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2 Hindustan Colas Limited

A market leader in the value-added bitumen segment, servicing road construction activity all over the country.

Our FacilitiesHINCOL has a network of eight manufacturing facilities strategically

located across India. Our reach is further enhanced by our strong

marketing network and storage depots that take our products

closer to our customers. Our manufacturing plants deploy modern

state-of-the-art production facilities. Technical support from COLAS

SA and marketing support from HPCL ensures excellence in our

operations. Well equipped labs at all HINCOL plants, supported by

the Central Research Laboratory of Colas SA, ensure strict Quality

Control.

Our ProductsnemutibdeifidomdnasnoislumenemutibsecudorpLOCNIH

conforming to the highest standards of quality. Our repertoire

also comprises special emulsions and tailor-made products like

PMB (Run-way Grade) and Warm Bitumen. Our latest product

ROADBOND has found recognition and appreciation as an effective

solution for pothole repairs.

Bitumen Emulsions Versatility & convenience in road construction

Modified Bitumen Modification happens when innovation meets engineering

Special ProductsSpecific needs are fulfilled with special productsP

RO

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SBusiness Profile


BOARD OF DIRECTORS

Mr. S Roy Choudhury, Chairman

Mr. Jacques Pastor, Director

Mr. Hervé Le Bouc, Director

Mr. Somchit Sertthin, Director

Mr. Bhaswar Mukherjee, Director

Ms. Nishi Vasudeva, Director (w.e.f. 1st July 2012)

Mr. K S R Prasad, Director (till 30th June 2012)

Mr. Jacques Leost

(Alternate Director to Mr. Hervé Le Bouc)

Mr. Chaiwat Srivalwat

(Alternate Director to Mr. Somchit Sertthin)

“MANAGER” UNDER THE COMPANIES ACTMr. Sanjay Grover, Chief Executive Officer

CFO & COMPANY SECRETARYMr. SitaRam Taparia

STATUTORY AUDITORSM/s Ford, Rhodes, Parks & Co.

Chartered Accountants, Mumbai

INTERNAL AUDITORSM/s G P Kapadia & Co.

Chartered Accountants, Mumbai

BANKERSCorporation Bank

State Bank of India

IDBI Bank

Kotak Mahindra Bank

Standard Chartered Bank

REGISTERED OFFICED-500, TTC Industrial Area, MIDC

Opp. HPCL Terminal, Turbhe, Navi Mumbai – 400 705

Email: [email protected]

CORPORATE OFFICER&C Building Annexe, Sir J J Road,

Byculla, Mumbai- 400 008 Tel. 91-22-61501000.

Website: www.hincol.com

CORPORATE IDENTITY NUMBERU23200MH1995PLC090671

Corporate Information

Bird's eye view of Admin Building at Haldia Plant


Performance Parameter FY11-12 FY10-11 FY 09-10 FY 08-09 FY 07-08Gross Fixed Assets 11,402 8,992 7,668 6,960 5,017Less :Depreciation 2,970 2,469 2,029 1,657 1,348Net Fixed Assets 8,432 6,523 5,639 5,303 3,669Capital Works-In-Progress 339 1,055 501 90 201

(A) 8,771 7,578 6,140 5,393 3,870

Inventories 2,606 1,951 1,774 1,473 1,011Trade Receivables 3,053 1,641 1,676 3,367 2,422Cash and Bank Balances 7,320 7,100 5,992 3,712 3,175Other Assets 1,421 1,363 1,096 953 872

(B) 14,400 12,055 10,538 9,505 7,480Liabilities & Provisions (C) 9,473 6,750 5,323 6,561 5,633 Net Working Capital (D=B-C) 4,927 5,305 5,215 2,944 1,847

(A+D) 13,698 12,883 11,355 8,337 5,717

Share Capital 945 945 945 945 945Reserves and Surplus 11,843 11,121 9,655 6,271 3,650Net Worth 12,788 12,066 10,600 7,216 4,595Loan Funds 206 253 254 646 694Deferred Tax Liability 704 564 501 475 428

13,698 12,883 11,355 8,337 5,717

Fixed Assets Turnover (Times) 5.09 5.16 6.10 7.66 7.37Current Ratio (Times) 1.52 1.79 1.98 1.45 1.33Liquid Ratio (Times) 1.25 1.50 1.65 1.22 1.15Debt to Equity Ratio (Times) 0.02 0.02 0.02 0.09 0.15

Capital Employed Turnover Ratio (Times) 3.13 2.92 3.58 5.05 5.19Book Value per Share ( ` ) 135.33 127.68 112.18 76.37 48.63

(in ` Lakhs)

Performance Profile


Performance at a glance

200

150

100

50

0

JobworkOwn Production Modified BitumenEmulsions and Cutback

Production Volumes (in TMT)

130

137

132

130

128

29

19

37

59

52

Sales Volumes (in TMT)

140

105

70

35

0

105

107

109

103

101

24 29 23 27 26

Revenue45,00040,00035,00030,00025,00020,00015,00010,0005,000

0

25,

410

35,

645

35,

609

35,

797 4

2,24

2

Revenue (in ̀lakhs)

Profit After Tax4000

3200

2400

1600

800

0FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12

1,9

12

2,7

87

3,8

25

2,8

38

2,6

44

PAT (in ̀lakhs)

Depreciation & Finance ChargesEmployee costsAdmin and S&D expenses

Income TaxCOGS & Operating expenses

Interest IncomeJobwork Charges Hospitality ChargesSales

Revenue Profile for FY11-12 Expenditure Profile for FY11-12

2% 2% 1%

2%

90%

3% 1% 4%

95%

FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12

FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12


The Company understands

the significance of concept

of sustainability and all the

business operations are

aligned towards creating a

sustainable growth model.

The Company very keenly

believes in the triple bottom-

line approach and recognizes

that sustainable development necessarily imbibes

taking care of communities and conservation of

environment and natural resources.

Products and their application

The products of the Company as well as application

of these products are friendly to the environment.

The societal responsibility of the road network

operators is increasingly moving towards addressing

the needs of the whole community which includes

environmental impact of road works. HINCOL is

helping the operators in discharging this responsibility

through a comprehensive offering of technical inputs

and environment friendly products. Going beyond

pavement maintenance and sustainable pavements,

bitumen emulsions also contribute to sustainable

development by reducing energy consumption and

emissions of greenhouse gases. Models have been

developed and assessed that show the positive

impact of the use of bitumen emulsions on these

parameters, fully in line with the “Declaration on

Environment and Climate Change” adopted by the

G-8 countries in June 2008.

Life cycle analysis is a technique for assessing

the environmental aspects and the environmental

impacts associated with a product, a process or a

Sustainability & CSR Reporting

material. One of its aspects is to identify and select

adequate indicators, together with the corresponding

measurement methods. In this respect, both

consumption of energy and climate change may be

seen as the most critical areas, as they involve the long

term and the whole world community. Limiting the

consumption of energy as well as the production of

CO2 goes beyond the single pavement preservation

concept, and towards a global sustainable

development scheme. Such an approach will

definitively boost the development of cold

technologies, based on the use of emulsions. As an

example, a comparison is made between hot and

cold mix manufacturing.

CO2 emission and energy consumption for cold v/s

hot processes

Manufacturing process Eq. CO2(kg/MT)

EnergyMJ/MT

Hot mix 160°C moisture content 3% 21 277

Cold mix 3 36

Sustainability & CSR Reporting

Tree Plantation at Haldia by Directors - Mr. Jacques Pastor (L)& Ms. Nishi Vasudeva (R)


Corporate Social Responsibility

Corporate Social Responsibility (CSR) addresses

the social aspect of Sustainable Development. The

promoters of HINCOL, HPCL as well as COLAS are

well respected corporate citizens in their respective

areas of operation and contribute significantly towards

social development through various programs and

initiatives. As a representative of these two parent

companies, it is incumbent upon HINCOL to follow

similar standards and principles.

The Company continues to support a noble cause of

the education of under-privileged children of workers

deployed in quarries (not connected to HINCOL or its

business) in the vicinity of Vashi Plant through an NGO

namely “The Association of Rural People for Health

and Education Needs (ARPHEN)”. The Company

has also participated modestly in initiatives towards

providing aid to the underprivileged, like helping fund

the heart operation of a child needing urgent medical

attention or holding a medical camp for the benefit of

contract workmen and inhabitants in the vicinity. The

Company is evaluating several other projects aimed

at helping the community in the vicinity of its Plants,

like donating an ambulance to help villagers in West

Bengal get faster medical aid; laying a pipeline to

carry water to the village neighbouring our Plant at

Bahadurgarh and supporting the cause of education

for children from under-privileged families near our

Vashi Plant.

In order to guide the management of the company

while pursuing various CSR initiatives deserving

support of the company as a responsible corporate

citizen, the Company has framed a comprehensive

policy towards CSR and has constituted Committees

at both Board level and executive management level

to oversee and drive various CSR initiatives. Even

pending enactment of Companies Bill, the Company

has adopted many provisions related to CSR as

best practice in the aforesaid policy. Going forward,

HINCOL would make sincere efforts to spend upto 2%

of the previous year’s PAT (Profit after Tax) on various

CSR initiatives. The initiatives may cover activities for

economic and social development of communities,

preferably in the vicinity of the company’s operations

such as education, skill building, self-employment,

health, cultural and social welfare etc., particularly

targeting the disadvantaged sections of society or it

could be a occasional need based aid to the victims

of natural calamities such as floods, earth quakes etc.

HINCOL may partner with local authorities, business

associations and civil society/non-government

organizations to carry out such initiatives.

Children from school run by ARPHEN - supported by HINCOL at our Vashi Plant on the occasion of Independence Day.


1. Company's Philosophy & Practiceon Governance, Risk Management &Compliance

HINCOL understands the significance of serving

all the stakeholders with fairness and transparency

and therefore, interest of all stakeholders are kept

in mind at all levels - from Board of Directors to

the lowest executive level. The entire executive

management takes greater responsibility in

taking care of governance, risk management and

compliances (GRC) aspects - right from conception

to execution of any decision.

Governance

In the governance framework of HINCOL, the Board

of Directors and various Committees thereof being

at the top of the organizational hierarchy oversee

and approve all the significant corporate as well

as business decisions in line with the Articles

of Association of the Company. While the Audit

Committee of the Board oversees the financial

reporting and internal controls, the Remuneration

Committee reviews the remuneration payable to

Corporate Governance Report

key managerial person(s). The newly formed CSR

Committee is responsible for steering various CSR

initiatives.

The executive management team under leadership

of the Chief Executive Officer discharges its

responsibilities subject to the supervision, control

and direction of the Board of Directors. Below the

level of the Board, a Management Committee has

been constituted comprising of CEO, COO, CFO,

Head - Commercial, Head - IT & ERP and all the

Regional Business Heads (RBHs). While the routine

decisions are taken by a sub-committee named

as “Empowered Committee”, the Management

Committee continues to serve as a think-tank to

ponder over broader issues relating to business

and operations.

The decision making process in HINCOL is

governed by an elaborate ‘Limits of Authority

Manual’ (LAM) approved by the Board of

Directors. The matrix given in LAM defines limits

of authority to be exercised at each level. The

decision making process in HINCOL is by and large

based on “collective wisdom” and all significant

decisions having financial implications are routed

for financial concurrence. The authorities given

to the employees are commensurate with the

responsibilities entrusted to them.

The Company is in process of developing a “whistle

blower policy” to protect interests of “whistle

blowers”, if any.

Risk Management

The Company takes all the possible measures to

minimize risks and enhance business controls. ToA discussion at the Board Meeting


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1917th Annual Report 2011-2012

� Details of Board Meetings

Meeting No. Meeting Date Location

70 29-Apr-11 Mumbai

71 28-Jun-11 Paris

72 18-Aug-11 Mumbai

73 12-Dec-11 Delhi

74 27-Mar-12 Mumbai

� Attendance of Directors during FY 2011-12

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Mr. S. Roy Choudhury 5 4 N

Mr. B Mukherjee 5 4 Y

Mr. Hervé Le Bouc 5 1 N

Mr. Jacques Pastor 5 5 Y

Mr. K S R Prasad 5 5 Y

Mr. Somchit Sertthin 5 5 Y

Mr. Jacques Leost 5 1 N

Mr. Chaiwat Srivalwat 3 – NA

* Including thru video conferencing.

3. Committees of the Board

3A. Audit Committee – Constituted on 6th March 2001

� Terms of reference

Functions

a. To oversee the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

b. To recommend the appointment and removal of external auditor, fixation of audit fee and also approval for payment to the auditors for any other services.

c. To review the half-yearly financial statements before submission to the Board.

d. To review with management the annual financial statements before submission to the board, focusing primarily on:

• Any changes in accounting policies and practices.

• Major accounting entries based on exercise of judgement by management.

• Qualifications in draft audit report.

• Significant adjustments arising out of audit.

• The going concern assumption.

• Compliance with accounting standards.

• Compliance with legal requirements concerning financial statements.

• Any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of company at large.

e. To discuss with the auditors periodically about observations of the auditors.

f. To review periodically with the management, external and internal auditors, the adequacy of internal control systems.

g. To ensure compliance of internal control systems.

h. To review the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.


i. To discuss with internal auditors any significant findings and follow up there on.

j. To review the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

k. To discuss with external auditors before the audit commences nature and scope of audit as well as to have post audit discussion to ascertain any areas of concern.

l. To review the company’s financial and risk management policies.

m. To look into the reasons for substantial defaults in the payment to debenture holders, shareholders (in case of non payment of declared dividends) and creditors.

Authority

The Audit Committee shall have all the authorities/powers of the Board of Directors, in discharging the functions indicated here in above and/or those mandated by the Companies Act, 1956 as well as any rules/regulations there under.

The authorities of the Audit Committee, shall include the following, as specified in Section 292A of the Act:

(i) authority to investigate into any matter in relation to the items specified here in above,

(ii) full access to information contained in the records of the company and

(iii) full access to external professional advice, if necessary.

� Members of Audit Comittee

Mr. S. Roy Choudhury # Chairman(till 31.03.2012)

Mr. Jacques Pastor * Chairman (since 1.4.2012)

Mr. Somchit Sertthin * Member

Mr. B Mukherjee # Member

Ms. Nishi Vasudeva � Member

Mr. K S R Prasad � Member

# Mr. S Roy Choudhury ceased to be a member on

31.03.2012 and Mr. B Mukherjee was nominated in

his place w.e.f 01.04.2012.

� Mr. K S R Prasad ceased to be a member on

30.06.2012 and Ms. Nishi Vasudeva was nominated

in his place w.e.f 01.07.2012.

* Mr. Jacques Pastor and Mr. Somchit Sertthin were

members throughout the year 2011-12.

� Meetings of Audit Committee during FY 2011-12


21 29-Apr-11 Mumbai

22 27-Mar-12 Mumbai

� Attendance of Members in the Audit Committee Meetings during FY 2011-12

Name of the member No. of Committee meetings held during tenure

No. of meetings attended*

Mr. S. Roy Choudhury 2 2

Mr. Jacques Pastor 2 2

Mr. K S R Prasad 2 2

Mr. Somchit Sertthin 2 2

* including thru video conferencing


3B. Remuneration Committee – Constituted on 16th March 2010


� To review the remuneration payable to managerial person(s) e.g. "Manager" appointed under the Companies Act (CEO)

� To make recommendations to the Board on any increase in annual remuneration as well as any variation in the maximum eligibility of profit sharing in terms of percentage towards variable pay for such managerial person(s)

� To ensure necessary compliances with the Companies Act in respect of Managerial Remuneration.

� Members of Remuneration Committee

Mr. B Mukherjee Member

Mr. Jacques Pastor Member

� Meetings

There was no meeting of Remuneration Committee during FY 2011-12.

3C. Committee for Sustainability and CSR Constituted on 27th March 2012


� To oversee and direct the Sustainability and CSR initiatives of the company

� To review and recommend changes in the CSR policy in future.

� Members of Sustainability and CSR Committee

Mr. B Mukherjee Member

Mr. Somchit Sertthin Member

� Meetings

There was no meeting of this Committee during FY 2011-12.

4. Details of last three Annual General Meetings


14 4-Sep-09 Mumbai

15 28-Jul-10 Mumbai

16 18-Aug-11 Mumbai

5. Shareholding pattern

Shareholders % Holding

M/s HPCL and its nominees 50%

M/s COLASIE SA and its nominees 50%

The 16th Annual General Meeting of Shareholders held on August 18th, 2011


Your Directors have pleasure in presenting the 17th Annual Report of your Company together with the Audited Balance Sheet as at March 31st, 2012, the Cash Flow Statement and Statement of Profit & Loss for the year ended March 31st, 2012.

Financial Performance

The summary detail of your company's performance during year is presented below:

(In ` Millions)

Particulars 2011-2012

2010-2011*

Revenue from operations (Net)

4,158 3,537

Other Income 66 43

Total Revenue 4,224 3,580

Materials & other cost 3,777 3,110

Finance Cost # – –

Depreciation 53 46

Exceptional Gain/(Loss) 7 2

Extraordinary Gain/(Loss) 4 (8)

Profits before Tax 405 418

Provision for Tax 141 134

Profit after Tax 264 284

Transfer to General Reserve

26 28

Dividend & Tax thereon 192 137

* Previous year numbers have been regrouped in line with financial statements.

# Finance Cost is ` 277,357 and ` 174,066 for FY 2011-12 and 2010-11 respectively.

Physical Performance

Your company now has 8 plants under operation at Navi Mumbai, Bahadurgarh (Haryana), Irungattukottai (near Chennai, Tamil Nadu), Savli (near Vadodara, Gujarat), Visakhapatnam (Andhra Pradesh), Mangalore (Karnataka), Jhansi (Uttar Pradesh) and Haldia (West Bengal). The details of performance of the company are as under:

Products # Sales in TMT * Production in TMT

2011-2012

2010-2011

2011-2012

2010-2011

Emulsions 101 103 102 104

Modified Bitumen

45 56 45 55

Total 146 159 147 159

* Includes clearances for others on jobwork.

# Emulsion includes Cutback and Cold-mix. Modified Bitumen includes Modifier and Anti-stripping agents.

Your company has made best efforts to utilise the capacity by pursuing manufacturing products for others on job work basis. During the year, your company manufactured 19 TMT for others as against 29 TMT in the previous year.

Directors' Report

A Panoramic view of Infrastructure at New Plant at Haldia


Shareholder Value (`)

Value Parameter 2011-2012

2010-2011

Earnings Per Share 27.98 30.04

Cash Earnings Per Share 33.60 34.86

Book Value Per Share 135.33 127.68

Dividend

Taking into consideration the performance of your Company during financial year 2011-12 and also the future growth plans, your Directors recommend for approval, a payment of dividend @ 175% of the paid up capital. Consequently, a sum of ` 165.37 Million towards proposed dividend and a sum of ` 26.83 Million towards tax on the proposed dividend would have to be appropriated out of the profits after tax of the current year.

Management Discussion & Analysis

This has been given in the Annexure I to the Directors’ Report.

Directors

During the year 2011-12, Mr. Chaiwat Srivalwat vacated the office of Alternate Director on two occasions (on 17th August 2011 and 26th March 2012) due to visit of Mr. Somchit Sertthin, Original Director, to the state of Maharashtra. On both occasions, Mr. Srivalwat was reappointed as Alternate Director to Mr. Sertthin effective 18th August 2011 and 28th March 2012 respectively.

Further, in accordance with provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. B Mukherjee and Mr. Somchit Sertthin, Directors of the Company, retire by rotation at the 17th Annual General Meeting of the Company and are eligible for re-appointment.

Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956 your Directors give hereunder the Directors' Responsibility Statement pertaining to the accounts of the Company, that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March 2012 and of the profit of the company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

Audit Committee

The Audit Committee of your Company carried out its functions in accordance with Sec 292 A of the Companies Act. During the year there were no instances of any recommendation of the Audit Committee relating to any financial matter that was not accepted by your Board.

A discussion at the Board Meeting


Auditors

M/s Ford, Rhodes, Parks & Co., Chartered Accountants, Statutory Auditors of the Company hold office until the conclusion of ensuing Annual General Meeting and are eligible for re-appointment.

Deposits

The Company has not accepted any deposits from the public.

Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and Particulars of EmployeesPursuant to Section 217 (1) (e) and section 217 (2A) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules 1988, the relevant information is given in Annexure II.

There is no employee in respect of which information needs to be given in pursuance of Companies (Particulars of employees) Rules 1975.

Acknowledgment

Your Company and its Directors wish to sincerely thank various Ministries of Govt. of India / State Governments for their excellent support and co-operation. Your Board also wishes to thank the promoters for the technology and marketing support. The Board also wishes to place on record their sincere gratitude to MORT&H, CRRI, DGBR, NHAI, NRRDA, AAI and various other Government Agencies. Your Directors also wish to place on record their appreciation for the dedicated services of the employees of the Company including those deputed by HPCL.

For and on behalf of the Board of Directors

S. Roy Choudhury

Chairman

Place : Mumbai

Date: 7th May 2012

Directors (from L to R) - Mr. Somchit Sertthin, Mr. Jacques Pastor, Mr. S. Roy Choudhury (Chairman),

Mr. B Mukherjee & Mr. K S R Prasad


ANNEXURE I : Management Discussion & Analysis

Sector Review

The 4.24 million Km long road network in India is the second largest in the world. The National Highways, which serve as the arterial road network of the country, have a total length of 70,934 km. It is estimated that more than 70 % of freight and 85 % of passenger traffic in the country is being handled by roads. While Highways/ Expressways constitute only about 2% of the length of all roads, they carry about 40 % of the road traffic. With the number of vehicles on the roads growing at a compounded annual growth rate (CAGR) of approximately 8% in the last five years, the Government is focusing very strongly on the development of road infrastructure in the country.

However, there has generally been a lag between the intent and the execution in this sector as witnessed during the past years and the pace of development of roads, especially National Highways, has not been as per the announced programs. The sluggish pace of award and implementation of road construction projects carried over from the previous year was evident through the first half of 2011-12 as well. The Bitumen consumption data, which is quite an accurate indicator of the road works execution shows that consumption during the period Apr-Oct 2011 was down by about 1% as compared

to the same period last year. The delays in award of new projects in the previous year and slow pace of execution of projects already awarded were primarily responsible for this scenario. Things began to look up from November 2011 onwards with pace on road construction projects picking up substantially. At the same time, the award of new projects by the NHAI also improved and the response from private sector players has been most encouraging and for many of the prestigious projects offered by the NHAI, the contractors have offered substantial premium to the Government.

A look at the official data released by the NHAI shows that in the 12 month period starting March 01, 2011, a total of 2,136 Km of National Highways were 4-laned. This works out to a little under 6 Km of National Highways per day – much below the target of 20 Km per day announced by the Government. Achievement of this ambitious target is now likely to be possible by the year 2014 as per the Ministry of Road Transport & Highways. On the positive side, the number of projects under implementation have gone up from 10,200 Km on the 1st of March 2011 to 12,967 Km this year as a result of 4,291 Km of road-works that were awarded during the period.

While the going has not been very easy for the road construction sector in the year 2011-12 owing to various problems, the developments in the latter half of the year auger well for the sector. The NHAI has received good support from the Government in improving the process of short-listing eligible companies and awarding contracts, apart from introducing policy changes to attract foreign investment into road construction projects. The Government of India has earmarked an investment of ` 50 Trillion on infrastructure in the 12th Five Year Plan period, with half of this investment expected to come from the private sector. Development of road infrastructure is certain to get due share of this proposed investment and accordingly the Government is expected to make all efforts to pave the way for a more efficient project award


and implementation methodology. Some of the important policy changes introduced recently include,

• Permitting 100% foreign equity in construction and maintenance of roads, highways, tunnels etc.

• Grants of up to 40% of project cost to make projects viable

• 100% tax exemption in any 10 consecutive years within a period of 20 years after completion of construction

• Agreements to avoid double taxation with a large number of countries

• Permitting concession period up to 30 years

• Improvement in the Toll calculation formula, making it more practical

• Permitting duty free import of high capacity equipment required for highway construction

• Simplification of the procedure and extending Government support for land acquisition, resettlement and rehabilitation

Very recently, the Government has relaxed the norms for project financing applicable to the road construction sector which will make it easier and cheaper for the contractors to obtain financing. All these measures are expected to drive project implementation at a faster pace in the years to come.

On the regulations front, in a development that is expected to positively impact the business of your company in future, there has been a small but significant move towards acceptance of cold-mix based road construction as a viable option. The National Rural Roads Development Authority (NRRDA) has formally written to all State Governments to take up trials with cold-mix based construction of rural roads and has offered its support for the same. Cold-mix based road construction would consume much larger quantities of Bitumen Emulsions and

your company has been relentlessly trying to promote the acceptance of this option in India. Trials conducted by your company jointly with the Central Road Research Institute (CRRI) have proven to be successful and the report issued by CRRI will further help strengthen the case for cold-mix based rural road construction. Cold-mixes are already gaining acceptance in the North-Eastern States and we hope to participate in the available business and see better momentum in the coming years.

Performance Analysis

The physical performance of your company is dependent directly upon the execution of road construction projects. Our main product-line, Bitumen Emulsions, finds its use only in the Prime Coat and Tack Coat applications in road construction and the off-take is linked to a greater extent with commencement of new road construction projects rather than repair or overlay of existing roads. Reflecting the slow pace of new projects taking off during the year, sales of Bitumen emulsions during the year 2011-12 were marginally lower as compared to last year. Our other product line – Polymer Modified Bitumen – saw the volumes increase by a little over 2% due to concerted efforts by your company to increase our share in the Modified Bitumen market. However, this growth was offset by a rather steep decline in the demand for Crumb Rubber Modified Bitumen


(CRMB), which is produced by your company on job-work basis for HPCL. The nearly 35% drop in the off-take of CRMB has brought down the overall volumes produced by your company during the year 2011-12.

Your company obtained all necessary approvals and completed the construction of its eighth Plant at Haldia in West Bengal during the year and also undertook successful trial production runs. However, due to a moratorium imposed by the Union Ministry of Environment & Forests on setting up any new industries in the Haldia Industrial Estate, we could not get the final "Consent to Operate" from the WBPCB and therefore could not start commercial production despite the Plant being ready in all respects in August 2011. While the approval was finally received on March 27, 2012, the delay in starting commercial production significantly hampered your company's efforts to develop its business in the eastern and north-eastern States of India.

Your company augmented its production infrastructure during the year through the following Capital projects,

• Complete revamp and streamlining of the facilities at Vashi Plant. This project is in the completion stages.

• Creation of additional emulsion tankage at Mangalore Plant.

• Installation of high-capacity Weighbridges at Mangalore, Savli and Visakh Plants. All Hincol Plants now have 60 MT Weighbridges to cater to the new generation tank trucks of larger capacity.

• Revamp of the hot and cold laboratories at Bahadurgarh Plant.

Future Outlook

With a strong manufacturing network of eight Plants located strategically across the country, your company is strongly placed to tap into

the opportunities arising out of the anticipated improvement in project implementation. The road construction sector is expected to see robust activity in the next 5 years and your company will spare no efforts to gain from the same. However, since the present specifications for road construction provide only a limited scope for application of Bitumen Emulsions, your company plans to dedicate its efforts towards expanding the application portfolio of emulsions. The thrust towards greater acceptance of cold-mix based applications is one such initiative that is likely to yield very good results in future.

Another business activity that your company plans to explore starting with the year 2012-13 is micro-surfacing. This emulsion based road rejuvenation technology is presently not highly used in India but is quite prevalent in most developed countries. As a logical extension to our existing products and services, we propose to offer micro-surfacing services to our existing customers in the Government as well as private sector.

Our Bulk Bitumen terminal at Haldia has been operating regularly and the volumes handled through this location are expected to improve considerably in the coming months with HPCL having taken a Bitumen carrying vessel on Time-

Vessel Operations by HINCOL at Haldia Port


Charter basis. This would undoubtedly give HPCL much better control on product movement from their refinery at Visakhapatnam and improve product availability at the terminal. Your company is evaluating the possibility of opening another such terminal on the west coast and is pursuing the matter jointly with HPCL.

Safety, Health and Environment

The role of business in society is being increasingly viewed differently and 'Sustainable Development' is replacing economic growth as the primary objective of any business enterprise. Companies now focus not only on enhancing their value through maximising profit but also concentrate on environmental and social issues equally. As such, a triple bottom-line approach of economic, ecological and social growth is being adopted by many companies. For your company, Health, Safety and Environment management has always been one of the most important aspects of our business operations.

During the year 2011-12, the Hincol Plants worked 5,85,001 man-hours without any reportable accident. Your company adopts a proactive approach towards prevention of occupational injuries, illness and incidents. Periodic Fire and Safety Audits are conducted across all the Plants to identify and eliminated unsafe conditions / practices and upgradation of safety facilities. Extensive training is being imparted to all company and contract employees to educate them on issues related to Health, Safety and Environment. Services of external agencies like St John Ambulance and National Safety Council etc are availed to impart training on various topics such as First Aid, behavioral based safety and accident prevention etc. to our company employees. Fire drills are conducted periodically to ensure preparedness for any eventuality.

As mentioned in the last year's Annual Report, your company has adopted Integrated Management

System (IMS) as a tool for achieving excellence in QHSE management. The Integrated Management System conforming to the requirements of ISO 9001 : 2008, ISO 14001 : 2004 & OHSAS 18001 : 2007 has been established, implemented and maintained at all Hincol Plants and the Head Office. During the year, a surveillance audit was carried out by M/s International Standard Certification (ISC) to check and evaluate the level of conformance to the system requirements. After critical evaluation of the system the auditors recommended for continuation of the certification.

To further augment our in-house capability to strengthen and improve adherence to the IMS norms, an extensive 3 – day training program on IMS auditing was organized for the Plant Managers, Plant Engineers and Quality Control Officers through M/s DNV. Your company now has a team of qualified internal IMS auditors. Cross Plant IMS audits were organized and conducted through our qualified internal IMS auditors to facilitate learning and sharing the best QHSE practices across the plants.

Facilities related to Safety and Fire Protection are continually being augmented. During the year 2011-12, your company installed and successfully commissioned a CO2 flooding system for modified bitumen tanks at Vashi Plant. The system is designed to be a more effective and safer means to tackle fire in modified bitumen processing tanks. It is proposed to replicate this system at other plants on the basis of its performance at Vashi. Risk in acid handling is also being minimized by elimination of manual intervention. Acid pumps with fixed unloading pipelines, dyke walls and adequate containment area are being provided to make acid handling safer. Additional Safety Showers and eye wash fountains have been installed at strategic locations in the plants. More effective fire-fighting equipment like foam mist guns have been procured for the Plants to enhance fire fighting capabilities. Further, to enhance operational safety in emulsion


plants, modification in hardware and software is being carried out in coordination with Colas S.A.

Plant wise statutory compliance requirements are monitored and 100% compliance is ensured. Our employees are our biggest asset and Hincol takes care to ensure health and well being of all employees. Health check up is carried out for every employee annually.

We are committed to protect the environment. In line with this commitment the thermic fluid heaters and other heating equipment at all Plants are regularly tuned. Emissions through stacks are monitored and ensured that the emission levels are within the stipulated norms of respective Pollution Control Boards. Our manufacturing processes do not discharge any solid or liquid wastes and it is our endeavor to make our products more environmental friendly.

Crush Risk Awareness Week and National Safety Week were observed in the month of March 2012 at all Hincol Plants and Headquarters office to renew our commitment to work safely. World Environment Day was celebrated on 6th June 2011 across all Hincol Plants to create awareness and reaffirm our commitment towards environment protection.

Internal Controls and Systems

The Enterprise Resource Planning (ERP) system has been supporting all business processes of HINCOL for over three years now. The SAP based system has made it possible to reduce the time taken for closing the quarterly, half yearly and annual accounts. Standardization of business processes in the system has resulted in better management control. The system enables the decision makers at various levels in taking timely business decisions based on on-line & accurate information available from the system. Since effectiveness of any such system depends largely on the competency levels of the users, a comprehensive training schedule has been put in place to enhance the user competencies.

Over a period of time, owing to business requirements, new functionalities and business processes have been added to the ERP system implemented by your company. Authorizations to approve various transactions have also been configured in line with the defined business process requirements. However, granting authorization to a position for a particular business transaction may sometimes lead to a conflict with another transaction depending upon the configuration of the transaction codes. Hence it is important to periodically review the authorizations granted to individual positions to ensure that they do not violate the Segregation Of Duties (SOD) desired and to take corrective action, wherever necessary. During this financial year, your company carried out such an audit and the findings of the audit / conflicts were presented to Management Committee. Recommendations of the committee have been implemented upon critical review to ensure that such SOD conflicts are avoided to the best extent possible.

Some other initiatives taken during the year by your company towards improving controls and ensuring confidentiality of data are: controlled

Fire Drill conducted at one of Plants


access to confidential data like payroll, duplicate checking of vendor invoices, enhanced release strategy for updation of Bank Guarantee furnished by customers, automatic clearance of customer accounts on FIFO basis, implementation of uniform 'Bill of Material' for production across Plants, enhanced customer credit overview/Credit Control Report, control over invoice generation in the absence of proper accounting entries, Purchase Order from approved Purchase Requisition, Vendor Invoice release strategy in case of additional cost other than PO, Tracking of Form F for interplant movements etc.

Risk Management and Legal Compliances

Your Company has taken an initiative of developing a Risk Management Framework. The Company has done identification of the risks through brain storming sessions across functions and levels

and has created a Risk Register. The Risk Owners appointed are developing the mitigation plan which would be reviewed by the Board at periodic intervals.

Your Company, being a responsible Corporate Citizen, understands significance of the statutory compliances and follows the laws of land in letter and spirit. The Regional Business Heads (RBHs) are 'Occupiers' under Factories' Act for the Plants in their regions and the RBHs alongwith Plant teams ensure compliance with all applicable laws. The compliances are strictly monitored by the respective functional heads at HQO.

As a standard practice, services of a professional audit firm are engaged by your company to carry out internal audits across all operating locations. The audit reviews the design as well as operational effectiveness of the controls put in place by the company.


ANNEXURE II : Conservation of Energy, Technology Absorption and Foreign Exchange Earnings

A. Conservation of energy

Ever increasing energy costs has been a continued area of concern for your company. During the year 2011-12, a decrease in the overall production volumes across plants had a slightly adverse impact on the energy performance of the Plants.

To maintain and improve energy efficiency performance heating equipments at all plants are regularly inspected and maintained under Annual Maintenance Contracts through the Original Equipment Manufacturers or their authorised representatives. During the year your company also made sustained efforts to reduce generation of electricity through in-house generators and maximise purchase from the SEBs to save on the cost of generation. This has helped us bring down our expenditure on power and fuel even though the consumption in terms of units has gone up.

Energy conservation projects like installation of heat exchangers for bitumen tanks and heat recovery from hot emulsion are planned and would be implemented to enhance energy efficiency. Your company is also continuously evaluating newer avenues for reducing its energy consumption and in this direction we have commenced a sustained monitoring and improvement program under the supervision of the Chief Technical Manager. This initiative has already started showing positive results and Plants are pro-actively sharing successful energy saving practices with each other.

The details relating to energy consumption are as given below :

(i) Power & Fuel Consumption

2011-2012

2010-2011

Electricity purchased / generated as Units (kWh)

1,480,788 1,437,192

Total Amount in ` 12,127,405 12,924,634Rate / Unit (` / kWh) 8.19 8.99

(ii) Consumption per MT of production

2011-2012

2010-2011

Electricity Consumed (in kWh)

10.21 9.02

LDO / FO (Litres) 6.42 5.84

B. Technology

As reported in the last Annual Report, your company worked closely with its customers last year to develop a special grade of Polymer Modified Bitumen for airport runway surfacing. This product has seen further demand. We have made the formulation more cost effective through process optimization and are presently supplying it for the repairs being carried out to the runway at the International Airports in Bangalore and Hyderabad.

We are also pursuing implementation of Emulfix process developed by Colas S.A and hope to make it operational at all Hincol Plants in the coming year. Starch addition is another process that is being introduced at all Plants. Both these processes are expected to help us bring down the cost of formulation of emulsions and improve margins. Similar optimization is being carried out for production of Modified Bitumen. Energy conservation projects like installation of heat exchangers for bitumen tanks and heat recovery from hot emulsion are also planned and would be implemented to enhance energy efficiency.

Your company has further augmented its R&D facilities with the acquisition of equipments like the Dynamic Shear Rheometer, Pressure Ageing Vessel and Rolling Thin Film Oven. These equipments will help us evaluate the un-modified and modified binders in a more precise manner. Hincol is among a handful of organisations in India to have a Dynamic Shear Rheometer.

C. Foreign exchange earnings & outgo

The details of foreign exchange earnings and outgo are given in the Notes to the Financial Statements in Note 33-35.


Auditors’ Report To The Members of Hindustan Colas Limited for the year ended

31st March 2012

1. We have audited the attached Balance Sheet of Hindustan Colas Limited as at 31st March 2012, the Statement of Profit

and Loss and the Cash flow Statement for the year ended on that date annexed thereto. These financial statements

are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosure

in the financial statements. An audit also includes assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report)

(Amendment) Order, 2004 (together the “Order”), issued by the Central Government of India in terms of sub-section

(4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

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

a) We have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purpose of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears

from our examinations of those books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agree-

ment with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in Sub Section (3C) of Section 211 of the Companies

Act, 1956.

e) On the basis of written representations received from the Directors, as on 31st March 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2012, from being appointed as a Director in terms of Section 274 (1) (g) of the Companies Act, 1956.

AuditorsÊ Report


5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March 2012;

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

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

For Ford, Rhodes, Parks & Co.

Chartered Accountants Firm Registration No. 102860W

A.D.Shenoy

Place: Mumbai PartnerDate : 7th May , 2012 Membership No. 11549


[Referred to in paragraph 3 of our Report of even date to the members of

Hindustan Colas Limited on the financial statements for the year ended 31st March 2012]

1. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

b) Fixed Assets have been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

c) In our opinion and according to the information and explanations given to us a substantial part of Fixed Assets has not been disposed of by the Company during the year.

2. a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records have been dealt with by the Company.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, clauses (iii)(b),(iii) (d),(iii) (f),(iii) (g)of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed asset and for sale of goods and services. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control system.

5. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that section. Accordingly, the question of commenting on transactions made in pursuance of such contracts or arrangements does not exist.

6. The Company has not accepted any deposits from the public, within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder.

ANNEXURE TO THE AUDITOR’S REPORT


7. The Company has appointed an Independent Chartered Accountants firm to carry out internal audit. In our opinion, the internal audit system is commensurate with the size and nature of its business.

8. The Central Government has prescribed maintenance of cost records under section clause (d) of subsection 1 of Section 209 of the Companies Act, 1956 for the product of the Company. The company is in the process of updating the same.

9. a) According to the information and explanations given to us and records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and any other material statutory dues as applicable with the appropriate authorities. There are no undisputed statutory dues payable for a period of more than six months from the date they become payable as at 31st March 2012.

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, wealth tax, service tax, customs duty, excise and cess as at 31st March 2012, which has not been deposited on account of dispute. The particulars of the dues of sales tax and entry tax at 31st March,2012 which has not been deposited on account of a dispute, is as follows:

Name of StatuteNature of

Dues

Amount

(`)

Period

to which

amount

relates

Forum where

dispute is

pending

Gujarat Sales Tax ActSales Tax including penalty

56,630,790 2007-2008 Appeal is to be filed

The Uttar Pradesh Value Added Tax Act Entry Tax 2,063,455 2008-2009 Allahabad High

Court

Orissa Value Added Tax & Entry Tax * VAT 178,537 2005-2006 to

2009-2010Joint Commissioner Cuttack

* The Company has deposited ` 66,330/- in respect to this matter. Gross liability is ` 2,44,867/-.

10. The Company has no accumulated losses as at 31st March, 2012 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the information and explanations given to us and records of the Company examined by us the company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

12. According to the information and explanations given to us the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.


13. The provisions of any special statute applicable to chit fund and nidhi /mutual benefit fund/societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investment.

15. According to the information and explanations given to us the Company has not given any guarantees for loans taken by others from banks or financial institution during the year.

16. The Company has not obtained any term loans.

17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to information and explanations given to us, we report that no funds on short term basis have been used by the company for long term investments.

18. The Company has not made any preferential allotment of shares to any parties or companies covered in the Register maintained under section 301 of the Companies act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that we have not come across any instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

For Ford, Rhodes, Parks & Co.

Chartered Accountants Firm Registration No. 102860W

A.D.Shenoy

Place: Mumbai PartnerDate : 7th May , 2012 Membership No. 11549


Financial Statements

As at As atEquity and Liabilities Note No. 31.03.2012 31.03.2011

` `Shareholders' FundsShare Capital 2 94,500,000 94,500,000Reserves and Surplus 3 1,184,323,084 1,112,101,249

1,278,823,084 1,206,601,249Non-Current LiabilitiesLong-Term Borrowings 4 15,356,040 19,895,300Deferred Tax Liabilities (Net) 5 70,424,911 56,364,005Other Long Term Liabilities 6 2,635,251 2,667,781Long-Term Provisions 7 10,385,841 7,966,055

98,802,043 86,893,141Current LiabilitiesTrade Payables 451,257,367 156,938,269Other Current Liabilities 8 294,085,122 308,531,888Short-Term Provisions 9 194,308,867 207,927,662

939,651,356 673,397,819Total 2,317,276,483 1,966,892,209

Assets

Non-Current AssetsFixed Assets Tangible Assets 10a 836,185,657 642,689,391 Intangible Assets 10b 7,044,665 9,678,390 Capital Work-in-progress 32,809,946 104,832,383Long-Term Loans and Advances 11 26,251,714 44,955,876Other Non-Current Assets 12 442,426,789 1,789,569

1,344,718,771 803,945,609Current AssetsInventories 13 260,577,007 195,127,324Trade Receivables 14 305,279,119 173,093,188Cash and Bank Balances 15 293,427,467 708,382,106Short-Term Loans and Advances 16 105,513,756 75,704,855Other Current Assets 17 7,760,363 10,639,127

972,557,712 1,162,946,600Total 2,317,276,483 1,966,892,209

Notes 1 to 37 form an integral part of the Financial Statements

Balance Sheet as at March 31, 2012

As per our report of even date For and on behalf of the Board

For Ford, Rhodes, Parks & Co. S Roy Choudhury Jacques Pastor

Chartered Accountants Chairman Director Firm Registration No: 102860W

A.D.Shenoy Sanjay Grover Sitaram Taparia Bharat Kaneri

Partner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and "Manager" and Company Secretary

Place : Mumbai Place : Mumbai Date : 7th May 2012 Date : 7th May 2012


Statements of Profit and Loss for the year ended March 31, 2012

As per our report of even date For and on behalf of the Board For Ford, Rhodes, Parks & Co. S Roy Choudhury Jacques Pastor Chartered Accountants Chairman Director Firm Registration No: 102860W

A.D.Shenoy Sanjay Grover Sitaram Taparia Bharat KaneriPartner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and "Manager" and Company Secretary Place : Mumbai Place : Mumbai Date : 7th May 2012 Date : 7th May 2012

Year ended

31.03.2012

`

Year ended31.03.2011

`Note No.

Income

Revenue from Operations (Gross) 18 4,723,153,042 4,012,320,508Less: Excise Duty 564,717,544 475,385,563Revenue from Operations (Net) 4,158,435,498 3,536,934,945

Other Income 19 65,833,389 42,743,779

Total Revenue 4,224,268,887 3,579,678,724Expenses

Cost of Materials Consumed 20 3,448,592,077 2,819,509,140Changes in Inventories of Finished Goods 21 (25,013,068) (18,444,303)Employee Benefits Expense 22 106,330,182 89,743,971Finance Costs 23 277,357 174,066Depreciation and Amortisation expense 10 53,122,824 45,635,864Other Expenses 24 246,496,648 218,760,556

Total Expenses 3,829,806,020 3,155,379,294

Profit before Exceptional and Extraordinary Items and Tax 394,462,867 424,299,430Exceptional Items - Gains / (Loss) 25 6,544,461 1,702,613Profit before Extraordinary Items and Tax 401,007,328 426,002,043Extraordinary Items - Gains / (Loss) 26 4,437,951 (8,374,971)Profit before Tax 405,445,279 417,627,072

Tax Expenses - Current Tax 120,641,431 134,499,448 - In respect of earlier years 6,318,148 (6,970,343)Provision for T - Deferred Tax Charge 14,060,906 6,283,084Provision for T - Fringe Benefit Tax – (19,450)

Profit /(Loss) for the year 264,424,794 283,834,333

Earning per Share - Basic & Diluted (nominal value of share ` 10)

Weighted average number of Equity shares of ` 10 each 9,450,000 9,450,000

Profit attributable to Shareholders excluding extraordinary items (net of tax) 261,426,736 289,492,045Earnings Per Share (excluding extraordinary items) 27.66 30.63

Profit attributable to Shareholders 264,424,794 283,834,333Earnings Per Share 27.98 30.04

Notes 1 to 37 form an integral part of the Financial Statements


Year ended

31.03.2012

`

Year ended 31.03.2011

` A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before Extraordinary items and tax 401,007,328 426,002,043 Loss on disposal / deletion of assets 1,858,273 1,147,529 Unrealised Exchange Differences (24,041) 427,843 Depreciation 53,122,824 45,635,864 Interest Income (64,518,468) (42,609,318) Write Down of Inventories 1,093,753 (1,131,732) Provision for Doubtful Debts (2,782,816) (717,214) Operating Profit before Working Capital Changes 389,756,853 428,755,015 Trade and Other Receivables (113,459,711) (29,223,084) Inventories (66,543,436) (17,523,329) Trade and Other Payables 265,709,661 (20,646,904) Cash Generated from Operations 475,463,367 361,361,698 Direct Taxes Paid (Net) (215,802,355) (73,931,356) Net Cash from Operating Activities before Extraordinary Items 259,661,012 287,430,342 Extraordinary Items- Loss by Fire Accident – (8,026,845) Proceeds from Insurance claims 4,437,951 – Net Cash from Operating Activities [A] 264,098,963 279,403,497

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase & Creation of Fixed Assets (163,360,295) (170,772,472) Proceeds from sale of fixed assets 264,970 412,531 Investments in Term Deposits (Net) 1,371,424 (205,433,877) Interest Received 63,774,454 45,916,744 Net Cash used in Investing Activities [B] (97,949,447) (329,877,074)

C. CASH FLOW FROM FINANCING ACTIVITIES Repayments of Borrowings ( Net) (5,430,461) (127,256) Dividend Paid (118,125,000) (37,800,000) Dividend Tax Paid (19,162,828) (6,278,108) Net Cash used in Financing Activities [C] (142,718,289) (44,205,364)

Net increase/(decrease) in cash and cash equivalents [A+B+C] 23,431,227 (94,678,941) Cash and cash equivalents as at 1st April (Opening) 36,871,091 131,550,032 Cash and cash equivalents as at 31st March (Closing) 60,302,318 36,871,091 Net increase / (decrease) in cash and cash equivalents 23,431,227 (94,678,941)

Notes: i) Cash and Cash Equivalents include:

(a) Balances with Schedule Banks on Current Accounts 53,731,089 33,955,436 (b) Cheques / Drafts in Hand 6,339,221 2,708,095 (c) Cash in Hand 232,008 207,560

60,302,318 36,871,091

ii) The above cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India

Cash Flow Statement for the year ended 31st March 2012

As per our report of even date For and on behalf of the Board For Ford, Rhodes, Parks & Co. S Roy Choudhury Jacques Pastor Chartered Accountants Chairman Director Firm Registration No: 102860W

A.D.Shenoy Sanjay Grover Sitaram Taparia Bharat KaneriPartner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and "Manager" and Company Secretary Place : Mumbai Place : Mumbai Date : 7th May 2012 Date : 7th May 2012


Notes to Financial Statements for the year ended 31st March 2012 (Contd.)

1. Significant Accounting Policies :

a. General

The financial statements are prepared under historical cost convention in accordance with all the applicable accounting principles in India, the applicable accounting standards notified u/s 211(3C) of, revised Schedule VI to, and other relevant provisions of the Companies Act, 1956. All income and expenditure having material bearing are recognised on accrual basis, except where otherwise stated. Necessary estimates and assumptions of income and expenditure are made during the reporting period and difference between the actual and the estimates are recognised in the period in which the results materialize.

The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it has significant impact on presentation and disclosures made in the financial statements.

b. Tangible & Intangible Assets

Fixed assets are stated at cost less accumulated depreciation. Cost includes all incidental expenditure necessary to bring the fixed asset to its present location and condition. Capital expenditure on assets (enabling facilities) ownership of which is not with the company is charged off to revenue.

The initial cost of software and implementation is capitalised. Any subsequent enhancement is charged off to revenue unless it brings significant improvements in system.

c. Depreciation

Depreciation is provided pro-rata to the period of use, on Straight Line Method, at the higher of the rates, based on estimated useful lives of the assets and those stipulated in Schedule XIV to the Companies Act,1956. The rates which are higher are as follows :-

Asset Useful Life (Years) Depreciation

Plant & Machinery - COLAS Plant 15 - Office and Lab Equipments 10 - Computers 4

Motor Vehicles (including Cars) 5

Intangible Assets - Software 4

Residential / Office Buildings / Roads 30

Leasehold land is amortised over the period of lease.

Individual assets acquired for less than Rs. 5,000 are entirely depreciated in the year of acquisition.

d. Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

e. Inventories

Raw materials, packing materials, stores & spares and fuel & lubricants are valued at cost or net realisable value, whichever is lower. The cost of raw materials, packing material, stores & spares and fuels & lubricants is calculated on moving weighted average cost basis. Finished products are valued at cost or net realisable value, whichever is lower. Finished products are valued at standard cost which is calculated every month on the basis of moving weighted average cost of various cost components and includes excise duty payable and an appropriate proportion of production overheads.



Excise Duty paid for specified inputs eligible for CENVAT credit has not been included in purchases and cost of closing inventories. Such accounting treatment, consistently followed by the Company in accordance with AS-2 Valuation of Inventorie’s is revenue neutral.

f. Foreign currency translation

Transactions denominated in foreign currency are recorded using the exchange rate prevailing at the date of transaction. Assets and Liabilities denominated in foreign currency as at Balance Sheet date are converted at the exchange rate prevailing on that date. Exchange differences relating to the acquisition of fixed assets from a country outside India were adjusted to the cost of such assets up to 31st March 2007 and are recognised in the Statement of Profit and Loss thereafter.

g. Employee benefits

Provident Fund is a defined contribution scheme and the contributions as required by the statute are charged to the Statement of Profit and Loss as incurred. The contributions are made to a government administered Provident Fund.

Gratuity and Leave Encashment Liability are defined benefit obligation and are non funded. The Company provides for liability for future gratuity / leave encashment benefits based on valuations, as at the Balance Sheet date, made by independent actuary. Actuarial gains/ losses are charged to the Statement of Profit and Loss.

h. Government Grants/ Subsidy

Government grants receivable / received with reference to total investment in manufacturing facility or by way of contribution towards total capital outlay, are treated as capital reserve.

i. Taxes on Income

Current tax is determined on the basis of the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

j. Impairment

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss will be recognised upon impairment testing wherever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and its disposal at the end of its useful life.

k. Contingencies / Provisions

A provision is recognised when there is a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote. Contingent Assets are not recognised.

l. Lease Rentals

Amount of Lease rental expenses are recognised in the Statement of Profit and Loss.



2. Share Capital As at

31.03.2012

`

As at31.03.2011

`

Authorised 30,000,000 Equity Shares of ` 10 each 300,000,000 300,000,000

Issued, Subscribed and Fully Paid up 9,450,000 Equity Shares of ` 10 each 94,500,000 94,500,000

94,500,000 94,500,000

The company is a Joint Venture of M/s Hindustan Petroleum Corporation Ltd. (HPCL), A Govt. of India Enterprise and M/s Colas SA, A French company. The shares of the company are held by both the joint venture partners & their nominees individuals in the ratio 50:50. In terms of provisions of joint venture agreement, Colas SA has availed opportunity to invest its share of equity in the company through M/s Colasie SA which is a subsidiary company of M/s Colas SA. All the shares issued to the joint venture partners rank pari passu and have same rights and obligations. The rights and obligations of the shareholders are governed by a shareholders' agreement known as Joint Venture Agreement dated 25th November 1994.

Details of shareholders holding more than 5% shares - (i). HPCL (including 400 shares held by nominee individuals on behalf of HPCL) 4,725,000

(ii). Colasie SA (including 400 shares held by nominee individuals on behalf of Colas SA / Colasie SA)

4,725,000

9,450,000

3. Reserves and Surplus As at

31.03.2012

`

As at31.03.2011

`

Capital Reserve 1,500,000 1,500,000

Market Development Reserve 28,001,230 28,001,230

General Reserve : Balance as per last financial statements 113,338,404 84,954,971 Add: Transfer from Statement of Profit and Loss 26,442,479 139,780,883 28,383,433 113,338,404

Surplus in the Statement of Profit and Loss : Balance as per last Financial Statements 969,261,615 851,098,543 Add: Profits / (Loss) for the year 264,424,794 283,834,333 Less : Appropriations Proposed final Equity Dividend (165,375,000) (118,125,000) Tax on Proposed Dividend (26,827,959) (19,162,828) Transfer to General Reserve (26,442,479) 1,015,040,971 (28,383,433) 969,261,615

1,184,323,084 1,112,101,249The equity dividend rate proposed by the Board of Directors is 175%.



4. Long-Term Borrowings As at

31.03.2012

`

As at31.03.2011

`

Deferred Payment Liabilities (Secured) 15,356,040 19,895,300 [Refer Note 8 for Current maturities]

15,356,040 19,895,300

Haryana Sales Tax Authorities granted Interest Free Sales Tax Deferral facility for seven years.The above amount reflects non-current portion of the said liability which would be payable in monthly installments based on the sales tax liability of corresponding month during availment period. The deferral facility is secured by charge on all fixed and movable assets other than stocks.

5. Deferred tax Liabilities (Net) As at As at31.03.2012 31.03.2011

` ` Deferred Tax Liability comprises of tax effect of timing differences on a/c of: Fixed Assets - Excess of Net Block over Written Down Value as per provisions of the Income Tax Act, 1961 75,873,301 64,555,024

Predeposits for sales tax appeal 1,530,088 –

77,403,389 64,555,024

Deferred Tax Asset comprises of tax effect of timing differences on a/c of :

Provision for Employee Benefits (3,933,362) (2,991,134)

Provision for Doubtful Debts (2,228,651) (3,131,536)

Provision for Other Payables (816,465) (2,068,349)

(6,978,478) (8,191,019)

70,424,911 56,364,005

6. Other Long Term Liabilities As at As at31.03.2012 31.03.2011

` ` Deposits from Customers 2,635,251 2,667,781

2,635,251 2,667,781

7. Long-Term provisions As at As at31.03.2012 31.03.2011

` `

For Leave Encashment 5,788,877 4,621,540 For Gratuity 4,596,964 3,344,515

10,385,841 7,966,055


8. Other Current Liabilities As at As at31.03.2012 31.03.2011

` `

Advance from Customers 202,179,970 221,487,993

Payables for purchase & creation of Tangible / Intangible Assets 36,243,984 25,062,884

Taxes & Duties Payable 32,740,376 39,940,882

Deposits Refundable 13,715,226 14,412,714

Current maturities of Deferred Payment Liabilities 5,301,260 5,430,461

Payable to Employees 3,904,306 2,196,954

294,085,122 308,531,888

9. Short-Term Provisions As at As at31.03.2012 31.03.2011

` `

For Income Tax (Net of Advance tax and Tax Deducted at Source) – 63,011,857

For Leave Encashment 1,031,190 823,253

For Gratuity 706,138 429,784

Proposed Dividend 165,375,000 118,125,000

Tax on Proposed Dividend 26,827,959 19,162,828

Provision for Litigation 368,580 6,374,940

194,308,867 207,927,662

The company had wrong availed VAT input credit during March-08 and September-09 at its Jhansi Plant. The department had levied penalty of ` 368,580. The company's first and second appeal were turned down by the respective Appellate Authorities. While the company has preferred an appeal in Allahabad High Court, it is felt prudent to create a provision for this.

Consequent to receipt of certificate of settlement and acceptance of application made last year by Company for settlement of liability under Tamil Nadu Sales Tax Samadhan Scheme (‘Scheme’), an amount of ` 6,374,940, being provision for litigation now no longer required, has been written back and the interest of ` 1,604,536 paid under Scheme has been charged to Statement of Profit and Loss of current year as exceptional item.



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11. Long-Term Loans and Advances As at As at31.03.2012 31.03.2011

` `

Unsecured, Considered Good

Deposits and other Balances with Tax Authorities 17,865,876 37,965,559

Other Deposits 6,914,286 6,068,621

Capital Advances [including secured amount of ` 27,286 (Previous Year : Nil)] 1,079,969 624,746

Advances recoverable in cash or in kind or for value to be received 336,583 215,050

Advances to Employees 55,000 81,900

26,251,714 44,955,876

12. Other Non Current Assets As at As at31.03.2012 31.03.2011

` `

Term Deposits with Banks (having maturity dates falling after one year from the reporting date) 438,637,304 1,622,862

Interest Accrued on Term Deposits with Bank 3,789,485 166,707

442,426,789 1,789,569

Term deposit includes margin money ` Nil (Previous Year : ` 1,622,862)

13. Inventories - at Cost or Net Realisable Value whichever is lower As at As at (As certified by the management) 31.03.2012 31.03.2011

` `

Raw Materials 139,957,260 99,334,734

[Includes Stock-in-transit ` 36,212,059 (Previous Year: ` 10,704,937)] Packing Materials 11,727,568 12,027,485

Fuels and Lubricants 6,883,618 6,053,906

Finished Products 101,408,746 76,395,678

Stores and Spares 599,815 1,315,521

260,577,007 195,127,324



14. Trade Receivables As at As at31.03.2012 31.03.2011

` ` Over six months (from the due date) :

- Secured, Considered good 47,388 – - Unsecured, Considered good 46,576,917 39,793,667 - Doubtful 6,869,012 9,651,828 Less: Provision for Doubtful Debts (6,869,012) (9,651,828)

46,624,305 39,793,667 Others :

- Secured, Considered good 158,942,882 23,649,392 - Unsecured, Considered good 99,711,932 109,650,129

258,654,814 133,299,521305,279,119 173,093,188

The amount recoverable from M/s State Trading Corporation (STC) on account of sales tax demand (including interest and penalty) raised by Gujarat Sales Authorities (due to non submission of sales tax form for the exports made by Company in FY 2003-04) was provided for as doubtful debt in FY 2008-09. Consequent to strong follow up made with STC, the form was received during FY 2011-12 and was submitted to the tax authorities which was accepted in the revised assessment order issued on 29th March 2012. Pending departmental procedures of pre-audit and refund of money deposited with the tax authorities on this account, the receivables from STC and corresponding provision for doubtful debts for an amount of ` 2,019,626 have been reversed in the current year and the refund receivable from tax authorities has been included in Balance with Central Excise, Custom and Tax Authorities.

15. Cash and Bank Balances As at As at31.03.2012 31.03.2011

` ` Cash and Cash Equivalents

– Balance with Scheduled Banks – on Current account 53,731,089 33,955,436 – Cheques /drafts on hand: 6,339,221 2,708,095 – Cash on Hand 232,008 207,560

60,302,318 36,871,091 Other Bank Balances (having maturity dates falling within one year from the reporting date)

–Term Deposits with Banks 232,550,149 671,511,015 –Margin Money Deposit with Banks 575,000 –

233,125,149 671,511,015293,427,467 708,382,106

All term deposits and margin money deposits shown in this note have original maturity of more than 12 months. Accordingly, they are not included in Cash & Cash Equivalents as per Accounting Standard 3.



16. Short-Term Loans and Advances As at As at31.03.2012 31.03.2011

` ` Unsecured, Considered Good

Advance Tax (Net of Provision for Income Tax) 25,830,919 – Deposits and other Balances with Tax Authorities 54,560,830 53,140,928 Advances to Suppliers 20,796,684 19,163,717 Advances recoverable in cash or in kind or for value to be received 3,277,855 2,122,486 Dues from related parties 852,913 1,027,539 Other Deposits 135,555 175,706 Advances to Employees 59,000 74,479

105,513,756 75,704,855

The dues from related parties are receivables from HPCL towards certain expenditure incurred on their behalf and the same is reimbursible by HPCL.

17. Other Current Assets As at As at31.03.2012 31.03.2011

` `

Interest Accrued on Term Deposits with Banks 7,760,363 10,639,1277,760,363 10,639,127

18. Revenue from Operations Year ended Year ended31.03.2012 31.03.2011

` `

Sale of Products 4,604,203,545 3,908,836,093 Less: Excise duty 564,717,544 475,385,563

4,039,486,001 3,433,450,530 Sale of Services

Processing Charges 22,113,616 34,040,601 [Tax deducted at source ` 301,288 (Previous Year ` 766,862)] Income from Hospitality Assistance and terminalling services 96,080,083 67,915,575 [Tax deducted at source ` 1,970,663 (Previous Year ` 1,379,785)] Income from Handling of Bitumen Depot (Net) 17,153 354,990 [Tax deducted at source ` 62,797 (Previous Year ` 36,730)]

118,210,852 102,311,166 Other Operating Revenue :

Sale of scrap 672,553 679,575 Freight on Delivered Supplies 66,092 493,674

738,645 1,173,2494,158,435,498 3,536,934,945



Sale of Products

Emulsions / Cutback / Cold Mix 3,063,410,113 2,602,613,397 Bitumen / Modified Bitumen / Modifier / Bitugrip 976,075,888 830,837,133

4,039,486,001 3,433,450,530

Sales Values are net of discounts of ` 24,914,953/- (Previous Year ` 15,584,788/-).

Refer Note 27 for quantitative information.

19. Other Income Year ended Year ended31.03.2012 31.03.2011

` `

Interest on term deposits with Banks 64,069,158 42,426,240 [Tax deducted at source ` 7,048,545 (Previous year ` 3,930,938)] Other Interest 449,310 183,078 [Tax deducted at source ` 5,501 (Previous Year ` 14,892 )] Other non-operating income 1,314,921 134,461

65,833,389 42,743,779

20. Costs of Materials Consumed Year ended Year ended31.03.2012 31.03.2011

` `

Raw Materials Consumed [Refer Note 28(a) for quantitative information] 3,203,258,969 2,589,932,761 Packing Materials Consumed 245,494,012 232,150,637 Inventory Loss / (Gain)-Raw Materials, Packing Materials and Fuels & Lubricants [Refer Note 28(b) for quantitative information] (286,101) (2,574,258) Excise Duty on Captive Consumption 125,197 –

3,448,592,077 2,819,509,140

Breakup of Raw Materials Consumed : Bitumen 2,786,201,404 2,164,412,923 Emulsifier 49,109,251 39,549,899 Acids 1,088,775 1,202,393 Solvents 205,335,096 211,905,092 Polymers 55,899,664 73,478,609 Non-Polymer Modifiers 94,406,441 93,695,724 Additives 5,025,233 3,773,917 Aggregates 371,850 56,447 Antistrip 5,821,255 1,857,757

3,203,258,969 2,589,932,761

Imported and Indigenous Raw Materials Consumed Imported 91,123,183 114,495,197 Indigenous 3,112,135,786 2,475,437,564

3,203,258,969 2,589,932,761 Percentage of Total Consumption Imported 2.84 4.42 Indigenous 97.16 95.58

100.00 100.00

Current year figures includes imported materials received directly from the foreign countries.



21. Changes in inventories of finished goods Year ended Year ended31.03.2012 31.03.2011

` ` Opening Stock

Emulsions / Cutback / Cold Mix 68,809,688 52,856,341 Modified Bitumen/Modifier/ Bitugrip 7,585,990 5,095,034

76,395,678 57,951,375 Closing Stock

Emulsions / Cutback / Cold Mix 88,221,202 68,809,688 Modified Bitumen/Modifier/ Bitugrip 13,187,544 7,585,990

101,408,746 76,395,678(25,013,068) (18,444,303)

Refer Note 27 for quantitative information.

22. Employee Benefits Expense Year ended Year ended31.03.2012 31.03.2011

` `

Salaries and Wages [Refer Note 29(b) for post employment benefits] 94,489,355 79,783,405 [Includes ` 13,814,416 being reimbursement of personnel cost to HPCL (Previous year ` 14,825,024)] Contribution to Provident and Other funds [Refer Note 29(a)] 3,962,832 3,281,212 Staff Welfare expenses 7,877,995 6,679,354

106,330,182 89,743,971

The current compensation package for the employees comprises of variable pay which is determined based on net profit (PAT) of the Company as per audited accounts for the concluded financial year and the performance appraisal rating of the individual employee. As the performance appraisal cycle is concluded in the month of June of subsequent financial year, the amount of variable pay is consistently accounted upon finalization of such rating and consequent payment to employees. The maximum amount payable on this account is restricted to 3% of PAT of concluded financial year. However, in case of growth in profits over last year, 10% of growth in PAT (subject to maximum 2% of PAT of the concluded financial year) can also be added to the maximum amount payable. Accordingly, the employee costs include an amount of ` 8,515,020 towards variable pay paid for FY 2010-11.

23. Finance Costs Year ended Year ended31.03.2012 31.03.2011

` `

Interest 87,963 174,066 Other Borrowing Costs 189,394 –

277,357 174,066



24. Other Expenses Year ended Year ended31.03.2012 31.03.2011

` ` Operating Expenses

Fuel and Lubricants consumed 51,903,469 44,950,506 Electricity and water 13,160,658 11,415,446 Maintenance and repairs : Plant and Machinery 13,340,313 14,501,088 Buildings 2,774,026 1,961,716 Technical Fees 11,894,573 10,470,581 Spares Consumed 915,572 728,382 Contract Labour 17,029,843 14,364,613 Charges for Teminalling Services 19,563,268 17,744,716 Freight incurred under contract of jobwork 2,035,765 3,469,058 Increase/(Decrease) in Excise Duty on stock of Finished Goods 2,058,548 3,292,045 Other Operating Overheads 4,636,498 3,012,194

139,312,533 125,910,345

Administrative Expenses

Rates and Taxes 3,690,063 3,704,730 Travelling and Conveyance 15,501,037 15,103,257 Consultancy and Certification Charges 5,600,997 6,388,956 IT Infrastructure Maintenance 4,329,979 2,819,944 Telephone and Internet Dedicated Lines 3,545,482 3,759,591 Printing and Stationery 1,408,225 1,405,375 Rent 4,596,053 3,435,672 Security and Surveillance 8,171,181 5,992,090 Insurance 2,637,873 1,369,435 Contributions & Expenditure towards Corporate Social Responsibility (CSR) 179,001 629,000 Exchange Variation (Net) 1,025,435 988,381 Employee Recruitment and Training 2,476,408 1,235,716 Bank Charges 207,284 253,738 Other Administrative Expenses 3,911,497 3,911,154 Auditors' Remuneration - Audit Fees 400,000 400,000 - Other Certifications / Audits 400,000 375,000 - Reimbursement of expenses 39,430 16,410

58,119,945 51,788,449



Selling and Distribution Expenses

Advertisement and Sales Promotion 3,573,186 2,156,011

Commission to agents 6,870,972 4,374,073

Expenditure on contractor operated depots 2,195,635 2,270,447

Marketing support fees 16,572,996 16,995,170

Freight on Stock Transfers 19,230,000 13,247,590

Other Selling and Distribution expenses 772,254 698,157

49,215,043 39,741,448

Provisions/ Write offs

Provision against doubtful debts (Net) (2,782,816) (717,214)

Debts written off 773,670 890,000

Loss on disposal / deletion of assets 1,858,273 1,147,528

(150,873) 1,320,314

246,496,648 218,760,556

Imported and Indigenous Spare Parts Consumed

Imported 790,152 602,534

Indigenous 125,420 125,848

915,572 728,382

Percentage of Total Consumption

Imported 86.30 82.72 Indigenous 13.70 17.28

100.00 100.00

25. Exceptional Items - Gains / (Loss) Year ended Year ended31.03.2012 31.03.2011

` `

Provision written back on account of Settlement of sales tax liability (Refer Note 9) 6,374,940 – Interest paid on settlement of sales tax liability (Refer Note 9) (1,604,536) – Other Payables/ Provisions written back 2,073,385 – Write Back / (Write Down) in values of Inventories except finished goods (299,328) 1,702,613

6,544,461 1,702,613

Closing Stocks of Finished Goods as on 31.03.2012 have been valued after writing down the value for obsolete / slow moving items to the extent of ` 794,425/- (Previous Year ` 570,882) which is included in Statement of Profit & Loss under "Changes in inventories of finished goods".



26. Extraordinary Items - Gains / (Loss) Year ended Year ended31.03.2012 31.03.2011

` `

Loss by Fire Accident – (8,374,971) Insurance Claims 4,437,951 –

4,437,951 (8,374,971)

During FY 2011-12, the Company received an amount of ` 4,437,951 towards insurance claim against loss incurred due to fire accident at Irungattukottai plant on 5th May 2010. While the loss had been accounted in the year of fire, the amount of insurance claim has been recognised as income on receipt of the same. Both the items have been treated as Extraordinary items. In addition, the company has also received an amount of ` 100,000 towards insurance claim on account of public liability for damages to neighbouring units. Consequently, the amount reported in contingent liability has been adjusted.

27. Quantitative Data for Finished Goods (in MT) Year ended 31.03.2012

ParticularsEmulsions/ Cutback/ Cold Mix

Modifi ed Bitumen/Modifi er/ Bitugrip

Opening Stock 2,625.272 212.804

Production 101,690.973 26,409.587

Sales 101,324.481 26,403.884

Inventory Loss/ (Gain)-Net 24.498 1.129

Closing Stock 2,958.120 215.393


ParticularsEmulsions/ Cutback/Cold Mix

Modifi ed Bitumen/Modifi er/ Bitugrip

Opening Stock 2,236.234 143.799 Production 103,822.759 26,875.435 Sales 103,425.032 26,804.469 Inventory Loss/ (Gain)-Net 7.529 (0.421) Closing Stock 2,625.272 212.804

(i) The value on account of loss has been included in Increase / Decrease in stock of fi nished goods. (ii) Sales does not include clearance of goods processed for others 18,678.465 MT (Previous year 28,643.27 MT). (iii) Closing Stock does not include goods processed for others 53.100 MT (Previous year 85.564 MT). (iv) Closing stock stated above are after adjustments for free samples.



28(a). Quantitative Data for Raw Material Consumed (in MT)

Particulars Year ended 31.03.2012


Bitumen* 83,529.016 84,822.042

Emulsifi er 279.724 270.645

Acids 328.136 318.653

Solvents 3,596.663 5,023.308

Polymers 395.880 572.553

Non-Polymer Modifi ers 4,465.203 4,863.242

Additives 722.637 419.018

Aggregates 574.960 77.855

Antistrip 30.400 13.840

* Bitumen consumption for the previous year includes quantity of 45.560 MT captively consumed for internal Road Works at Bahadurgarh Plant.

28(b). Inventories' Loss / (Gains)-Raw Materials, Packing Materials, Fuels & Lubricants (in MT)

Particulars Year ended

31.03.2012


Bitumen 31.860 48.392

Emulsifi er 0.928 0.241

Acids (0.503) (11.829)

Solvents (11.111) (6.024)

Polymers (1.738) (1.546)

Non-Polymer Modifi ers (44.031) (15.781)

Additives (10.860) (19.569)

Aggregates 60.337 7.382

Packing Material (in Nos) (17) 10

Fuels & Lubricants 0.181 (26.981)




29. Employee benefits

(a) During the year, the company has recognised the following defined contribution obligations :

2011-12

(`)2010-11

(`)

1. Contribution to Provident Fund 3,770,374 3,111,554 2. Contribution to Employee State Insurance Corporation 190,838 168,542

(b ) Defined Benefit Obligation Reconciliations of opening and closing balances of the present value of the defined benefit obligation are given below:

(in `)2011-12 2010-11

Gratuity Leave Encashment

Gratuity Leave Encashment

I. Change in Benefit Obligation :

Liability at the beginning of the year 3,774,299 5,444,793 2,772,148 4,381,357 Interest Cost 316,688 360,254 203,152 324,432 Current Service Cost 1,563,511 1,064,157 1,230,417 885,312 Past Service Cost – – 414,371 – Benefit Paid (200,845) (2,531,032) (465,487) (651,910) Actuarial (gain)/loss on obligations (150,551) 2,481,895 (380,302) 505,602 Liability at the end of the year 5,303,102 6,820,067 3,774,299 5,444,793

II. Fair value of Plan Assets :

Fair Value of Plan Assets (Opening) – – – – Expected Return on Plan Assets – – – – Contributions 200,845 2,531,032 465,487 651,910 Benefit Paid (200,845) (2,531,032) (465,487) (651,910) Actuarial gain/(loss) on Plan Assets – – – – Fair Value of Plan Assets (Closing) – – – – Total Actuarial Gain/(Loss) To Be Recognised 150,551 (2,481,895) 380,302 (505,602)

III. Amount Recognised in the Balance Sheet

Liability at the end of the year 5,303,102 6,820,067 3,774,299 5,444,793 Fair Value of Plan Assets (Closing) – – – – Difference 5,303,102 6,820,067 3,774,299 5,444,793 Amount Recognised in the Balance Sheet 5,303,102 6,820,067 3,774,299 5,444,793

IV. Expenses Recognised in the P&L Account

Current Service Cost 1,563,511 1,064,157 1,230,417 885,312 Interest Cost 316,688 360,254 203,152 324,432 Expected Return on Plan Assets – – – – Net Actuarial (Gain)/Loss To Be Recognised (150,551) 2,481,895 (380,302) 505,602 Past Service Cost 1,002,151 – 414,371 – Expense Recognised in P&L Account 2,731,799 3,906,306 1,467,638 1,715,346

V. Amount Recognised in the Balance Sheet :

Opening liability (Net) 2,772,148 5,444,793 2,772,148 4,381,357 Expense as recognised in the P&L Account 2,731,799 3,906,306 1,467,638 1,715,346 Employers Contribution paid (200,845) (2,531,032) (465,487) (651,910) Closing Liability (Net) 5,303,102 6,820,067 3,774,299 5,444,793

Assumptions : Discount Rate 8.62% 8.62% 8.00% 8.00% Salary Escalation Rate 10.50% 7.50% 10.00% 6.00%



30. Related party disclosures (A) Names of related parties and nature of relationship:

a) Enterprises where control exists Parties having substantial interest in the Company 1. M/s Hindustan Petroleum Corporation Limited, India (Holds 50% of the share capital of the Company) 2. M/s COLASIE SA, France (Holds 50% of the share capital of the Company) b) Other Parties related to (a) above with whom the Company had transactions M/s COLAS SA, France (Holding Company of M/s COLASIE SA, France) c) Key Management Personnel ''Manager'' under Companies Act, 1956 – Mr. Sanjay Grover (B) Transactions with Related Parties*

ParticularsYear ended31.03.2012

`

Year ended31.03.2011

`M/s Hindustan Petroleum Corporation Limited

Income:-Sales 63,823,159 85,007,372Hospitality assistance and Terminalling services 96,080,083 67,915,575Handling of Bitumen depot 2,528,126 2,511,610Processing charges for job work 22,113,616 34,040,601

Expenditure:-Purchases (Net of Discount and Cenvat differential) 2,593,642,706 1,728,998,853Other Expenses - Salary cost for personnel deputed 13,814,416 14,825,024 - Compensation for marketing support 16,572,996 16,995,170 - Rent 1,905,840 1,143,840 - Water Charges 685,955 547,645 - IT Infrastructure Support 1,921,984 1,827,426

Balance Receivable/(Payable) (263,527,558) (12,159,974)Provision for Doubtful Debts (1,097,784) (1,097,784)

M/s COLAS SA

Expenditure:-Purchases - Spares 29,466 1,657,389 - Capital Equipments – 19,672,380 - Commissioning charges (capitalised) 633,135 –Other Services - Technical Assistance 11,430,591 10,059,521

Balance Receivable/(Payable) (3,071,896) (21,138,664)

Details of remuneration to "Manager"

Fixed Salary & Entitlements/Other Benefits# 2,508,988 2,393,804Special Incentive / Profit Sharing 926,589 1,100,000Valuation of Perquisites 497,229 500,450# The above includes contribution to Provident Funds but does not include contribution to Gratuity Fund and Leave Encashment as separate figures applicable to an individual employee are not available.

* The details given under this heading do not include transactions of pure reimbursement nature towards activities undertaken on behalf of related parties.


31. Contingent Liabilities and Commitments (to the extent not provided for)

A. Contingent Liabilities As at

31.03.2012

`

As at 31.03.2011

`

Sales Tax/VAT (including penalty) 60,706,131 55,744,424

Local Levies 377,687 377,687

Excise Duty – 1,010,720

Income Tax 6,279,345 7,036,954

Claims from neighbouring units affected by fire accident 236,490 336,490

Claims for utilities 555,456 –

Total 68,155,109 64,506,275

(i). Future cash outflow in respect of above are determinable only on receipt of judgements/decisions pending with various forums / authorities.

(ii). Show cause notices issued by tax authorities are not considered for liability or contingent liability until they are converted in demand.

(iii). Liability towards pending collection of concessional sales tax forms is not considered for the purpose of contingent liability disclosures.

B. Estimated amount of contracts remaining to be executed on capital account and not provided for ` 45,982,796 (Previous year: ` 114,549,864)

C. Other Commitments

The company has entered into a Terminalling Services Agreement for the use of terminal facilities and services for handling import and storage of Bulk Bitumen. Pursuant to this agreement, the company has started availing terminalling services wef 7th May 2010. The total of future minmum assured payments :

As at

31.03.2012

`

As at 31.03.2011

`

Within one year 20,573,690 17,010,000

Later than one year and not later than five years 46,558,186 52,721,855

These charges are reported under "Charges for Teminalling Servicing" under Note 24-"Other Expenses". The agreement shall remain in force for a period of sixty months. However, our Company can terminate the contract at the end of thirty six months by giving six months' notice in advance and by paying a compensation of ` 24,000,000 as early termination fees to the lessor. Any extension after sixty months will be on mutually agreed terms and conditions, with first right of refusal to our company.



32. The Micro, Small and Medium Enterprises (MSME) for the purpose of MSME Development Act, 2006 have been identified on the basis of information available with the Company and the same is relied upon by the auditors. The information as required by the MSME Act is given below :

Year ended

31.03.2012

`


`

Principal Amount and the interest due thereon remaining unpaid

to any supplier as at the end of accounting year

- Principal 4,322,029 –

- Interest 1,167 4,026

Amount of payments made to the supplier during the year

- Principal beyond due date 630,538 1,840,747

- Interest 4,299 171,442

Amount of Interest due and payable for the year 1,440 4,026

Amount of interest accrued and remaining unpaid at the end of the

accounting year1,167 4,026

Amount of interest due and payable brought forward from

previous accounting year4,026 171,442

33. Value of Imports calculated on CIF basis Year ended

31.03.2012

`


`

Spares 29,466 1,657,389

Capital Goods 10,671,720 23,589,324

Raw Material 81,639,513 96,527,768

34. Expenditure in foreign currency Year ended

31.03.2012

`


`

a. Technical Assistance 9,362,643 8,221,200

b. Travel 402,133 561,799

c. Membership and subscriptions 462,763 475,570

d. Conference Fees 69,564 –



35. Remittance of Dividend in foreign currency to non-resident

shareholders

Year ended

31.03.2012

`


`

Number of equity shares of ` 10 each 4,725,000 4,725,000

Dividend for the year ended 31.03.2011 31.03.2010

Amount in ` 59,062,500 18,900,000

Number of non-resident shareholders 1 1

36. The Company deals in different products classified as 'Bitumen mixtures based on Petroleum Bitumen' and all the activities of the Company revolve around the above main activity. As such, there are no reportable segments as defined by Accounting Standard 17 - Segment Reporting, issued by the Institute of Chartered Accountants of India.

37. Previous year figures have been regrouped/reclassified wherever necessary.


As per our report of even date For and on behalf of the Board

For Ford, Rhodes, Parks & Co. S Roy Choudhury Jacques Pastor

Chartered Accountants Chairman Director Firm Registration No: 102860W

A.D.Shenoy Sanjay Grover Sitaram Taparia Bharat Keneri

Partner Chief Executive Officer Chief Financial Officer Head CommercialMembership No : 11549 and “Manager” and Company Secretary

Place : Mumbai Place : MumbaiDate : 7th May 2012 Date : 7th May 2012

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