Annexure XIV Continued… - Edelweiss

Decrease/(increase) in stock
Our stock decreased by ` 31.58 million in Fiscal 2008 as compared to Fiscal 2007. This change was primarily
the result of the increase in purchases of coal. Decrease/(increase) in stock represented 4.21% and 0.57% of
our total income in Fiscal 2007 and Fiscal 2008, respectively.
Direct expenses
Direct expenses increased by ` 738.43 million, or 51.21%, to ` 2,180.28 million in Fiscal 2008 from
` 1,441.85 million in Fiscal 2007, primarily due to an increase in the quantity of raw coal beneficiated at our
coal beneficiation plants and the full year of operations of our 30 MW Chakabura Power Plant. The increase
relates to an increase in power and fuel costs of ` 137.43 million, an increase in materials consumed of `
198.77 million, an increase in transportation and loading charges of ` 187.06 million, an increase in energy
duty charges of ` 9.74 million and an increase in expenses related to the repair, running and maintenance of
plant and machinery of ` 247.07 million. However, there was a decrease of ` 45.16 in expenses related to the
repair, running and maintenance of buildings and heavy vehicles. Direct expenses as a percentage of total
income decreased from 42.57% in Fiscal 2007 to 39.08% in Fiscal 2008.
Personnel cost
Employee costs increased by ` 122.67 million, or 75.22%, to ` 285.75 million in Fiscal 2008 from ` 163.08
million in Fiscal 2007, primarily due to an increase in remuneration of our Directors of ` 36.99 million and an
increase in employees costs due to growth in the number of employees and an annual increase in salaries.
Personnel cost as a percentage of total income increased from 4.81% in Fiscal 2007 to 5.12% in Fiscal 2008.
Administrative and selling expenses:
Administrative and selling expenses increased by ` 214.40 million, or 66.37%, to ` 537.44 million in Fiscal
2008 from ` 323.04 million in Fiscal 2007, primarily due to an increase in rent of ` 14.71 million, an increase
in rates, fees and taxes of ` 9.29 million, an increase in legal and professional fees of ` 18.87 million, an
increase in travelling and conveyance of ` 7.67 million, an increase in coal handling charges paid to various
agencies of ` 70.05 million, an increase in foreign exchange fluctuation loss of ` 11.01 million, an increase in
bad debts written off of ` 77.15, an increase in interest on late payment of service tax of ` 17.42 . However,
there was also a decrease in administrative and selling expenses primarily due to a decrease in deductions
related to the quality/quantity of our products as charged by the customers of ` 26.48 million and a decrease in
bank charges of ` 6.6 million. Administrative and selling expenses as a percentage of total income increased
from 9.54% in Fiscal 2007 to 9.63% in Fiscal 2008.
Depreciation
Depreciation increased by ` 87.02 million, or 27.64%, to ` 401.87 million in Fiscal 2008 from ` 314.85
million in Fiscal 2007, primarily due to the full year depreciation of our 30 MW Chakabura Power Plant,
which was commissioned in February 2007, and depreciation related to our Gevra beneficiation plant, which
was commissioned in March 2008. Depreciation as a percentage of total income decreased from 9.29% in
Fiscal 2007 to 7.20% in Fiscal 2008.
Finance costs
Interest and finance charges increased by ` 81.48 million, or 49.73%, to ` 245.34 million in Fiscal 2008 from `
163.86 million in Fiscal 2007, primarily due to an increase in interest on term loans related to our 30 MW
Chakabura Power Plant. This interest was capitalized until February 2007 and was charged to finance cost
after the commissioning of the project. Finance costs as a percentage of total income decreased from 4.84% in
Fiscal 2007 to 4.40% in Fiscal 2008.
Profit before Tax
As a result of the foregoing, profit before taxation increased by ` 342.13 million, or 44.12%, to ` 1,117.66
million in Fiscal 2008 from ` 775.53 million in Fiscal 2007.
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