Gurgaon, 22 May 2004

FINANCIAL RESULTS

The results for the quarter and fiscal year are not comparable with those of the corresponding periods of the previous year in view of the business portfolio changes in both the years.

QUARTER - January-March 2004

Net sales/Income from operations during the quarter grew by 26% compared to the corresponding period of previous year. Though profits from Business segments more than doubled, PBIT before exceptional items fell by 34% on account of income from investment being lower by Rs 5.9 cr due to phasing.

The exceptional items of Rs 32.9 cr for the quarter include profit of Rs 46.3 cr from divestment of Nitrocellulose and Trading businesses and a charge of Rs 13.9 cr for retiral funds top up contributions. As a result, the PAT at Rs 33.3 cr is substantially higher compared to the corresponding period last year.

Business Segments

Paints: Paints sales grew ahead of market during the quarter with good performance in premium Dulux and 2K brands. Higher volumes supported by new product launches, strengthening of the distribution channels and better product mix substantially improved the business performance compared to the corresponding period of last year.

Industrial Specialties: National Starch's sales increased significantly during the quarter with improved market share in key segments. Uniqema sales growth reflects a strong performance in Polymer, personal care and Lubricant segments. Higher sales together with improved efficiencies resulted in profit growth of over 36%.

Industrial Chemicals: Improved export performance resulted in increase in sales by 6%. However, profitability of Rubber Chemicals business continued to be affected by lower sales realizations and higher prices of key raw materials. Nitrocellulose and Trading Businesses were divested during the quarter, with effect from 16 March 2004.

FISCAL YEAR - 2003-04

On the back of strong growth in Paints and Industrial Specialties, the continuing businesses sales grew by 19% and operating profits by 49%. On a total basis, net sales/ income from operations at Rs 699 cr were ahead of last year by 10%. However, the operating profit at Rs 83 cr was Rs 4 cr lower than last year predominantly due to divestment of Synetix in November 2002 and difference in phasing of investment income.

Exceptional items of Rs 77 cr mainly comprise profit from sale of Nitrocellulose/Trading businesses and 51% stake in Indian Explosives Limited net of provisions for top up contribution for retiral funds and restructuring costs. Consequently, the Company achieved a record PAT of Rs 109 cr, marginally ahead of the previous year.

Dividend

Though the profit before tax from operations is lower compared to the last year, keeping in view the very special occasion of Golden Jubilee year of the Company and high level of non recurring profits from divestments of businesses and shareholding in IEL during the year, the Board has recommended as a once off special case a dividend of
Rs 12.50 per share (previous year Rs 10 per share). The dividend for the year will be paid after the approval of the shareholders at the AGM scheduled to be held on 30 July 2004.

For further information:

R Guha
Tel: +91 124 2540810
Fax: +91 124 2540839
E mail: r_guha@ici.com