NIRMA LIMITED ANNUAL REPORT 2002-2003 CHAIRMAN'S REPORT Chairman's Statement Dear Shareholders, The country has faced one of the worst droughts in recent years. Needless to say, it has had an effect on the consumers. Despite this, the market for consumer goods has attained some semblance of stability. The overall economy has grown slowly, but inflation is under control. After a prolonged period of turbulence, the Indian economy is offering rays of hope and I am happy to share my view on some aspects of the situation. The world is sitting up and taking note of this nation and appreciating the capabilities of this emerging force. We are now witnessing a distinct move towards some of the milestones listed out in my communication with you exactly two years back. The global business community is considering India as an important and efficient source of goods and services. Private educational institutions have been given deemed university status, non-resident Indians and foreign financial institutions are more comfortable to invest in the country and some initiatives have been taken to establish basic research facilities. I hope this is the beginning of a long and fruitful journey with the ultimate objective to achieve the status of a developed economy. The Indian currency has appreciated strongly against US Dollar over the last two years. Interest rates have come down to unprecedented levels. This has created a long awaited level playing field for the entrepreneur. However, it is distressing to note the apathy of the Indian financial system towards borrowers. The entrepreneur seems to be the last one to benefit from the reduced interest rates, even later than consumers. And that is when he does manage to avail of a loan! This scenario has arisen because of the monopolistic situation the Banking system is in. It is high time the State gives up ownership and control on the Banking system and allows wider competition in this fundamental sector. The State needs to focus on providing the right environment for growth. Even today in this electronic age, the Indian entrepreneur needs a plethora of approvals to set up a business and run it. Single window clearances need to become a norm rather than an exception. The State also needs to focus on infrastructure development. The existing infrastructure is not capable of handling the existing demand, leave alone the anticipated growth in economic activity. Steps have been taken in the right direction in the road & telecom sectors. However, much needs to be done in the power and ports sectors. At the cost of repetition, I will reiterate the need to revamp the education system. As a fulfilment of our social responsibility, your Company continues to provide support to the educational institutes set up under the aegis of Nirma Education & Research Foundation. You will be pleased to note that institutes set up by the Foundation have been accorded university status within a short span of seven years in existence, under the name of Nirma University of Science & Technology. We have a long way to go. I am sure we will, provided we continue in the right direction and speed up the process as we move on. At Nirma too, we have miles to go. In the year just concluded, your Company has achieved the debottlenecking of the Soda Ash Project resulting in an increase in installed capacity of Soda Ash to 650000 tpa. With this, your Company will be able to reduce the cost of production of this critical input for detergents and extract better margins. As you are aware, your Company decided to acquire the trademarks "Nirma" and "Nirma" from Nirma Industries Limited. This step is expected to enable the perception of the complete characteristics of a Fast Moving Consumer Goods company among the various stakeholders and add significant value to your Company. The Scheme of Arrangement will be operational once all approvals for the same are obtained. Your Company has been able to withstand several odds and is presenting yet another year of improved financial results. In adverse circumstances, the import of stability is best appreciated. I am proud to report that Nirma has exhibited highest standards of stability and resilience in the most testing times witnessed by businesses not only in India, but also across the world over the last two years. Having gone through this period of consolidation satisfactorily, I look forward to another period of strong growth with renewed optimism and assure you that your Company is fully geared to take on the future. I sign off by making a renewed commitment to our philosophy of providing Better Products, Better Value, Better Living. Truly Yours, Dr. K. K. Patel Chairman