Annual Report - EID Parry - 2009-2010

E.I.D. PARRY (INDIA) LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Your Directors have pleasure in presenting their Report together with the
audited accounts for the financial year ended 31st March, 2010.



The performance highlights of the Company for the year are summarised
below:

FINANCIAL RESULTS Rs. Lakhs

2009-2010 2008-2009

Total Income 129682 167772

Profit Before Interest and
Depreciation 35536 96539

Less: Interest 3857 2682

Depreciation 6933 5017

Profit Before Tax 24746 88840

Less: Provision for Tax:

- Current 2600 13800

- Deferred 2987 5776

- MAT Credit entitlement (1369) -

- Fringe Benefit Tax - 68

Profit After Tax 20528 69196

Add: Surplus brought forward 59180 15784

Amount available for Appropriation 79708 84980

APPROPRIATIONS

Transfer to General Reserve 40000 6920

Transfer to Debenture Redemption
Reserve 417 -

Dividend on Equity Capital:

Interim paid 5181 12181

Proposed Final 3454 5167

Dividend Tax (Net) (24) 1532

Surplus carried to Balance Sheet 30680 59180

TOTAL 79708 84980

PERFORMANCE

The Company recorded a revenue of Rs.129682 lakhs (including other income
of Rs.14950 lakhs) for the year ended 31st March, 2010. Other income
includes Rs.798 lakhs (2008-09 - Rs.74972 lakhs) of Profit on sale of
investments. The total gross sales of the company for the year 2009-10 grew
by 51% to Rs. 118576 Lakhs from Rs. 78384 Lakhs in the year 2008 - 09.

The Earnings before Interest, Depreciation, Tax and Amortization for the
year was Rs. 34738 Lakhs (excluding Profit on sale of Investments of Rs.798
lakhs) representing 30% of total sales and showed a growth of 61% over
previous year's Rs. 21567 Lakhs (excluding profit on sale of investments of
Rs.74972 lakhs). The increased profits in Sugar resulted in higher EBIDTA
during current year.

Sugar sales increased from Rs.58618 Lakhs to Rs.93634 Lakhs in 2009-10,
showing a growth of 60% mainly driven by higher prices. Alcohol sales
increased by 113% consequent to the newly commissioned Distillery plant at
Sivaganga district, Tamilnadu. Revenue from sale of power recorded an
increase of 29%.

Bio-Pesticides' sales dropped marginally due to drop in volume.

Nutraceuticals division's sales increased by 29%, due to higher sales
volume of Spirulina and traded products that include Lycopene , Lutein &
Others.

SUGAR

The sugar industry is one of the largest agro based industries, supporting
India's economic growth. The downturn in sugar production witnessed in
2008-09 Sugar Season is slated to continue into the next two Sugar Seasons
(2009-10 and 2010-11) as production is expected to be significantly lower
than consumption, leading to the possibility of sugar imports to meet
domestic demand.

E.I.D.-PARRY (INDIA) LIMITED

The Company has six sugar plants spread across South India of which four
are in Tamil Nadu, one in Puducherry and one in Karnataka through its
subsidiary, Sadashiva Sugars Ltd. The Company has increased the throughput
sugarcane capacity to 21,500 TCD and cogeneration capacity to 100 MW across
its sugar mills. The integrated Sugar Units have been designed to optimize
process efficiencies, increase sugarcane recovery ratio, and increase
energy efficiency through reduced steam and power consumption.

The Company continues to be one of the low cost producers of international
quality sugar, through its innovative process and farmer centric practices.
The existing Distillery unit at Nellikuppam has been converted into a
multi-product unit with ENA and Ethanol production facilities. Further
expanding capacity from 40 KLPD to 75 KLPD is in progress. The green field
stand alone distillery factory in Sivaganga, with a capacity of 60 KLPD,
commissioned during March 2009 stabilised during the year.

INVESTMENT IN SADASHIVA SUGARS LIMITED

As part of the growth strategy for the Sugar business, in October, 2009 the
Company acquired a 76% stake in the Equity of M/s Sadashiva Sugars Limited,
Bangalore having its factory at Nagaral Nainegali, Bagalkot District,
Karnataka. The factory has a capacity to crush sugarcane of 2500 TCD and
Cogen capacity of 15.5 MW. With this acquisition, the Company made an entry
in the State of Karnataka.

JOINT VENTURE WITH CARGILL ASIA PACIFIC HOLDINGS PTE LIMITED

During the financial year ended 31st March 2010, your company invested
Rs.1430 lakhs in the equity of the Joint Venture entity viz. Silkroad Sugar
Private Ltd. The commercial production is yet to commence and is expected
to commence in 2010-11 and the delay has been due to non availability of
gas. With a capacity of 2000 tons of refined sugar production per day and
with a 35 MW Co-Generation Plant, this refinery will be the largest in the
South Asian region.

BIO PRODUCTS

Bio Pesticides

The US market experienced economic slowdown resulting in 10-15% sales
reduction for agrochemicals. Organic crop areas reduced by 20-30% over
2008-09 leading to sales reduction of biological inputs. Better economic
outlook over 2010-11 and thereafter is expected to bring back the organic
momentum.

Domestic markets, mainly in Tamil Nadu, Karnataka, West Bengal and North
Eastern States registered growth over 2008-09, mainly due to the product
acceptability of Bio Granule Abda in rice and Fruits & Vegetables crop
segments.

The revenue (including excise duty) for the year ended 31st March, 2010 was
Rs.3626 lakhs as compared to Rs.3636 lakhs of previous year. PBIT for the
year was Rs. 561 lakhs against the previous year's Rs. 717 lakhs.

Nutraceuticals

The Nutraceuticals products continued to grow in all the markets and are
currently exported to over 38 countries. Certified Organic Spirulina
continues to outperform competition in its segment.

The revenue (including excise duty) for the year ended 31st March, 2010 was
Rs. 3747 lakhs representing 3% of the Company's revenue. About 80% of this
represents exports. Nutraceuticals division's sales has increased by 28%,
due to higher sales volume of Spirulina and traded products that include
Lycopene, Lutein & Others.

To ensure that Parry Nutraceuticals maintains its edge in product
development, the Parry Life Sciences facility was established at TICEL
Park, Chennai to develop products and formulations in line with market
demand across dietary supplement, functional foods and Pharmaceuticals
segments.

R & D

During the year, the Company incurred a sum of Rs. 357.90 lakhs towards the
revenue expenditure on account of Research and Development at the Approved
In-House R & D units at Bangalore and Nellikuppam. The Company also
incurred a sum of Rs. 1.61 lakhs towards Capital expenditure in respect of
Approved In-House R & D units at Bangalore and Nellikuppam. In addition to
the above, the Company also spent a sum of Rs. 270.49 lakhs towards revenue
expenditure and Rs. 298.19 lakhs towards Capital expenditure for
establishing a new research centre at Chennai.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 4 (200%)
per equity share of Rs. 2 each for the financial year ended 31st March,
2010. During the year, the Company had already paid an interim dividend of
Rs. 6 (300%) per equity share of Rs. 2 each in February, 2010.

With this, the total dividend declared for the year is Rs.10 (500%) per
share.

CORPORATE DEVELOPMENTS

INVESTMENT IN EQUITY SHARES OF PARRY PHYTOREMEDIES PRIVATE LIMITED,
SUBSIDIARY COMPANY

During the year under review, the Company acquired a further 20,000 equity
shares of Rs. 100 each of Parry Phytoremedies Private Limited, a subsidiary
increasing the stake from 51% to 63%.

INVESTMENT IN EQUITY SHARES OF COROMANDEL INTERNATIONAL LIMITED, SUBSIDIARY
COMPANY

During the year, the Company acquired a further 3,36,500 shares of Rs.2
each of Coromandel International Limited, a listed Subsidiary of the
Company. With this, the Company holds 63% in their Equity.

SALE OF SHARES IN TRICHY DISTILLERIES AND CHEMICALS LIMITED

During the year, the Company divested its entire stake of 2,20,000 equity
shares of Rs.10 each held by the Company in Trichy Distilleries and
Chemicals Limited.

VOLUNTARY DELISTING OF EQUITY SHARES FROM THE MADRAS STOCK EXCHANGE LTD.

In accordance with the provisions of SEBI (Delisting of Equity Shares)
Regulations, 2009, the Company has made an application to The Madras Stock
Exchange Limited for voluntary delisting of its Equity Shares from where
the Company's Equity Shares are listed. The proposed voluntary delisting
would not adversely affect the investors, as the Company's shares would
continue to be listed on the NSE and BSE, which have nation wide terminals.

EMPLOYEE STOCK OPTION SCHEME

Under the 'Employee Stock Option Scheme' ('the Scheme') of the Company, the
Company had not granted any Options during the year ended 31st March, 2010.
The details of the Options granted up to 31st March, 2010, and other
disclosures as required under Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999, are set out in the Annexure to this Report.

The Company's Auditors, Messrs. Deloitte, Haskins & Sells, have certified
that the Scheme had been implemented in accordance with the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 and the resolutions passed by the Members
in this regard.

SUBSIDIARY COMPANIES

Coromandel International Limited

The name of the Company has been changed during the year from Coromandel
Fertilisers Limited to Coromandel International Limited (Coromandel) in
order to communicate the business potential of the Company across the globe
to the stakeholders. Coromandel achieved a turnover of Rs. 639473 lakhs for
the year ended 31st March, 2010 and the profit after tax was Rs.46820
lakhs. The Company's Board had recommended a final dividend of Rs. 4 per
share (200% ) for the year. With the interim dividend of Rs. 6 per share
(300%) paid in February, 2010, the total dividend from Coromandel for the
year ended 31st March, 2010 is Rs.10 per share (500%).

Parry Chemicals Limited

Parry Chemicals Limited, a 100% subsidiary of Coromandel, achieved a
turnover of Rs.56.96 lakhs for the year ended 31st March, 2010. The Profit
after Tax was Rs.1.68 lakhs.

Parrys Sugar Limited

The Company during the year ended 31st March 2010, earned an income of
Rs.12.56 lakhs and after providing for expenses amounting to Rs.0.44 lakhs,
the Profit before tax was Rs.12.12 lakhs. After providing for tax of Rs. 3
lakhs, the Profit after Tax was Rs.9.12 lakhs. With the brought forward
amount of Rs.27.95 lakhs, Rs.37.07 lakhs is carried to Balance sheet.

Parry Infrastructure Company Private Limited

The Company is in the process of evaluating various properties held by the
Murugappa Group Companies and depending on the market demand and potential
value, the Company will progress on the development of these properties for
residential/commercial purposes.

During the year under review the company earned a profit of Rs.5 lakhs.
After adjusting the carried forward loss of Rs.4 lakhs, the balance amount
of Rs.1 lakh is carried to the Balance Sheet.

Parry America Inc.

Parry America Inc, the 100% subsidiary based in US, reported an income of
US$ 2,960 thousands for the year ended 31st March, 2010. The Profit After
Tax was US$ 134 thousands. Including the carried forward profit of US$ 142
thousands for the previous year, the profit carried forward for the year
was US$ 276 thousands.

Parrys Investments Limited

During the year ended 31st March, 2010 the company earned an income of Rs.5
lakhs and the Profit after Tax was Rs.1 lakh.

Coromandel Bathware Limited

No operations were carried on during the current year.

Parry Phytoremedies Private Limited

The revenue for the year was Rs.603 lakhs. During the year ended 31st
March, 2010 the company made a loss of Rs. 89 lakhs.

Sadashiva Sugars Limited

The Company, acquired by EID Parry during October, 2009 recorded a revenue
of Rs.1123 lakhs for the year ended 31st March, 2010. After providing for
depreciation, interest and expenses the loss carried forward was Rs.1470
lakhs.

SUBSIDIARY ACCOUNTS

In terms of the approval granted by the Central Government u/s 212 (8) of
the Companies Act, 1956, copies of the Balance Sheet, Profit & Loss
Account, Reports of the Board and the Auditors of all the Subsidiary
Companies have not been attached to the Balance Sheet of the Company as at
31st March, 2010.

However as directed by the Central Government, the financial data of the
subsidiaries have been separately furnished forming part of the Annual
Report. These documents will also be available for inspection at the
Registered Office of the Company and the concerned subsidiary companies,
during working hours up to the date of the Annual General Meeting. However,
the related detailed information of the Annual Accounts of the Subsidiary
Companies will be made available to the Holding and Subsidiary Companies
investors seeking such information at any point of time. The Annual
Accounts of the Subsidiary Companies will also be kept for inspection by
the investors at the Registered Office of the Company and that of the
Subsidiary Companies concerned.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by the Company in
accordance with the applicable Accounting Standards (AS-21, AS-23 and AS-
27) issued by the Institute of Chartered Accountants of India and the same
together with Auditors' Report thereon form part of the Annual Report.

DIRECTORS

Mr.Sridhar Ganesh, Director resigned from the Board with effect from 30th
October, 2009.

The Board places on record its grateful appreciation of the valuable
services rendered and contributions made by Mr.Sridhar Ganesh as a
Director.

Mr.M.B.N.Rao and Mr.V.Ravichandran, joined the Board as Additional
Directors on 1st August, 2009 and 30th October, 2009 respectively and will
hold office till the ensuing Annual General Meeting. The Company had
received notices from members proposing the appointments of Mr.M.B.N.Rao
and Mr.V.Ravichandran as Directors of the Company.

Mr. A.Vellayan, Chairman retires by rotation in terms of Articles 102 and
103 of the Articles of Association of the Company and being eligible,
offers himself for re-appointment.

As required under Clause 49 of the Listing Agreement relating to Corporate
Governance, a brief resume, expertise and details of other directorships of
Mr.M.B.N.Rao, Mr.V.Ravichandran and Mr.A.Vellayan are provided in the
Notice of the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a
Management Discussion and Analysis Report, Corporate Governance Report and
Auditors' Certificate regarding compliance of conditions of Corporate
Governance are made a part of the Annual Report.

CEO/CFO CERTIFICATION

Mr.K.Raghunandan, Managing Director and Mr.P.Gopalakrishnan, Vice President
(Finance), have given a certificate to the Board as contemplated in Clause
49 of the Listing Agreement.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 205C of the Companies Act, 1956, an amount of Rs.6.32
lakhs being unclaimed dividend, interest on fixed deposit and unclaimed
deposits etc. was transferred during the year to the Investor Education and
Protection Fund established by the Central Government.

DEPOSITS

4 deposits totalling to Rs. 0.39 lakhs due for repayment on or before 31st
March, 2010 were not claimed by the Depositors on that date. Efforts are
being made to contact all such deposit holders to facilitate the refund to
them. The Company had discontinued acceptance of deposits since July 2003.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that, to the best of their knowledge and belief:

* In the preparation of the Profit & Loss Account for the financial year
ended 31st March, 2010 and the Balance Sheet as at that date ('financial
statements'), applicable Accounting Standards have been followed;

* Appropriate accounting policies have been selected and applied
consistently and such judgements and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state of
affairs of the Company as at the end of the financial year and of the
profit of the Company for that period;

* Proper and sufficient care has 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. To ensure this, the Company has
established internal control systems, consistent with its size and nature
of operations. In weighing the assurance provided by any such system of
internal controls its inherent limitations should be recognised. These
systems are reviewed and updated on an ongoing basis. Periodic internal
audits are conducted to provide reasonable assurance of compliance with
these systems. The Audit Committee meets at regular intervals to review the
internal audit function;

* The financial statements have been prepared on a going concern basis.

AUDITORS

M/s. Deloitte, Haskins & Sells, Chartered Accountants, Chennai, the
Company's Auditors, retire at the conclusion of the forthcoming Annual
General Meeting and are eligible for re-appointment.

The Board, on the recommendation of the Audit Committee, has proposed that
M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai be re-
appointed as the Statutory Auditors of the Company and to hold office till
the conclusion of the next Annual General Meeting of the Company. M/s.
Deloitte Haskins & Sells, Chartered Accountants, Chennai have forwarded
their certificate to the Company, stating that their re-appointment, if
made, will be within the limit specified in that behalf in Sub-section (1B)
of Section 224 of the Companies Act, 1956.

COST AUDITOR

The Company received the approval of the Central Government for appointment
of Mr.D.Narayanan as Cost Auditor to conduct the cost audits for the
financial year 2009-10.

PARTICULARS OF EMPLOYEES

Under the provisions of Section 217 (2A) of the Companies Act, 1956 read
with Companies (Particulars of Employees) Rules, 1975 as amended, the names
and ther particulars of employees are set out in the Annexure to the
Directors' Report.

ACKNOWLEDGEMENT

The Directors thank the customers, suppliers, farmers, financial
institutions, banks and shareholders for their continued support and also
recognise the contribution made by the employees to the Company's progress
during the year under review.

On behalf of the Board

Place: Chennai A. VELLAYAN
Date : April 24, 2010 Chairman

Annexure to the Directors' Report

Statement as at 31st March, 2010 pursuant to Clause 12 (Disclosure in the
Directors' Report) of the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

a) Total Number of Options granted:

Date of Grant No. of Options
granted

31.08.2007 929100
29.10.2007 116200
24.01.2008 230300
24.04.2008 76100
28.07.2008 65000
24.09.2008 193500
29.10.2008 56800
20.03.2009 23900
1690900

b) (i) Pricing Formula:

The pricing formula, as approved by the shareholders of the Company, is the
latest available closing price of the equity shares on the stock exchange
where there is highest trading volume as on the date prior to the date of
the Compensation & Nomination Committee resolution approving the grant.

(ii) Exercise Price per option, (Rs.) (Each Option represents 1 Equity
Share of Rs.2/- each):

31.08.2007 29.10.2007 24.01.2008

Rs.129.60 Rs.151.40 Rs.188.30

24.04.2008 28.07.2008 24.09.2008

Rs.207.20 Rs.185.95 Rs.212.60

29.10.2008 20.03.2009

Rs.149.90 Rs.138.25

c) Total number of Options vested : 161438

d) Total number of Options exercised : 244656

e) Total number of Shares arising as
a result of exercise of Options : 244656

f) Total number of Options lapsed : 432306
/cancelled

g) Variation of terms of Options : Nil

h) Money realised by exercise of options : Rs.378.87 lakhs

i) Total number of Options in force : 1013938

j) Details of Options granted to:

i) Senior Managerial Personnel : As provided below

No. of options
Name Designation granted

1. Mr. P.Gopalakrishnan Vice President-Finance 42600

2. Dr. M.C.Gopinathan Senior Vice President- R & D 50500

3. Mr. D.Kumaraswamy President- Bio, Nutra &
Corporate Affairs 91600

4. Mr. K.Raghunandan Managing Director 129100

5. Mr. Sebastian K.Thomas Chief Executive- Nutraceuticals 63200

6. Mr. S.K. Sathyavrdhan Vice President (HR) 38600

ii) Any other employee who received a grant in any one year of Options
amounting to 5% or more of the Options granted during that year:

1. Mr. G. Madhavan 32500
2. Mr. P. Nagarajan 32500
3. Mr. K.E. Ranganathan 193500
4. Mr. Manoj Kumar Jaiswal 56800
5. Mr. G. Rajasekar 23900

iii) Identified employees who were granted Options, during any one year,
equal to or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the Company at the time of grant:

None

k) Diluted Earnings Per Share (EPS) pursuant to issue of Shares on exercise
of Options calculated in accordance with Accounting Standard (AS) 20
'Earnings Per Share':

Rs. 23.62

l) (i) Method of calculation of employee compensation cost:

The employee compensation cost has been calculated using the intrinsic
value method of accounting to account for Options issued under ESOP 2007.
The stock-based compensation cost as per the intrinsic value method for the
financial year 2009-10 is Nil.

(ii) Difference between the employee compensation cost so computed at (i)
above and the employee compensation cost that shall have been recognised if
it had used the fair value of the Options:

Rs. 237 Lakhs

(iii) The impact of this difference on profits and on EPS of the Company:

The effect on the net income and earnings per share, had the fair value
method been adopted is presented below:

Net Income Rs. in Lakhs

As reported Rs. 20528

Add: Intrinsic Value

Compensation Cost Rs. Nil

Less: Fair Value Compensation
Cost (Black Scholes model) Rs. 237

Adjusted Net Income Rs. 20291

Earnings per Share Basic Diluted
(Rs.) (Rs.)

As reported Rs. 23.81 Rs. 23.62

As adjusted Rs. 23.53 Rs. 23.35

m) Weighted average exercise prices and weighted average fair values of
Options granted for Options whose exercise price either equals or exceeds
or is less than the market price of the stock:

Weighted average exercise
price Per Option : Rs. 155.05

Weighted average fair
value Per Option : Rs. 54.73

n) A description of the method and significant assumptions used during the
year to estimate the fair values of Options:

The fair value of each Option is estimated using the Black Scholes Option
Pricing model after applying the following key assumptions on a weighted
average basis:

(i) Risk-free interest rate : 7.5%

(ii) Expected life tranches I to III : 3 years
tranches IV to VIII : 4 years

(iii) Expected volatility tranches I to III : 0.5264
tranches IV to VIII : 0.5055

(iv) Expected dividends : 100%

(v) The price of the underlying Share in market at the time of Option grant

No. of Tranche Date of grant Market price

I 31.08.2007 Rs. 129.60
II 29.10.2007 Rs. 151.40
III 24.01.2008 Rs. 188.30
IV 24.04.2008 Rs. 207.20
V 28.07.2008 Rs. 185.95
VI 24.09.2008 Rs. 212.60
VII 29.10.2008 Rs. 149.90
VIII 20.03.2009 Rs. 138.25

Information under Section 217(1)(e) of the Companies Act, 1956 read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors), Rules, 1988 and forming part of the Directors' Report

I. CONSERVATION OF ENERGY

1. At the Nellikuppam Sugar unit, Condensate pumps were eliminated by
introducing 'U' Siphon system for condensate withdrawal from the
Evaporator.

2. At the Pugalur Sugar unit, various steam saving measures implemented
like Flash heat recovery system for juice heaters, Clear juice for B & C
sugar melting and Evaporator Third body vapour bleeding for Sulphured juice
heating first stage.

3. At the Pugalur and Pudukottai Sugar units, planetary gear drives were
installed at crystallizers for electricity saving.

4. At the Pugalur and Pudukottai Cogen units, introduced automation of Air
Cooled Condenser operation based on vacuum for energy savings.

II. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

At the Pugalur Sugar unit, mill automation (speed of the rake has to be
controlled based on the crushing rate) installed for better crushing rate
and energy saving.

III. During the year an amount of Rs. 6.28 Crore has been incurred on
account of revenue expenditure towards Research and Development activities
in the various divisions.

IV. FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars 2009-10
Rs. Crore

(a) Earnings 46.87

(b) Outgo 3.94

V. ENERGY CONSUMPTION

2009-2010 2008-2009

A. Power & Fuel Consumption

1. Electricity

(a) Purchased

Units (KWH) 6801756 5792418

Total Amount (Rs. Lakhs) 444.81 471.81

Rate per Unit (Rs.) 6.54 8.15

(b) Own Generation

(i) Through Emergency Diesel
Generator

Units (KWH) 2807798 2227579

Units per ltr of Diesel Oil 2.99 3.10

Cost per unit (Rs.) 11.82 11.46

(ii) Generated Through Steam Turbine

Out of Own Bagasse (KWH) 252062399 342725891

Out of Outside fuel (KWH) 136355956 43008217

2. Furnace Oil

Qty. (K. Litres) 755 627

Value (Rs. Lakhs) 160 154

Average Rate/K. Ltr.(Rs.) 21136.60 24487.88

3. Others/Internal Generation

HSD
Qty (KL) 1345 447

Total Cost (Rs. In Lakhs) 472 156

Rate per KL (Rs.) 35118.14 34843.23

B. Consumption per unit of Production

(KWH) Electricity

2009-2010 2008-2009

Sugar Per MT 393 296

On behalf of the Board

Place: Chennai A. VELLAYAN
Date : April 24, 2010 Chairman

MANAGEMENT DISCUSSION AND ANALYSIS

REVIEW OF EID PARRY'S BUSINESS

EID Parry continued to expand and grow its Sugar business by acquiring a
76% stake in Sadashiva Sugars Ltd. at Karnataka and commenced commercial
production of the new Cogen unit in Pettavaithalai and the Distillery in
Sivaganga (both in Tamil Nadu). Thus it increased its presence beyond Tamil
Nadu and Puducherry. The Company also enhanced its position in the
promising areas of Bio Pesticides and Nutraceuticals. The Company retains a
significant presence in the area of Farm Inputs, through its subsidiary
Coromandel International Ltd., besides a 50% stake in Silkroad Sugar
Private Limited, a Joint Venture with Cargill, having a sugar refinery at
Kakinada, Andhra Pradesh.

The Company's Sugar business

E.I.D Parry is one of the largest producers of sugar in Tamil Nadu. The
Sugar business, being the predominant business of the Company, accounted
for 92% of the total revenue at Rs. 1134 crores.

Sugar Facilities

Sadashiva Sugars Ltd., based at Bagalkot, Karnataka, has a 2500 TCD of
Sugarcane and 15.5 MW of Cogeneration facility. Sadashiva Sugars is E.I.D's
first acquisition outside Tamil Nadu and Puducherry, establishing a
presence in the Karnataka region.

The Company now has six sugar plants spread across South India of which
four are in Tamil Nadu, one in Puducherry and one in Karnataka
(subsidiary). Overall, the Company has increased the daily sugarcane
crushing capacity to 21,500 TCD and cogeneration capacity to 100 MW across
its sugar mills. The integrated Sugar Units have been designed to optimize
process performance and increase energy efficiency through reduced steam
and power consumption.

The Company continues to be one of the low cost producers of international
quality sugar, through its farmer and people centric practices.

South India has many advantages for Sugar Production and the Company is
able to capitalise on these advantages:

- Geographically, Tamil Nadu has the advantage of good soil conditions and
abundant water with sugarcane yield being highest across India. Thus
sugarcane productivity in terms of sugar recovery per unit land area is
highest in India and arguably in the world.

- The average farm size is less than a hectare and owned by hardworking and
progressive farmers.

- Farmers willing to adopt new farming practices and cultivation
methodologies, including mechanization, to improve yield.

- Access to ports to reach export market and improved development of
infrastructure facilities.

- Direct relationship with cane growers to ensure adequate cane
availability and supply.

- Focused sugarcane breeding programmes to ensure timely availability of
newer varieties of cane.

Cane and Manufacturing

Cane R&D

EID Parry is the only Sugar Company in India with a comprehensive in-house
breeding program. This has given the company the advantage of developing
several, new high yielding cane varieties, with higher sucrosecontent,
greater pest resistance and better yields, to suit the local conditions.
The Company has also developed a cane grower and farmland database by
conducting soil surveys including use of satellite imagery. The information
is shared with the farmers for effective soil and water management.

Cane Development

EID Parry gives extensive service support to the farmers through its Cane
Extension team. The team works closely with the farmers introducing them to
new and innovative farming practices, monitoring crop growth, providing
crop protection from pests and diseases and increasing land productivity.
The Company transfers good farm management techniques through its 'lab-to-
land' programmes to farmers through training sessions on yield improvement
and field demos. Besides this, the company also helps its cane growers by
facilitating agri-credit through Banks and offers unique insurance
policies, that provide protective insurance cover, both for the crops in
the field and the individual against personal accidents.

Namadhu Parry Mayyam - Farm Side Initiatives

Namadhu Parry Mayyam, a unique concept of a 'service hub' for farmers
introduced last year, is being extended to cover a larger rural base.
Through this concept a local entrepreneur is identified and trained to
become a franchisee. The Company extends operating loan for buying farm
equipments & implements, besides offering mechanized equipments on rental
services. The core idea is that small farmers who are unable to afford
these farm equipments could individually make use of the services at the
Mayyam and at the same time ensure higher utilization of the expensive
equipments.

During the year 2009-10, more than 50 Namadhu Parry Mayyams were introduced

extending a range of services to the farmers such as agri inputs, farm
implements, and also organizing manual labour on contract. The Mayyams
assume a multi dimensional role of Information and Knowledge Centre, and a
nodal centre for bank transactions besides being an agri clinic
disseminating information on improving soil health, increasing yield and
profitability of the cane growers. To expand its rural reach and service
its cane growers better, the Company has plans to increase the number of
franchisees to 72 in the current year.

Manufacturing

EID Parry is continuously implementing new milling technologies that are
process efficient and environmental friendly. All Sugar Units in Tamil Nadu
are integrated with Co-generation facility while Distillery production is
operational at Nellikuppam. The Distillery at Sivaganga to convert Molasses
from the 2 sugar units on river Cauvery is being stabilised during the
year. In the sugar process, different types of sugar, viz. Raw Sugar, White
Sugar, Refined Sugar and value added products are being produced.

Value added Products

Increasingly, a large portion of the Company's production is shifting from
the commodity segment to the specialized, value added segment. Apart from
strengthening its base in branded Sugar in the South Indian Retail Segment,
the company is also penetrating the value added segment by offering
specialized sugar to the Pharma sector. Investments are being made not only
in appropriate manufacturing facilities but also in branding and offering
customized solutions for institutional customers.

Leveraging Co-Products

India's power requirements are growing strongly, while capacity additions
are lagging far behind. Co-generation of electricity from bagasse, a by-
product of sugar, offers an excellent opportunity for sugar mills to expand
their earnings potential. The power generated and exported by the co-gen
unit is environment friendly and made available to rural areas, where the
mills are located, by a de-centralized infrastructure.

Molasses, the other by-product of sugarcane can be converted into various
types of alcohol like Rectified Spirit, Extra Neutral Alcohol and Fuel
Ethanol, providing another earning stream for the business.

Both these businesses are 'green' considering their renewable nature and,
more importantly, given the relatively steady demand, help reduce the
vulnerability of the Company, which is exposed to the cyclicality of the
sugar business. Thus sugarcane is increasingly becoming an energy crop.

Business Models

Integration of Co-products enables movement up the value chain on bagasse
and molasses. The plants at Nellikuppam, Pugalur, Pettavaithalai and
Pudukottai operate at a high level of integration with Sugar, Power and
Distillery operations.

MARKETING

The Company offers a wide range of Sugar to a broad and diverse customer
base. The company specializes in making tailor-made products to suit
customer needs. This diversification effort is not restricted only to
Sugar, but has been further extended to include, ENA, Ethanol, etc. This
allows the Company to extract the intrinsic value of every part of the
stick of Sugarcane. The company is also concentrating on smaller
institutional buyers to increase the refined sugar penetration. Parry is
also in the process of developing more pharma grade sugar.

Additionally plans are also on the anvil to expand retail distribution to
Tier - 2 cities in South India and to extend private labeling activities.
Market presence in towns and operational zones is slated to double from
existing levels, while shelf space in retail outlets is targeted for an
upward coverage to about 33000 in the current year.

INTERNATIONAL SUGAR SCENARIO

The world sugar economy, for the second consecutive year, is facing a
significant gap between consumption and production. As per recent ISO
report, world production is now pegged at 151.160 million tons, raw value,
up by 4.678 million tons or 3.07% from the last season. Production in the
world's leading sugar producing countries - with the exceptions of the EU,
Russia and probably, India - are slated to be lower than expected at the
beginning of the season. Additionally, world sugar consumption is expected
to grow at a rate significantly lower than the long term 10 year average
(1.48% and 2.66% respectively). This lower growth is attributed to higher
world market prices as well as the lingering impact of the 2008/09 global
recession. The world statistical deficit expected to reach 9.425 million
tons.

World Sugar Balance
(min. tonnes, raw value)

Change
2009/10 2008/09 in min. t in%

Production 151.160 152.482 4.678 3.07

Consumption 166.585 164.153 2.432 1.48

Surplus/Deficit -9.425 -11.671

Import demand 54.281 50.068 4.213 8.41

Export availability 52.156 50.070 2.086 4.17

End Stocks 53.068 60.368 -7.300 -12.09

Stocks/Consumption
ratio in % 31.86 36.78

Crucially, although the statistical deficit projected for this season is
lower than in the previous crop year (11.671 million tons), there is an
increasing supply tightness as an estimated 70% of sugar stocks accumulated
during the previous two surplus seasons (2006/07 and 2007/08) were already
used during the first deficit season. A continuing decrease in the level of
stocks is expected to further escalate the shortage. The industry will see
the lowest ever stocks/consumption ratio as low as the current 32% (last
seen in 1989/90) and a trade deficit of 2.125 million tons of export
shortfall from anticipated import demand.

Sugar

Scorecard

Sugar prices are expected to lower over the course of the season, as better
harvest in Brazil and India, and other smaller producers come on stream.
Although sugar has stalled below USc 24/lb, sentiments appear strong in the
short term with the possibility of near term rally, as supplies remain
tight ahead of an expected export of Brazil sugar in Q2-2010-11.

Drivers of Consumption

There are two key underlying drivers of consumption at the global level.
The use of sugar is growing due to population growth, which has been rising
by 1.3% annually since the mid-1990s. However, in 2008 the rate of growth
almost halved since its peak of 2.2% per year, which was reached in 1963.
On the one hand, population growth is still more highly correlated to sugar
use changes and sugar producing countries of Central and South America. On
the other hand, consumption is also increasing as a result of income
growth, in particular in developing countries. Income growth has been the
major driver of consumption in developing countries in Africa and Asia.

Fuel Ethanol

Global fuel ethanol production and consumption is forecasted to grow by 13%
to reach around 83 billion litres in 2010. This is similar growth to that
of the last year but still far below the average growth of 28% over the
previous 3 years. New and expanding consumption mandates in the US, several
countries in Central and South America, and the EU, together with the
anticipated increase in Brazil's domestic ethanol consumption are expected
to drive the expanding world ethanol market. In India, a fall in fuel
ethanol output is forecast for the year, due to continuing limited
availability of molasses and strong competition from the industrial alcohol
sector. In the world market, Brazil's tight supplies have limited and
boosted prices recently. However, looking forward there is potential for
limited growth in traded volumes in 2010, on expectations of increased
ethanol production in Brazil.

India Sugar Balance - SY (Mn MT)

Domestic Sugar Balance - Likely Surplus in F2011

(Million Tonnes) F2001 F2002 F2003 F2004 F2005 F2006

Opening Stock 9.3 10.6 11.2 12.4 8.2 4.6
Production 18.5 18.5 20.1 13.5 12.7 19.3

Increase in
production 2% 0% 9% -33% -6% 52%

Local Consumption 16.2 16.8 17.5 17.9 18.5 20.4

Growth YoY 0.6% 3.7% 4.2% 2.3% 3.4% 10.3%

Exports 1.0 1.1 1.5 0.2 - 1.1

Imports - - - 0.4 2.1 -

Closing Stock 10.6 11.2 12.4 8.2 4.6 3.7

Months of
consumption 7.9 8.0 8.5 5.5 3.0 2.2

Stock-to-use
ratio 65.4% 66.7% 70.9% 45.8% 24.9% 18.1%

(Million Tonnes) F2007 F2008 F2009E F2010E F2011E

Opening Stock 3.7 9.8 8.9 3.7 5.0
Production 28.3 26.4 14.7 16.8 23.5

Increase in
production 47% -7% -44% 14% 40%

Local Consumption 20.2 22.5 22.5 22.5 23.0

Growth YoY -1.0% 11.4% 0.0% 0.0% 2.0%

Exports 2.0 4.8 - - -

Imports - - 2.6 7.0 -

Closing Stock 9.8 8.9 3.7 5.0 5.6

Months of
consumption 5.8 4.7 2.0 2.7 2.9

Stock-to-use
ratio 48.5% 39.6% 16.4% 22.2% 24.2%

E = Morgan Stanley Research estimates

Source: Company data, Morgan Stanley Research

INDIAN SCENARIO

The sugar industry is one of the largest agro based industries, supporting
India's economic growth. The industry is inherently inclusive, supporting
over 50 million farmers and their families, along with workers and
entrepreneurs of almost 500 mills, apart from a host of wholesalers and
distributors across the country. The Indian sugar industry enjoys an annual
turnover of Rs.700 billion and contributes more than Rs.22.50 billion
annually to the Central and state Exchequers as tax, cess and excise duty.

The downturn in sugar production witnessed in 2008-09 Sugar Season (SS) is
slated to continue into the next two years (2009-10 SS and 2010-11) as
production is expected to be lower than consumption, leading to the
possibility of sugar imports to meet domestic demand. This is likely to be
the first time in more than a decade that India will see imports for three
years in a row (2008-09 SS to 2010-11 SS). Domestic sugar production in SS
2009-10 is expected to be16.80 million tons, an upward rise of 16% over the
previous season. This is a result of higher production in World Fuel
Ethanol Production Uttar Pradesh and Maharashtra, together with yields,
higher than anticipated.

Going by the past trends, with higher sugar and sugarcane prices, fresh
planting is expected. In SS 2010-11, production is expected to reach 22.30
million tons, a growth of about 33% over SS 2009-10. This surge in
production would largely be on account of an increase in area under
sugarcane cultivation. Sugarcane acreage in Uttar Pradesh and Maharashtra,
which together account for 60-65% of Indian sugar production, is projected
to increase by 30% and 20% respectively.

India: Sugar Supply and Demand

The tightness in demand and supply arising from lower production and
stretched inventories is expected to drive sugar prices, which have been on
an upswing since the latter half of 2007-08 SS further up in SS 2009-10.

Government Policies and Interventions

Sugar being an essential commodity and having a high weightage (3.62%) in
the Wholesale Price Index (WPI), is regulated by the Government through
control on cane pricing, sale quantities and thus indirectly prices that
can be sold in the open market.

In a significant change, the Central Government has replaced the Statutory
Minimum Price (SMP) with the Fair Remunerative Price (FRP) from 21st
Oct' 2009, at which sugar mills have to purchase sugarcane from farmers.
The FRP is based on the recommendations of the Commission for Agricultural
Costs and Prices. For the 2009-10 Sugar Season, the FRP was fixed at
Rs.129.84 per Quintal linked to a base sugar recovery of 9.50%. Cane prices
saw a spurt across the country. In a series of controls exercised to hold
sugar prices, the Central Government has increased the levy quota to 20%
(vs. 10%) and the proposal to increase the levy price is in the pipeline.
The government has omitted the Additional Cane Price (5A clause) in
Sugarcane (Control)

Amendment order, 2009.

The Central Government has announced the stocking limit for the bulk
consumers of sugar to 10 days and has extended the stay on stocking limit
to August 2010 from earlier limit of March 2010.

The government has directed the sugar mills in the country to sell the free
sale sugar on a weekly basis from February 2010, and report the actual sale
and dispatch of sugar to the Directorate of Sugar within 7 days, at the end
of each week. If any sugar mill fails to report the sale and dispatch to
the Directorate, the sugar will be deemed unsold, Sugar is left unsold will
automatically get converted into levy sugar.

To tide over the sugar shortage, the government has extended by 15 months,
setting a deadline till the end of March 2011, for meeting re-export
obligation of white sugar against prior duty-free raw sugar imports made
between September 2004 and April 2008. The export obligation against the
imported raw sugar during this period was 2.075 million tons, while 0.967
million tons are yet to be shipped out to fulfill the obligation.

In addition, the Government has also extended duty-free imports of white
sugar, for a further period of nine months till December 2010, with a
directive that only the mill that had made the raw sugar imports could
process it anywhere in the country, without payment of additional duty.

The commodity market regulator, Forward Markets Commission (FMC) banned
sugar trading futures in May 2009 and it has been extended upto September
2010. The ban is expected to be lifted based on increase in yields and
sugarcane availability for SS 2010-11.

Power

The current situation of Power deficit in India is making Cogeneration an
attractive option. Implementation of reforms introduced through Electricity
Act, 2005 like Open access and third party sales are improving realisation
and thus profits of Cogen units. The availability of bagasse is a key
determinant for running a cogen plant. Many state Governments are also
chalking out the plans to increase the tariff for off season production.

The Tamilnadu Electricity Regulatory Commission (TNERC) has come out with
its latest order on pricing of power, purchased from bagasse based
cogeneration units commissioned after 19th September 2008. The increase in
purchase price of power is beneficial to the company's commissioned Co -
generation units.

Ethanol

Fuel ethanol production in India this year will, like last year, be
constrained by continued poor availability of molasses and consequent high
prices for the key feedstock. Output in 2009 was put at 350 million litres,
with the regulated procurement price, of about Rs.24 per litre. There was
little incentive for sugar mills to produce fuel ethanol and instead the
focus was on the more viable non-fuel market. The current price of molasses
is around Rs.4,500-5,000 per ton, with production costs worked at
Rs.31/litre. The ongoing strong demand from the chemical and potable
alcohol industry is economically more viable than the modest increase in
the procurement price of Rs.27/litre agreed by the petroleum companies,
which is still less than production costs.

Attractive Industry Dynamics

The trends in Sugar, Cogen and Distillery favour EID Parry.

Deregulation of sugar business in developed countries lead to reduction of
import restriction. Socio economic development at 7-9% with migration of
people to urban areas, will result in increase in per capita consumption.
Global environmental concerns favour use of renewable fuels like ethanol.
Consolidation of mills will lead to increase in scale and lower production
cost. Finally, ever growing demand for energy, creates opportunity for
biomass power generation.

Tamil Nadu Sugar Industry

Tamil Nadu is the fourth largest sugar producing state in India, accounting
for about 10% of the country's total sugar production. The State is
expected to produce 16 LMT of sugar this Sugar Year as against the low
production of 13.28 LMT, of the previous year. During the year 2009-10,
four new units have been commissioned.

EID Performance Review

Execution of the Growth and de-risking strategy:-

* The existing Distillery unit at Nellikuppam has been converted into a
multi-product unit with ENA and Ethanol production facilities. Further, the
capacity expansion from 40 KLPD to 75 KLPD is in progress. The operations
are stabilized in the green field stand alone distillery unit in Sivaganga
with a capacity of 60 KLPD linked to molasses from Pugalur and
Pettavaithalai both of which are located close to river Cauvery.

The company crushed 25.46 LMT (33.72 LMT in 2008-09) of cane with sugar
production (incl. raw sugar) of 2.89 LMT (3.22 LMT). The company continued
to make substantial revenues from co-products, its export to grid were at
2570 lakh units (2518 Lakh units) and total alcohol sales were at 162.81
Lakh litres (97.80 Lakh litres) (including the ENA sales of 117.44 Lac
litres (9.60 Lac litres)).

Sugar Score Card Rs. Lakhs

2005-06 2006-07 2007-08 2008-09 2009-10

Revenue 72463 55592 64158 75957 113439

EBIDT 9909 5764 -2211 9099 23892

EBIT 7967 3080 -5958 4716 17644

Capital Employed 40082 51427 74663 96802 91590

Operating Margin (%) 14 10 -4 12 21

Sugar Cogen Distillery Total

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

Revenue 97645 65273 10305 8114 5489 2570 113439 75957

EBIDT 19674 2780 3598 5530 620 789 23892 9099

EBIT 16510 177 1272 3829 (138) 710 17644 4716

Capital
Employed 44395 52343 30393 29043 16802 15416 91590 96802

E.I.D.-PARRY (INDIA) LIMITED

The change in the product mix lends greater stability and predictability to
the financial performance of the company. With the completion of new
investments in Co-products, the share of the profitability from Co-products
is slated to increase substantially in the coming years, thus de-risking
from Sugar cycles.

Refinery Joint Venture

A port-based stand-alone sugar refinery set up by Silkroad Sugar Private
Limited, a joint venture company between EID Parry (India) Ltd. and Cargill
International S.A. in Kakinada, Andhra Pradesh, will commence operations in
2010-11. With a capacity of 2000 tons of refined sugar production per day
and with a 35 MW Power Plant, this refinery will be the largest in the
South Asian region. The refinery will be importing the entire raw material,
raw sugar, adding value by refining it, and exporting its entire
production. EID Parry holds 50% in this joint venture.

Bio-Products

A. Bio-Pesticides

The Bio-Pesticides Division registered revenue (including excise duty) of
Rs. 3626 lakhs in 2009/10 accounting for 3% of the Company's Revenue.

Highlights:

* US market experienced economic slow down resulting in10-15% sales
reduction for agrochemicals. Organic crop areas reduced by 20-30% over
2008-09 leading to sales reduction of biological inputs. Better economic
outlook over 2010-11 and thereafter is expected to bring back the organic
momentum.

* Sales through Trifolio to the European markets viz., Spain and Italy
improved over the plan, in spite of the recession.

* Domestic markets viz., Tamil Nadu, Karnataka, West Bengal & North Eastern
states registered 42% growth over 2008-09, mainly due to the product
acceptability for Bio Granule Abda in rice and Fruits & Vegetables crop
segments.

Divisional performance

* Revenue for the year was Rs.3626 lakhs as compared to Rs.3636 lakhs of
previous year. PBIT for the year was Rs. 561 lakhs against the previous
year Rs. 717 lakhs.

Financial performance

(Rs.Lakhs)

Details 2007-08 2008-09 2009-10

Revenue 3060 3636 3626

EBIDTA 813 877 737

PBIT 592 717 561

Industry Scenario and Development

In early 2009, the European Union voted to phase out more than 200 chemical
pesticides. The governments in the northern European countries have
required a 50 percent reduction in on-farm chemical pesticide use. Many
countries pay farmers large subsidies to farm organically and sustainable
and organic farming which are codified into the EU Common Agricultural
Policy.

In the United States, bio-pesticides are increasingly integrated in the IPM
programs leading to mainstream usage. Microbials dominate in the IPM
segments and contribute to high growth due to better pricing possibilities.
Bioproduct usage trend is growing in Agriculture, T&O and Home gardens.
Consumer Lawn and Garden organic products are the new opportunities both in
Americas and Europe and the industry has started focusing its resources
towards creation of product variables to address these markets.

Many Asian countries have banned classes of toxic chemicals. In India, due
to the steady increase in the cost of crop protection in high value Fruit &
Veg crops and Plantation crops including Tea & Spices, Scientific
Institutions and government machineries have started advocating use of
Natural, green products in alternation with synthetic pesticides. Growers,
getting to experience the benefits upon adopting this concept, are turning
out to be the spokespersons.

In the global pesticide marketplace, biopesticides' market share is
projected to reach just over 4 percent (more than $1 billion) by 2010.

Operating results (In Kgs)

Sales 2007-08 2008-09 2009-10

100% Technical

Domestic 1412 1471 2137

Exports 3746 3609 2691

Total 5158 5081 4828

Outlook

The market for commercial biopesticide products has been growing healthily
over the past 5 years and at much faster rate. Biopesticides offer a safer,
sustainable and generally more targeted approach to pest control which is
reflected in their growing popularity for use in agriculture, greenhouses,
nurseries, forestry, turf and home gardens. The years ahead are very
clearly set for the growth of biological products in the light of growing
emphasis and need for sustainable production. Hence, biologicals will play
key business role due to its adoption in mainstream agriculture production.

Industry associations, Crop Life America, BPIA and OTA even though confer a
definite slow down in agrochemical market 2009-10 predict better outlook in
the long term with improvements in the economic conditions.

The new US government powered by Democratic Party continues to make a major
influence in promoting biopesticides. Traditionally, democratic governments
encouraged and provided incentives to Green Technologies. The decades ahead
are an era for sustainability globally and thereby biopesticides, organic
products and green products will play a major role.

The primary drivers for biopesticides globally are organic crops followed
by IPM and growing through sustainable approaches. Organic Ag / animal
produces and its value added products are estimated to reach US $43 billion
with a share of 34% in the US, 33% in Europe and 33% in rest of the world.

Parrys Bio's mission is to emerge as a significant biopesticides company,
capitalizing the growing trends of sustainable, organic and low toxic pest
control business around the world by maintaining leadership on Aza
biopesticides through customer friendly product deliveries, IPR's and
direct market access, adding NEEMAZAL. synergistic microbial biopesticides
with quality and cost efficiency and Long term R & D focus to innovate
natural products from rich Indian biodiversity for global markets.

B. Nutraceuticals

The Nutraceuticals division's turnover was Rs. 3731 lakhs for the year
ended 31st March, 2010 representing 3% of the Company's Revenue. About 80%
of this represents exports. The Nutraceuticals products continued to grow
in all the markets and are currently exported to over 38 countries.
Certified Organic Spirulina continues to outperform competition in its
segment. The sales of Organic Spirulina during the year had grown at 14%
over the previous year.

The Organic Spirulina produced by your Company is produced according to
leading Organic standards - USDA NOP, Naturland - Germany, ECOCERT France
and OCIA - IFOAM certifications. The company already holds 5 quality
certifications (ISO 9001, ISO 14001, HACCP - Food Safety, Kosher and Halal)
for its facility and entire algal product range in addition to US
Pharmacopeia certification for its Organic Spirulina. Organic Spirulina
has also received GRAS (Generally Recognised As Safe) status in the US
market opening up its increased use in functional foods and beverages.
Process improvements are being carried out for production of Astaxanthin in
open ponds.

The Company's stake in Parry Phytoremedies, Pune has increased from 51% to
63% during the year. The Lycopene extraction facility at their Boisar,
Maharashtra got further scaled up to a capacity of 1000 kg of 6% lycopene
oil per month. Your company has developed key customer accounts and will
focus on further developing the business during the year.

Our Overseas Associate Valensa International, Florida USA, a leading
science-based developer and provider of high quality botanically sourced
products for nutritional supplements and functional foods is in the process
of drawing up health condition specific formulations covering eye and joint
health which can be leveraged for marketing across the global markets. The
Company has entered into an agreement with Aker Biomarine, Norway for
developing IP protected Krill oil based formulations. Krill oil is one of
the important sources of health promoting Omega 3 fatty acids. The focus of
the company is to develop science backed formulations.

To ensure that Parry Nutraceuticals maintains its edge in product
development, the Parry Life Sciences business initiative located at TICEL
Park, Chennai will aim to develop products and formulations in line with
market demand across dietary supplement, functional foods and
Pharmaceuticals segments. This initiative will also be a support to our
Overseas Associate Valensa International in product development and
establishment of science behind the products.

Industry Scenario and Development

The size of the global Nutraceuticals industry is estimated well over US
$27 billion per annum growing at 12% per annum (Source: BCC 2009).
Preventive health care is bound to grow at a steady pace with increasing
awareness on the positive effects of Nutraceuticals in health maintenance.

Worldwide, the Nutraceuticals industry is increasingly being regulated to
safeguard consumer interests with science based product claims.
Consequently, a major portion of R&D spent by leading players in the
Nutraceuticals industry is in establishing product claims through clinical
studies. The use of Nutraceuticals in functional foods and beverages would
increase demand for these products.

Outlook

The Nutraceuticals industry is set to play an important role in preventive
healthcare and in improving the quality of life across all sections. With
our strategic investments in Valensa International and Parry Phytoremedies,
the division has strengthened its position in the fast growing Carotenoid
segment which has wide applications in the Nutraceuticals, functional foods
and beverage sector. With the establishment of Parry Life Sciences, the
division will be able to play a significant role in the global
Nutraceuticals market by offering science based specialty formulations. The
Company is also set to participate in a very significant segment of Omega 3
fatty acids which is currently the fastest growing segment backed by
scientific claims and studies. Parry Nutraceuticals is committed to provide
complete manufacturing solutions to its customers from carrying out
formulation development to carry out private labeling for customers both in
India and overseas.

With the global trend moving towards preventive healthcare, Parry
Nutraceuticals is at the threshold of riding a new emerging business
opportunity.

Financial Analysis and Review 2009-10

The Company as a whole has shown improved growth in its Sugar and Nutra
businesses. Non-Operating Income of the company has also contributed for
the growth of the company.

Detailed analysis of the operations is given below:

I) Results of Operations

Revenue

The Company's Operations are classified into the following segments:

2009-10 2008-09

Segments Unit Qty Value Realis- Qty Value Realis-
Rs. ation Rs. ation
Lakhs Rs./Unit Lakhs Rs./Unit

Sugar Tonnes 328643 93634 28491 366925 58618 15975

Alcohol Lac Ltrs 163 5488 33.67 98 2570 26.28

Power Lac units 2572 9765 3.80 2518 7585 3.01

Bio Pesticides Kgs 4828 3578 74109 5081 3632 71489

Nutraceuticals 3747 2911

Others 2364 3068

Total 118576 78384

The total Gross revenue of the company grew by 51% to Rs. 118576 Lakhs in
the year 2009-10 from Rs. 78384 Lakhs in the year 2008-09.

Sugar sales increased from Rs.58618 Lakhs to Rs.93634 Lakhs in 2009-10
mainly driven by increased average realization of 78%. Alcohol sales
increased by 113% as the newly commissioned Distillery at Sivaganga
district, Tamilnadu contributed to the higher output. Power sales recorded
an increase of 29% due to higher rate realized during off season period.

Bio-Pesticides' sales dropped marginally due to drop in exports volume by
919 Kgs in 2009-10.

Nutraceuticals division's sales have increased by 29%, due to higher sales
volume of Spirulina and traded products that include Lycopene, Lutein &
Others.

Other Income

Other income was Rs. 14950 Lakhs as against Rs. 89248 Lakhs in 2008-09.
Other income of the previous year includes Rs. 74639 Lakhs of profit on
sale of shares held in Parryware Roca Pvt. Ltd.

Dividend Income decreased by 13% to Rs. 10017 Lakhs mainly due to drop in
the short term investible surplus during the year. The interest income
earned during the year is Rs. 772 Lakhs as against Rs.840 Lakhs in 2008-09.

Profits

EBIDTA

The Earnings before Interest, Depreciation, Tax and Amortization for the
year was Rs. 34738 Lakhs (excluding Profit on sale of Investments)
representing 30% of total revenues and showed a growth of 61% over previous
year of Rs 21,567 Lakhs. The increased profits in Sugar Segment have
contributed for higher EBIDTA during current year.

EBIT (Excluding Profit on sale of Investments) was Rs. 27805 Lakhs as
against Rs.16550 Lakhs of 2008-09, up by 68%.

Finance Charges

The Company incurred finance charges of Rs. 3857 Lakhs for the year 2009-10
as compared to Rs. 2682 Lakhs in 2008-09.

Term loan interest was Rs. 2815 Lakhs as against Rs. 2313 Lakhs in 2008-09.
The increase is due to additional term loans availed during the year for
capital expenditures on various projects. Other Interest cost was higher at
Rs.1042 Lakhs due to lower interest capitalization of Rs. 236 Lakhs as
against Rs. 1516 Lakhs in 2008-09.

Depreciation

Depreciation was Rs. 6933 Lakhs for the year 2009-10, as compared to Rs.
5017 Lakhs for the year 2008-09. Completion of various sugar expansion and
cogeneration projects by the end of 2008-09 has resulted in higher
depreciation by 38% in 2009-10.

PAT

PAT (excluding Profit on sale of investments and tax thereon) stood at
Rs.19820 Lakhs representing 17% of the total revenue as against Rs 12489
Lakhs of previous year.

II) Financial Condition

Net worth

The Net worth increased from Rs. 96932 Lakhs in 2008-09 to Rs. 109634
Lakhs. During the year, the Company earned a net profit of Rs. 20528 Lakhs.
During the year, 244656 Equity Shares were issued to the employees on
exercise of Employee Stock options for an aggregated premium of Rs. 374
Lakhs (2009 : Nil) and total number of shares were 86358470 as on 31st
March, 2010.

Debenture Redemption Reserve has been created for the Non-convertible
Debentures of Rs.5000 Lakhs issued and Rs. 417 Lakhs has been transferred
from Profit and loss account.

During the year, the company had issued 500 - 8.65% Secured Redeemable Non-
convertible Debentures aggregating to Rs.5000 Lakhs and availed Rs. 3694
Lakhs from the Sugar Development Fund at a concessional rate of interest.
Also term loans of Rs. 4941 Lakhs has been availed from State Bank of India
towards the Distillery projects.

Working capital borrowing decreased to Rs.13970 Lakhs as on 31st March,
2010 as against Rs. 21381 Lakhs in previous year end.

Fixed Assets

The Company has incurred Rs. 4451 Lakhs of Capital expenditure during the
year towards Distillery expansion at Nellikuppam and normal capex. Since
the company has already completed the expansion projects in 2008-09, the
Capex spend was lower by 84% in 2009-10 compared to previous year.

Investments

During the year, the Company made its entry in Karnataka State by acquiring
76% stake in M/s Sadashiva Sugars Ltd. for Rs. 4962 Lakhs. Further, Company
infused equity of Rs. 1430 Lakhs in M/s Silkroad Sugar Private Limited.

Other investments include Rs. 804 Lakhs in Coromandel International Limited
and Rs.40 Lakhs in Parry Phytoremedies Private Limited, subsidiary
companies. The total investment of the company as at 31st March 2010
amounts to Rs. 68282 Lakhs. The Mutual Fund Investments as at 31st March,
2010 was Rs. 37710 Lakhs.

Rating

During the year, rating agency CRISIL has upgraded the Long Term Debt
rating to AA/Stable outlook from AA-/ Stable outlook. It has reaffirmed P1+
rating for short term borrowings. The same ratings have also been assigned
by CRISIL as Bank loan rating as per BASEL II requirements for the existing
and proposed Bank Facilities. Further, in its Independent Equity Research
Report, CRISIL has graded the Company as 'Superior Fundamentals and
Potential upside to the current market price' (4/5). The company holds
prime rating from its main banker State Bank of India.

Book Value and Earnings per Share

Book Value of the Company has increased from Rs. 113 per share to Rs. 127
per share, as on 31st March, 2010. Earnings per share (excluding Profit on
sale of investment) grew by 61% to Rs. 22.98 per share for the year ended
31st March, 2010.

RATIOS

Particulars 2009-10 2008-09

Key Profitability Ratios

EBIDTA (excl Profit on
Sale of Investments)/Sales % 30.28% 28.54%

PAT (excl Profit on
Sale of Investments)/Sales % 17.28% 16.53%

PAT/ Networth % (ROE) 18.72% 71.39%

Key Capital structure Ratios

Debt/Equity ratio 0.52 0.56

Long Term Debt/Equity ratio 0.44 0.40

Outside liabilities/Networth 0.81 0.82

Net Fixed Assets/Networth 0.78 0.89

Debt Service coverage Ratio
(Excl profit on sale of invt) 4.15 5.87

Liquidity Ratios

Current Ratio 1.23 1.11

Inventory Turnover (days) 57 66

Receivables (day gross sales) 35 59

Earnings and Dividend Ratios

Dividend % 500% 1000%

Dividend Payout % 42% 27%

Earnings Per share 23.81 77.80

Book Value Per share 127 113

P/E Multiple (Excl
Profit on sale of Invt) 14.87 9.89

Risk Management

The Company has a Risk Committee which systematically evaluates the
business risks, operational controls and policy compliance associated with
its business through its risk document, on an on-going basis.

The Risk document details the various risks, the probability of their
occurrence, their likely impact and the strategies to mitigate the risks.

The Board is apprised of the Risk Document and the mitigation plans at the
Board Meetings.

Business risks - Sugar

The major risks faced by Sugar business includes - Cane availability,
Government regulations, Linkage of sugar price and sugar cane price
(Cyclicality of sugar business), and Capacity utilisation.

Cane availability - During 2009-10, there was a substantial shortage of
sugar cane availability due to which sugar prices exceeded Rs 40/Kg. The
cane availability depends on climatic conditions and the economies in
planting cane. EID's farmer-centric initiatives of prompt payments, good
agronomy practices and ethical transactions have helped in maintaining a
good relationship with the cane growers, earning their support in
successive cane plantings. Introducing the farmer to modern technologies
like drip irrigation, mechanical harvester, etc., and also fixing the cane
price at Rs. 1725/- MT for the SY 2009-10, has substantially mitigated the
risk of lower cane availability.

Government regulations - During 2009-10, the Government increased the levy
quota from 10% to 20%. The monthly free sugar release order mechanism was
changed from a monthly to a weekly working basis. However, import duty was
removed on import of raw sugar and white sugar. To mitigate this risk, the
company has been working closely with the Indian Sugar Mills Association
(ISMA) and South Indian Sugar Mills Association (SISMA) towards developing

appropriate policy recommendations, to represent the needs of industry to
the government.

Linkage of sugar price and sugar cane price - Sugar price was riding an
uptrend till January 2010, going to about Rs. 40/Kg and from February 2010,
prices started to fall. The risk of high fluctuations in sugar price is
mitigated by increasing the proportion of retail sugar sales and making
direct bulk sales to institutional customers.

Capacity utilisation - Sugar being a seasonal business, cane is available
for crushing during 7/8 months in a year. Non-availability of cane leads to
under utilisation of sugar plant and cogeneration plant capacities. This
risk is mitigated by operating the sugar plant with imported raw sugar and
cogeneration plants with coal or other fuels.

Business risks - Bio Pesticides

The major risks faced by the Bio-Pesticides division include dependence on
overseas markets, dependence on single product, raw material price and
procurement, currency risks.

Dependence on Overseas markets - Recession in Europe and Americas and the
consequent slowdown in economic activities poses a risk to the Bio-
Pesticides division since most of the sales are to overseas customers. This
risk is mitigated by providing adequate techno-commercial support to a few
select countries in Europe and Americas, where there is a greater awareness
and demand for organic products.

Dependence on single product - A substantial proportion of the products
sold by the division is made from Aza (taken from neem seed). The risk of
high dependence on a single molecule is mitigated by proposed introduction
of new biological products.

Raw material price and procurement - Neem seed trade is unorganized, with
no government support, no new plantations and unlawful felling of trees.
Increase in neem seed price is a cause of concern. These risks are
mitigated by procuring seeds from non-traditional areas in Tamil Nadu,
planned procurement from the Mysore market and preserving Aza content in
neem seeds/ kernels through cold storage facilities.

Currency risks -Bio-pesticide sale is predominantly export oriented and
hence the currency fluctuations have a direct impact on the income. This
risk is mitigated by implementing hedging policies.

Business risks - Nutraceuticals

The major risks in Nutraceuticals division include, dependence on weather,
sourcing of raw materials, currency risk.

Dependence on weather - The micro algae production is weather dependent and
changes in the weather patterns will have an adverse impact on productivity
and cost of production. The risk is mitigated through operation of multiple
algae varieties requiring differing weather conditions that will provide
opportunities to minimise impact due to changes in weather patterns.
Efforts are on to manage the controllable factors in Astaxanthin production
to reduce the risks to a large extent. Increasing Regulatory Issues -
Increasing regulatory issues across the world for the Nutraceuticals
products are being mitigated by obtaining various certifications like the
ISO 9001:2000, 14001, HACCP system, Organic certification, GRAS for
Spirulina in the US market etc., and following the GMP systems,
documentation and also close follow up with various authorities on product
documentation.

Sourcing of raw materials - This risk is mitigated by moving from a single
source to multi source of raw material supply and developing indigenous
source for raw materials.

Currency risks - The Nutraceuticals business is largely export oriented.
The division operates in multiple markets with multiple currencies, hence
exchange fluctuations have a direct impact on the income. Also there are
some raw materials which are imported, where the company is posed to
currency risks. This risk is mitigated by taking exchange cover and
implementing hedging policies.

Internal Control and Systems

The Company believes that internal control is a necessary part of the
principle of governance and that freedom of management should be exercised
within a framework of appropriate checks and balances. The Company remains
committed in its endeavor to ensure an effective internal control
environment that provides assurance on the efficiency and effectiveness of
operations, reliability of financial reporting, statutory compliance and
security of assets.

The Company has a well established and robust internal systems and
processes in place to ensure smooth functioning of the operations. An
effective internal control system, supported by an Enterprise Resource
Planning platform for all business processes, ensures that all transaction
controls are continually reviewed and adequately addressed. The control
mechanism involves well documented policies, authorization guidelines
commensurate with the level of responsibility and standard operating
procedures specific to the respective businesses.

The company has its own Internal Audit department that monitors and makes
continuous assessments of the adequacy and effectiveness of the internal
controls and systems across the Company. The status of compliance with
operating systems, internal policies and regulatory requirements are also
monitored. The Board, Audit Committee and the Management review the
findings and recommendations of the Internal Audit department and take
corrective actions wherever necessary.

It is a matter of satisfaction and reassurance that the Company's Internal
Audit function is certified as complying with ISO 9001:2008 quality
standards for its process.

Information Technology

The Company continues to invest judiciously in Information Technology
infrastructure, to increase productivity and maintain low cost of
ownership. Systems audit of SAP is being conducted on a periodic basis to
validate the internal control systems of the ERP and the controls were
found to be adequate and commensurate with the business requirements.

The Company focuses on improving security and enhancing productivity.
During the current year, servers and core network has been shifted to a new
Level 2 data center at VSNL in a highly secured environment. Windows server
and clients critical security patches distribution and installation has
been automated across the company to enhance the security of the network.
Constant review and validation of the Security Architecture is carried out
and the Company is investing for further strengthening the security
framework.

Cane Management System

During the year, the Web Enabled Cane management system has been
implemented in all the sugar factories to facilitate the business to
improve Cane availability monitoring and related enhancements.

Process Improvement

To keep pace with the rapidly changing business processes and improve
productivity, payments for the vendors has been centralised in tie up with
State Bank of India. This would benefit the business by moving towards
service oriented architecture and enhancing the bargaining power with
vendors and Banks thereby reducing cost.

The Company has been optimally utilizing the IT resources and is constantly
focused on improving existing systems and processes thereby facilitating in
the business growth.

Human Resources

EID Parry is a value based company with a culture that promotes empowerment
and freedom. In a challenging and competitive environment, the Company
believes that people are the key to success. The Human Resources function
proactively develops innovative and business focused methods to attract,
develop, motivate and retain our talented competitive resources - our
people. The Company had a total employee strength of 1666 as on 31st March,
2010.

The Human Resources function strives to deliver contemporary HR practices
focusing on the five key imperatives of talent management, learning &
development and capability enhancement, employee communication, employee
engagement and employee rewards and recognition.

Talent Management

The Company values both experience and fresh talent. The Company has
inducted experienced talent for its existing and sunrise businesses in
support of the Company's overall growth strategy. With a view to build a
future talent pipeline in the Company, participation in campus placement
programs continues. Adequate importance is placed on job enrichment as a
means of retention of talent.

Learning & Development and capability enhancement

The Company places a high emphasis on learning and facilitates every
employee to experiment, learn and develop new ideas. Training programs are
mostly organized in-house with the help of internal/ external faculty.
Behaviourial programs are conducted on topics such as Supervisory Skills,
Stress Management, Interpersonal Relations etc., focusing on helping
executives develop their managerial capability.

Employee Communication

The Company is guided by its stated core values which influences our
management practices. The contemporized version of our values and beliefs
was launched as 'The Five Lights' - integrity, passion, quality, respect
and responsibility. In order that all employees abide by these Five Lights,
communication to one and all is essential. With this objective, the
awareness and understanding of these five lights were cascaded to all
executives of the Company through a series of initiatives.

Employee Engagement

The Company has instituted an Industrial Social Work wing which is now
present at three of our factories. The ISW operates on the concept of
'Employee and beyond'.

Intervention strategies are designed and executed to support employees in
dealing with issues that impact work life such as addiction, poor financial
management, marital discord and health. The Company engages with its
employees by connecting with their families. Various initiatives such as
awareness programs on pre-marital counseling, parental care, domestic
safety, women's health supports the objective of enhancing the quality of
life of the employees and their families.

The Company places importance on the health and well being of its
employees, children of employees and the society. This is done by promotion
campaigns which include lectures, free screening facilities, provision of
informative booklets, etc., on prevention and management of major diseases
such as diabetes and AIDS. Employees are also encouraged to participate in
voluntary blood donation camps that are organized on a regular basis.
Workshops on yoga and meditation are organized for employees and their
families to further emphasize the importance of good health and well being.

Rewards and Recognition

Talent is rewarded and recognized in formal forums such as the Annual
Communication Meetings. Long service of employees is valued and recognized
at such forums and also at the Annual Retirement Function. Parry awards are
given to employees every month to recognize innovative ideas.

With aggressive growth targets for the future, Human Resources practices at
Parry strives to deliver the business requirements of an organization that
is committed to its people and responds to them with care and concern.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the
Company's objectives, projections, estimates and expectations may
constitute 'forward looking statements' within the meaning of applicable
laws and regulations. Actual results might differ materially from those
either expressed or implied.

On behalf of the Board

Place: Chennai A. VELLAYAN
Date : April 24, 2010 Chairman