Gurgaon, 24 May 2005

FISCAL YEAR - 2004-05

With strong growth in the continuing businesses, sales and operating profit grew by 25% and 85% respectively. Due to difference in phasing, income from investment for the year at Rs 16.6 cr was higher than Rs 4.9 cr in the previous year. However, due to the divestment of Nitrocellulose and Trading businesses, the overall sales/income at Rs 766 cr (Rs 700 cr last year) and profit before tax from operations Rs 70 cr (Rs 54 cr last year) reflected a lower growth at 9% and 28% respectively. Further, with exceptional charge of Rs 14 cr this year (Rs 77 cr income in the previous year), PAT for the year was Rs 47 cr compared to Rs 109 cr last year.

QUARTER - January-March 2005

Continuing businesses net sales/income at Rs 185 cr (Rs 148 cr last year) and PBIT from operations of Rs 13.9 cr (Rs 5.6 cr last year) represent 25% and 150% growth respectively during the quarter compared to the same period last year, with improved performance in all the businesses and phasing of investment income. However, pressure on margins continued due to input cost escalations arising from crude oil price hikes, which could only be partially offset by product price corrections. However, growth in total sales and profit before interest and tax were only 10% and 24% respectively as previous year's corresponding figures included performance of Nitrocellulose and Trading.

The exceptional charge of Rs 12.8 cr for the quarter includes provisions for retiral benefits (Rs 11.3 cr) and certain pending litigations, net of write back of some excess provisions created in the previous years (Rs 1.5 cr). As a result, the PAT at Rs (-) 0.8 cr is substantially lower as compared to the same period last year, which had large exceptional income from divestments.

Business Segments

Paints: Sales continued to grow ahead of market during the quarter with good performance in premium Dulux and 2K brands. Higher volumes and better product mix improved the business performance compared to the corresponding period of last year.

Chemicals: Uniqema sales grew in line with market though there was some impact on trade sales on account of uncertainty during VAT implementation. National Starch's sales increased significantly during the quarter helped by expansion in its product offering. A new Polymerization plant commissioned during the quarter is expected to enhance the business' ability to service the growing market. Rubber Chemicals Business recorded a strong topline growth with improved performance aided by the long awaited price correction in some of its products.

Dividend

In line with the current year's profitability and the company's prudent dividend policy, the Board has recommended a dividend of Rs 5.50 per share, which will be paid after the approval of the shareholders at the AGM scheduled to be held on 5 August 2005. It may be noted that in the previous year, in view of the very special occasion of Golden Jubilee Year of the Company and high level of exceptional income, dividend of Rs 12.50 per share was paid and hence not comparable to the current proposal.

General

The continuing businesses performed strongly during the quarter and the fiscal year ended 31 March 2005, as can be seen from the segment results. However, the overall results are not comparable with those of the corresponding period last year in view of the sale of the Nitrocellulose and Trading Businesses and non-recurring exceptional income last year.