Directors' Report

Your Directors have pleasure in presenting the Twenty-Second Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2002.

FINANCIAL RESULTS
The summarised financial results for the year are as under:

Sales (including trading operations of Rs142.11 crores) increased to Rs512.27 crores as against Rs489.99 crores (including trading operations of Rs124.28 crores) for the previous year. The operating profit has dropped to Rs117.94 crores from Rs147.20 crores of the previous year. Profit after tax has come down to Rs48.64 crores from Rs62.70 crores of the previous year.

DIVIDEND
Considering the performance during the year under review, your Directors recommend a dividend @ 20 % (Previous Year 25%) on Equity Shares of the Company for year ended 31st March, 2002. The proposed dividend will absorb Rs.14.95 crores as against Rs20.58 crores (including corporate dividend tax) for the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report, which is forming part of this Report, inter-alia, adequately deals with the operations as also current and future outlook of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of sub-section (2AA) of Section 217 of the Companies Act, 1956 your Directors confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the accounting policies selected had been applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on 31st March, 2002 and of the profit of the Company for that period;

(iii) proper and sufficient care had been taken for the 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; and

(iv) the annual accounts had been prepared on a going concern basis.

CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a separate section titled "Corporate Governance" is attached to this Annual Report.

SAFETY & ENVIRONMENT
In recognition of its performance in the past 3 years, your Company has won "Excellence in Safety" award for 2000-01 in Nitrogenous and Complex Fertiliser Sector from Fertiliser Association of India. As a part of its continued efforts towards environment protection, your Company has initiated various measures for reducing wastes, effluent and in conservation of natural resources.

INDUSTRIAL RELATIONS
Industrial Relations during the year under review continued to be peaceful.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure forming part of this Report.

SUBSIDIARY COMPANIES
Owing to changes in shareholding, Priyank Mercantile Limited, Sandhya Commercial Limited and Deepak Agro Solutions Limited are no longer subsidiaries of the Company.

DIRECTORS
During the year, IDBI had withdrawn the nomination of Shri Siby Antony from the Board of Directors of the Company and appointed Dr. A. S. Kane and subsequently Shri Aloke Sengupta in his place.

The Company has repaid the entire amount of term loans availed from UTI, LIC and GIC. GIC has withdrawn the nomination of Shri Y. D. Patil from the Board of Directors of the Company.

Shri A. C. Mehta, who was co-opted as an Additional Director of the Company during the year, holds office upto the date of the ensuing Annual General Meeting and is not seeking appointment.

Shri S. S. Marathe and Shri N. C. Singhal are liable to retire by rotation and being eligible, offer themselves for re-appointment.

AUDITORS
M/s. B. K. Khare & Co., Chartered Accountants, Mumbai, the Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting. The Company has received a letter from them to the effect that their appointment, if made, by the Company for the year 2002-2003 will be within the limit prescribed under Section 224 (1-B) of the Companies Act, 1956. The Board of Directors commends their re-appointment.

PERSONNEL
As required by the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of employees are set out in the annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the annual report and accounts are being sent to all members of the Company excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENT
Your Company continues to receive the necessary support and guidance from the financial institutions led by IDBI and the consortium of banks led by State Bank of India and your Directors would like to place on record their sincere appreciation for the same.

Your Directors are also pleased to record their appreciation for the hard work put in by the employees at all levels which has enabled your Company to achieve good performance in the emerging competitive environment.