs


65



7. INVENTORIES

At lower of cost and net realisable value

Land for Property development, at cost 62.06 -Stores & Spares 252.18 182.86Packing Materials and Fuel 225.66 274.05Raw Materials 5,340.23 4,243.60Work-in-Process 686.29 560.95Finished Goods 3,950.78 3,289.13Excise Duty on Finished Goods 498.08 532.34

11,015.28 9,082.93

8. SUNDRY DEBTORS - UNSECURED

(a) Debts outstanding for a period exceeding six months:Considered good 2,170.57 2,278.87Considered doubtful 1,811.13 1,791.27

(b) Other Debts :Considered good 13,139.41 10,520.92

17,121.11 14,591.06Less : Provision for doubtful debts 1,811.13 1,791.27

15,309.98 12,799.79

9. CASH AND BANK BALANCES

Cash/Cheques on hand 898.26 299.97With Scheduled Banks :

Current Account 1,321.02 1,073.55Fixed Deposits/Margin account 1,154.91 1,296.84

3,374.19 2,670.36

10. LOANS AND ADVANCES

(Unsecured, considered good unless otherwise specified)

Loan to Companies - 162.41

Advance Tax (net of Provisions) 1.67 -Advances recoverable in cash or in kind or for value to be received:

Considered good 3,912.05 2,928.42Considered doubtful 65.78 65.78

3,977.83 2,994.20Less : Provision for doubtful advances 65.78 65.78

3,912.05 2,928.42Share application money (towards equity shares of Gulf Oil Yantai - 293.95Limited-pending allotment)Balance with Excise Authorities on Current Account 706.83 552.99

4,620.55 3,937.77

11. CURRENT LIABILITIES

Acceptances 4,192.96 3,146.29Sundry Creditors 13,599.33 13,582.43Interest accrued but not due 53.12 46.77Unpaid/Unclaimed Dividends 35.97 39.01

17,881.38 16,814.50


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14. OTHER INCOMEDividend 1.42 83.70Profit on sale of Property - 572.79Profit/(loss) on Sale/Scrap of other Fixed Assets 76.54 49.72Profit on sale of Investments - Current 0.73 986.01Insurance Claims 56.30 53.00Export Incentives (DEPB) 105.07 163.73Miscellaneous 55.03 140.33Provision no longer required written back - 1.43

295.09 2,050.71

15. COST OF MATERIALS

Raw Materials Consumed :

Opening Stock 3,912.78 3,676.04

Add : Purchase 30,601.85 20,140.24

34,514.63 23,816.28

Less : Closing Stock 5,340.23 3,912.78

29,174.40 19,903.50

Purchase of Finished Goods 6,488.24 4,380.51

(Increase)/Decrease in Finished Goods andWork-in-Process:Closing Stock

Finished Goods 3,950.78 3,127.33Work-in-Process 686.29 363.38

4,637.07 3,490.71

Opening Stock :Finished Goods 3,127.33 2,587.40Work-in-Process 363.38 301.64Closing Stock of trial run production 388.79 -

3,879.50 2,889.04

(757.57) (601.67)Packing Materials Consumed 2,422.14 2,081.63

37,327.21 25,763.97Less: Scrap realisation 131.70 101.23

37,195.51 25,662.74

12. PROVISIONS

Provision for Taxation (net of Advance Tax) - 73.29Provision for Fringe Benefit Tax 25.24 -Proposed dividend 1,115.38 971.02Tax on dividend 189.56 136.19Miscellaneous - Leave encashment 130.16 97.87

- Gratuity 363.81 354.14

1,824.15 1,632.5113. MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)Payments under Voluntary Retirement Scheme 1,010.01 1,000.45Deferred Revenue Expenses 38.47 60.11Preliminary Expenses - 1.58Camp site Expenditure 33.81 -

1082.29 1062.14



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16. EXPENSES

Payments to and provisions for Employees :

Salaries, Wages and Bonus 4,067.90 3,450.32

Contribution to Provident Fund, Gratuity

Fund and other Funds 489.89 391.31

Workmen and Staff Welfare Expenses 476.76 427.05

5,034.55 4,268.68

Interest Expense:

On Debentures and Fixed Loans 959.00 398.18

Other 924.68 585.26

1,883.68 983.44

Less: Interest Income (Gross):

(Tax deducted at source Rs.24.52 Lakhs; Previous year Rs.18.81 Lakhs)

—On deposits, income-tax refunds, loans to employees 132.40 112.25

1,751.28 871.19

Stores, Spare Parts and Loose Tools consumed 182.01 99.78

Processing Charges 663.11 544.68

Power, Fuel and Water 809.68 539.20

Rent 374.76 193.80

Rates and Taxes 202.53 234.26

Expenses on Operation Contracts 3,909.73 5,831.63

Insurance 237.03 248.56

Advertising 926.38 621.78

Distribution Expenses 2,470.26 1,948.59

Commission on Sales 136.56 148.73

Discount on Sales 3,572.76 2,179.48

Repairs to Buildings 40.91 25.55

Repairs to Machinery 117.81 99.58

Travelling Expenses 592.96 561.27

Bank charges and other Financial charges 490.98 327.85

Directors’ Fees 10.44 14.24

Commission to non- wholetime Directors 7.97 6.51

Postage, Telephone and Telex 190.63 191.89

Agriculture & Farm Maintenance 23.04 78.91

Legal & Professional charges 285.40 289.57

Provision for doubtful debts 322.74 352.02

Bad debts written off - 0.86

Bad Debts, advances etc written off 307.84Less: Provision for doubtful debts written-back 307.84 - -

Miscellaneous expenditure written off :Deferred Revenue expenses 25.05 20.92

Software expenditure 4.05 12.18

Preliminary Expenses 2.09 1.18

Royalty 300.01 264.71

Miscellaneous 807.80 916.09

23,492.52 20,893.69


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17. NOTES ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007

1 (a) The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21)-“Consolidated Financial Statements”, Accounting Standard 23 (AS23) “accounting for Investments in Associates inConsolidated Financial Statements” issued by The Institute of Chartered Accountants of India.

(b) The subsidiaries (which along with Gulf Oil Corporation Limited, the parent, constitute the Group) considered in thepreparation of these consolidated financial statements are :

Name Country of Percentage of Percentage ofIncorporation voting power as voting power as

at 31st March 2007 at 31st March 2006

IDL Buildware Limited India 100.00 100.00(Formerly IDL Finance Limited)

IDL Agro Chemicals Limited India 100.00 100.00

Gulf Carosserie India Limited India 95.00 95.00

Gulf Oil Bangladesh Limited Bangladesh 51.00 51.00

PT Gulf Oil Lubricants Indonesia Indonesia 75.00 75.00

IDL Arom International Limited India - 100.00(Subsidiary up to 31.12.2006)

(c) Investments in Associates are:

Name Country of Percentage of Percentage ofIncorporation ownership interest as ownership interest as

at 31st March 2007 at 31st March 2006

IDL Arom International Limited India 48.99% -(w.e.f. 01.01.2007)

Gulf Oil (Yantai) Co., Limited China 34.01% -

(d) The share of profit/(loss) in respect of investment in associate companies include the figures which are consideredas per the unaudited financial statement/profit and loss account for the year ended 31st March 2007, as per thedetails given below: -

Share of profit/(loss) up to 31st March,2007(Rs. In lakhs)

Gulf Oil (Yantai) Co., Ltd (39.07)

2. ACCOUNTING POLICIES

The accounts have been prepared primarily on the historical cost convention and in accordance with the mandatory accountingstandards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.Financial Statements of two foreign subsidiaries, prepared in accordance with the Accounting Standards of those countrieshave been recast for the purpose of consolidation with the Indian Parent. The significant accounting policies followed by theGroup are stated below:

I. FIXED ASSETS:

Fixed assets are shown at cost less depreciation. Cost comprises purchase price and other attributable expenses.

II. DEPRECIATION ON FIXED ASSETS:

(i) The Group, except Gulf Oil Bangladesh Limited and P.T.Gulf Oil Lubricants, Indonesia follows the straight linemethod of charging depreciation on all its fixed assets. Depreciation has been provided in the manner and at therates prescribed in Schedule XIV to the Companies Act, 1956 on all the assets except certain equipments whichare depreciated over their estimated useful life. In respect of Gulf Oil Bangladesh Limited, depreciation has beenprovided using straight line method over the useful lives of the assets as summarized below :

Plant and Machinery

Office equipment 10 Years

Computer/Computer software 4 Years

Mould 5 Years

Vehicles 5 Years

Furniture and Fixtures 10 Years



69

In respect of P.T.Gulf Oil Lubricants, Indonesia, depreciation on Office furniture and equipment has been computedon a straight-line method, based on the estimated useful life of the related assets, for 4 years at the rates of 25%p.a.

(ii) Leasehold land is being amortised in equal installments over the lease period.

(iii) Technical Know-how is being amortised over a period of five to seven years.

III. INVESTMENTS:

Current Investments are valued at lower of cost and fair value, Long Term Investments are valued at cost. Whereapplicable, provision is made where there is a permanent fall in valuation of Long Term Investments.

IV. INVENTORIES:

Inventories are valued at lower of cost and net realisable value. The method of arriving at cost of various categories ofinventories is as below:

(a) Stores and Spares, Raw and Packing material First – in – First – out method/ Weighted Averagemethod

(b) Finished goods and work-In-process Weighted average cost of production, whichcomprises direct material costs, direct wages,appropriate overheads.

(c) Finished goods-Traded First-in-First-out basis.

V. SUNDRY DEBTORS AND ADVANCES:

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for respectively.

VI. FOREIGN EXCHANGE TRANSACTIONS:

Transactions made during the year in foreign currency are recorded at the exchange rate prevailing at the time oftransaction. Assets and Liabilities related to foreign currency transactions remaining unsettled at the year end aretranslated at the contract rates, when covered by forward cover contracts and at year-end rate in other cases. Realisedgains and losses on foreign exchange transactions other than those relating to fixed assets are recognised in the profitand loss account. Gain/loss on transaction of long term liabilities incurred to acquire fixed assets is treated as anadjustment to the carrying cost of fixed assets.

Exchange differences arising on account of the assets or liabilities and income or expenditure of non-integral foreignoperations are recorded in foreign currency translation reserve.

VII. REVENUE RECOGNITION:

(a) Sale of goods is recognised at the point of dispatch of finished goods to customers. Sales include amount recoveredtowards excise duty but exclude sales tax. Export incentive under the Duty Entitlement Pass Book scheme hasbeen recognized on the basis of credits afforded in the passbook.

(b) Income from services is recognised at the time of rendering the services.

(c) Dividend income from investment is recognised when the owner’s right to receive payment is established.

(d) Income from property development is recognised as soon as the contract is entered with the party and theconsideration is received.

VIII. RESEARCH AND DEVELOPMENT EXPENSES:

Research and Development expenditure of revenue nature is written off in the year in which it is incurred and expenditureof a capital nature is added to fixed assets.

IX. RETIREMENT BENEFITS:

Retirement benefits to employees are provided for by means of gratuity, superannuation and provident fund.

The gratuity liability is determined based on the actuarial valuation by an approved actuary.

Payments in respect of superannuation are made to the fund administered by LIC. Provision in respect of leaveencashment is made based on actuarial valuation as at year end.

X. TAXES ON INCOME:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences,being the difference between taxable income and accounting income that originate in one period and are capable ofreversal in one or subsequent periods.



70

XI. SEGMENT REPORTING:

The accounting policy adopted for Segment Reporting is in line with the accounting policy of the Company with thefollowing additional policy for Segment Reporting:-

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities ofthe segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to the segmentson a reasonable basis, have been included under “Unallocated Expenses”. Inter Segment transfers are at cost.

XII. MISCELLANEOUS:

(a) Deferred revenue expenses are written off over the expected period of future benefits.

(b) Payments under the Voluntary Retirement Scheme are written off over a period of five/four years.

(c) Software expenditure is amortised over a period of three/four years.

(d) Preliminary Expenses are written off over a period of five/ten years.

(e) Camp site expenditure; i.e., Expenditure on setting up camps for execution of Operation contracts is written offover the period of the contract.

3. MANAGERIAL REMUNERATION2006-07 2005-06

Rs. Lakhs Rs. Lakhs

Salaries 30.72 40.99

Commission 7.97 10.45

Contribution to Provident Fund and Superannuation Fund 5.18 7.73

Benefits 3.16 1.29

Commission to non-whole time Directors 7.97 6.51

55.00 66.97

Note :Having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an individualemployee is not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in the abovecomputation.

4. CONTINGENT LIABILITIES


Rs. In Lakhs Rs. In Lakhs

(a) Corporate Guarantees 390.00 -

(b) Bills Discounted 77.64 -

(c) Claims against the Company not acknowledged as debts hence not provided

(i) Income Tax Demands 552.99 545.97

(ii) Sales Tax Demands (see note 6) 1787.93 2280.56

(iii) Excise Demands 190.93 20.89

(iv) Additional Demands towards cost of land 3.81 3.81

(v) Claims of workmen/ex-employees 97.13 94.51

(vi) Other Matters 347.82 372.46

5. SECURED LOANS:

(a) Loan from banks on Cash Credit account including foreign currency demand loan is secured by hypothecation of allmovable assets of the Parent Company including raw materials, finished goods, work-in-process, Stores and Sparesand present and future book debts of the Parent Company and by a second charge on all the fixed assets of the ParentCompany, both present and future.

(b) Loan from Indian Renewable Energy Development Agency Limited is secured by bank guarantee issued by StateBank of Mysore.

(c) The Term Loan from State Bank of India is secured by first charge on the fixed assets created out of the loan rankingpari-passu with other term lenders and by hypothecation of Raw materials, finished goods, stock in process, storesand spares and receivables of the Parent Company ranking pari-passu with other working capital lenders and isfurther secured by second charge on land, buildings and fixed assets of the Parent Company both present and proposedranking, pari-passu with other working capital lenders.



71

(d) The Term Loan from State Bank of Hyderabad is secured by first charge on the fixed assets created out of the loanranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process,stores and spares and receivables ranking pari-passu with other working capital lenders and further secured by asecond charge on land, buildings and fixed assets of the Parent Company, present and future.

(e) Foreign Currency Term Loan from Bank of Bahrain & Kuwait B.S.C is secured by a pari-passu first charge on all fixedassets of Lubricants division of the Parent Company.

(f) The Term Loans from State Bank of Indore and Syndicate Bank are secured by first charge on the fixed assets of theParent Company.

(g) The Term Loans from Export Import Bank of India are secured by exclusive first charge on all the fixed assets ofSpeciality Chemicals Division of the Parent Company.

(h) Interest accrued and due on loans taken over from erstwhile IDL Salzbau (India) Limited amounting to Rs.42.09 lakhsis secured by first charge on all immovable properties and second charge on other assets including raw materials,finished goods, work-in-process, stores and spares and book debts of Building Products Division of the Parent Company.Consequent to the transfer of all the immovable properties and other assets including raw materials, finished goods,work-in-process, stores and spares, and book debts of Building Product Division to a subsidiary of the Company, thesubsidiary Company is in the process of obtaining a No Objection certificate from the lender.

(i) Fixed Deposits to the extent of Rs 375.86 Lakhs were secured by a second charge on all tangible movable propertyand fixed assets including all movable machinery and plant, machinery spares and stores, tools and accessories andother movables both present and future as approved by the Controller of Capital Issues vide his letter dated 1st November,1980.

(j) Term Loan from ABN AMRO Bank N.V and SREI Infrastructure Finance Limited are secured by way of first charge onspecific mining equipment of Consult Division of the Parent Company.

(k) In respect of loans fully repaid during the previous year/current year to the banks and Public Financial Institutions,satisfaction of charge has been obtained.

(l) Cash Credit from Andhra Bank is secured by hypothecation on all the movable assets and existing and future cropsand orchards, a lien on term deposits of Rs.4.94 Lakhs and deposit of title deeds for land admeasuring 9.29 acres ofIDL Agro Chemicals Limited, a subsidiary.

(m) In respect of Gulf Oil Bangladesh Limited, one of the subsidiaries, cash credit/overdraft facilities from the Banks aresecured by hypothecation of imported goods and stocks of finished products, first charge on fixed and floating assetsof the aforesaid company and lien on duly discharged fixed deposit receipts.

6. SALES TAX

(a) In respect of taxability under the Central Sales Tax Act, 1956, of stock transfers from Rourkela Unit of the ParentCompany to its consignment agents outside the State of Orissa, the amount deposited under protest by the ParentCompany with the Orissa Sales Tax authorities in respect of this matter stands at Rs. 150.17 Lakhs as on 31 March,2007 and along with interest of Rs. 69.30 Lakhs accrued till 1st June, 1998 on the said deposit is included under Loansand Advances (Schedule 10).

The Honourable High Court of Orissa vide its order dated 11th April 2006, has held that the Stock Transfers are Inter-State Sales. The Parent Company has filed Special Leave Petition (SLP) in the Honourable Supreme Court of India.The Apex Court, while hearing SLP, considering the merits of case, ordered, “Issue of Notice” to the State of Orissaand granted time to parties, for filing of written statements. Since the matter being sub-judice, status quo has beenmaintained. No provision has been made in respect of disputed deposit (including interest thereon) as the ParentCompany is hopeful of recovering the same.

(b) Further, in the previous years the Parent Company received various demands from Assistant Commissioner, SalesTax, Rourkela through appeal orders in respect of assessment years 1994-95, 1995-96 and 1998-99 amounting to Rs.1294.08 Lakhs treating the stock transfers to various branches/consignment agents of the Parent Company as salesunder Central Sales Tax. The Parent Company filed petition in the Honourable High Court of Orissa, Cuttack for fullstay of the demand of Asst. Commissioner of Sales Tax Rourkela since in earlier assessment years on the similarcases Honourable High Court has decided the matter in favour of the Parent Company. The Honourable High Court ofOrissa has granted full stay for payment of Sales Tax demands till the disposal of Parent Company’s Appeal filed beforeOrissa Sales Tax Tribunal.

7. FIXED ASSETS

Buildings include:

(i) Rs.7.09 lakhs, which represents the cost of ownership flats Rs.7.08 lakhs and Rs.0.01 lakhs being the value of Sharemoney in Sett Minar Co-operative Housing Society Limited.

(ii) Rs.4.70 lakhs, which, represents the cost of ownership flats Rs. 4.43 lakhs and Rs.0.27 lakhs being the value of 270ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited.

8. TAXATION

(i) Pursuant to the scheme of merger with IDL Salzbau (India) Limited (ISIL) sanctioned by the BIFR, the Parent Companyhas considered the tax losses of Rs. 1498.36 lakhs allowable upto 31st March, 1999 in computing the Company’s income



72

for the year ended 31st March, 1999 giving a tax benefit of Rs. 524.43 lakhs in that year. However, the tax losses and taxbenefits thereon do not include funded interest accrued on the loans taken by ISIL from the Financial Institutions as thetax benefit on such interest shall accrue to the Parent Company as and when the interest is paid to the Financial Institutions.

In the current year the Parent Company has paid an amount of Rs. 42.09 lakhs being the interest due to the Institution.

(ii) Pursuant to the scheme of amalgamation of erstwhile Gulf Oil India Limited with the Parent Company, brought forwardlosses of Rs. 3462.77 lakhs as at 31st December, 2001 have been considered in computing the Company’s tax liabilitiesfor the year 2001 -02 and an amount of Rs. 1236.24 lakhs was considered as deferred tax asset. In view of insufficienttaxable income in subsequent years till 31st March 2007, the Company is not able to utilize the deferred tax asset. Themanagement is confident that the Company would be in a position to make adequate profits in future and would realizethe deferred tax asset of Rs. 993 lakhs being carried forward as on 31st March, 2007.

(iii) Deferred tax

31st March 2007 31st March 2006Rs. Lakhs Rs. Lakhs

(a) Deferred tax assets arising on account of timing differences:

Unabsorbed business loss/depreciation # 1126.75 1096.22Provision for doubtful debts/advances 625.05 598.83

Other timing differences 185.26 196.43

1937.06 1891.48(b) Deferred tax liabilities arising on account of timing differences:


# Rs. 993 lakhs relates to erstwhile Gulf Oil India Limited. In view of the Parent Company’s future profit projectionsthe Company expects to fully realise the deferred tax asset.

(iv) In view of losses incurred by IDL Buildware Limited (formerly IDL Finance Limited) one of the subsidiaries and notaxable income in the current year, the aforesaid Company has not recorded the deferred tax liability as on 31st March2007 arising on account of timing differences-depreciation amounting to Rs.117 lakhs (Previous year Rs.122 lakhs) asstipulated in Accounting Standard-22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountantsof India. Deferred tax liability/asset shall be provided in the books in the year the aforesaid Company starts makingprofits and is liable to tax.

9. MISCELLANEOUS:

(a) “Sundry Debtors – Debts outstanding for a period exceeding six months, Considered good”, include

(i) Rs. 480.63 lakhs (net of provision) due from certain customers of the Parent Company which are outstandingfrom earlier years against some of whom the Parent Company has initiated appropriate legal proceedings and ishopeful of recovering the dues in full; pending finalisation in this matter, no provision has been considered necessaryfor this amount.

(ii) Rs. 97.45 lakhs in respect of customers of subsidiary companies, which are outstanding from earlier years. Inrespect of these debts, appropriate legal proceedings have been initiated for recovery of the amounts, andsubsidiaries are hopeful of recovering the debts in full; pending finalisation in this matter, no provision has beenconsidered necessary for the amount.

(b) Loans and Advances of IDL Buildware Limited (formerly IDL Finance Limited) one of the subsidiaries include Rs. 5.76lakhs due from certain parties, which are outstanding from earlier years. The aforesaid Company is hopeful of recoveringthe dues in full and no provision has been considered necessary for this amount.

(c) The net exchange gain / loss, (i.e., difference between the spot rate on the dates of the transactions and the actual rateat which the transactions are settled/appropriate rates applicable at the year end) credited to Profit & Loss Account isRs. 153.45 Lakhs (Previous Year Rs.231.54 Lakhs Debited to Profit & Loss Account).

(d) Exchange difference in respect of forward exchange contracts to be recognised in the Profit and Loss Account in thesubsequent accounting period is Rs. 1.12 Lakhs Credit (Previous year Rs. 17.57 Lakhs)

(e) Gulf Carosserie India Limited one of the subsidiaries had entered into collaboration agreement with SIPAL, ArexonsSpa, Italy, in terms of which it was agreed by the said collaborator to subscribe to 20% of the Capital of the Companyfor which a sum of Rs.10,00,000 had been received as share application money pending the final approval of theReserve Bank of India. As the final approval of the Reserve Bank of India has not been forthcoming, the Company hasdecided to repay/remit the said amount with required approvals and till that time to consider the said share applicationmoney as current liability.

(f) The financial statements of Gulf Oil Bangladesh Limited, one of the subsidiaries, have been prepared on a goingconcern basis nothwithstanding accumulated loss of Rs. 243.91 lakhs and a negative networth of Rs. 134.66 lakhs asat 31st March, 2007, as the Parent Company has agreed to provide necessary support for this company’s activities tocontinue as a going concern.



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(g) The financial statements of IDL Arom International Limited have been prepared on a going concern basis as the Boardof Directors of the Company has identified property development as the business. The Company has applied fornecessary permissions from the relevant authorities to commence the development activities.

(h) Life Insurance Corporation of India ( LIC) fund managers of the Parent Company’s Employees Gratuity Fund, have notbeen able to ascertain the total liability towards gratuity as on 31st March, 2007. In the absence of such information theCompany has approached an independent actuary who has ascertained the gratuity liability as Rs. 700.73 lakhs. TheCompany during the year has provided Rs. 107.89 lakhs towards gratuity liability and is of the view that availableprovision in the books is adequate to meet the total liability in this regard. Adjustment if any, in this regard will be madewhen the final liability is ascertained by LIC.

10. EARNINGS PER SHARE

Year ended Year ended31st March, 2007 31st March, 2006

a. Profit after Tax (Rs. Lakhs) 1093.07 1594.32

b. Weighted average number of Equity shares outstandingduring the year 13871747 13871747

c. Potential equity shares on conversion of share warrants 649341 183372d. Weighted Average number of equity shares in computing

diluted earnings per share 14521088 14055119e. Face value of each Equity Share (Rs.) 10 10

f. Earnings per Share-Basic (Rs.) 7.88 11.49-Diluted (Rs.) 7.52 11.34

11. RELATED PARTY DISCLOSURES:

Information relating to Related Party Transactions as per “ Accounting Standard 18” issued by the Institute of CharteredAccountants of India.

(A) Name of the Related Party Relationship

Gulf Oil International (Mauritius) Inc. Associate

Gulf Oil (Yantai) Limited

IDL Arom International Limited

N N Investments BV, Netherlands

Mr. S. Pramanik, Managing Director Key Management Personnel

(B) Details of transactions between the Company and Related Parties and the status of outstanding balances at the yearend:

Rs. Lakhs

Particulars Associates Key Management Personnel

31.03.07 31.03.06 31.03.07 31.03.06

Dividend paid 476.07 442.07 0.07 0.24

Directors’ Remuneration - - 47.03 60.46

Purchase & Other Services - 2.50 - -

Royalty 300.01 264.71 - -

Investment in Preference Share 350.00 - - -

Investment in Equity Shares 1245.26 - - -

Sale of Development Rights in Property 350.00 - - -

Advance given 33.67 - - -

Outstanding balance Payable 255.01 218.90 - -

Outstanding balances receivables 40.12 - - -



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12. DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD 19, “LEASES” ISSUED BY THE INSTITUTE OFCHARTERED ACCOUNTANTS OF INDIA ARE GIVEN BELOW:

a) Operating Lease:

a. Where the Company is a Lessee:

i) The Parent Company’s significant leasing arrangements are in respect of operating leases for premises(residences, office, storage godowns for finished goods etc.). The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent onagreed terms. The aggregate lease rents payable are charged as rent in the Profit and Loss Account.

ii) The company has taken certain Plant and Machinery under non-cancellable leases.


Rs. Lakhs

31st March, 2007 31

st March, 2006



Total of future minimum payments at the balance sheet date 3085.15 638.84 2446.31 116.64 24.34 92.30

Rs.Lakhs

Gross Block Accumulated Depreciation for Depreciation as on the year

31-3-2007 31-3-2006 31-3-2007 31-3-2006 2006-07 2005-06

Building 30.17 30.17 9.85 9.40 0.45 0.45

Plant & Machinery 80.32 80.32 43.02 39.20 3.82 5.26

Lease Rent charged to Profit & Loss account for the year is amounting to Rs. 116.61 lakhs [Previous year Rs. 2.05Lakhs].

b. Where the Company is Lessor:

Details in respect of assets given on operating lease:

The assets given on lease are not non-cancellable and range between 11 months to 5 years generally and are usuallyrenewable by mutual consent, on mutually agreeable terms. The aggregate lease rentals are recognised as incomefrom property in the Profit & Loss account.

Initial direct costs are recognised as an expense in the year in which these are incurred.

c) Hire Purchase:

(i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which theownership will be transferred to the Company at the end of the hire purchase term.

(ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the presentvalue: Rs. Lakhs

31st March, 2007 31

st March, 2006



Total of minimum hirepurchase payments at thebalance sheet date 328.04 141.91 186.13 83.20 39.97 43.23

Less: Future FinanceCharges 36.93 22.27 14.66 10.06 5.62 4.44

Present value of minimumhire purchase paymentsat the balance sheet date 291.11 119.64 171.47 73.14 34.35 38.79


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d) Finance Lease:

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified asFinance Lease. Fixed Assets acquired by way of Finance Lease are stated at amount equal to the lower of its fair valueand the present value of the minimum lease payments at the inception of the lease less accumulated depreciation andimpairment loss.

(i) Particulars of Lease payments made during the year:

Rs. Lakhs

Particulars 2006-07 2005-06

Principal 10.45 13.94

Lease Finance Charges 2.61 5.63

(ii) The break up of minimum lease payments outstanding at the balance sheet date is as under:

Rs.Lakhs

Particulars 31st March 2007 31st March 2006Lease Principal Interest Lease Principal Interest

Payments PaymentsPayable within one year 9.51 9.21 0.30 12.03 10.59 1.44Payable after one year but withinfive years - - - 10.34 9.08 1.26

Total 9.51 9.21 0.30 22.37 19.67 2.70

13 SEGMENT INFORMATION FOR THE YEAR ENDED 31st MARCH 2007

(i) Primary Business SegmentsRs. Lakhs

Revenue by geographical marketInter-Segment TotalCarrying amount of segment assetsAdditions to Fixed Assets

India Outside India Total2007 2006 2007 2006 2007 2006

59176.41 45091.08 5007.07 4356.11 64183.48 49447.19 - - - - - -

59176.41 45091.08 5007.07 4356.11 64183.48 49447.1955561.09 43631.76 2051.06 1927.98 57612.15 45559.74

5416.18 2066.14 0.29 12.84 5416.47 2078.98

(ii) Information about Secondary Business Segments (in Rupees Lakhs)


76

(iii) Notes:

(a) Business Segment

The Company has considered business segment as the primary segment for disclosure.

Segments have been identified and reported taking into account the Organisation structure, the nature of productsand services, the deferring risks and returns of the segments

The business segments of the Company are (I)Explosives,(ii) Consult dealing in Minning & Infrastructure Contracts,(iii) Specialty Chemicals dealing in Builk Drugs & Pharma, (iv) Building Products, (v) Lubricating Oils, (vi) PropertyDevelopment and (vii) Others. Others include Floriculture, farm produce.

(b) Geographical Segment

The Geographical segments considered for disclosure are as follows:

- Revenue with in India includes sales to customers located within India and earnings in India.

- Revenue outside India includes sales to customers located outside India and earnings outside India

14. Income from Property Development :

(a) The Parent Company during the year entered into “Development Agreements” with IDL Arom International Limited(wholly owned subsidiary till 31st December, 2006 and an Associate thereafter) towards sale of development rights invarious properties owned by it for a consideration of Rs. 2337 lakhs, which has been based on valuers report. IDLArom would undertake constructions on the aforesaid properties. Subsequent to the development of such properties,and at the time IDL Arom enters into agreements for sale with intending buyers on such terms and conditions as it maydeem fit, the Parent Company shall convey its right, title and interest in the said properties in favour of the intendingbuyers without further consideration.

(b) The Parent Company, during the year entered into “Option for Development Rights” with Aasia Property DevelopmentLimited (APDL) wherein, APDL has only the right to decide whether or not to exercise the option to acquire thedevelopment rights in respect of certain properties of the Parent Company located at Hyderabad and Bangalore. Theoffer of grant of the development rights in respect of the said properties by the Parent Company is open upto 30th

September, 2007. In consideration of the Parent Company agreeing to keep such offer open APDL has paid an amountof Rs. 1000 lakhs as a Non Refundable Commitment Amount. Further, if the option for development is exercised byAPDL, a Development Agreement would be entered with the Parent Company wherein, the Company shall be entitledto share of the Gross Sale Proceeds (as determined in the agreement) realized from the sale of buildings constructedon the said properties.

The consideration received on entering into the above agreements has been shown under “Income from PropertyDevelopment” in the Profit and Loss Account.

15. Previous year’s figures have been regrouped / recast wherever necessary.

For Deloitte Haskins & Sells For and on behalf of the Board of Directors

Chartered Accountants






77

ELECTRONIC CLEARING SERVICES (ECS) MANDATE FORM

(For Shares held in physical form)

From : Date :

To :

Dear Sirs,

Please fill-in the information in CAPITAL LETTERS in ENGLISH ONLY. Please TICK wherever is applicable.

Folio No.

Name of First Holder

Bank Name

Branch Name

Bank & Branch Code : (9 Digits Code Number appearing on the MICR Band of the cheque supplied by the Bank. Pleaseattach a Xerox copy of a cheque of your bank duly cancelled for ensuring accuracy of the bank name,branch name and code number)

Account Type Savings Current Cash Credit

A/c No. (as appearing in the cheque leaf)

I, hereby declare that the particulars given above are correct and complete. If any transaction is delayed or not effected at allfor reasons of incompleteness or incorrectness of information supplied as above, the Company /Registrar will not be heldresponsible. I agree to avail ECS facility provided by Reserve Bank of India as and when implemented by the Company.

I further undertake to inform the Company / Registrar any changes in Bank /Branch and Account number.

Signature of the first holder

��


78

NOTES


79

��

GULF OIL Corporation LimitedRegd. Office: Kukatpally, Sanathnagar (IE) PO, Hyderabad 500 018

ATTENDANCE SLIP

Folio No: .............................. DP ID: .................................. L F/ Client ID No. ........................................

Shareholders Names: Mr./ Mrs./Miss. ..............................................................................................................................................

(in block letters)

IN CASE OF PROXY

Name of the Proxy: Mr./Mrs./Miss. ...................................................................................................................................................

(in block letters)

No. of shares held: ………………………………...............................................

I certify that I am a registered Shareholder/ proxy for the registered Shareholder of the Company.

I hereby record my presence at the 46th Annual General Meeting of the Company held on Friday, the 28th day of September,2007.

Signature of the Shareholder/ Proxy

Notes: 1. Please bring this Attendance Slip when coming to the Meeting.2. Please do not bring with you any person who is not a member of the Company.

GULF OIL Corporation LimitedRegd. Office: Kukatpally, Sanathnagar (IE) PO, Hyderabad 500 018

PROXY

I/ We …………………………………………………………....................................................................……………………………………

of ………….....................................…………………in the district of ……………......................................………………………………..

being a member(s) of GULF OIL Corporation Limited hereby appoint …………...........................................................………..………

of…………………………in the district of…………………………… or failing him ……………………… of…………………………in

the district of ……………………as my/ our Proxy to vote for me/ us on my/ our behalf at the Forty-sixth Annual General Meeting

of the Company to be held on Friday, the 28th day of September, 2007 and at any adjournment there of.

As witness my/ our hand(s), this………………..day of ……………..2007.

Folio No. ............................... Signature of the Shareholder(s)

DP ID .......................................... Client ID No. ..........................................

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