As filed with the Securities and Exchange Commission on June 26, 2003

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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F

|o                                                               | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|OR                                                             
|ý                                                               | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended December 31, 2002                    
|OR                                                             
|o                                                               | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934      
|For the transition period
from                               to
|Commission file number: 1-14838                                

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RHODIA(Exact name of Registrant as specified in its charter)

|Not applicable(Translation of Registrant's name into English)                                              |  | Republic of France(Jurisdiction of incorporation or organization)
|---------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------
|26, quai Alphonse Le Gallo 92512
Boulogne-Billancourt Cedex
France(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:

|Title of each class:                                                                        |  | Name of each exchange on which registered
|------------------------------------------------------------------------------------------- |  | -----------------------------------------
|American Depositary Shares,
each representing one Ordinary Share
nominal value €1 per share |  | New York Stock Exchange                  
|Ordinary Shares, nominal value €1 per share*                                                |  | New York Stock Exchange                  

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Securities
registered or to be registered pursuant to Section 12(g) of the Act: None

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary
Shares: 179,309,188

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

Indicate
by check mark which financial statement Item the registrant has elected to follow.

Item
17 o          Item 18 ý

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TABLE OF CONTENTS

|PRESENTATION OF FINANCIAL AND OTHER INFORMATION |          | ii 
|----------------------------------------------- | -------- | ---
|PART I                                          |          | 1  
|                                                | Item 1.  |    
|                                                | Item 2.  |    
|                                                | Item 3.  |    
|                                                | Item 4.  |    
|                                                | Item 5.  |    
|                                                | Item 6.  |    
|                                                | Item 7.  |    
|                                                | Item 8.  |    
|                                                | Item 9.  |    
|                                                | Item 10. |    
|                                                | Item 11. |    
|                                                | Item 12. |    
|PART II                                         |          | 131
|                                                | Item 13. |    
|                                                | Item 14. |    
|                                                | Item 15. |    
|                                                | Item 16. |    
|PART III                                        |          | 132
|                                                | Item 17. |    
|                                                | Item 18. |    
|                                                | Item 19. |    

i

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Since January 1, 1999, Rhodia has published its consolidated financial statements in euro ("€"). Prior to that date, Rhodia prepared its
consolidated financial statements in French francs ("francs" or "FRF"). Rhodia has subsequently translated financial information for periods prior to January 1, 1999 from the French franc
amounts into euro amounts at the fixed legal rate of €1.00 = FRF 6.55957. For your convenience, this annual report on Form 20-F contains translations of certain franc and
euro amounts into U.S. dollars at specified rates. These translations should not be construed as representations that the converted amounts actually represent such U.S. dollar amounts or could be
converted into U.S. dollars at the rates indicated or at any other rate.

The
financial statements contained in this annual report on Form 20-F have been prepared in accordance with French generally accepted accounting principles ("GAAP"), which differ
in certain significant respects from U.S. GAAP. See Note 29 to Rhodia's audited consolidated financial statements for the three years ended December 31, 2002 (together with the notes
thereto, the "Consolidated Financial Statements"), included elsewhere in this annual report on Form 20-F, for a description of the principal differences between French GAAP and U.S. GAAP, as
they relate to Rhodia and its consolidated subsidiaries, and for a reconciliation to U.S. GAAP of net income and stockholders' equity.

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The
discussion and analysis of Rhodia's results of operations includes information concerning the year-to-year comparison of the operating performance of Rhodia
and its divisions on a comparable basis in order to eliminate the impact of:



Rhodia
has developed this measure of performance based on monthly reporting from its various businesses and uses it for both its internal analysis and for its financial communications.
In comparing the results of operations for two periods (the "prior" period and the "subsequent" period), Rhodia calculates the effect of these changes as follows:



The
prior period's results are then adjusted to reflect the effect of such changes. The difference between the prior period's results as adjusted and the historical results of the
subsequent period is referred to in the subsequent discussions as changes on a "comparable basis". After sales and operating expenses are restated on a comparable basis in this manner, two further
effects are evaluated:



ii

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Rhodia
believes that these measures are useful tools for analyzing and explaining changes and trends in its historical results of operations because it assists in comparing performance
on a consistent basis. However, these measures are unaudited and are not measurements of performance under either U.S. GAAP or French GAAP. They should not be considered as an alternative to any
measures of performance under U.S. GAAP or French GAAP. Rhodia's method of calculating comparable basis information may differ from methods used by other companies.

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Unless
the context requires otherwise, the terms "Rhodia," the "Company," the "Group," "we," "our" or "us" refer, for periods prior to January 1, 1998, to the Chemicals segment
and the Fibers and Polymers segment of Rhône-Poulenc, as well as certain other businesses related to the chemicals, fibers and polymers businesses that were operated during such periods
by other Rhône-Poulenc segments, and to Rhodia and its consolidated subsidiaries for the periods subsequent to January 1, 1998. See "Item 4. Information About
RhodiaCorporate HistoryFormation of Rhodia." On December 15, 1999, Hoechst merged into Rhône-Poulenc and Rhône-Poulenc changed its name
to Aventis. References to "Aventis" refer to Rhône-Poulenc S.A. and its consolidated subsidiaries for periods prior to the merger, and refer to the merged entities for periods after the
merger.

All
references herein to "United States" or "U.S." are to the United States of America, references to "dollars" or "$" are to the currency of the United States, references to "France"
are to the Republic of France, references to "French francs," "francs" or "FRF" are to the currency of France prior to January 1, 1999, and references to "euro" and "€" are to
the currency of the European Union member states (including France) participating in the European Monetary Union.

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The
brand names (indicated in capital letters) mentioned in this annual report on Form 20-F are trademarks of Rhodia, its affiliates and/or associated companies, or are used with
permission under a license agreement.

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

Selected Financial Data

The tables below set forth selected consolidated financial data for Rhodia for each of the five years during the period ended December 31, 2002. These
financial data are derived from the Consolidated Financial Statements of Rhodia, which have been prepared in accordance with French GAAP and audited by PricewaterhouseCoopers, independent auditors.
The selected consolidated financial data for the fiscal years 2002, 2001 and 2000 should be read in conjunction with the Consolidated Financial Statements. French GAAP differs in significant respects
from U.S. GAAP. For a discussion of the principal differences as they relate to Rhodia, and a reconciliation to U.S. GAAP of net income and total stockholders' equity for the three years ended
December 31, 2002, see Note 29 to the Consolidated Financial Statements.

|                                        |                                                                | Year Ended and as of December 31,     |        
|--------------------------------------- | -------------------------------------------------------------- | ------------------------------------- | -------
|
|
|
|Amounts in accordance with French GAAP: |                                                                |                                       |        
|Income Statement Data:                  |                                                                |                                       |        
|                                        | Net sales                                                      |                                       | 5,537  
|                                        |                                                                | Production costs and expenses         |        
|                                        |                                                                | Administrative and selling expenses   |        
|                                        |                                                                | Research and development expenses     |        
|                                        |                                                                | Depreciation and amortization         |        
|                                        |                                                                | Restructuring and environmental costs |        
|                                        | Operating expenses                                             |                                       | (5,191 
|                                        |                                                                |                                       |        
|                                        | Operating income                                               |                                       | 346    
|                                        | Financial expensenet                                          |                                       | (113   
|                                        | Other income/(expense)net(3)                                  |                                       | (38    
|                                        |                                                                |                                       |        
|                                        | Income/(loss) of consolidated subsidiaries before income taxes |                                       | 195    
|                                        | Income taxes                                                   |                                       | (51    
|                                        | Income/(loss) of consolidated subsidiaries                     |                                       | 144    
|                                        | Equity in earnings/(losses) of affiliated companies            |                                       | (21    
|                                        | Amortization of goodwill                                       |                                       | (12    
|                                        | Income/(loss) before minority interests                        |                                       | 111    
|                                        | Minority interests                                             |                                       | 5      
|                                        |                                                                |                                       |        
|                                        | Net income/(loss)                                              |                                       | 116    
|                                        | Earnings/(loss) per share(4)                                   |                                       | 0.67   
|                                        | Dividend per share(5)                                          |                                       | 0.20   
|                                        | Average number of ordinary shares outstanding (in thousands)   |                                       | 174,146
|                                        |                                                                |                                       |        

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|Balance Sheet Data:                   |                                                        |  |        |   |        |   |        |   |        |   |       
|------------------------------------- | ------------------------------------------------------ |  | ------ | - | ------ | - | ------ | - | ------ | - | ------
|                                      | Working capital(6)                                     |  | (250   | ) | 359    |   | (261   | ) | (428   | ) | (335  
|                                      | Tangible assets (net book value)                       |  | 2,624  |   | 2,946  |   | 3,759  |   | 3,561  |   | 2,743 
|                                      | Total assets                                           |  | 7,810  |   | 7,015  |   | 9,566  |   | 9,013  |   | 7,687 
|                                      | Long-term debt(7)                                      |  | 465    |   | 1,145  |   | 2,077  |   | 1,949  |   | 1,739 
|                                      | Other long-term liabilities                            |  | 1,008  |   | 1,000  |   | 1,206  |   | 1,388  |   | 1,374 
|                                      | Total debt(8)                                          |  | 2,766  |   | 1,830  |   | 3,325  |   | 2,985  |   | 2,384 
|                                      | Cash, cash equivalents and marketable securities       |  | 1,630  |   | 277    |   | 259    |   | 413    |   | 251   
|                                      | Net debt(9)                                            |  | 1,136  |   | 1,553  |   | 3,066  |   | 2,572  |   | 2,133 
|                                      | Minority interests                                     |  | 65     |   | 69     |   | 87     |   | 84     |   | 23    
|                                      | Total stockholders' equity                             |  | 2,130  |   | 2,390  |   | 2,593  |   | 2,267  |   | 1,835 
|                                      | Common stock and additional paid-in capital            |  | 2,667  |   | 2,624  |   | 2,693  |   | 2,693  |   | 2,693 
|Cash Flow Statement Data:             |                                                        |  |        |   |        |   |        |   |        |   |       
|                                      | Capital expenditures                                   |  | 336    |   | 372    |   | 503    |   | 483    |   | 374   
|Amounts in accordance with U.S. GAAP: |                                                        |  |        |   |        |   |        |   |        |   |       
|Income Statement Data:                |                                                        |  |        |   |        |   |        |   |        |   |       
|                                      | Net sales                                              |  | 4,582  |   | 4,713  |   | 6,647  |   | 6,554  |   | 6,061 
|                                      | Operating expenses(10)                                 |  | (4,404 | ) | (4,379 | ) | (6,243 | ) | (6,726 | ) | (5,800
|                                      | Operating income/(loss)(10)                            |  | 178    |   | 334    |   | 404    |   | (172   | ) | 261   
|                                      | Income/(loss) from continuing operations               |  | 105    |   | 254    |   | 222    |   | (232   | ) | 67    
|                                      | Income/(loss) from discontinued operations             |  | 1      |   | (27    | ) | (6     | ) | 19     |   | (24   
|                                      | Net income/(loss)                                      |  | 106    |   | 227    |   | 216    |   | (213   | ) | 43    
|                                      | Earnings/(loss) per share from continuing operations   |  | 0.60   |   | 1.46   |   | 1.26   |   | (1.30  | ) | 0.37  
|                                      | Earnings/(loss) per share from discontinued operations |  | 0.01   |   | (0.16  | ) | (0.03  | ) | 0.11   |   | (0.13 
|                                      | Earnings/(loss) per share:(4)                          |  | 0.61   |   | 1.30   |   | 1.23   |   | (1.19  | ) | 0.24  
|Balance Sheet Data:                   |                                                        |  |        |   |        |   |        |   |        |   |       
|                                      | Working capital(6)                                     |  | (297   | ) | 359    |   | (261   | ) | (463   | ) | (373  
|                                      | Total property, plant and equipment                    |  | 2,517  |   | 2,946  |   | 3,759  |   | 3,561  |   | 2,743 
|                                      | Total stockholders' equity(11)                         |  | 1,973  |   | 2,213  |   | 2,409  |   | 2,014  |   | 1,446 

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Exchange Rate Information

Under the provisions of the Treaty on European Monetary Union negotiated at Maastricht in 1991 and signed by the then 12 member states of the European Union in
early 1992, a European Monetary Union, known as EMU, was implemented on January 1, 1999, and a single European currency, known as the euro, was introduced. The following 12 member states
participate in EMU and have adopted the euro as their national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The
legal rate of conversion between French francs and the euro was fixed on December 31, 1998 at €1.00 = FRF 6.55957.

Fluctuations
in the exchange rate between the euro and the U.S. dollar will affect the U.S. dollar price of Rhodia's ADSs on the New York Stock Exchange and the U.S. dollar value of any
dividends Rhodia may declare.

Since
the euro did not exist prior to January 1, 1999, Rhodia cannot present exchange rates between the euro and the U.S. dollar for periods prior to that date. Rhodia's reporting
currency during those periods was the French franc. In order that you may ascertain how the trends in Rhodia's financial results might have appeared had they been expressed in U.S. dollars, the table
below sets forth the French franc/U.S. dollar exchange rate for 1998 based on the Noon Buying Rate expressed in French francs per $1.00 and the euro/U.S. dollar exchange rate for 1999, 2000, 2001 and
2002 based on the Noon Buying Rate expressed in euro per U.S. dollars.

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|Month                       |  | Period-end rate |  | Average rate(1) |  | High    |  | Low    
|--------------------------- |  | --------------- |  | --------------- |  | ------- |  | -------
|Euro/Dollar(2)              |  |                 |  |                 |  |         |  |        
|June 25, 2003               |  | 0.86            |  |                |  |        |  |       
|June 2003 (through June 25) |  | 0.86            |  | 0.85            |  | 0.87    |  | 0.84   
|May 2003                    |  | 0.85            |  | 0.83            |  | 0.89    |  | 0.84   
|April 2003                  |  | 0.89            |  | 0.92            |  | 0.94    |  | 0.89   
|March 2003                  |  | 0.92            |  | 0.88            |  | 0.95    |  | 0.90   
|February 2003               |  | 0.93            |  | 0.93            |  | 0.93    |  | 0.92   
|January 2003                |  | 0.95            |  | 0.94            |  | 0.97    |  | 0.92   
|December 2002               |  | 0.95            |  | 0.98            |  | 1.01    |  | 0.95   
|Year                        |  |                 |  |                 |  |         |  |        
|Euro/Dollar(2)              |  |                 |  |                 |  |         |  |        
|2002                        |  | €0.95           |  | €1.05           |  | €1.16   |  | €0.95  
|2001                        |  | 1.12            |  | 1.12            |  | 1.19    |  | 1.05   
|2000                        |  | 1.07            |  | 1.09            |  | 1.21    |  | 0.97   
|1999                        |  | 0.99            |  | 0.94            |  | 1.00    |  | 0.85   
|French Franc/Dollar         |  |                 |  |                 |  |         |  |        
|1998                        |  | FRF5.59         |  | FRF5.90         |  | FRF6.21 |  | FRF5.39

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Risk Factors

In addition to other information contained in this annual report on Form 20-F, you should consider carefully the risks
described below. These risks are not the only ones we face. Additional risks not currently known to us or that we currently deem immaterial may also impair our business operations. Our business,
financial condition or results of operations could be materially adversely affected by any of these risks.

This annual report on Form 20-F also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as describe below and elsewhere in this annual report on
Form 20-F. See "Cautionary Statement Regarding Forward-looking Statements".

Risks Related to our Indebtedness

Our substantial level of indebtedness could materially adversely affect our ability to react to changes in our business and our ability to incur
additional debt to fund future needs

We have a substantial amount of debt. As of December 31, 2002, we had gross financial debt (long-term debt plus short-term borrowings and current portion
of long-term debt) of €2,384 million and stockholders' equity (excluding minority interests) of €1,835 million. In addition, we have granted guarantees in
respect of indebtedness of our joint ventures and other non-consolidated companies in the amount of €197 million as of December 31, 2002.

Our
substantial debt could have important consequences for investors. For example, it could:



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Our ability to refinance maturing debt as well as to finance our working capital and capital expenditures needs depends on our ability to renegotiate
our existing credit facilities and to maintain our existing sources of liquidity

A significant portion of our gross financial debt matures over the next four years. Our ability to refinance these debts as they come due depends in part on our
ability to renegotiate our committed credit facilities. As of December 31, 2002, €645 million of debt was maturing in 2003, €404 million in 2004,
€537 million in 2005 and €488 million in 2006. These amounts relate principally to the maturities of debt securities issued under our Euro
medium-term note program (with €500 million maturing in 2005 and €300 million maturing in 2006), and amounts drawn under our committed credit
facility agreements.

As
of December 31, 2002, we had €2,116 million of committed credit facilities. €565 million of these facilities expire in 2003,
€1,065 million in 2004, €220 million in 2005 and €177 million in 2006. The amounts expiring in 2004 include our syndicated credit
facility of €600 million. Since December 31, 2002, we have negotiated new committed credit facilities and certain facilities have expired. As a result, the total amount
of our committed credit facilities as of March 31, 2003 was €2,094 million. In order to refinance our indebtedness as it matures, as well as to finance our working
capital and capital expenditure needs we must renegotiate these facilities as they
expire, enter into new facilities or obtain capital from other sources. We may not succeed in renewing these credit facilities or raising capital from other sources. Moreover, any agreement reached
with our lenders could result in new terms that are less favorable than current terms under our existing credit facility agreements and could involve a reduction in availability of funds, an increase
in interest rates and shorter maturities, among other things. If we are not able to renegotiate our existing credit facilities on terms acceptable to us, this could have a material adverse effect on
our liquidity and financial condition.

Short-term
borrowings are also an important source of financing for us, and as of December 31, 2002 our short-term borrowings included
€175 million of commercial paper and €269 million of other short-term financings. Our commercial paper program consists principally of sales
of Frenchbillets de trésorerie. Our access to the French commercial paper market depends in part on the assessment of our financial
condition by investors, as well as on the continued functioning of the markets. The unavailability of the commercial paper market would require us to obtain capital from other sources, and we cannot
be sure that the terms of such financing would be as favorable as those of the commercial paper market. Our other short-term borrowings of €269 million are generally
financings granted to Rhodia and to various subsidiaries and are generally without a specific maturity date, and because they are generally uncommitted, would not be available to us as sources of
liquidity if the lender elects not to renew them.

Another
important source of our financial liquidity is the monthly or quarterly sale of some of our uncollected trade receivables. As of December 31, 2002, trade receivables
outstanding of €627 million had been sold, with respect to which we received cash payments of €531 million. The balance is paid to us after the collection
of the trade receivables is made, ordinarily within three months of the sale. Trade receivables are among our most liquid assets, and selling them reduces the availability of such assets to our
creditors. In addition, a portion of our sales of receivables are financed through sales of commercial paper by third-party financing vehicles. Although these financing vehicles have entered into

5

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back-up
credit facilities to provide liquidity in the event of, among other things, short-term disruption of the commercial paper market, if the commercial paper market became
unavailable to these vehicles for the longer term, or if these backup facilities were cancelled or not renewed, our ability to sell trade receivables would be impacted. Similarly, we cannot guarantee
that we will be able to continue to access the securitization market on terms comparable to those we have enjoyed in the past.

Our existing credit facilities and indentures contain financial covenants which we could fail to meet

We have issued notes and entered into various revolving credit facilities that require us to maintain compliance with certain financial covenants regarding a
maximum level of net debt to EBITDA, a minimum level of EBITDA to net interest expense, a minimum level of stockholders' equity and/or a
maximum level of net debt to capitalization. Financial covenant calculations are based on French GAAP financial information. As of December 31, 2002, we satisfied all of our financial
covenants.

Most
of our committed credit facility agreements and the agreement governing the U.S. private placement notes contain a covenant requiring us to maintain a ratio of net debt to EBITDA of
less than 3.5 and a ratio of EBITDA to net financial expense of greater than 5.0. In facilities for which the ratio of EBITDA to net financial expense is tested after December 31, 2004, such
ratio will be 4.5 or less for such testing dates. Net debt, EBITDA and net financial expense are defined in the agreements and differ from similar measures used elsewhere in this annual report on
Form 20-F. At December 31, 2002 our ratio of net debt to EBITDA amounted to 3.3 and our ratio of EBITDA to net financial expense amounted to 6.8. These covenants are tested
annually, and under some agreements, semi-annually. Our ability to comply with these covenants will depend on our operating performance and level of indebtedness. Depending on our operating
performance, we could be required to take other measures to reduce our indebtedness in order to comply with these covenants, including asset disposals. We might not be successful in completing such
disposals.

Five
of our committed credit facility agreements (with combined commitments of €672 million) contain a covenant, to be tested on December 31, 2003 and 2004, as
applicable, requiring us to maintain a minimum stockholders' equity of €1,829 million. €410 million of these facilities expire in 2004 and
€96 million expire in 2005. After the completion of the private placement of senior notes and senior subordinated notes that we issued on May 28, 2003, one of these
facilities was amended to, among other things, remove the stockholders' equity covenant and reduce the ratio of EBITDA to net financial expense to 4.0. As of December 31, 2002 our total
stockholders' equity amounted to €1,835 million and as of March 31, 2003, it amounted to €1,700 million. In addition, the agreement governing our $290
million U.S. private placement notes contains a covenant requiring us to maintain a minimum stockholders' equity of €1,600 million on an ongoing basis. Stockholders' equity as of
December 31, 2002 was negatively affected, without any cash impact, by a €397 million loss resulting from the translation of financial statements of foreign operations
(due principally to the severe decline in the value of the Brazilian real and to a lesser extent the U.S. dollar). In addition to translation adjustments, stockholders' equity is adjusted by net
income or loss, which in turn is affected by our operating performance, including goodwill and other intangible asset amortization or impairment.

Our
ability to comply with these covenants in the future will be affected by our operating performance and level of indebtedness, as well as by events beyond our control such as changes
in exchange rates. In the event of a default under any of these agreements, the lenders could elect to declare all amounts outstanding under the agreements to be immediately due and payable. Although
we would expect to negotiate with our lenders to seek a waiver of such default or an amendment to the relevant agreement, such negotiations might not be successful. If the debt under these agreements
were to be accelerated, we cannot assure you that our assets would be sufficient to repay such debt in full. We are currently in discussions with the lenders under several of our credit facilities to
renegotiate or extend these facilities and modify the terms of these financial covenants. Such discussions may not be successful.

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Restrictions imposed by the indentures governing the senior notes and the senior subordinated notes that we issued on May 28, 2003 through a
private placement, our credit facilities and our other outstanding indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in
other business activities

Our credit facilities, other outstanding indebtedness and the indentures governing the senior notes and the senior subordinated notes that we issued on
May 28, 2003 through a private placement contain various covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to:



Changes in respect of our public debt ratings may materially and adversely affect the availability, the cost and the terms and conditions of our debt
and asset-based financings

Certain of our outstanding debt instruments are publicly rated by Moody's Investor Service and Standard & Poor's, independent rating agencies. These public
debt ratings affect our ability to raise debt, our access to the commercial paper market, and our ability to engage in asset-based financing. These public debt ratings also affect the cost to us and
terms and conditions of debt and asset-based financings. In February 2003, Moody's Investor Service lowered our credit rating to Ba2, which is below investment grade. This downgrading caused a
125 basis point increase in the interest rate applicable to the $290 million of U.S. private placement notes we issued in July 2002, resulting in $3.6 million of additional annual
interest expense. In March 2003, Standard & Poor's lowered our credit rating to BB+, which is also below investment grade. The downgradings by Moody's and Standard & Poor's have not
affected the cost or terms and conditions of our other existing financings. However, the downgradings are likely to affect the cost of future financing. Additionally, negative developments regarding
our cash flow, and/or our incurring significant levels of debt or secured debt, or our failure to meet certain covenants under our credit agreements and other indebtedness, could require us to grant
security, lose access to, and/or cause a default under, certain of our credit facilities and other indebtedness and adversely affect further the cost and terms and conditions of our debt and
asset-based financings.

We
cannot guarantee that we will be successful in carrying out measures that strengthen or maintain our credit profile, nor can we guarantee that the rating agencies will regard the
measures we do carry out as sufficient. In addition, factors that are not within our control, including factors relating to our industry or specific countries or regions in which we operate, may
affect the rating agencies' assessment of our credit profile. As a result, we cannot guarantee that the assessment of our credit profile will not be further downgraded by the rating agencies.

7

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Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate the cash required to service our debt

Our ability to make payments on and refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future. Our
historical financial results have been, and our future financial results are expected to be, subject to substantial fluctuations, and will depend upon general economic conditions and financial,
competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to meet our debt service obligations or fund our other liquidity needs, we may need to refinance
all or a portion of our debt before maturity, seek additional equity capital or sell assets. We cannot assure you that we will be able to pay our debt or refinance it on commercially reasonable terms,
or at all, or to fund our liquidity needs.

If
for any reason we are unable to meet our debt service obligations, we would be in default under the terms of our agreements governing our outstanding debt. If such a default were to
occur, the lenders could elect to declare all amounts outstanding under such facilities immediately due and payable, and the lenders would not be obligated to continue to advance funds under our
revolving credit facilities. Although we would expect to negotiate with our lenders to seek a waiver of such default or an amendment to the relevant agreement, such negotiations might not be
successful. If the amounts outstanding under these agreements are accelerated, we cannot assure you that our assets will be sufficient to repay in full the money owed to the banks or to our debt
holders.

Risks Related to our Business

Currency and interest rate fluctuations may have a material impact on our financial results

A considerable portion of our assets, liabilities, sales, revenues, expenses and earnings is denominated in currencies other than the euro, principally in U.S.
dollars, Brazilian reals and, to a lesser extent, British pounds. Fluctuations in the values of these currencies with respect to the euro have had and may continue to have a significant impact on our
financial condition and operating results. In 2002, variations in currencies, particularly the decline in the value of the dollar and the Brazilian real relative to the euro, decreased our
consolidated net sales by approximately 3.9%. Currency fluctuations can also have a significant impact on our balance sheet, particularly stockholders' equity, when we translate the financial
statements of our subsidiaries located outside of the euro-zone into euros. For example, in 2002 our stockholders' equity was reduced by €397 million due to the
translation of the financial statements of our foreign subsidiaries and related notably to the decline of the U.S. dollar and the severe depreciation of the Brazilian real relative to the euro.

An
appreciation of the euro compared to the dollar would lessen the euro-value of sales generated in dollar-zone countries and could lower the competitiveness of
the products we produce in Europe against products produced in, or exported from, the United States and other dollar zones. We expect that this effect would be partially offset by the decreased cost
in euro of a significant portion of our raw material and energy purchasing requirements.

Our
policy with respect to limiting our exposure to short-term fluctuations in exchange rates is to calculate on a daily basis our net foreign currency exposure based on our
transactions, including both sale and purchase transactions, and to use financial instruments to reduce such exposure against rate changes with respect to the euro. The main instruments we currently
use are over-the-counter forward exchange contracts with maturities of generally less than six months. Nonetheless, we may not be able to protect ourselves from sustained movements in the value of the
euro against other currencies.

We
are also exposed to interest rate risk. As of December 31, 2002, our gross financial debt amounted to €2,384 million, of which long-term debt
amounted to €1,739 million. Fluctuations in interest rates may affect our interest expense on existing debt and the cost of new financing. We use

8

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swaps
to manage this risk, but our financial condition and results of operations may nevertheless be materially adversely affected by sustained increases in interest rates.

For
further discussion of these matters and the measures we have taken to seek to protect our business against these risks, see "Item 11. Quantitative and Qualitative Disclosure
About Market Risk".

Environmental and health and safety laws and regulations expose us to the risk of costs, liabilities and claims that could have a material adverse
effect on our business, financial condition and results of operations

Environmental and health and safety laws and regulations expose us to the risk of substantial costs and liabilities, including costs and liabilities associated
with assets that have been sold and activities that have been discontinued. In most jurisdictions in which we operate, industrial activities are subject to obtaining permits, licenses and other
authorizations, or to prior notification. In addition, local or regional regulatory bodies may impose restrictions on the use of certain of our products. In addition, we have been and may be subject
to liabilities and claims relating to personal injury (including exposure to hazardous substances used, produced, disposed of by us or located in our facilities), property damage or damage to natural
resources. We are subject to a broad range of extensive and evolving environmental and health and safety laws and regulations in each of the jurisdictions in which we operate, which impose
increasingly stringent standards on us. They relate to, among other things, air emissions, waste water discharges, the use and handling of hazardous materials, waste disposal practices, and
clean-up of environmental contamination.

Compliance
with environmental laws and regulations has resulted in significant ongoing costs for us, and could restrict our ability to modify or expand our facilities or continue
production, or require us to install costly pollution control equipment or incur significant expenses, including remediation costs. A failure to comply with any such law or regulation could result in
the issuance of fines and penalties or the imposition of other sanctions. We could also incur significant expenses in the event that new laws, regulations or governmental policies were to require that
hazardous wastes, including radioactive wastes, currently stored on-site, be disposed of at off-site locations. Currently, we are involved in a number of compliance and
remediation efforts and legal proceedings concerning environmental health and safety matters. Based on information presently available, we have budgeted capital expenditures for environmental
improvement projects and have established reserves for known environmental remediation liabilities that are probable and reasonably capable of estimation. However, environmental matters cannot be
predicted with certainty, and these amounts may not be adequate for all purposes. In addition, the development or discovery of new facts, events, circumstances or conditions, and other developments
such as changes in the law or the interpretation or enforcement thereof, could result in increased costs and liabilities.

Many
of our current, former and discontinued manufacturing sites have an extended history of industrial use. As is typical for such sites, soil and groundwater contamination has occurred
in the past at some sites and might occur or be discovered at other sites in the future. We are continuing to investigate, remediate and monitor soil and groundwater contamination at or from certain
of these sites. In addition, we have been and may in the future be liable under various laws, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act (commonly known as
"Superfund"), to contribute to the costs to clean up third-party facilities to which we have sent waste for disposal. Under these laws, the owner or operator of contaminated properties and the
generator of wastes sent to a contaminated disposal facility may be held jointly and severally liable for the remediation of such properties, regardless of fault.

As
of December 31, 2002, our accrued reserve for probable future remediation expenses amounted to €146 million. Based on current information, provisions
established for environmental matters and amounts we expect to receive pursuant to the environmental indemnification arrangements with Aventis described in "Item 7. Major Stockholders and
Related Party TransactionsAgreements with Aventis",

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we
do not believe that environmental compliance and remediation requirements will have a material adverse effect on our business, financial condition or results of operations. Future events, such as
changes in laws and technology, the promulgation of new laws or the development or discovery of new facts or conditions, however, could cause us to incur significant additional costs and liabilities
that could have a material adverse effect on our business, financial condition and results of operations.

Sustained high raw materials prices may increase our production costs and expenses of goods sold, and ultimately adversely affect our profitability

A significant portion of our raw materials costs is linked, directly or indirectly, to the price of crude oil. We are therefore exposed to any volatility in the
price of oil that may result from any instability in oil-producing regions (including civil unrest in Venezuela, war in Iraq or broader disruption in the Middle East). Significant
variations in the costs of fuel, natural gas and other raw materials can affect our financial condition and results of operations. Increases in overall levels of raw materials prices may not
necessarily be passed on through an increase in sales prices, and may, in certain cases, create negative pressure on margins. Decreases in the average prices of raw materials may, as a result of
competitive pressures, also cause prices to decline, and may, in certain cases, limit the potential gain on margins. See "Item 5. Operating and Financial Review and
ProspectsCertain Factors Affecting Rhodia's Financial Condition and Results of OperationsCost of Raw Materials" and "Item 4. Information About RhodiaRaw
Materials."

We are subject to intense competition

We face significant competition in each of our markets. In the specialty chemicals industry, competition is based upon a number of considerations, principally
product differentiation and innovation, product quality and quality of logistics, including distribution capability. In addition, in some market segments, our products are subject to intense price
competition due to factors such as overcapacity, competition from low-cost producers and consolidation among our customers and competitors. New products or technologies developed by
competitors also may have a material adverse impact on our competitive position.

We are dependent on new products and processes

Our operating results depend to a significant extent on our ability to continue to introduce new products and applications and to continue to develop our
production processes to be a competitive producer. We believe that many of our businesses are technological leaders in their principal markets. We are committed to remaining a technological leader and
a competitive producer and believe that our portfolio of new products and improved products under development is strong. However, we may not be able to develop new products and applications
successfully or bring them to market in a timely manner.

Sales of our products and services to the pharmaceutical industry may depend on our clients' ability to obtain and maintain regulatory approval for
particular pharmaceutical products

We sell certain of our products and services to the pharmaceutical industry, which must comply with a broad range of regulatory controls on the development,
testing, approval, manufacturing and marketing of pharmaceutical products, including notably the U.S. Food and Drug Administration (the "FDA") in the United States and the European Medicines
Evaluation Agency (the "EMEA") in the European Union. Although we do not ourselves apply for product authorizations from these regulatory authorities, the sale of some of our products and services may
depend on our clients' ability to obtain and maintain authorization to market or manufacture a particular pharmaceutical product. In our principal markets (the European Union and the United States),
the process of obtaining authorization is lengthy and expensive, and there are a variety of factors that could adversely affect our clients' ability

10

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to
obtain marketing authorization for a product or to successfully market or continue to market a product once approved. In recent years, the authorization process before the FDA has been subject to
delay. FDA approval for certain planned product launches by customers of our Pharma Solutions business has been delayed in recent months, which will cause sales by the business to be lower than our
initial expectations. In addition, delays in FDA approval are affecting the pharmaceutical ingredients market as a whole, contributing to overcapacity in the industry. Our clients' failure to obtain
or maintain authorization for a product could adversely affect the sales of our products and services to the pharmaceutical industry.

We have unfunded liabilities with respect to our pension plans and other post-retirement benefits

We have obligations to our employees relating to retirement and other end of contract indemnities in the majority of the countries where we operate.

In
France, retirement indemnities arise pursuant to labor agreements, internal conventions and applicable local legal requirements. Retirement indemnities in France are funded from
current cash flows, and there is no legal requirement to maintain assets to fund these liabilities. As of December 31, 2002, we had projected benefit obligations of
€674 million with respect to our French retirement indemnities.

In
the United States and the United Kingdom, liabilities arise pursuant to labor agreements, pension schemes and plans and other employee benefit plans, some of which are required to
maintain assets to fund their liabilities. As a result of stock market declines in 2002, the market value of the assets in our funded pension plans, including our nonqualified and foreign plans, has
declined. In 2002, the pension plan assets for certain of our foreign pension plans fell below required levels with respect to their
related accumulated benefit obligation. Applicable laws and regulations would have allowed us to spread contributions to cover the shortfall over 3 to 5 years. However, we chose to cover most of the
shortfall by making an exceptional cash contribution of €145 million to U.S. and U.K. pension plans in 2002. We cannot assure you that we will not be required to make similar
cash contributions in the future. Any such payments could have an adverse effect on our financial condition and liquidity. With respect to our foreign plans, as of December 31, 2002, we had
projected benefit obligations of €1,382 million and plan assets of €1,122 million.

Our
projected benefit obligations are based on certain actuarial assumptions that vary from country to country, including discount rates, long-term rates of return on invested plan
assets and rates of increase in compensation levels. If actual results, especially discount rates and/or rates of return on plan assets, were to differ from these assumptions, our pension, retirement
and other post-employment costs would be higher or lower, and its cash flows would be unfavorably or favorably impacted from the funding of these obligations.

Our business is subject to many operational risks for which we may not be adequately insured

We cannot assure you that we will not incur losses beyond the limits of, or outside the coverage of, our insurance policies. From time to time, various types of
insurance for companies in the chemical industry have not been available on commercially acceptable terms or, in some cases, have been unavailable. We cannot assure you that in the future we will be
able to maintain existing coverage or that premiums will not increase substantially.

We will be obligated to adopt new accounting standards in 2005 that will impact our financial reporting

We currently prepare our financial statements in accordance with French GAAP, and prepare a reconciliation to U.S. GAAP of stockholders' equity and net income.
See Note 29 to the Consolidated Financial Statements. In June 2002, the Council of Ministers of the European Union approved a new regulation proposed by the European Commission requiring
all EU-listed companies, including Rhodia,

11

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to
apply International Financial Reporting Standards ("IFRS") in preparing their financial statements no later than 2005. Because IFRS emphasizes the measure of the fair value of a company's assets
and liabilities, applying these standards to our financial statements may have a considerable impact on a number of important areas, including, among others, accounting for share-based compensation,
goodwill and intangibles, asset depreciation, employee benefit plans, marketable securities and derivative financial instruments and financing arrangements such as asset securitizations. Although we
have not yet determined the full effect of the application of IFRS to our financial statements, we disclose our on- and off-balance sheet obligations, including our trade
receivables, securitization, operating and capital leases and pension obligations, in our financial statements. Nevertheless, because our financial statements prepared in accordance with IFRS would
differ from our financial statements prepared in accordance with French GAAP, the methods used by the financial community to assess our financial performance and value our publicly-traded securities,
such as price-to-earnings ratios and debt-to-equity ratios, could be affected.

Risks Related to our Shares and to our ADSs

The price of our ADSs and the U.S. dollar value of any dividends will be affected by fluctuations in the U.S. dollar/euro exchange rate

The ADSs trade in U.S. dollars. As the principal trading market for the shares underlying the ADSs is thePremier
Marchéof Euronext Paris, where the shares trade in euro, the value of the ADSs will likely fluctuate as the U.S. dollar/euro exchange rate fluctuates. If the
value of the euro decreases against the U.S. dollar, the price at which our ADSs trade will decrease. In addition, since any dividends that we may declare will be denominated in euro, exchange rate
fluctuations will affect the U.S. dollar equivalent of dividends received by holders of ADSs. See "Exchange Rate Information," above. If the value of the euro decreases against the U.S.
dollar, the value of the U.S. dollar equivalent of any dividend will decrease comparatively.

You may not be able to exercise pre-emptive rights for shares underlying your ADSs

Under French law, stockholders have pre-emptive rights("droits préférentiels de
souscription")to subscribe for cash for issuances of new shares or other securities giving rights, directly or indirectly, to acquire additional shares on a pro rata basis.
Stockholders may waive their pre-emptive rights specifically in respect of any offering, either individually or collectively, at an extraordinary general meeting. Pre-emptive
rights, if not previously waived, are transferable during the subscription period relating to a particular offering of shares and may be quoted on thePremier
Marché.U.S. holders of ADSs may not be able to exercise pre-emptive rights for the shares underlying their ADSs unless a registration statement
under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights or an exemption from the registration requirements thereunder is available. We intend to evaluate at the
time of any rights offering the costs and potential liabilities associated with any such registration statement, as well as the indirect benefits of enabling the exercise by the holders of ADSs of the
pre-emptive rights associated with the shares underlying their ADSs, and any other factors we consider appropriate at the time, and then to make a decision as to whether to file such a
registration statement. We cannot guarantee that any registration statement would be filed, or, if filed, that it would be declared effective. If pre-emptive rights cannot be exercised by
an ADS holder, Citibank N.A., as depositary, will, if possible, sell such holder's pre-emptive rights and distribute the net proceeds of the sale to the holder. If the depositary
determines, in its discretion, that such rights cannot be sold, the depositary may allow such rights to lapse. In either case, ADS holders' interest in us will be diluted and, if the depositary allows
rights to lapse, holders of ADSs will not realize any value from the granting of pre-emptive rights.

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Holders of ADSs may be subject to additional risks related to holding ADSs rather than shares

Because holders of ADSs do not hold their shares directly, they are subject to the following additional risks:



Cautionary Statement Regarding Forward-looking Statements

Certain of the statements contained in this annual report that are not historical facts, including, without limitation, certain statements made in the subsections
entitled "Outlook" for each of Rhodia's Divisions and discussed in "Item 4. Information About Rhodia," and in "Item 5. Operating and Financial Review and ProspectsOutlook," are statements
of future expectations and other forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "is expected
to," "will," "will continue," "should," "would be," "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of
strategy, plans or intentions. These statements are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those anticipated by such statements. Factors that could cause such differences in actual results include: (i) changes in the competitive and
regulatory framework in which the Company operates, in particular increased competition in the specialty chemicals industry; (ii) changes in raw material prices, in particular the price of oil;
(iii) the Company's ability to introduce new products and to continue to develop its production process; (iv) changes in interest rates and currency exchange rates, including
particularly the exchange rate of the euro to the U.S. dollar and U.S. dollar-influenced currencies; (v) changes in economic or technological trends; (vi) customers and market
concentration; (vii) risks and uncertainties attendant to doing business in numerous countries that may be exposed to, or may have recently experienced, economic or governmental instability;
and (viii) general competitive and market factors on a global, regional and/or national basis. For a description of other factors that might affect Rhodia's results, please see
"Risk Factors".

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Item 4. Information About Rhodia

Overview

With net sales of €6,617 million for 2002, Rhodia is one of the world's largest specialty chemicals companies. Rhodia has leading worldwide
market positions in many of its major businesses, ranking number one on the basis of 2002 net sales in products such as food phosphates, hydroquinone, vanillin, guar gum, aspirin, precipitated silica,
and separated rare earths products. Rhodia is the second largest producer in the world of polyamide, food cultures, xanthan gum and paracetamol, and it ranks number two in services such as
custom development for pharmaceutical companies. Rhodia has developed strong customer relationships throughout the world in a broad range of industries, including consumer goods such as health, beauty
and food products; industrial applications, such as electronics, fibers and metal and water treatment products; chemicals; housing and construction materials; pharmaceuticals; agrochemicals,
automobile industry; and environmental protection.

In
2002, Rhodia recorded a net loss of €4 million, and its research and development expenses totaled 3.3% of net sales. As of December 31, 2002, Rhodia had
24,523 employees and 114 sites worldwide.

To
adopt a more market-oriented business approach and to facilitate closer relationships with its customers including many of the world's largest industrial companies, Rhodia reorganized
its business structure at the beginning of 2003. Rhodia has identified eight strategic markets in which it believes it is well-positioned to develop targeted, innovative solutions:
industrial care; consumer care; automotive; fibers; food; pharmaceuticals; agrochemicals; and electronics. Similarly, Rhodia has identified key functions, such as reinforcing materials and high purity
treatment, for which, due to its technologies, Rhodia offers significant expertise and cross-fertilization opportunities and on which Rhodia bases its product offerings.

Rhodia
has reorganized its previous internal structure, which was based on five technology-oriented divisions (Fine Organics, Consumer Specialties, Industrial Specialties, Polyamides and
Services and Specialties), into a new organization comprised of four market-oriented divisions: Consumer Care and
Food; Automotive, Electronics and Fibers; Industrial Care and Services; and Pharmaceuticals and Agrochemicals. In part, this reorganization involved the transfer of businesses from the former Services
and Specialties Division within the new organization, primarily the transfer of Acetow businesses to Consumer Care and Food, Eco Service businesses to Industrial Care and Services and Electronics &
Catalysis businesses to Automotive, Electronics and Fibers. In addition, Rhodia's pharmaceutical businesses were reorganized within a new division, Pharmaceuticals and Agrochemicals.

The
following discussion is based on Rhodia's historical internal structure of five divisions, which was in place until the end of 2002.

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Organizational Chart by Business

The discussion in this section reflects Rhodia's historical internal business organization. The simplified organizational chart below sets forth, for each of
Rhodia's five Divisions, their principal technologies for the year ended December 31, 2002.

|Consumer Specialties                                                      |  | Polyamide                                                                                        |  | Fine Organics                                                         |  | Industrial Specialties                                                 |  | Services and Specialties                   
|------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | -------------------------------------------
|Phosphates
Surfactants
Hydrocolloids
Food Cultures
Phosphorus Derivatives |  | Textile Yarns
Polyamide
Intermediates
Technical Fibers
and Industrial Yarns
Engineering Plastics |  | Synthesis of Intermediates
Fine Synthesis
Custom Synthesis
Phosphates |  | Aliphatic
Di-Isocyanates
Oxygenated solvents
Latexes
Silicas
Silicones |  | Acetow
Eco Services
Electronics & Catalysis

The
principal activities of Rhodia's five Divisions are set forth below:



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The
pie charts below set forth the percentage breakdown of Rhodia's net sales by Division and geographic origin for the year ended December 31, 2002.

|GRAPHIC | GRAPHIC
|------- | -------

Corporate Information

The legal and commercial name(dénomination sociale)of the company is Rhodia. Rhodia was
incorporated in 1989 for a period of 99 years. The company is asociété anonyme,a form of limited liability
company, domiciled in, incorporated under and governed by the laws of Francemost notably Law No. 066-537 of July 24, 1966 (as amended), regulating commercial
companies. Rhodia's corporate governance structure is set out in the company's by-laws(statuts),which were last amended on May 21,
2002.

The
Company is registered with the Register of Commerce and Companies of Nanterre under the number 352 170 161. Rhodia's registered office is located at 26, quai Alphonse Le Gallo, 92512
Boulogne-Billancourt Cedex, France, and its phone number at this location is +331-5538-4000.

Corporate History

Predecessors of Rhodia

Rhodia's origins go back to the nineteenth century to two chemical companies, the Société Chimique des Usines du
Rhône and l'Entreprise de Produits Chimiques Etienne Poulenc. In 1928, they merged to form Rhône-Poulenc. Over the years Rhône-Poulenc, now called Aventis,
expanded into such areas as polyamide and polyester fibers, life science, and made many major acquisitions in the chemical industry, including food phosphates and sulfuric acid regeneration (Stauffer
Chemicals, USA, 1987); aspirin and paracetamol (Monsanto, USA, 1988); surfactants and guar (RTZ Corporation PLC, UK, 1989).

During
the 1990s, Rhône-Poulenc divested many businesses and refocused its strategy on life sciences and specialty chemicals. From 1990 to 1997, it divested many
businesses in basic chemicals, including polyvinyl chloride (PVC), bromine derivatives, polychloroprene, acetyl operations in Europe, soda ash production in North America, vinyl acetate in Brazil,
titanium dioxide, some chlorine and caustic soda operations, and toluene di-isocyanate. Rhône-Poulenc also applied its strategy of focusing

16

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on
specialty products to its Fibers and Polymers division and gradually disposed of its polyester business.

Formation of Rhodia

The formation of Rhodia with its current name and organizational structure occurred as of January 1, 1998, through a series of transactions carried out by
Rhône-Poulenc and several of its subsidiaries. Rhône-Poulenc transferred to Rhodia (i) its directly and indirectly held equity interest in the other subsidiaries,
partnerships and businesses that made up the Chemicals and Fibers and Polymers segments of Rhône-Poulenc and (ii) substantially all other assets and liabilities related to its
chemicals, fibers and polymers businesses that were historically recorded under segments of Rhône-Poulenc other than the Chemicals and Fibers and Polymers segments.

Rhodia
became a public company on June 25, 1998, when Rhône-Poulenc sold 33% of its stake in the Rhodia Group to the public. In October 1999,
Rhône-Poulenc divested its remaining 67.3% stake in Rhodia with a two-part transaction in which it sold 39.1% of Rhodia's outstanding shares and issued notes exchangeable
into Rhodia shares representing 25.9% of Rhodia's share capital. In December 2002, Rhône-Poulenc (which had become Aventis) proceeded with the early redemption of these bonds,
effectively canceling all outstanding bonds. As of February 13, 2003, Aventis held 25.2% of Rhodia's share capital. Aventis has announced its intent to dispose of the shares. The relationship
between Rhodia and Aventis is described in "Item 7. Major Stockholders and Related Party TransactionsAgreements with Aventis."

Since
its creation, Rhodia has continued to actively restructure its portfolio. In March 2000, Rhodia acquired the British company Albright & Wilson, the world's leading
producer of phosphates. As a result of this acquisition, Rhodia became the world leader in specialty phosphates. In September 2000, Rhodia acquired ChiRex, a U.S. company specializing in
providing high technology services to the pharmaceutical industry, through a friendly takeover. In addition, Rhodia contributed its own pharmaceutical custom manufacturing activities to ChiRex,
creating a new company called Rhodia ChiRex. In 2001 and 2002, Rhodia undertook a significant divestiture program, disposing of the following activities: Albright & Wilson's European surfactants and
lubricant additives; metal organics; paper latex; polyvinyl acetate; certain animal feed products; hazardous industrial waste treatment; meta-aramid fibers; European basic chemicals and
its brewing and enzymes businesses. In addition, in October 2002, Rhodia sold its entire 88.4% interest in Rhodiaster to the Italian group Mossi & Ghisolfi. Rhodiaster was Rhodia's last
remaining business in the polyester sector, from which the Group has withdrawn in all other world markets. These divestitures and acquisitions are described in "Item 5. Operating and Financial
Review and ProspectsCertain Factors Affecting Rhodia's Financial Condition and Results of OperationsScope of Activities Included in the Consolidated Financial Statements" and
in Note 2 to the Consolidated Financial Statements.

Consumer Specialties Division

Overview

The Consumer Specialties Division develops, manufactures and markets high value-added additives designed to improve performance, in particular, in food,
cosmetics, detergents and water treatment products. To serve these markets, the Division uses its expertise in five core technologies: phosphates, phosphorus derivatives, hydrocolloids, surfactants
and food cultures. Rhodia is number one worldwide in terms of 2002 sales in food and specialty phosphates (excluding fertilizers), phosphorus derivatives, and guar gum, and is number two worldwide in
terms of 2002 sales in food cultures and xanthan gum.

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The
table below sets forth certain financial information for the Consumer Specialties Division for the years ended and as of December 31, 2000, 2001 and 2002.

|                                 |  | Year ended and as of December 31, |  
|-------------------------------- |  | --------------------------------- | -
|
|
|Total Division sales(1)          |  | 2,175                             |  
|Operating income (loss)          |  | 100                               |  
|Capital expenditures             |  | 99                                |  
|Total segment assets             |  | 2,473                             |  
|Contribution to Rhodia net sales |  | 29.3                              | %

---

The
Consumer Specialties Division has expanded its activities in high growth markets by combining its technological skills, scientific knowledge and employee capabilities. For example,
by combining proprietary nanoparticle technologies and the formulation technologies of the Cosmetics and Detergents business, Rhodia developed and launched a new-generation sunscreen,
Mirasun, in 2001.

During
2001, the Consumer Specialties Division completed the integration of Albright & Wilson, which serves a wide variety of markets, including the food, personal care,
pharmaceuticals, electronics and detergents markets. In April 2001, Albright & Wilson's European Surfactants business was sold to Huntsman Corporation. The Consumer Specialties Division
completed the reorganization of its manufacturing base and sales processes, the integration of its teams and the harmonization of its information systems in 2001.

Rhodia's
expertise spans the entire phosphate value chain, from manufacturing and purification of phosphoric acid to the production of specialty salts and special formulations designed
for world-class food and industrial customers. The Specialty Phosphates business develops solutions to optimize quality and performance of finished products in a wide range of industries, including
food, pharmaceuticals, detergents, water treatment, papermaking, metal treatment, horticulture and textiles.

The
industrial and drinking water treatment market is a source of strong demand for specialty phosphates. KALIPOL, one of the business's flagship products, offers an innovative solution
to help reduce heavy metal concentrations by eliminating traces of lead in water pipes. Stricter European legislation in this area is expected to stimulate demand for water treatment products.

On
January 6, 2003, Rhodia announced the sale of its Brewing & Enzymes businesses based in the United Kingdom and the transfer of a technology license and production rights
of an animal feed product to the U.S. company Genencor. Enzyme production is not a core technology for the Division, which is focusing on food additives.

Technologies



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The
table below sets forth the percentage contributions (unaudited) to the Consumer Specialties Division's net sales by principal technology for the years ended December 31, 2000,
2001 and 2002.

|                                |       | Year ended December 31, |    
|------------------------------- | ----- | ----------------------- | ---
|
|
|
|Phosphates                      |       | 32                      | %  
|Surfactants                     |       | 43                      |    
|Hydrocolloids and Food Cultures |       | 13                      |    
|Phosphorus Derivatives (PPD)    |       | 12                      |    
|                                |       |                         |    
|                                | Total |                         | 100
|                                |       |                         |    

Division Strategy

The Consumer Specialties Division uses extensive cross-fertilization among the Group's technologies to develop functions able to meet customer needs,
in particular to create innovative products and applications by early partnering with key customers.

Management
believes this strategy based on continuous innovation will result in achieving sustainable growth in the Division's selected core activities. Main drivers to achieve this
strategy are expected to be:



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Products, Markets and Competition

The table below sets forth, for each of the Consumer Specialties Division's principal products, markets, brand names and competitors.

|Products                   |  | Markets                                                                                                        |  | Brands                                                                                              |  | Competitors                                                  
|-------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|Phosphates                 |  | Food, detergents, water
treatment, horticulture,
metal treatment, ceramics                                     |  | LEVAIR REGENT, RHODIA-PHOS, KALIPOL                                                                 |  | Astaris, Foret,
Prayon/OCP, Thermphos,
Budenheim, BK Giulini 
|Surfactants                |  | Cosmetics, agrochemical
formulations, lubricants,
emulsion polymerization                                      |  | MIRANOL, DERMALCARE,
MIRACARE, SOPROPHOR,
LUBRHOPHOS, SUPERSOL,
ABEX, RHODAFAC                      |  | Stepan, Huntsman, Shell,
Dow, Cognis, Sasol
(Condea), Degussa
|Hydrocolloids              |  | Food, cosmetics,
detergents, oil drilling                                                                      |  | MEYPRO, RHODIGEL,
JAGUAR, RHEOZAN,
RHODOPOL                                                         |  | CP Kelco
(Hercules/Lehman JV)
Degussa, FMC                   
|Food Cultures              |  | Dairy and meat products                                                                                        |  | MARSCHALL, EXAL, TEXEL, RHODOPAS, AVGARD,
MICROGARD, FLORA-FIT, DPL, MIRAPOL SURF,
NCFM, SUPERSTART |  | DSM, Hansen, Danisco                                         
|Phosphorus
    Derivatives |  | Industrial applications (flame retardants, water treatment, leather tanning, agrochemicals, plastic additives) |  | ANTIBLAZE, PROBAN,
TOLCIDE, BRIQUEST,
ALBRIVAP, BRICORR, ALBRITE                                    |  | Great Lakes, Astaris,
Albemarle, Bayer                       

Four business units, organized by market and technology, manage the Division's technologies.

Specialty Phosphates.The Specialty Phosphates business produces principally purified phosphoric acid
and phosphate salts starting from phosphate rock. The acid is used in food applications and for technical uses such as water treatment and fertilizers. Salts include:



The
Specialty Phosphates business is primarily responsible for technologies related to salts and acid production. It sells some of the products it manufacturers and delivers products to
other businesses of the Division such as to Cosmetics and Detergents for metal treatment, oral care, laundry and automatic dishwashing, and to Phosphorus Derivatives for water treatment or catalysis
and to Food Ingredients. Each of these other businesses is responsible for marketing the products of the Specialty Phosphates business.

Phosphorus Derivatives.The Phosphorus Derivatives business focuses on several core markets: water
treatment, flame retardants, plastics and polymers, pharmaceutical intermediates and fine chemicals. In 2001, its manufacturing capabilities were strengthened through new production agreements and
joint ventures in China. In 2002, these activities in China became operational and have

20

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been
fully integrated within the structure of the Division. In 2002, several new products were brought to market, including a pharmaceutical intermediate, an anti-corrosion agent for water
treatment applications and a softer second-generation flame retardant for the textiles industry. In addition, certain organic derivatives are used as agrochemical products to regulate plant growth and
as synthetic intermediates used in critical applications for the pharmaceutical industry.

The
Phosphorus Derivatives business develops water treatment solutions to prevent the formation of scale deposits, corrosion and microbial contamination in a broad variety of industrial
applications. In the oil-drilling segment, for example, TOLCIDE, is the only biocide used for drilling wells in the North Sea and the Gulf of Mexico because it is adaptable to their
ecosystems. BRICORR, which Rhodia believes is the most effective scale prevention polymer in its category, is also used in this industry.

In
2001, Rhodia launched the second generation of PROBAN, the flame retardant used in clothing, bed linen and furniture. PROBAN has become the global benchmark in this market segment.
Rhodia expects this market to grow because recent U.S. legislation requires the use of fire-retardant fibers in children's sleepwear.

With
its expertise, the Phosphorus Derivatives business has begun marketing advanced phosphorus chemicals research and development services, which range from laboratory development to
full-scale commercial production. These services, provided under exclusivity agreements, enable customers to quickly develop new specialty chemical intermediates from phosphorus molecules.

Food Ingredients.The Food Ingredients business provides the food industry with three main product
lines: phosphates, food cultures and hydrocolloids. Food phosphates are used for leavening baked goods and preserving mixes. Food cultures are used principally for fermenting cheese, yogurt and other
dairy products and improving the preservation, flavor and texture of meat and dairy products. Food hydrocolloids (principally guar gum and xanthan gum) are used in ice cream, frozen desserts,
convenience foods and a variety of other food products for stabilizing, improving texture and enhancing preservation. The Division also markets vanillin produced by the Fine Organics Division and
produces anti-oxidants. The Division also markets co-stabilizers for PVC products.

In
terms of 2002 sales, Rhodia is one of the leading suppliers of food cultures to the dairy industry and a leading manufacturer of food preservation products with its antioxidants, food
cultures and phosphate salts. The food additives market is highly fragmented, with a significant portion of worldwide sales made on a regional basis. In recent years, increased demand for safety and
product innovation has stimulated the food additives market. The food additives market is also characterized by high entry barriers, primarily due to three factors: the advanced technology involved in
manufacturing processes, the importance of experience with food regulatory and safety issues and the need for a worldwide presence to compete effectively.

Management
believes that Rhodia's strong relationships with the major North American and European multinational food groups, which dominate a large number of food product lines, will
permit Rhodia to benefit from future growth in demand. Rhodia's customers in both the yogurt and desserts market and the baking market are principally major international manufacturers, while its
customers in the dairy market are principally regional manufacturers.

As
innovation is a key factor in meeting food industry expectations, Rhodia operates a laboratory in central Europe dedicated to developing food textures and has intensified its
scientific initiatives in the field of probiotic cultures. Rhodia has also identified food safety as a strategic development path, and preparations are underway to introduce targeted solutions for
meat and processed food producers in the United States. Rhodia has developed a new-generation of its AVGARD antibacterial poultry treatment process. Marketed worldwide in 2002, the new
process will enable poultry plants to reduce their waste effluentan important advantage for customers in environmentally-sensitive regions. A third strategic priority is geographical
expansion. By strengthening its sales and marketing resources

21

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and
laboratories in Asian markets, the Food Ingredients business expects strong growth in the Asian market where purchasing power is increasing and modern distribution is developing. Its locally-based
teams adapt solutions to the specific requirements of the fast growing Chinese and Southeast Asian markets. Alliances with other companies, such as the joint venture with Organo in Japan, also allow
Rhodia to better serve its customers.

Cosmetics and Detergents.The Cosmetics and Detergents business offers four main product lines:
surfactants, hydrocolloids, phosphates and silicates. Sales of surfactants to the consumer products industries consist principally of surfactants tailored specifically to client demands for use in
products such as skin care products, cosmetics, shampoos, conditioners and detergents. Hydrocolloids serve as ingredients in cosmetics and as a texturing agent. Phosphates are used for specialty
applications in detergents, pharmaceutical products and personal care products. Rhodia also produces sodium silicate, which enhances cleaning qualities in laundry detergents.

By
combining surfactant technologies with other areas of expertise within the Group, the Consumer Specialties Division is developing new solutions for the cosmetics, detergents and
industrial markets. In addition, Rhodia's capabilities in hydrodispersible polymers (natural or synthetic), which are critical raw materials for surface treatment technologies, along with its
production plants in Europe, North America, South America and Asia, enable Rhodia to offer its customers highly-competitive solutions.

The
Cosmetics and Detergents business serves two principal markets: personal care and detergents. The personal care market is segmented into oral care, hair care, skin care, conditioning
and cleansing products. The detergents market is segmented into laundry detergent, dishwashing detergent, household cleaners and institutional and industrial cleaners. The principal purchasers in such
markets are generally major international manufacturers of detergents, cosmetics and other personal care products as well as major regional manufacturers. Most of such businesses generally serve
markets with non-cyclical demand, and thus their needs for manufacturing ingredients are also generally non-cyclical.

The
Cosmetics and Detergents business operates in markets in which innovation represents a key factor of differentiation and where customers tend to be cross-border organizations seeking
partnerships with suppliers to quickly bring to market innovations that offer perceptible benefits to consumers. Rhodia's speed and effectiveness in responding to these concernswith
faster time-to-market cycles and enhanced performancehave helped make it one of the top producers of anti-stain polymers and foaming agents. Rhodia is
a major supplier to the world cosmetics industry, marketing a full range of products that combine surfactant, hydrocolloid and polymer technologies. In 2001, it successfully entered the
baby-wipe segment with a mild, easy-to-use, surfactant-based product. In the household cleaning product segment, Rhodia delivers innovative solutions designed to
enhance the positions of its customers in the highly-competitive detergent market. In 2002, Rhodia launched MIROPOL SURF, a synthetic polymer adapted to treat hard surfaces (ceramics and glass).
MIROPOL SURF is absorbed by the treated surface, making it hydrophilic and thereby protecting it from becoming encrusted with dirt and from other damages. In industrial markets, the Cosmetics and
Detergents business is well-known for its innovation and production of agrochemical formulation products, metal treatment and oil field products.

22

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Production Facilities

The Consumer Specialties Division has facilities at 39 sites worldwide. Rhodia's phosphate operations produce phosphoric acid at several production facilities
located in the United States and Western Europe, principally through "wet route" production, a process which management believes to be less costly than the "thermal route" production utilized by
certain competitors, principally in the United States. Rhodia operates food cultures production facilities in France and the United States, which together serve Rhodia's customers on a worldwide
basis. Rhodia's guar gum production is vertically-integrated, with guar gum processing facilities in India supplying sites located near customers in the United States and Europe. Xanthan gum is
produced and distributed worldwide from a single site in France. Rhodia produces specialty surfactants principally in Europe and North America and surfactants for detergents principally in North
America.

Polyamide Division

Overview

Polyamide is a high value-added polymer used in a wide variety of applications for its elastic, easy-to-dye, readily recyclable and
heat- and abrasion-resistant properties. Rhodia is among the top three world manufacturers of polyamide in terms of 2002 sales.

The
table below sets forth certain financial information for the Polyamide Division for the years ended and as of December 31, 2000, 2001 and 2002.

|                                 |  | Year ended and as of December 31, |  
|-------------------------------- |  | --------------------------------- | -
|
|
|Total Division sales(1)          |  | 1,559                             |  
|Operating income (loss)          |  | 178                               |  
|Capital expenditures             |  | 105                               |  
|Total segment assets             |  | 1,312                             |  
|Contribution to Rhodia net sales |  | 21.0                              | %

---

Estimated
at €20.5 billion, the global polyamide market had an average annual growth rate of 3% since 1970. The market is relatively concentrated, with six
manufacturers producing 45% of worldwide yarn, fiber and plastics, and 58% of intermediates. This high concentration, which is expected to continue in the years ahead, is sustained by substantial
technological and financial barriers to entry.

Management
believes that the integrated production of adiponitrile (ADN) and adipic acid, the two key raw materials for manufacturing polyamide 6.6, represents an important competitive
advantage for Rhodia. Rhodia produces ADN through Butachimie, a 50/50 joint venture with DuPont. Butachimie operates an ADN production plant, which management believes is one of the most cost
efficient in the world. In 2001, Rhodia and DuPont jointly made a major investment in the Butachimie plant, making it the world's largest producer of polyamide intermediates.

By
sharing research and development capabilities and working closely with other Group businesses, the Polyamide Division creates new custom, adipic acid-based solutions for
leading customers. For

23

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example,
the Polyamide Intermediates business developed an additive for laundry detergents, and the new ADIFOOD product has enabled the food industry to improve the preservation of powder
preparations. The resistance properties of polyamide fibers used in the recently-introduced RHOXIMAT Nyl are also finding new applications in construction and public works projects where they are used
to reinforce construction materials.

From
the production of raw materials to the recovery of end-of-cycle waste, the Polyamide Division fully embraces Rhodia's commitment to reduce pollutant
emissions. A far-reaching research program is exploring ways to recycle by-products from polyamide manufacturing, while a network for recovering polyamide waste is being set up
in collaboration with customers.

In
July 2002, Rhodia sold its Kermel subsidiary by means of a management buy out led by Argos Soditic. Kermel produced fire safety and fire fighting equipment. This divestment is
consistent with Rhodia's strategy of selling non-core businesses and activities that do not contribute significantly to the Group's development model based on cross-fertilization of
technologies.

Technologies



The
table below sets forth the percentage contributions (unaudited) to the Polyamide Division's net sales by principal technology for the years ended December 31, 2000, 2001 and
2002.

|                                         |       | Year ended December 31, |    
|---------------------------------------- | ----- | ----------------------- | ---
|
|
|
|Textile Yarns(1)                         |       | 36                      | %  
|Polyamide Intermediates and Polymers     |       | 23                      |    
|Technical Fibers and Industrial Yarns(2) |       | 23                      |    
|Engineering Plastics                     |       | 18                      |    
|                                         |       |                         |    
|                                         | Total |                         | 100
|                                         |       |                         |    

---

Division Strategy

The Polyamide Division's strategy is based on cash generation resulting from its investments. It also aims to achieve sustainable growth by developing industrial
partnerships in order to share investment and expand operations into Asia and the United States. Management expects Rhodia to

24

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become
a global producer of polyamide 6 and 6.6, optimizing production capacities in Europe, especially in eastern Europe, by developing polyamide 6 technologies. This is supported by Rhodia's key
account management program and by strong innovation and brand policy (MERYL/MERYL SKINLIFE).

In
2003-2004 management expects to launch a new generation of polymers protected by patents in automotive and fibers markets. Management aims to increase cross-fertilization
with other Rhodia businesses in order to enlarge its portfolio of products and services and bring value-added products to its markets.

Products, Markets and Competition

The table below sets forth, for each of the Polyamide Division's principal products, markets, brand names and competitors.

|Products                              |  | Markets                                                                                                                                                                      |  | Brands                        |  | Competitors                                 
|------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- |  | --------------------------------------------
|Textile Yarns                         |  | Lingerie, stockings and pantyhose, Casual and sportswear                                                                                                                     |  | MERYL, AMNI                   |  | DuPont, Radici                              
|Polyamide Intermediates and Polymers  |  | Engineering plastics, industrial yarns, textile yarns and technical fibers, polyurethane intermediates for shoes, automotive applications, paper, detergents, food, coatings |  | DIORO, ADIFOOD                |  | Dupont, BASF, Solutia, Asahi                
|Technical Fibers and
Industrial Yarns |  | Automotive applications, tires,
carpeting, furniture, textiles, filtration,
silkscreen printing, paper                                                                       |  | SYLKHARESSE,
NOVAL            |  | DuPont, Acordis, Solutia, Honeywell         
|Engineering Plastics                  |  | Automotive applications, electrical,
electronics, industrial goods,
consumer goods, sports and
recreational products                                                         |  | TECHNYL,
TECHNYLSTAR,
SNIATAL |  | DuPont, Solutia, BASF, DSM, Honeywell, Bayer

Four business units, organized by technology and market, manage the Division's technologies.

Engineering Plastics.Rhodia is one of the leading producers in terms of 2002 sales of polyamide 6.6
and 6 and polyamide engineering plastics. Light and ideal for making complex, high-performance parts, polyamide engineering plastics are increasingly replacing steel or aluminum. Used in
various markets such as electricity, automotive, electronics, and consumer and industrial goods, polyamide engineering plastics are used in applications facing high temperatures, a corrosive
environment, strong mechanical constraints and aesthetic requirements.

Rhodia
sells its polyamide products in specific segments such as under-the-hood applications (engine covers and air intake manifolds), automotive interiors and
exteriors, low/high voltage electrical distribution, domestic appliances, connectors for electricity and electronics, machine components, power tools, sporting goods and consumer and industrial goods.
Rhodia seeks to meet its customer's product delivery, product development and commercial service needs worldwide. Its eight manufacturing facilities and ten technical centers cover North America,
South America, Europe and Asia.

To
sustain growth, Rhodia has focused on high-potential markets where it has become a preferred partner for its customers from design to production through innovative and
dedicated solutions. In 2002, Rhodia received a Siemens 2002 Award in recognition of its technological leadership in research and development and product applications in connection with its TECHNYL
STAR product.

Technical Fibers and Industrial Yarns.Among the principal producers worldwide for high performance
technical fibers in 2002, the Technical Fibers business manufactures and sells yarns and

25

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fibers
that are used in a variety of markets. Rhodia's Technical Fibers business produces staple fibers and BCF (bulk continuous filament) from both polyamide 6.6 and polyamide 6 for contract and
residential tufted carpets markets. Rhodia is the worldwide leader in terms of 2002 sales in non-woven polyamide fibers used for paperfelts, abrasives and interlinings, in textile
polyamide fibers (blended with wool) used for socks, pullovers and outerwear and in polyamide flock mainly used for upholstery, automotive seats and window insulation. In these products lines, Rhodia
is focusing on high value-added technical applications.

Among
the principal producers worldwide in 2002, the Industrial Yarns business manufactures yarns and monofilaments from polyamide that are used in a variety of markets. The principal
application is
for polyamide tire cord used for truck, tractor, forklift and car tires. Other applications are in conveyor belts, air bags, parachutes, tents, inflatable rafts and sewing threads.

In
terms of 2002 sales, Rhodia is a global leader in high precision monofilament polyamide fibers. The business continued to reconfigure its production base in Western Europe and its
facilities in Eastern Europe and Brazil in 2002. Rhodia seeks to consolidate its leadership positions in specialty markets and expand its product line to meet customer requirements more effectively.
In Brazil, for example, downstream capacity was added to produce dipped fabrics used as reinforcements by tire manufacturers operating in Brazil such as Pirelli.

Rhodia's
industrial yarns and technical fibers are utilized around the world for their flexibility, durability and strength, for their resistance to heat, moisture and fire, and for
their variety of sizes. They are used to manufacture filters for chemical applications, in particular to filter liquids and gases, and for medical applications such as filtering blood.

Textile Yarns.Textile yarns from Polyamide 6.6 and Polyamide 6 are produced in Europe and the United
States by Nylstar and by Rhodia's subsidiaries in Brazil and China. This business, which is a leader in Europe and number two worldwide in terms of 2002 sales, designs, manufactures and markets high
value-added textile yarns that combine performance and comfort and are designed for various clothing markets, such as sports and ready-to-wear apparel, underwear, stockings and
pantyhose. The distinguishing feature of Nylstar yarns is that their filaments are extremely fine, giving clothing such unique characteristics as durability, flexibility, texture, resistance to
perspiration and ease of use. The quality, inter-fiber weavability and strength of Nylstar yarns have captured the interest of leading fashion designers. Kappa, Sergio Tacchini sportswear and Benetton
are working with Nylstar to create new collections that combine performance and comfort.

These
fibers are produced in Europe and the United States by Nylstar, a joint venture with SNIA, and by Rhodia in Brazil and China. MERYL, a microfiber introduced in 1996, is the
flagship product and accounts for approximately 50% of Nylstar's sales. Rhodia has taken advantage of the different characteristics of this product, which can be found under several brand names and is
used in various applications: as a lightweight, insulating, hollow fiber for ski clothing, or combined with other (e.g. cotton and velvet) fibers to improve texture.

Nylstar's
products offer such multiple benefits as comfort and elegance, intensive wearability and resistance to perspiration, flexibility and resistance. Nylstar introduced MERYL
SKINLIFE, which management believes is the first bacteriostatic polyamide fiber that prevents the proliferation of bacteria associated with body odor. The result of a joint project with Kappa, the
MERYL microfiber is exceptionally light weight, totally adaptable to heat and moisture and fast-drying. This fiber was used in jerseys worn by Italy's soccer team during the 2002 World Cup.

Polyamide Intermediates and Polymers.Rhodia's polyamide intermediates products line includes
adiponitrile (ADN) (produced by Butachimie, a 50/50 joint venture with DuPont), hexamethyle diamine (HMDA), adipic acid, nylon salt and polyamide 6.6. A significant portion of polyamide intermediates

26

---

production
is used by the Polyamide Division for the production of downstream products. These intermediates are produced in France, Brazil and South Korea.

Adipic
acid and ADN are the key intermediates in polyamide 6.6 polymers. Rhodia is among the top three producers of adipic acid for non-nylon applications. Traditionally used
to make polyamide 6.6 plastics and fibers, ADN-based polymers and intermediates are finding new applications in coatings, plastics additives, perfumes and reinforcing resins. Developments
in the Polyamide Intermediates business are closely linked to the Division's downstream businesses, in particular the sales of fibers and engineering plastics. Recently, the business increased
capacity at its adipic acid plant in Paulinia, Brazil to meet the requirements of various Rhodia markets in the Americas and, with its joint-venture partner DuPont, nearly doubled capacity (from 300
to 500 kilotons per year) at the Butachimie plant in Chalampé, France.

Production Facilities

The Polyamide Division has facilities at 17 sites in Europe, Brazil, Asia and North America. Management believes that Rhodia's polyamide intermediate facility in
France, operated through a joint venture with DuPont, is one of the lowest cost polyamide 6.6 monomer production facilities in Europe.

Fine Organics Division

Overview

The Fine Organics Division develops, manufactures and markets advanced intermediates and active ingredients worldwide. Its businesses are focused on expanding
market segments and all areas in which its capabilities and the quality of its industrial assets can create significant value for its customers.

The
Fine Organics Division has a portfolio that includes products developed using phenol chemistry and phenol derivatives which have enabled the Division to obtain global leadership
positions in terms of 2002 sales for vanillin, analgesics (acetylsalicylic acid, the active ingredient in aspirin and paracetamol), benzenoids for perfumes and building blocks for agrochemicals and
pharmaceuticals. Rhodia is number one worldwide in terms of 2002 sales of acetylsalicylic acid (aspirin), diphenols and vanillin, and number two worldwide in terms of 2002 sales of paracetamol. Rhodia
develops and produces intermediates and active pharmaceutical ingredients (APIs) for the life sciences industries. The Group is also a leader in the field of fine fluorinated intermediates.

The
table below sets forth certain financial information for the Fine Organics Division for the years ended and as of December 31, 2000, 2001 and 2002.

|                                 |  | Year ended and as of December 31, |  
|-------------------------------- |  | --------------------------------- | -
|
|
|Total Division sales(1)          |  | 1,060                             |  
|Operating income (loss)          |  | 82                                |  
|Capital expenditures             |  | 94                                |  
|Total segment assets             |  | 1,632                             |  
|Contribution to Rhodia net sales |  | 14.3                              | %

---

27

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The
further integration of Rhodia ChiRex, following the acquisition of ChiRex in September 2000, strengthened the Division's capabilities in pharmaceutical services. Rhodia ChiRex
has the capacity to manage processes across the pharmaceutical production cycle, which allows its pharmaceutical customers to focus their skills on research and development and marketing. In addition,
the need to shorten time-to-market is leading the pharmaceutical industry to select chemical manufacturers with the highest level of expertise and technology. Rhodia offers an
extensive range of solutions to meet all of the critical challenges involved in the production of pharmaceuticals.

By
capitalizing on the Group's portfolio of technologies, the Fine Organics Division is developing new solutions for its customers, for example, by using phosphorus-containing molecules
manufactured by the Consumer Specialty Division to produce treatments for osteoporosis, cancer and AIDS in partnership with pharmaceutical companies.

The
Group historically produced phenol to meet its own needs, since a significant number of Fine Organics products are derived from the technology tree that branches out from this raw
material. In December 2002, Rhodia divested its hydrochloric acid, soda ash and phenol business activities in Europe, because these businesses are highly commoditised and Rhodia only holds a
regional market position. It maintains a dominant position in terms of 2002 sales for the South American market.

In
2002, the FDA issued only 17 authorizations allowing new chemical products to be marketed. Several new medications expected to be launched in 2002 have been delayed because of
additional tests or studies required by the FDA. These delays have had a significant impact on Rhodia, in particular Rhodia ChiRex, as well as other suppliers to the pharmaceutical industry, creating
an imbalance between supply and demand. In addition, the increase in the price of petro-chemical raw materials has increased costs for the sector. As a result, in a context of continued weak economic
growth, certain fine chemical suppliers, including Rhodia, have restructured their activities.

Technologies



28

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The
table below sets forth the percentage contributions (unaudited) to the Fine Organic Division's net sales by technology for the years ended December 31 2000, 2001 and 2002.

|                                              |       | Year ended December 31, |    
|--------------------------------------------- | ----- | ----------------------- | ---
|
|
|
|Synthesis of Intermediates (including phenol) |       | 58                      | %  
|Fine Synthesis                                |       | 32                      |    
|Custom Synthesis                              |       | 8                       |    
|Phosphates                                    |       | 2                       |    
|                                              |       |                         |    
|                                              | Total |                         | 100
|                                              |       |                         |    

Division Strategy

During the final quarter of 2002, and with operational effect from January 2003, Rhodia reorganized the Fine Organics division into three businesses and
changed its name to Rhodia Pharmaceuticals and Agrochemicals. This new organization reflects the need to bring more coherence to Rhodia's market-orientated structure. The three businesses are:



This
business reorganization reflects Rhodia's overall strategic target to better service its end markets by simplifying interface with customers and grouping internal expertise. From
this coherent base Rhodia aims to:



29

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Products, Markets and Competition

The table below sets forth, for each of the Fine Organics Division's sectors, the principal products, markets, brand names and competitors.

|Products/Technology                           |  | Markets                                                                                                                                                       |  | Brands                                                                       |  | Competitors                        
|--------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | -----------------------------------
|Synthesis of Intermediates (including Phenol) |  | Salicylates, Para-amino-phenol,
upstream fibers, diphenols,
perfumery, epoxy, polycarbonates, solvents, photography, electronics, agrochemicals, refrigerants |  |                                                                              |  | Ineos, Eastman, DSM, Mitsui, Ube   
|Fine Synthesis                                |  | Pharmaceuticals, perfumery, flavoring agents                                                                                                                  |  | RHODINE, RHODAPAP, RHODIAFLOR, RHODIANTAL, RHODIAROME, RHONAVIL, RHODIASCENT |  | Mallinckrodt, Bayer Borregaard, Ube
|Custom Synthesis                              |  | Agrochemicals, pharmaceuticals                                                                                                                                |  |                                                                              |  | Lonza, DSM, Degussa, Avecia        
|Calcium phosphates                            |  | Pharmaceuticals, consumer health                                                                                                                              |  | A-TAB,
DI-TAB, TRI-TAB                                                       |  |                                    

Five business units, organized by technology and market, manage the Division's technologies.

Advanced Intermediates and Active Ingredients.Rhodia ChiRex provides products and services to the
pharmaceutical industry. These activities support pharmaceutical clients during the pre-clinical and clinical development phases, as well as during launch, peak sales and over the product
life cycle. Activities in the development phases include the procedures to rapidly create a new active matter, as well as laboratory and pilot project production of quantities necessary for the
realization of the clinical trials, and synthesis route development. The manufacturing part of the business includes technical transfer, scale up and industrialization, and determination of the most
cost efficient synthesis routes, along the product life cycle. The integration of Rhodia ChiRex allows the Division to enhance its activities in the pre-clinical and clinical phases of the
development of new medications in line with the life sciences capabilities. In 2002, the business expanded its customer base both among world-class pharmaceutical companies and among smaller
start-ups specialized in the development of new molecules, which are now playing an increasingly important role in the industry.

The
market for specialty chemicals for the pharmaceuticals industry is a global market. Most of the pharmaceuticals industry is based in the United States, while most of the specialty
chemicals industry is based in Europe. The presence of Rhodia ChiRex in the United States provides the business easy access to its major market.

In
a market where chiral molecules account for two-thirds of new drugs brought to market, management believes that Rhodia ChiRex's expertise in chiral chemistry provides a
competitive advantage for Rhodia. Its processes and technologies are designed to meet the technical challenges associated with most of the major therapeutic domains. Rhodia ChiRex is one of the few
companies that offers its customers an integrated approach to their needs, from research and development to contract manufacturing of their new products. Rhodia ChiRex's competitive positioning is
increasingly challenged by a number of strong chiral players, as well as the development of complementary multi-synthesis capabilities among its competitors. However, management believes that Rhodia
ChiRex's

30

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strong
technology profile in both new and traditional technologies, as well as its Scientific Advisory Board composed of top scientists provide Rhodia with a sound base to build the technologies of
the future.

Chemistry for Life Science.Rhodia develops, synthesizes and produces customized molecules. In
collaboration with its customers, customized molecules are used in products ranging from intermediates supporting anti-inflammatory and cancer-fighting chemicals for the pharmaceuticals
industry to herbicides and fungicides for the agrochemicals industry. As well as performing custom synthesis of advanced intermediates within pharmaceuticals, Rhodia produces customized molecules
through a network of production facilities for fluorination, chlorination, nitration, oxidation, hydrogenation and other processing. With expertise in three major
technologiesfluorination, chlorination and nitrationthe business focuses on manufacturing and marketing building blocks to the pharmaceutical and agrochemical industries.

Management
estimates that the worldwide market for life science chemicals totaled approximately $1214 billion in sales in 2002. The market has grown more than 5% per
year over the past five years, due principally to the trend in the pharmaceuticals and agrochemicals industries toward outsourcing product development and production. Competition in the synthesis of
building blocks and intermediates is fragmented, with producers mainly focusing on niche markets demanding individual processes for the production of customized molecules. Management believes that
Rhodia's chief competitive advantage is its broad range of chemical processing technologies, including proprietary systems for certain processes such as fluorination and nitration, and its ability to
supply consistently high performance products from its global production network. In addition, management believes that Rhodia's integrated project management approach and collaboration with customers
allows it to develop molecules more efficiently than competitors.

Perfumery and Specialties.The Perfumery and Specialties business develops, synthesizes and produces
catechol (used principally as an intermediate for the agrochemicals and pharmaceuticals industries), catechol derivatives (such as vanillin and vanillin derivatives) and hydroquinone (used principally
as an antioxidant for developing photographs and X-rays and as a polymerization inhibitor). The Perfumery and Specialties business sells vanillin, under the trademark RHOVANIL, on the open
market as well as to Rhodia's Consumer Specialties Division. The diphenol product tree operates in a concentrated competitive environment, with four producers accounting for most of worldwide sales of
diphenols and derived perfume ingredients. The top two producers of most diphenol derivatives account for more than half of worldwide sales of each of vanillin, vanillin derivatives, coumarin and
benzyl salicylate. In terms of 2002 sales, Rhodia is the world's largest producer of vanillin and vanillin derivatives as well as specialty diphenols such as polymerization inhibitors and
antioxidants. The salicylates tree also brings an important breadth to the flavor and fragrances business with such products as methyl salicylate and isoamyl salicylate, where Rhodia holds a
leadership position in terms of 2002 sales.

Rhodia
has production facilities on four continents and a sales network that spans the globe. In addition to an established position in Europe and the United States, the business
maintains a strong manufacturing base in Brazil and two production sites in China. With a broad presence in the detergents, fine perfumes and cosmetics markets, the business also benefits from growing
demand for functional fragrances used in detergents and cosmetics, and serves a wide variety of specialty markets, ranging from photography and tires to electronics.

Analgesics and Nutritional Supplements.Rhodia produces salicylic acid and analgesic active
ingredients, including acetyl salicylic acid, for the pharmaceuticals and food industries. Pharmaceuticals manufacturers use Rhodia's products to produce retail analgesics. Each of the Division's
sites producing analgesic active ingredients has been audited and approved by the U.S. Food and Drug Administration (the "FDA").

31

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The
salicylates and phosphoric and purification business feeds the pharmaceutical market, among others, through the production of bulk aspirin and bulk paracetamol. The bulk actives are
marketed to major pharmaceuticals manufacturers worldwide, divided approximately equally between Europe and North America in 2002. The analgesic active ingredients market is concentrated, with Rhodia
and Bayer (Germany) accounting for approximately half of worldwide capacity in both salicylic acid and acetyl salicylic acid, and Rhodia and Mallinckrodt (United States) accounting for the majority of
worldwide capacity in paracetamol. The Analgesics and Nutritional Supplements business sells both active ingredients, in particular aspirin and paracetamol used in pharmaceutical applications, and
additives for nutritional supplements.

The
Analgesics and Nutritional Supplements business has adopted a strategy of long-term contractual relationships with its clients to confront increased competition from
producers in China, who benefit from lower production costs. The business derives its competitiveness from the performance of its salicylic acid manufacturing process. Customers may choose from an
extended range of exclusive services, with guaranteed quality, formulation capabilities, integration into their supply chain and online ordering. In 2001, the business signed partnership agreements to
provide formulation services for two pharmaceutical groups, Roche and PharmaFab. Formulation services consist of manufacturing active ingredients designed to improve the properties and delivery of
pharmaceuticals. Rhodia's ability to develop formulation capabilities across the Rhodia group will be a key axis of development for the future, which could reinforce Rhodia's value-added services in a
highly price competitive market. Rhodia's objective is to strengthen and develop its relationships through long-term contracts with other large customers in the pharmaceuticals industry
and through the addition of such services, enriching Rhodia's offer, and improving its clients' competitive performance. Management believes that competition is based principally on quality and cost,
and that Rhodia's principal competitive strengths in this business are high quality, as demonstrated by FDA approval of each of its production facilities and International Organization for
Standardization certification of most of its manufacturing operations, and its ability to supply consistently high quality products worldwide from its global manufacturing base.

Intermediates.The Division produces principally phenol, acetone and bisphenol A. In 2002, the
business sold approximately one third of its phenol production to other businesses of the Fine Organics Division as a raw material for acetyl salicylic acid, paracetamol, diphenols and
bisphenol A, and the remainder in the open market as a raw material for phenolic resins. Rhodia sells acetone mainly as a raw material for methyl methacrylate (Plexiglas) and certain chemical
solvents. Bisphenol A is sold to producers of epoxy resins and polycarbonate.

On
January 3, 2003, Rhodia announced the sale of its industrial and commercial activities in Europe related to basic chemicals to Bain Capital, a private investment firm. The
divestiture of these chemical intermediates, which includes phenol, hydrochloric acid and soda ash, corresponds to Rhodia's strategy to re-align its portfolio and divest activities that
are outside Rhodia's core businesses. Long-term contracts have been negotiated in order to maintain the competitive position of the Division, which no longer has an integrated phenol
production chain in Europe. The Division has, however, retained its phenol production in Brazil, which remains an important source of raw material for the Group.

Other.Outside the core technologies the division also markets calcium phosphates manufactured by the
Group. The calcium phosphates sales in the consumer healthcare sector and pharmaceuticals sector represent an important area of growth for the Group. Rhodia has developed calcium phosphates into an
important healthcare product aimed at ensuring bone health. Competing with calcium carbonate, the importance of phosphorus in bone health has helped Rhodia to develop a growing position in the
nutraceuticals market.

32

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Production Facilities

The Fine Organics Division has facilities, including small production lines, at 13 sites in France, the United States, Brazil, the United Kingdom, China, Thailand
and Germany. The Division's single-purpose facilities have traditionally been designed to apply one of the Division's core processing technologies: chlorination, nitration, fluorination and oxidation.
Because one or more of these processing technologies is applied during the production of most agrochemical and pharmaceutical molecules, Rhodia continues to develop and refine these technologies at
specialized sites. The Fine Organics Division maintains a large diversified base of reactors and facilities for manufacturing advanced intermediates and active ingredients, which conform to cGMP
standards (current Good Manufacturing Practices). These production sites are regularly inspected by the FDA (the "Food and Drug Administration") and the EMEA (the "European Agency for the Evaluation
of Medicinal Products"). In recent years, Rhodia has expanded multistep production capacity by the acquisition of ChiRex and expanding capacity at existing facilities which apply multiple processing
technologies, allowing the Division to enhance efficiency in the production of complex molecules primarily for the pharmaceuticals and agrochemicals industry. The Division produces phenol in Brazil.
Rhodia applies additional processing technologies, such as diazotation, hydrolysis and condensation, at multipurpose facilities, resulting in cost savings and faster synthesis of customized molecules.

Industrial Specialties Division

Overview

The Industrial Specialties Division develops specialty products based on five key technologies: silicones, silica, specialty latex, aliphatic
di-isocyanates (ADI) and oxygenated solvents. These products are used primarily in applications all along the value chain for a diversified range of end-markets: automotive,
construction, paints and coatings, tire, paper and textile as well as high-technology industries such as electronics and medical.

Rhodia
holds leadership positions in targeted high value-added market segments. Rhodia is number one or number two worldwide in terms of 2002 sales for moldmaking and paper coating
silicones, precipitated silica and polyurethane coating hardeners (ADI polymers). Rhodia is number one in Latin America in terms of 2002 sales for oxygenated solvents.

The
table below sets forth certain financial information for the Industrial Specialties Division for the years ended and as of December 31, 2000, 2001 and 2002.

|                                 |  | Year ended and as of December 31, |  
|-------------------------------- |  | --------------------------------- | -
|
|
|Total Division sales(1)          |  | 1,211                             |  
|Operating income (loss)          |  | 92                                |  
|Capital expenditures             |  | 62                                |  
|Total segment assets             |  | 970                               |  
|Contribution to Rhodia net sales |  | 16.3                              | %

---

33

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The
Industrial Specialties Division has competency in a broad range of technologies and functions, which Rhodia has combined to develop innovative solutions for its customers. In 2002,
the Division launched a significant number of products with high-growth potential. For example, the Division recently introduced a new moisture-resistant water-based paint developed by
combining expertise of the silicones and latexes businesses. It also pooled the competencies of the food ingredients, pharmaceutical ingredients and silica businesses to create the nutritional unit,
designed to speed-up the development of products to improve the delivery of active ingredients in the human body. Innovations designed with environmental protection in mind are allowing
industrial customers to deliver equivalent products that are more environment-friendly, while improving the safety of their manufacturing processes. For example, to enhance safety in the manufacturing
process, Nike uses dust-free silicas that are much easier to handle.



The
table below sets forth the percentage contribution (unaudited) to the Industrial Specialties Division's net sales by principal technology for the years ended December 31,
2000, 2001 and 2002.

|                     |       | Year ended December 31, |    
|-------------------- | ----- | ----------------------- | ---
|
|
|
|PPMC Technologies(1) |       | 48                      | %  
|Silicones            |       | 35                      |    
|Silicas              |       | 17                      |    
|                     |       |                         |    
|                     | Total |                         | 100
|                     |       |                         |    

---

34

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Division Strategy

The Division's three core technologiessilicones, silica and aliphatic di-isocyanatesconstitute a significant component of
sales and operating income for Industrial Specialties. The Division holds a regional leadership position in Latin America for oxygenated solvents and aims to improve, in particular, its position in
decorative coatings. Rhodia sold its paper-latex business to the Finnish group Raisio Chemicals in June 2002, pursuant to Rhodia's strategy to divest non-core businesses in order to
focus on high value segments, with high potential differentiation.



Products, Markets and Competition

The table below sets forth, for each of the Industrial Specialties Division's principal technology areas, the principal products, markets, brand names and
competitors.

|Products                      | Markets                                                                                                                                        |  | Brands                                                   |  | Competitors                                           
|----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- |  | ------------------------------------------------------
|Aliphatic Di-
    Isocyanates | Industrial paints (OEM, coil, wood), adhesives, leather                                                                                        |  | TOLONATE, RHODIOCOAT                                     |  | Bayer, Degussa, BASF                                  
|Oxygenated
    solvents       | Paints, leather, adhesives, printing inks, oils and lubricants, agrochemicals, pharmaceuticals                                                 |  | RHODIASOLV, RHODIAECO                                    |  | Oxiteno, Exxon, BP, Shell, Sol Petroleo, Celanese, Dow
|Latexes                       | Decorative paints, roof tiling, construction materials, adhesives                                                                              |  | RHODOPAS, RHOXIMAT                                       |  | Rohm & Haas, Celanese, ICI, Air Products/
Wacker JVs  
|Silica                        | Tire, oral care, nutraceutic (animal feed), polymer reinforcement                                                                              |  | ZEOSIL, TIXOSIL, TIXOLEX                                 |  | Degussa, PPG, Huber                                   
|Silicones                     | Automotive, textile, personal care, health care (dental, consumer goods, implantables), electronics, paper coating, sealing, paints & coatings |  | RHODORSIL, SILCOLEASE, RHODOTAK, RHODALIS, SILBIONE, CAF |  | Dow Corning, General
Electric, Wacker, Shin-Etsu      

35

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Three business units, organized by market and technology, manage the Division's five technologies.

Performance Products for Multi-functional Coatings (PPMC).The PPMC business delivers innovative
differentiated solutions for surface beauty and protection. This business serves three strategic markets: industrial coatings (paints and coatings), architectural coatings (paints and coatings) and
adhesives.

Rhodia's
latexes product line included styrene butadiene (X-SB) latex used for paper coating, which was sold with the Latexia divestment. The Division still produces vinylic
latexes (RHOXIMAT) for construction and adhesives and styrene acrylic latexes (RHODOPAS) for decorative coatings. Rhodia has expanded its range of pure acrylics as part of its shift towards high value
products.

PPMC
technologies are also combined with many other Group technologies, such as surfactants, silica, silicones, hydrocolloids, polyamide fibers and specialty phosphates. For example,
TOLONATE, the major ADI-based product used for industrial coatings, is produced by processing hexamethyle diamine from the Polyamide Division and phosgene from the Fine Organics Division. TOLONATE is
principally used as a binding agent for high quality refinish paints in the automobile industry.

PPMC's
innovations have been achieved through maximum cross-fertilization with other Rhodia technologies, strategic partnerships, "breakthrough" innovations such as Rhodibloc, a
proprietary polymer family with an improved range of properties, and tailored solutions for customers. Special emphasis is now being given to new products whose application and use are more
environmentally friendly, such as TOLONATE HDT LV2, a low-solvent hardener for automotive paint applications, and Ultragreen (RHODOPAS 2800), a solvent-free water-based paint
and the family of oxygenated solvents.

Silica.Silica is used for reinforcement in tires, shoe soles, paint and paper. Silica also provides
flow-ability and absorption as a carrier of active ingredients for life science applications in animal feed and agrochemical formulations. Rhodia's principal precipitated silica product is
highly dispersible "micropearl" silica, a component of green tires. Rhodia also produces dental care grade silica, sold by the Consumer Specialties Division, which provides controlled abrasion and
transparency in tooth-paste.

The
global precipitated silica market amounts approximately to €640 million in sales for 2002. Sales for the Silica business have grown over the past five years,
especially in specialty silica. Management believes that the business has developed leadership positions in terms of 2002 sales in its main markets.

In
terms of 2002 sales, Rhodia is a worldwide leader for precipitated silica, with approximately one-fourth of the market. Rhodia is the only global player present in all geographical
regions supplying
global customers. Initially based solely in Europe, Rhodia strengthened its industrial, technical and commercial presence in the Asian silica market in 1996 through the construction of a new
production facility in China and the acquisition of its joint venture partner's interest in Kofran in South Korea. The development of the green tire market allowed Rhodia Silica to penetrate the North
American market in 1995.

The
tire industry drives Rhodia's major innovations in this business. New innovations in micropearl silica offer significant performance advantages to tire manufacturers, which Rhodia
expects will contribute to the growth of this business. The global market for high performance tires amounted to 250 million tires in 2001 and has sustained an average growth rate of over 10% a
year.

Silicones.Silicones are used in a diversified range of industrial applications for bonding,
lubrication, softening, foam control, paper release, demolding and molding. Rhodia Silicones focuses on three major strategic markets: coating resins for the paper and textile markets, performance
engineering elastomers for industrial applications and functional specialty fluids for all major markets (personal care, paints and coatings, agricultural and home care).

36

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The
Silicones business operates in both the upstream and downstream silicones production phases, manufacturing a limited number of intermediates and focusing capacity utilization on the
production of higher value-added downstream formulated products. Rhodia's Silicone business is mainly concentrated in Europe, where it provides a full range of coating resins, performance elastomers
and functional fluids. Rhodia is a specialty high value niche player focused in rubber and other industries markets in North America, and with an emerging position in Asia through business alliances
with local players. Rhodia is also an important producer of upstream integrated silicones.

Rhodia
intends to increase its market share by relying on innovation, technical service and cross-fertilization with other technologies. Rhodia enjoys strong market positions in high
value segments such as mold-making, coatings for airbag textiles, and paper coatings.

Production Facilities

The Industrial Specialties Division has facilities at 27 sites worldwide. The Division's Silica business has aligned its industrial presence on a regional basis
(in Europe with Collonges (France), in Asia with Inchon (Korea) and Qingdao (China) and in Latin America with Paulinia (Brazil)) ensuring at least one manufacturing facility for each geographic
region. The Division's Silicones business has one upstream production unit and more than ten downstream production units in different areas of the world. The PPMC business has a worldwide network
aimed at serving both global and multi-regional
markets. The paper latex production facilities were sold to Raisio with Rhodia's share in the Rhodia-Raisio joint venture.

Services and Specialties Division

Overview

The Services and Specialties Division operates its three businessesElectronics & Catalysis, Rhodia Eco Services and Acetowin
close partnership with the electronics, automotive, refining and chemical industries. The Services and Specialties Division also supplies water companies and cigarette manufacturers. Rhodia is number
one in terms of 2002 sales in separated rare earths and a principal provider in sulfuric acid regeneration.

The
table below sets forth certain financial information for the Services and Specialties Division for the years ended and as of December 31, 2000, 2001 and 2002.

|                                 |  | Year ended and as of December 31, |  
|-------------------------------- |  | --------------------------------- | -
|
|
|Total Division sales(1)          |  | 963                               |  
|Operating income (loss)          |  | 121                               |  
|Capital expenditures             |  | 67                                |  
|Total segment assets             |  | 917                               |  
|Contribution to Rhodia net sales |  | 13.0                              | %

---

37

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The
Services and Specialties Division combines its expertise with other Group technologies. Rhodia Eco Services, for example, has enhanced its global lineup of water treatment products
and services with KALIPOL, which provides a simple solution for preventing lead corrosion in water pipes by drawing upon Rhodia's phosphate expertise. Moreover, to broaden its capabilities in the
water market, Rhodia has undertaken a cross-functional study of water-related issues, working mainly with Specialty Phosphates, Phosphorus Derivatives and Rhodia Eco Services.

On
July 1, 2002, Rhodia sold its interest in Teris, which specializes in hazardous industrial waste processing in Europe and the United States, to SITA, the waste services
division of Suez. In accordance with the agreements, Rhodia will continue its industrial partnership agreements currently existing with Teris for a period of at least five years.

Technologies



The
table below sets forth the percentage contributions (unaudited) to the Services and Specialties Division's net sales by technology for the years ended December 31, 2000, 2001
and 2002.

|                                               |       | Year ended December 31, |    
|---------------------------------------------- | ----- | ----------------------- | ---
|
|
|
|Acetate Tow                                    |       | 41                      | %  
|Eco Services                                   |       | 40                      |    
|Electronics & Catalysis (formerly Rare Earths) |       | 19                      |    
|                                               |       |                         |    
|                                               | Total |                         | 100
|                                               |       |                         |    

Division Strategy

The Services and Specialties Division's strategy is to generate cash and to seek customer proximity.



38

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Products, Markets and Competition

The table below sets forth, for each of the Services and Specialties Division's principal products, markets, brand names and competitors.

|Products                                        |  | Markets                                                                                                      |  | Brands                                           |  | Competitors                                                   
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------ |  | --------------------------------------------------------------
|Acetow                                          |  | Cigarette filters, polyester tow for ink containers                                                          |  | RHODIA FILTER TOW, RHODIA ACETOL,
RHODIA WICKTOW |  | Celanese, Eastman, Acordis, Daicel                            
|Eco Services                                    |  |                                                                                                              |  |                                                  |  |                                                               
|Sulfuric acid regeneration                      |  | Chemicals, refining, metallurgy, pigments, fertilizer, paper, electronic components                          |  | SATCO, REGENT                                    |  | Grillo, DuPont,
Arch Chemicals                                
|Industrial waste treatment                      |  | Specialized incineration, waste treatment, soil audit and reclamation, recycling of catalytic converters     |  | ULYSSE, CLARIDIS,
LABO PROPRE,
CYCLEON           |  | Onyx, Laidlaw, SARP, Trédi, US Waste Services, Dames and Moore
|Water treatment                                 |  | Municipal water                                                                                              |  | AQUALENC,
AQUAPHONE,
DESHYDRIX                   |  | Sachtleben, Atofina, Kemira                                   
|Sludge treatment                                |  | Industrial effluents                                                                                         |  |                                                  |  |                                                               
|Membrane filtration systems                     |  | Automotive paint applications, biotechnologies, agri-food, textiles, nuclear energy                          |  | PLEIADE, KERASEP, CARBOSEP, PERSEP,
IRIS         |  | Vivendi Water, Ondeo Pall                                     
|Electronics & Catalysis                         |  |                                                                                                              |  |                                                  |  |                                                               
|Products containing oxides and rare earth salts |  | Luminescence, optics,
electronics, catalysis,
automotive pollution
abatement, chemical catalysis,
fuel cells |  | ACTALYS, OPALINE,
CEROX, EOLYS                   |  | Manufacturers in China                                        

Three business units, organized by technology and market, manage the Division's technologies.

Acetow.The principal products of the Acetow business are acetate filter tow, the principal raw
material for cigarette filters, and cellulose acetate flakes. In terms of capacity, the Acetow business is one of the world's three largest manufacturers in 2002, along with Celanese and Eastman, of
acetate tow. Its production process is based on high-performance techniques combined with sophisticated quality control systems. The Acetow business is competitive both in terms of costs
and location, with facilities in Germany, Russia and Latin America to support its customers' international expansion.

The
global shift from non-filter to filter cigarettes, which comprised approximately 90% of the cigarettes market in 2002, has increased demand for filters. This
substitution, combined with the growing penetration of acetate filter (as opposed to polypropylene filter), has significantly contributed to stimulate market growth. Heightened liability issues
arising from stricter regulations continue to prompt cigarette manufacturers to look for ways to mitigate the harmful effects of tobacco. The Acetow business is also developing a new generation of
filters to respond to new legislative requirements. Competition in the filter tow market is highly concentrated, with five producers accounting for more than 90% of worldwide production of filter tow
in 2002.

The
Group is pursuing expansion opportunities in Eastern Europe and Asia, where cigarette filter demand is climbing rapidly. Growth in these markets is also being led by consumer demand
for increasingly diverse products. To serve these markets, the Acetow business strengthened its industrial

39

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base
by consolidating its production facilities and extending its best manufacturing practices to all four of its other facilities.

Eco Services.The Eco Services business offers products, systems and services to industrial
manufacturers for controlling the environmental impact of their activities. In terms of 2002 sales, Rhodia is a significant service provider in the regeneration of used sulfuric acid, one of the most
frequently employed industrial chemical agents. Rhodia also produces water treatment systems, systems for the treatment of industrial liquid effluents and systems for clean processes, such as
ultrafiltration membranes and bio-reactors.

Rhodia
Eco Services leverages various capabilities, from purification to recycling to reuse, in order to develop solutions in sulfuric acid regeneration and water and industrial fluid
treatment. Eco Services principally serves industrialized economies. In Europe, the principal customers are in the chemical industry. In North America, the principal customers for sulfuric acid
regeneration are oil refiners who use sulfuric acid as a catalyst to manufacture alkylates for lead-free gasoline and are generally under medium- to long-term contracts,
providing steady and sustainable growth related to refinery output growth of lead-free gasoline.

Rhodia
serves a large part of the sulfuric acid regeneration market in the United States, through an extensive industrial base. Rhodia also provides the ability to offer
end-to-end solutions, from the management of used sulfuric acid at customer facilities to the resale or delivery of the purified product.

Rhodia
Eco Services is repositioning its portfolio of products and services in the European sulfuric acid regeneration market, while improving the competitiveness of its products and
services. In 2001 and 2002, several long-term sulfuric acid regeneration contracts were signed with large manufacturers.

Electronics & Catalysis.The Electronics & Catalysis business processes and markets
products used by high-technology industries for a variety of applications, including: phosphors for televisions, x-ray screens, trichromatic lamps, computers and cellular
phones; magnetism for computer disk drives and magnetic resonance imaging machines; batteries for laptop computers and cellular phones; automobile catalytic converters and petroleum and polymerization
catalysis; coloration of glass, ceramics and plastics; and optoelectronics and integrated circuits.

Electronics &
Catalysis is one of the main processors worldwide of rare earths in terms of 2002 sales. Its technological expertise in this area is driving the development of
performance products meeting exacting quality standards. The business' global presence allows it to provide local services and technical support in the United States, China, Japan and Europe. Its two
strategic plants in China facilitate access to raw materials, thus enhancing the competitiveness of its products. Rhodia faces strong price competition, particularly from numerous relatively small
producers of rare earths in China, as well as major producers in Japan and North America.

Electronics &
Catalysis' marketing and innovation strategy is based on close partnerships with customers, and early involvement in the product development cycle in order to
satisfy their needs. In a number of areas, such as automotive emissions control and industrial gas scrubbing, the business' catalysis expertise and materials help to implement solutions to reduce or
diversify consumption, in particular of non-renewable resources, and improve environmental impact (for example, by curbing greenhouse gases). They also support the introduction of
alternative power generation solutions for clean energy sources.

Production Facilities

The Services and Specialties Division has facilities at 18 sites worldwide. Sites are generally located near customer operations principally in Europe and the
United States. The Acetow business' major production facility is located in Germany, with additional sites for cellulose acetate flakes in Europe and the United States, and for filter tow in Brazil,
Venezuela and Russia. The Electronics & Catalysis

40

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business
has a worldwide presence with facilities in France, the United States, Japan and China. Eco Services facilities are located in the United States and Europe.

Insurance

Rhodia analyzes risks and manages them through a worldwide prevention policy and global insurance programs.

Rhodia
prepares annually a report on internal initiatives and the related results in the areas of industrial safety, workplace hygiene, environmental protection and product traceability.
In addition, a global industrial risk prevention/insurance program has been set up with insurers. All manufacturing facilities are inspected using the same methodology and capital expenditure plans
are analyzed for the
purpose of preparing action plans to improve practices and procedures and to upgrade detection and protection equipment.

This
risk management policy is backed by global insurance programs. To limit insurance premiums and provide strong incentives to implement preventive measures, all insurance programs
include high deductibles. Under these programs, the Group absorbs any losses that do not materially affect its earnings and only transfers major losses to the insurance market. No major insurance
claims were made in 2002. The following description of Rhodia's insurance programs is only a summary in order to comply with the insurance companies' confidentiality rules and to protect Rhodia's
competitive position. Total industrial risk insurance premiums paid by all the companies in the Rhodia Group were approximately €50 million in 2002.

In
addition to the property and casualty program, the Group has taken out Business Interruption insurancefor periods ranging from 12 to 24 months depending on the
businessassociated not only with fire/explosions but also machine breakdown and natural disasters. The insured values are consistent with the assessment of the related risk, taking into
account any knock-on effect on operations that depend on the affected facility or process, either because they are located on the same site or because they are internal customers of the
facility. Following a sharp rise in premiums in 2002, the 2003 program has been renewed with higher insured values and a moderate increase in rates.

The
liability insurance program covers both operating and product liability. In 2002, Rhodia continued to benefit from the lower rates negotiated for the 2001/2002 policy. Premium rates
for 2003 are significantly higher, due to conditions in the insurance market. The Transport Insurance program covers all goods held by Rhodia, as well as goods in transit or stored temporarily with
third parties. The adjustments to the insurance premiums paid by Rhodia reflect current conditions in the industrial risk market in general and the chemicals risk market in particular.

Research and Development

Specialty chemical makers were originally mere producers of molecules, but over time they have evolved into designers of exclusive solutions. One of the essential
growth levers for Rhodia is its ability to respond to its customers' specific needs and to innovate through five centers of expertise: organic synthesis, inorganic synthesis, polymer synthesis,
material physics and physical chemistry of dispersed materials.

41

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Research
and development constitutes an important part of Rhodia's activities. The table below sets forth research and development expenses by Division and as a percentage of Division
net sales (including sales to other Divisions) for the years ended December 31, 2000, 2001 and 2002.

|                         |  | Year ended December 31,
|------------------------ |  | -----------------------
|
|
|
|Consumer Specialties     |  | 52                     
|Polyamide                |  | 37                     
|Fine Organics            |  | 31                     
|Industrial Specialties   |  | 58                     
|Services and Specialties |  | 25                     
|Polyester                |  | 3                      
|Other                    |  | 6                      
|                         |  |                        
|Total(1)                 |  | 212                    
|                         |  |                        

---

After
reconfiguring its research and development organization in 2000, Rhodia is now focusing on improving research and development productivity by speeding up innovation and shortening
time-to-market cycles. Rhodia's research and development structure is based on:



Rhodia
files over 200 patent applications in an average year, and 14% of its sales come from products that are less than five years old.

Raw Materials

Rhodia purchases raw materials and chemical intermediates from a large number of third parties, with a centralized purchasing department procuring the entirety of
the raw materials needs of each of Rhodia's Divisions. The cost of the main raw materials contracted to €1.4 billion in 2002 from €1.6 billion the year
before, led by lower prices for petrochemicals and organic and inorganic chemicals. Lower purchasing volumes and changes in exchange rates also contributed to a lesser extent to the decrease.

Any
significant change in raw material costs can have a significant effect on Rhodia's earnings. Changes in prices of raw materials cannot always be passed on to the customer as higher
prices for finished goods, hence profit margins may be affected. Moreover, competitive pressures may drive down

42

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selling
prices in the wake of lower raw material prices, thereby limiting the potential for improved profits. As a hedge against fluctuations in the prices of raw materials, Rhodia enters into medium-
and long-term contracts for the primary materials used in its production. The table below sets forth the principal raw materials purchased by Rhodia from outside sources for its production
operations and the principal products for which such materials are used.

|Division                 |  | Raw Material                                                          |  | Products used for               
|------------------------ |  | --------------------------------------------------------------------- |  | --------------------------------
|Consumer Specialties     |  | Elemental phosphorus, phosphoric acid, rock phosphate, ethylene oxide |  | Phosphate surfactants           
|Polyamide                |  | Butadiene, cyclohexane,
natural gas                                   |  | Polyamide intermediates         
|Fine Organics            |  | Benzene, propylene, methanol                                          |  | Phenol, methyl chloride         
|Industrial Specialties   |  | Styrene, butadiene, methanol                                          |  | Latex, silicones                
|Services and Specialties |  | Sulfur                                                                |  | Sulfuric acid, carbon disulphide

Major
requirements for key raw materials and energy are typically satisfied pursuant to medium- or long-term contractual agreements with suppliers. Rhodia is not generally
dependent on
any one supplier for a major part of its raw materials requirements, but certain important raw materials are obtained from a few major suppliers. In general, where Rhodia has limited sources of raw
materials, it has developed contingency plans to minimize the effect of any interruption or reduction in supply.

Temporary
shortages of raw materials may occasionally occur and cause temporary price increases. In recent years, such shortages have not resulted in unavailability of raw materials.
However, the continuing availability and price of raw materials are subject to unscheduled plant interruptions occurring during periods of high demand, or due to domestic and world market and
political conditions, as well as to the direct or indirect effect of European and national regulations. During periods of high demand, certain raw materials are subject to significant price
fluctuations, and, in the past, such fluctuations have had an adverse impact on the results of operations of Rhodia. The impact of any future raw material shortages on Rhodia's business as a whole or
in specific geographic regions cannot be accurately predicted. Operations and products may, at times, be adversely affected by legislation, shortages or international or domestic events. See also
"Item 5. Operating and Financial Review and Prospects".

Sales, Marketing and Distribution

Rhodia sells its products and services in over 130 countries through decentralized sales, marketing and distribution functions. Such functions are currently
carried out pursuant to policies established by the management of each business. Rhodia's products are generally ready in bulk for use in industrial applications or subsequent reformation or
incorporation in consumer and business goods. In connection with Rhodia's strategy of increasing accountability of enterprise management, sales, marketing and distribution, which in the past were
managed mainly by local subsidiaries responsible for several enterprises, are increasingly being placed under the direct responsibility of the management of individual enterprises. In addition, Rhodia
is putting increased emphasis on key account management and new product launching across geographic regions in order to establish global sales, marketing and distribution arrangements for customers
operating internationally.

Sales
in all Divisions are generally on a purchase order basis; however, long-term arrangements have been established with certain key customers or when dictated by customer
requirements. Such arrangements generally do not extend beyond one year. Rhodia occasionally enters into long-term

43

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arrangements
for periods ranging from three to five years with customers who consider their purchases to be strategic products or with whom Rhodia has jointly developed customized products.

Health, Safety and Environment

Rhodia's Health, Safety and Environment policy (HSE) is based on a worldwide program of risk prevention and continued improvement. In 2002, Rhodia devoted
€168 million to safety and the environment and invested €68 million in installations designed to reduce water and air pollutants as well as waste
products. These investments are part of Rhodia's ongoing improvement programs that have been in place for several years. Rhodia has targeted four HSE objectives:



Environment

Sustainable development entails the satisfaction of the present generation's needs without jeopardizing the resources for generations to come. Rhodia's objective
is to use its technologies, capabilities and innovations to reduce consumption of energy and non-renewable materials. Reducing the consumption of energy and non-renewable
materials is one of the guiding principles
in a commitment to sustainable development. Rhodia's sustainable development policy entails three key objectives:



Rhodia's
sustainable development objectives strive to safeguard natural resources through innovation while developing synergies among different businesses and leveraging strong
partnerships with customers. For example, Eolys has led to the production of a catalyst which enables the filtering of over 90% of soot particles in diesel fuel exhaust. At Rhodia's La Rochelle site
in France, suspended solids are recycled to recover rare earth oxides.

In
compliance with the regulations set forth by the European Chemical Industry Council (CEFIC), and in accordance with the French government's commitment to reduce its gas emissions by
30% over the period of 1990-2010, Rhodia has implemented a policy that targets the reduction of the release of greenhouse gases (CO2 and N2O emissions) and
tropospheric ozone-generating volatile organic

44

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compounds
(VOCs). Over €15 million have been invested towards the achievement of these aims. Emissions reduction is a challenge that requires long-term action at all
Group sites concerned, in particular regarding VOC emissions and the quantification of releases.

Rhodia
also gives special attention to protecting water resources, particularly by anticipating implementation of the European Water Framework Directive. Over a ten-year
period (1990-2000), Rhodia reduced its water pollution by 60% and is now focusing on micro-pollutant releases with pilot projects underway at several sites. In addition, to prevent accident-related
pollution, Rhodia's main manufacturing sites have been equipped with release retention basins. In 2000, Rhodia implemented a data reporting procedure based on CEFIC standards. This procedure combines
both raw data and indicators based on overall environmental impacts at over 90% of the Group's sites.

Workplace Safety

With its workforce of 24,523 employees (as of December 31, 2002), approximately 63% of which are outside France, Rhodia is a global enterprise that faces
human and social challenges. It meets these challenges in a spirit of sustained improvement, innovation and strict ethics. The Group is committed to a proactive policy of dialogue with employees,
career planning on a world scale, and implementation and encouragement of an organization firmly based on strong ethical principles. Rhodia monitors the health and safety of employees and other people
on its sites. Its objective in this respect is to evaluate risks associated with each workstation for the past five years. Approximately half of the workforce at Rhodia that management believes is
exposed to significant HSE risks has been studied. Rhodia moreover engages in preventive procedures regarding the health of its own employees, persons working at Rhodia sites, and the users of Rhodia
products.

Rhodia
remains dedicated to its zero-accident objective. As the establishment of an entirely risk-free industrial environment is nevertheless impossible, it is
vital to prepare and train all employees in the Group to respond as effectively as possible in the event of an accident or other crisis. Rhodia's objective is to establish and test emergency plans
that are tailored to the risks involved for every business and activity. More than two-thirds of Rhodia's businesses have revised and tested their emergency plans over the past three
years. Industrial hygiene correspondents have been appointed to coordinate industrial initiatives and to ensure the execution of risk evaluations at all Group sites. This involves, among other things,
identifying chemical, biological, physical and ergonomic hazards, as well as estimating exposure levels and assessing short-, medium-and long-term risks.

Rhodia
seeks to improve its safety record on an ongoing basis. This requires daily individual commitment by all of the Group's employees, especially its managers. Accordingly, members of
the Executive Committee inspect Rhodia's sites without prior warning. The results reflect the efforts expended, as the rate of accidents at Rhodia's sites has declined each year. The accident
frequency rate, with or without work stoppage, declined 23% in 2002 compared with 2001. The table below sets forth certain information relating to the accident frequency rate for the years ended
December 31, 2000, 2001 and 2002.

|         |  | Year ended December 31,
|-------- |  | -----------------------
|
|TFI(1)   |  | 2.1                    
|TF2(2)   |  | 5.8                    
|TF1EE(3) |  | 6.4                    

---

45

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Rhodia
currently owns or operates plants, previously owned successively by Stauffer Chemicals and Rhone-Poulenc, where asbestos was used in piping and industrial installations like
boilers and furnaces, but not in the production of its products. As a consequence, the Group has received various minor claims relating to alleged asbestos exposure. While it is not possible to
determine the ultimate outcome of all claims that may be brought against Rhodia, Rhodia believes that its future risk related to asbestos exposure is limited based on available information and its
experience with these claims.

Industrial Sites

Rhodia has implemented a policy to perform safety reviews tailored to the risks of each production facility, to identify hazards and to assess industrial risks in
order to provide appropriate prevention and protective measures. Over the course of the past five years, such safety reviews were performed on more than two-thirds of facilities and sites.
Approximately 50 of Rhodia's facilities (15 of which are in France) qualified as "top-tier sites" under the European Union's Seveso Directive (meaning that detailed studies have been
carried out to assess the potential dangers).

In
2002, Rhodia performed an internal audit of 16 of its sites around the world that Rhodia considered as high risk due to their activities and geographic location. The audit, which
covered process safety management, safety and prevention, revealed certain potential areas for improvement, which led to the adoption and implementation of action-plans. In 2003, Rhodia's objective is
to target issues related to the growing urbanization of the areas around Group facilities, as well as improving communications with employees, through the health and safety committees, and with local
communities, through local information and consultation commissions.

Outside
the boundaries of its sites, whether active or closed, Rhodia's policy is to ensure that its industrial operations do not significantly impact people or the environment. One of
the objectives of Rhodia's sustainable development commitment is thus to analyze the potential impact of operations at each site. Releases and potential damage are inventoried, measured, and
classified, and improvement objectives are defined in conjunction with action and investment plans. Pursuant to Rhodia's policy, this analysis and the defined objectives for each site are to be
reviewed at least every five years. Approximately two-thirds of Rhodia's activities have been analyzed in connection with this policy.

Products

Rhodia's HSE policy also applies to its products, from the design stage to manufacturing and eventual marketing. Rhodia's global product stewardship initiative,
already extended in 2000, seeks to effectively manage the entire life cycle of its products (design, manufacturing, distribution, use and end of life) in order to minimize their impact on people and
the environment. In practice, this initiative involves creating and updating safety data sheets for all Rhodia products. Based on maximum product information, the stewardship policy raises awareness
of all concerned participants. Rhodia has targeted a systematic review of its safety data sheets every three years. In 2002, over three-fourths of these safety data sheets have been reviewed in the
past three years.

In
addition, Rhodia has placed focus on transportation safety, from its industrial sites to reception at customer facilities. Globally, Rhodia aims to encourage local initiative
involving both transporters and customers to monitor, train and report. Rhodia's commitment covers more than just the products leaving its plants, but also targets the applications in which they are
used. Rhodia has introduced a
method for analyzing risks associated with product final application conditions based on the risk software. Rhodia expects to continue the implementation of this policy through 2003.

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Rhodia's commitment to sustainable development also involves recycling and reuse of its products, which is conducted in strategic partnerships with its customers. For example, Rhodia
supplies Degussa with certain raw materials used in the production of silicones and fumed silica. In partnership with Degussa, Rhodia recovers a by-product of the fumed silica production
and recycles it into its own production of methylchlorosilane, a raw material for silicones. This cooperation makes Rhodia's silicones production more competitive.

Intellectual Property

Rhodia owns a large number of patents that relate to a wide variety of products and processes. Each year, Rhodia files over 200 new patent applications, and is
also licensed under a small number of patents owned by others. In addition, Rhodia owns a considerable number of registered trademarks throughout the world, under which it markets its products. Such
patents and trademarks in the aggregate are of material importance in Rhodia's operations. In addition to patent protection, Rhodia also relies on its know-how and technical expertise in
many of its manufacturing processes for developing and maintaining its market position.

Although
exclusivity can be maintained on a relative basis for certain products following patent expiration through know-how and technical expertise, the expiration of a
patent can result in intense competition, including from lower cost producers, and erosion of margins. Prior to and following expiration of the patent for a key product, Rhodia will generally focus
efforts on developing patentable enhancements to the product or new patentable formulations for which the product is used. Management does not believe that the loss of patent protection for any
particular product or process would have a material adverse effect on Rhodia's financial condition, results of operations or cash flows.

Government Regulation

Production and marketing of chemical substances are regulated by domestic and international laws. Although almost every country has its own legal procedure for
registration and import, laws and regulations in the European Union, the United States, Canada and Japan are most significant to Rhodia's business. The most important of these laws include the
European Inventory of Existing Chemical Substances, the European List of Notified Chemical Substances, the United States Toxic Substances Control Act Chemical Substances Inventory, the Domestic
Substance List of Canada and the Japan Handbook of Existing and New Chemical Substances. Chemicals that are on one or more of
the above lists can usually be registered and imported without additional testing in any other country, although additional administrative hurdles may exist. Rhodia personnel work closely with the
regulatory agencies of these countries to bring new chemicals and products to market. Rhodia continues to closely follow the promulgation of the European Commission's regulations relating to chemical
substances. Although the scope of these future regulations has yet to be determined in detail, the economic and social impact on the European chemical industry is expected to be significant. Within
the Chemical Industries Union, Rhodia has participated in a study to measure the impact of the proposed regulations on the French economy, which has recently been made public.

Rhodia
also actively seeks approvals from the FDA for certain specialty chemicals, principally where Rhodia believes that such specialty chemicals will or may be used in the manufacture
of products that will come in contact with food and health. In addition, certain chemicals to be used in the manufacture of food and/or drug products are subject to thorough review by Rhodia's staff
and, where applicable, the FDA.

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Property, Plant and Equipment

As of December 31, 2002, Rhodia operated 114 production sites worldwide, excluding closed sites and sites operated by joint ventures accounted for under
the equity method. The net book value of Rhodia's property, plants and equipment was €2.7 billion as of December 31, 2002, of which €908 million
corresponded to assets located in France. Many sites contain two or more facilities operated by different Divisions. Net fixed assets located in France, North America and Latin America accounted for
33.1%, 28.0% and 13.1%, respectively, of Rhodia's net fixed assets base as of December 31, 2002. All of Rhodia's major manufacturing facilities have qualified for ISO 9001 or ISO 9002
certification. Rhodia has also entered into several production arrangements and participates with interests of up to 50% in more than 25 joint ventures accounted for under the equity method.

The
table below sets forth the number of Rhodia's principal production sites, by Division and geographic region, for the year ended December 31, 2002. The sizes of Rhodia's sites
vary considerably in terms of employees and production capacity. Of the 114 sites, 16 serve two or more Divisions. These sites are listed in the table under the principal Division utilizing the site.
The table excludes facilities operated by joint ventures accounted for under the equity method.

Production Sites

|                         |  | As of December 31, 2002
|------------------------ |  | -----------------------
|
|Consumer Specialties     |  | 15                     
|Polyamide                |  | 11                     
|Fine Organics            |  | 10                     
|Industrial Specialties   |  | 14                     
|Services and Specialties |  | 7                      
|                         |  |                        
|Total                    |  | 57                     
|                         |  |                        

Utilization
of Rhodia's principal facilities may vary with economic and other business conditions. Rhodia's business facilities generally have sufficient capacity for existing needs and
expected near-term growth. The acquisition of ChiRex in September 2000 has given Rhodia access to large cGMP capacities to custom-manufacture active ingredients and advanced
intermediates for the pharmaceutical industry, thus enabling high future growth in this field. As part of its global productivity review, the management of each Division is reviewing its facilities to
identify opportunities for closure or consolidation. Where possible, Rhodia seeks to consolidate production at lower cost sites in order to enhance operating efficiency. Rhodia is strengthening its
position in emerging markets, particularly Asia-Pacific, by expanding its facilities in these areas, generally by entering into joint ventures with local producers.

Many
of Rhodia's manufacturing sites have an extended history of industrial use. See "Item 3. Key InformationRisk FactorsRisks Related to Our Business"
and "Item 5. Operating and Financial Review and ProspectsEnvironmental Matters" for a discussion of environmental issues relating to Rhodia.

Item 5. Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with "Selected Financial Data" and Rhodia's Consolidated Financial
Statements and the notes to those statements beginning on page F-1 of this annual report on Form 20-F. The discussion of Rhodia's results of operations includes certain information
on a comparable basis, to eliminate the impact of changes in the scope of consolidation and the translation effect of exchange rate fluctuations. See "Presentation of Financial and Other Information"
for an explanation of the calculation of this information, as well as an explanation of how we calculate the

48

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effect of changes in volume and price on our operating results. This discussion contains forward-looking statements that reflect Rhodia's plans, estimates and beliefs. Rhodia's results could
materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and
elsewhere in this annual report on Form 20-F, including in "Item 3. Key InformationRisk Factors".

Overview of 2002

In 2002, Rhodia fulfilled the key commitments made at the end of 2001: an improvement in operating income, the generation of positive cash from operations and the
successful completion of a significant asset divestiture program. In the absence of an economic recovery, consolidated net sales declined by 9.1% due principally to disposals of non-strategic assets
made during the year. On a comparable basis, consolidated net sales declined by 1.5%.

Operating
income rose to €351 million in 2002 from €91 million in 2001. This change in operating income was due principally to changes in
restructuring and environmental costs and restructuring-related depreciation and amortization, which amounted to €163 million and €65 million, respectively, in
2001. In 2002, restructuring and environmental costs amounted to €25 million, and restructuring-related depreciation and amortization amounted to €5 million. The
improvement in 2002 operating income was also due to lower raw materials costs, which benefited all Divisions. The restructuring program launched in late 2001 was deployed on 19 sites in 2002. Rhodia
estimates that the restructuring plans launched in 2000 and 2001, together with early results from its 2002 plan, contributed to reducing production costs and expenses in 2002 by approximately
€70 million. However, start-up problems at a Fine Organics plant (which reduced operating income by an estimated €37 million) and sharply
higher pension and insurance costs partially offset these improvements.

Following
the restructuring and in line with its commitments, Rhodia cut capital expenditures by €109 million in 2002, primarily by applying stricter selection
criteria. Tight control was also maintained over operating working capital (defined as accounts receivable, before the impact of sales of receivables as of year end under its securitization program,
plus net inventory, less accounts payable).

However,
free cash flow (defined as net cash provided by operating activities minus additions to property, plant and equipment) contracted to €132 million in 2002
from €193 million in 2001, due principally to a €145 million exceptional contribution to UK and U.S. pension funds paid in 2002, and the lower volume of
receivables sold under the securitization program.

Rhodia
sold a large number of non-strategic assets during the year, including:



Cash
proceeds from these disposals (which were used to reduce financial debt), together with the deconsolidation of indebtedness of the divested companies, amounted to
€516 million. The negative impact of these disposals on operating income and net income for the year was €47 million and
€24 million, respectively. The difference between the book value on Rhodia's balance sheet of these disposed assets and the total proceeds of the disposals was
€38 million. This amount reflects the €109 million loss on the sale of Rhodiaster, due principally to the generally depressed state of the

49

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polyester
market and the fact that the company operated in Brazil, which is perceived as a high-risk country.

Certain Factors Affecting Rhodia's Financial Condition and Results of Operations

Certain factors affecting Rhodia's financial condition and results of operations are described below. For further discussion of these and certain other factors,
see "Results of Operations".

Exchange Rate Fluctuations

Rhodia publishes its Consolidated Financial Statements in euro. Because a substantial portion of its assets, liabilities, sales and earnings are denominated in
currencies other than the euro, Rhodia is exposed to fluctuations in the values of these currencies against the euro. These currency fluctuations, especially the fluctuation of the value of the
Brazilian real and the U.S. dollar against the euro, have had and may continue to have a material impact on Rhodia's financial condition and results of operations.

In
2002, variations in currencies, particularly the decline in the value of the U.S. dollar and the Brazilian real relative to the euro, decreased Rhodia's consolidated net sales
by approximately 3.9%.
Currency fluctuations can also have a significant impact on Rhodia's balance sheet, particularly stockholders' equity, when translating the financial statements of subsidiaries located outside of the
euro zone into euros. For example, in 2002 stockholders' equity was reduced by €397 million due to the translation of the financial statements of foreign subsidiaries, related
notably to the decline of the U.S. dollar and the severe depreciation of the Brazilian real relative to the euro.

An
appreciation of the euro compared to the dollar would lessen the euro-value of sales generated in dollar-zone countries, and could lower the competitiveness of
products manufactured by Rhodia in Europe against products produced in, or exported from, the United States and other dollar zones. Rhodia expects that this effect would be partially offset by the
decreased cost in euro of a significant portion of the Group's raw material and energy purchasing requirements.

The
table below sets forth average exchange rates of the euro with respect to key currencies in 2000, 2001 and 2002.

|                    |  | Average exchange rates and changes(1)
|------------------- |  | -------------------------------------
|
|U.S. dollar/euro    |  | 0.92                                 
|Pound sterling/euro |  | 0.61                                 
|Brazilian real/euro |  | 1.69                                 

---

Rhodia's
policy with respect to limiting its exposure to short-term fluctuations in exchange rates is described under "Quantitative and Qualitative Disclosure
about Market Risk." See also Notes 1(b), 1(m), 21 and 23 to the Consolidated Financial Statements.

Cost of Raw Materials

Rhodia tracks the cost of certain of its key raw materials on a central basis. In 2002, Rhodia's expenses for purchases of these key raw materials were
approximately €1.4 billion. Rhodia also had approximately €400 million of costs for energy purchases. Significant variations in the costs of raw materials
can affect Rhodia's financial results.

50

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Rhodia
continually tracks the prices of key raw materials through a raw materials index encompassing Rhodia's top 100 strategic raw materials. The strategic raw materials index compares
the purchase price of the basket of 100 strategic raw materials for each quarter of 2002 with the average quarterly purchase prices for 2001 (set as a base value of 100) at constant volume and
exchange rates. The strategic raw materials index decreased seven points from an average of 100 points for fiscal year 2001 to an average of 93 points for fiscal year 2002. This decrease in raw
materials index corresponds principally to decreases in the prices of raw materials linked to crude oil prices. The main raw materials that affected the price index in 2002 were cyclohexane,
butadiene, ammonia, caustic soda, caprolactam and natural gas.

The
principal raw materials shown below together represented approximately €950 million in costs.

|Acetic acid    |  | Nitric acid |  | Phosphoric acid MGA |  | Phosphoric acid PWA  
|-------------- |  | ----------- |  | ------------------- |  | ---------------------
|Ammonia        |  | Benzene     |  | Butadiene           |  | Caprolactam          
|Cumene         |  | Cyclohexane |  | Glass fiber         |  | Gas (as raw material)
|Ethylene oxide |  | Wood pulp   |  | Rock phosphate      |  | Phenol               
|Phosphorus     |  | Propylene   |  | Styrene             |  | Caustic soda         
|Sulfur         |  |             |  |                     |  |                      

The
graphic below sets forth changes in the Rhodia price index with respect to the average price in fiscal year 2001 for the top 100 raw materials for each quarter in fiscal year 2002. GRAPH

The
index fell to a low in the first quarter and, although it rose in the following periods, it remained below the 2001 average throughout the year. Partly caused by lower oil prices and
weak demand, the favorable year-on-year change also reflects the benefits of measures taken by the Group to cut purchasing costs.

After
maintaining an average price above U.S.$21 a barrel during the first quarter of 2002, the average Brent reference price increased to U.S.$27 in the third and fourth quarters of
2002.

Because
of the length of manufacturing cycles, the impact of changes in raw material prices normally affects Rhodia's financial statements after a delay of two to three months.

Increases
in overall levels of raw materials prices may not necessarily be passed on through an increase in sales prices, and may, in certain cases, create negative pressure on margins.
Decreases in the average prices for raw materials may, as a result of competitive pressures, cause prices also to decline, and may, in certain cases, limit the potential gain in margins. In order to
reduce the impact of change in raw materials prices, Rhodia's major requirements for key raw materials are typically satisfied pursuant to medium- or long-term contracts. See
"Item 4. Information About RhodiaRaw Materials."

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Scope of Activities Included in the Consolidated Financial Statements

During the period covered by the discussion below, Rhodia has pursued a program of focusing on the specialty chemicals business and reducing its activities in
commodity chemicals. The principal acquisitions, divestitures and other changes in the scope of activities included in Rhodia's financial statements during the three years ended December 31,
2002, are set forth below.



In line with Rhodia's objective to divest non-strategic businesses, the following businesses were divested in 2002:



Net
sales of these businesses were €772 million in 2000 and €725 million in 2001. In 2002 net sales of these businesses (taken from
January 1, 2002 through their respective dates of sale) were €556 million.



52

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Change in Accounting Presentation

In accordance with Rule No. 99-02, issued by the French accounting authorities (Comité de la
Réglementation Comptable), Rhodia has modified its accounting classification under French GAAP with respect to the classification of amortization of goodwill and
the classification of income tax provision for affiliated companies. Certain items on Rhodia's consolidated financial statements for the years ended December 31, 2000 and 2001 have therefore
been restated to account for the new policy.

Goodwill.Under the new policy, Rhodia has reclassified its accounting for the amortization of
goodwill. In previous periods amortization of goodwill was included as an operating expense in the item Depreciation and amortization. Under the new policy amortization of goodwill has been
reclassified below Operating income in accordance with Rule No. 99-02. Accordingly, the Operating income for 2001 and 2000 reflects a reclassification of
€75 million and €32 million, respectively.

Goodwill
and Other intangible assets are now shown separately on Rhodia's balance sheet. Certain intangible assets that were previously recorded as Deferred charges and other assets have
been reclassified to Other intangible assets. The amounts reclassified were for an amount of €52 million and €54 million at December 31, 2001 and
2000, respectively.

Income tax provision for affiliated companies.Under the new policy, Rhodia has also reclassified its
accounting for income tax provisions for affiliated companies. In previous periods, income tax provision for affiliated companies was classified under Income taxes. Under the new accounting policy the
income tax provisions for affiliated companies is classified under Equity in earnings/(losses) of affiliated companies. Accordingly, Income taxes and Equity in earnings/(losses) of affiliated
companies for 2001 and 2000 reflect a reclassification of €(8) million and €9 million, respectively.

As
a result, the negative equity of affiliated companies previously recorded as a reduction under Investments accounted for by the equity method on the Balance sheet has been
reclassified to Other long-term liabilities. The amounts reclassified were for €54 million and €53 million at December 31, 2001 and
2000, respectively.

Restructuring charges and related amortization charges

Restructuring charges amounted to €30 million in 2002, consisting principally of €25 million of restructuring and
environmental costs concerning the Fine Organics Division (with respect to pharmaceutical activities in the United Kingdom) and the Services and Specialties Division (with respect to Eco Services in
Europe), as well as productivity plans at various headquarters sites. The additional €5 million relates to amortization charges linked to restructuring measures.

Restructuring
charges and related goodwill amortization charges amounted to €253 million in 2001. These charges include restructuring and environmental costs
(€163 million in 2001) and the exceptional write-down of assets linked to restructuring measures, which amounted to €90 million (including
€25 million for the accelerated amortization of goodwill).

Cash
payments related to Rhodia's restructuring plans amounted to €84 million in 2000. Cash payments related to Rhodia's restructuring plans amounted to
€113 million in 2001, of which €25 million was specifically related to the Company's 2001 plan. Cash payments related to Rhodia's 2001 and 2002
restructuring plans totaled €152 million in 2002.

Rhodia
achieved an aggregate 16.7% reduction in personnel from December 31, 2000 through December 31, 2002. Rhodia estimates that approximately 12.8% of this reduction was
due to these restructuring measures.

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The
table below sets forth the restructuring and environmental costs recorded in fiscal year 2001 by Division as well as related depreciation and amortization and accelerated goodwill
amortization.

|                         |  | Restructuring and
environmental costs |   | Restructuring-
related depreciation
and amortization |   | Restructuring-
related accelerated
goodwill amortization |  
|------------------------ |  | ------------------------------------- | - | ---------------------------------------------------- | - | -------------------------------------------------------- | -
|
|Consumer Specialties     |  | (19                                   | ) | (16                                                  | ) |                                                         |  
|Polyamide                |  | (36                                   | ) | (10                                                  | ) |                                                         |  
|Fine Organics            |  | (49                                   | ) | (24                                                  | ) | (20                                                      | )
|Industrial Specialties   |  | (12                                   | ) | (2                                                   | ) |                                                         |  
|Services and Specialties |  | (20                                   | ) | (12                                                  | ) | (5                                                       | )
|Other                    |  | (27                                   | ) | (1                                                   | ) |                                                         |  
|                         |  |                                       |   |                                                      |   |                                                          |  
|Total                    |  | (163                                  | ) | (65                                                  | ) | (25                                                      | )
|                         |  |                                       |   |                                                      |   |                                                          |  

In
2000, restructuring charges amounted to €20 million, consisting of €14 million of provisions for restructuring and environmental costs
that included mainly costs for the Polyamide and Fine Organics Divisions' European production units, as well as €6 million in exceptional write downs of assets linked to
restructuring efforts.

For
further details on Rhodia's restructuring plans, see Note 17(d) to the Consolidated Financial Statements.

Critical Accounting Estimates

Rhodia's management continually reviews the accounting estimates used in the preparation of the consolidated financial statements in order to ensure that they are
reasonable. Changes in these estimates could require Rhodia to record higher or lower costs, or could favorably or unfavorably impact Rhodia's financial condition and cash flows.

Rhodia's
consolidated financial statements are prepared in accordance with Rule no 99-02 issued by the Comité de la Réglementation Comptablerelating to the consolidated
financial statements of commercial societies and public
companies. Since Rhodia is also listed in the United States, a reconciliation between accounting principles generally accepted in France ("French GAAP") and accounting principles generally accepted in
the United States ("U.S. GAAP") is prepared and can be found in Note 29 to the Consolidated Financial Statements.

The
preparation of the consolidated financial statements requires management to make estimates that may affect the reported amount of assets, liabilities, revenues, expenses and the
disclosures of contingent assets and liabilities. Management believes that its estimates are reasonable; however, actual amounts could differ from these estimates since even the best estimates
routinely require adjustment.

The
following paragraphs review the critical accounting estimates that management considers most important for the understanding of Rhodia's financial condition, results of operations
and cash flows. An accounting estimate is considered a critical accounting estimate if it meets the following criteria:



54

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Management has reviewed the following critical accounting estimates with its Accounts Committee, and the Accounts Committee has reviewed Rhodia's disclosures relating to critical
accounting estimates in this section.

Goodwill impairment tests

For each reporting unit, Rhodia annually compares the net book value of the assets and liabilities that are associated with the reporting unit with the fair value
of the reporting unit. The methodology used for the determination of the reporting unit's fair value consists of the development of discounted cash flows, using the following principal assumptions:



The
fair value determined as of December 31, 2002 for the Rhodia ChiRex reporting unit confirms that the goodwill is recoverable. However, this reporting unit, which experienced
operating losses in 2001 and 2002, is still in a development phase. Therefore, its forecasts are characterized by a level of uncertainty that will necessitate regular assessments that the assumptions
made in the fourth quarter of 2002, which are summarized below, are realized:



Considering
all these above assumptions, the terminal value represents essentially the total fair value of the Rhodia ChiRex reporting unit. If the fair value of the reporting unit as
determined above were not to support the net book value of the reporting unit, an impairment of goodwill would be recorded. See Note 4 to the Consolidated Financial Statements.

Other long-lived assets

Rhodia reviews the book values of other long-lived assets whenever events or circumstances indicate that the future cash flows of these assets may not
support their carrying values. Rhodia compares the net book values of these assets with the undiscounted future cash flows. When this comparison indicates that adjustments to the carrying values of
these assets are required then accelerated depreciation of these assets is recorded, and the amount recorded is the difference between the net book value and the discounted future cash flows.

55

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Assumptions
made by Rhodia relating to the future cash flows of these assets are subject to change, which may require adjustments of the carrying values of these assets in future
periods.

Deferred tax assets

During the process of preparing its consolidated financial statements, Rhodia is required to estimate income taxes in each of its operations. This process
involves estimating the actual current tax expense together with assessing timing differences resulting from differing treatment of items for tax and accounting purposes. These differences result in
deferred tax assets and liabilities, which are included within the consolidated balance sheet. The likelihood that the deferred tax assets will be recovered from future taxable income is then assessed
and, to the extent that recovery is not likely, a valuation allowance is established. If a valuation allowance is established or increased in a period, it must be included as an expense within the
income tax provision in the statement of operations.

Significant
management judgment is required in determining the valuation allowance. Rhodia has recorded a valuation allowance, and there are uncertainties regarding the ability to
utilize some of these deferred tax assets before they expire. The principal uncertainty relates to the likelihood of future taxable income from the entity which generated the deferred tax asset. The
valuation allowance is based on Rhodia's estimates of future taxable income by jurisdiction in which it operates and the period over which the deferred tax assets will be recoverable. In the event
that actual results differ from these estimates or these estimates are adjusted in future periods, the valuation allowance may need to be adjusted, which could materially impact Rhodia's consolidated
financial position and results of operations. As of December 31, 2002, Rhodia recorded deferred tax assets of €347 million (net of €167 million of
valuation allowances).

Pensions, retirement and other post-employment obligations

Rhodia accounts for commitments with respect to pensions, retirement and other post-employment obligations based on projected
end-of-career salaries using a number of actuarial assumptions that vary from country to country, including:



If
actual results, especially discount rates and/or rates of return on plan assets, were to differ from these assumptions, Rhodia's pension, retirement and other
post-employment costs would be higher or lower, and its cash flows would be unfavorably or favorably impacted from the funding of these obligations.

Environmental liabilities

Rhodia recognizes losses and accrues liabilities relating to environmental matters on a case-by-case basis when information indicates that the event of loss is
probable and can reasonably be estimated. Management estimates are based on an assessment of many factors, including the amount of remediation costs, the timing and extent of remediation actions
required by the applicable governmental authorities, and the amount of Rhodia's liability after considering the liability and financial resources of other potentially responsible parties.

As
of December 31, 2002, Rhodia's accrued reserve for probable future remediation expenses amounted to €146 million. Based on current information,
provisions established for environmental matters and amounts Rhodia expects to receive under the environmental indemnity with Aventis,

56

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described
in "Item 7. Major Stockholders and Related Party TransactionsAgreements with Aventis", Rhodia does not believe that environmental compliance and remediation requirements will
have a material adverse effect on its business, financial condition or results of operations. Future events, such as changes in existing laws and technology, the promulgation of new laws or the
development or discovery of new facts or conditions, however, could cause Rhodia to incur significant additional costs and liabilities that could have a material adverse effect on its business,
financial condition and results of operations.

Rhodia's
management believes that environmental matters are difficult to assess for numerous reasons, including the discovery of new contamination, discovery of new information and
scarcity of reliable information pertaining to certain sites, improvements in technology, changes in the scope, enforcement or interpretation of environmental laws and regulations, numerous possible
remedial techniques and solutions, difficulty in assessing the involvement of and the financial capability of other potentially responsible parties and the extended time periods over which remediation
occurs. Changes in estimates on which these accruals are based may result in higher or lower costs to Rhodia.

Recent Developments

Consolidated Operating Results for the first quarter of 2003 compared to the first quarter of 2002

Overview

Rhodia's operating results for the first quarter of 2003 were negatively impacted by the high price of raw materials, particularly petrochemicals, a weakening in
demand and the negative impact of the rise in the value of the euro, particularly relative to the U.S. dollar.

The
table below sets forth net sales, depreciation and amortization and operating income for the quarters ended March 31, 2002 and March 31, 2003.

|                              |  | Quarter ended March 31, |  
|----------------------------- |  | ----------------------- | -
|
|
|Net sales                     |  | 1,711                   |  
|Depreciation and amortization |  | (119                    | )
|Operating income              |  | 79                      |  

Rhodia
reported operating income of €9 million in the first quarter of 2003 compared to €79 million in the first quarter of 2002, impacted
by high raw materials prices, restructuring provisions and an extraordinary expense related to difficulties in re-starting a production unit.

Net Sales

Net sales declined by 16.5% to €1,428 million in the first quarter of 2003 from €1,711 million in the first quarter of 2002.
Changes in the scope of consolidation had a 9.8% negative impact on net sales, while changes in exchange rates had a 10.2% negative impact.

On
a comparable basis (i.e., excluding changes resulting from the scope of consolidation and changes in exchange rates), net sales increased by 4.4% due to a 3.0% increase in sales
volumes and a 1.4% increase in average selling prices. All Divisions contributed to the increase in net sales, with the exception of the Pharmaceuticals and Agrochemicals Division.

The
table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's consolidated net sales between the
first

57

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quarter
of 2002 and the first quarter of 2003. The method of calculating these estimates is described under "Presentation of Financial and Other Information."

|          |  |       |  |      |    |       |    |       |  | On a Comparable Basis |   |    
|--------- |  | ----- |  | ---- | -- | ----- | -- | ----- |  | --------------------- | - | ---
|
|
|
|Net sales |  | 1,711 |  | (9.8 | )% | (10.2 | )% | 1,368 |  | 3.0                   | % | 1.4

Operating income

Operating income decreased to €9 million in the first quarter of 2003 from €79 million for the same period in 2002.
Operating income in the Consumer Care and Food Division and the Industrial Care and Services Division decreased in the first quarter of 2003 compared to the first quarter of 2002. Operating losses in
the Pharmaceuticals and Agrochemicals Division and in the Other Businesses Division increased in the first quarter of 2003 compared to the first quarter of 2002. Operating income in the Automotive,
Electronics and Fibers Division, however, increased in the first quarter of 2003 compared to the first quarter of 2002. Operating income in the first quarter of 2003 was negatively impacted by
increases in prices of raw materials, restructuring costs and expenses of €8 million related to difficulties in restarting a production unit of the Intermediates business of the
Pharmaceuticals and Agrochemicals Division partially offset by a reduction in fixed costs. The strategic raw materials index, discussed above under "Cost of Raw Materials", increased to an average of
102 for the first quarter of 2003 compared to 87 for the first quarter of 2002.

Financial expenseNet

Financial expensenet declined to €27 million in the first quarter of 2003 from €38 million in the same
period for 2002, reflecting a decline in Rhodia's net debt.

Other income/(expense)Net

Other income/(expense)net represented a net expense of €(8) million in the first quarter of 2003 compared to
€(16) million for the same period in 2002.

Income taxes

In the first quarter of 2003, Rhodia recorded a tax charge of €16 million compared to a charge of €8 million for the
same period in 2002.

Equity in earnings/(losses) of affiliated companies

Equity in earnings/(losses) of affiliated companies made a negative contribution of €9 million in the first quarter of 2003 compared with a
negative contribution of €8 million for the same period in 2002. Losses attributable to Nylstar amounted to €7 million and
€2 million of such losses were attributable to Butachimie.

Amortization of goodwill

Amortization of goodwill decreased 15.4% to €11 million in the first quarter of 2003 compared to €13 million for the
same period in 2002.

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Minority interests

Minority interests amounted to €(1) million in the first quarter of 2003 compared to €(2) million for the same period in 2002.

Net loss

Rhodia had a net loss of €63 million, or €0.35 per share, in the first quarter of 2003 compared to a loss of
€6 million, or €0.03 per share, for the same period in 2002. The average number of shares used to calculate loss per share was 179,309,188 in the first quarter
of 2003 and 179,092,589 in the first quarter of 2002.

Consolidated Balance Sheet

Operating Working capital

Rhodia's operating working capital was €903 million at March 31, 2003 compared to €892 at December 31, 2002. As of
March 31, 2003, Rhodia's gross working capital requirement (defined as inventories plus accounts receivable plus other current assets minus accounts payable and other current liabilities) was
€572 million.

Consolidated Net debt

Consolidated net debt (defined as long-term debt, plus short-term borrowings and current portion of long-term debt, minus cash
and cash equivalents and marketable securities) increased €167 million to €2,300 million at March 31, 2003 from
€2,133 million at year-end 2002. The increase is mainly attributable to increased working capital requirements partially offset by positive operating cash flow. Cash
originating from the securitization program was €481 million as of March 31, 2003 compared to €531 million as of December 31, 2002,
contributing to a €50 million increase in working capital requirements.

Other long-term liabilities

Long-term contingency reserves amounted to €1,225 million at March 31, 2003 compared to
€1,233 million at December 31, 2002. Reserves at March 31, 2003 consisted mainly of reserves for pension and retirement costs of €805 million and
deferred income taxes of €210 million. Other long-term liabilities amounted to €210 million.

Stockholders' equity and minority interests

Stockholders' equity including minority interests was €1,724 million at March 31, 2003, a decrease of
€134 million compared to €1,858 million at December 31, 2002. The decline primarily corresponds to recognition of the net loss for the first
quarter of 2003 of €63 million and negative translations adjustments of €72 million (due principally to the devaluation of the U.S. dollar).

Private Placement of High Yield Notes

On May 28, 2003, Rhodia issued the equivalent of €1,000,000,000 in notes through a private placement. The issuance consisted of
$200,000,000 aggregate principal amount of 7.625% senior notes due 2010, €200,000,000 aggregate principal amount of 8.000% senior notes due 2010, $385,000,000 aggregate principal
amount of 8.875% senior subordinated notes due 2011 and €300,000,000 aggregate principal amount of 9.250% senior subordinated notes due 2011. For additional information on the risks
relating to the issuance of high yield notes see "Item 3. Key InformationRisk Factors."

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Divestiture of Polyurethane Flame Retardants Business

On June 17, 2003, Rhodia announced that it had signed a binding agreement with Albemarle Corporation pursuant to which Albemarle Corporation will acquire
Rhodia's phosphorus-based polyurethane flame retardants business. As part of the transaction, Albemarle is acquiring Rhodia's associated production site in Avonmouth in the United Kingdom. The
transaction is subject to regulatory approvals.

Nylstar Restructuring Plan

Faced with on-going difficulties in the worldwide textile market, Nylstar, Rhodia's 50/50 joint venture with SNIA, shall be implementing a restructuring plan for
2003 aimed at reducing its manufacturing and production capacity at its plants located in Germany and Italy.

Butachimie

In connection with DuPont's announcement that it intends to spin off its polyamides business, Rhodia and DuPont have commenced discussions on the future status of
their partnership in the Butachimie 50/50 joint venture.

Results of Operations

Consolidated Operating Results for 2000, 2001 and 2002

The table below sets forth an analysis of operating income for the fiscal years ended December 31, 2000, 2001 and 2002.

|                                              |  | Year ended December 31, |  
|--------------------------------------------- |  | ----------------------- | -
|
|
|Net sales                                     |  | 7,419                   |  
|Production costs and expenses                 |  | (5,053                  | )
|Administrative and selling expenses           |  | (1,138                  | )
|Research and development expenses             |  | (194                    | )
|Restructuring and environmental costs         |  | (14                     | )
|Depreciation of property, plant and equipment |  | (450                    | )
|Amortization of intangible assets             |  | (42                     | )
|                                              |  |                         |  
|Operating income                              |  | 528                     |  
|                                              |  |                         |  

---

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Consolidated Operating Results for 2001 and 2002

Net Sales

The table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's
consolidated net sales by Division between 2001 and 2002. The method of calculating these estimates is described under "Presentation of Financial and Other Information."

|                            |  |       |  |      |    |      |    |       |  | On a comparable basis |    |     
|--------------------------- |  | ----- |  | ---- | -- | ---- | -- | ----- |  | --------------------- | -- | ----
|
|
|
|Consumer Specialties(1)     |  | 2,163 |  | (5.6 | )% | (3.5 | )% | 1,965 |  | (3.0                  | )% | (1.4
|Polyamide(1)                |  | 1,444 |  | (0.4 | )  | (3.7 | )  | 1,385 |  | 1.7                   |    | (3.9
|Fine Organics(1)            |  | 1,219 |  | 0.5  |    | (4.7 | )  | 1,168 |  | 3.7                   |    | 0.2 
|Industrial Specialties(1)   |  | 1,220 |  | (4.9 | )  | (4.8 | )  | 1,101 |  | 2.1                   |    | 0.4 
|Services and Specialties(1) |  | 1,013 |  | (1.2 | )  | (3.6 | )  | 964   |  | 2.3                   |    | (3.4
|Other(2)                    |  | 220   |  |     |    |     |    |      |  |                      |    |    
|                            |  |       |  |      |    |      |    |       |  |                       |    |     
|Net sales                   |  | 7,279 |  | (3.8 | )% | (3.9 | )% | 6,718 |  | 0.9                   | %  | (2.4
|                            |  |       |  |      |    |      |    |       |  |                       |    |     

---

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The
tables below set forth the consolidated net sales and contribution by Division and contribution to net sales by geographic region for the fiscal years ended December 31, 2001
and 2002.

|                          |  | Year ended December 31, |  
|------------------------- |  | ----------------------- | -
|
|
|
|Net sales                 |  | 7,279                   |  
|Contribution by Division: |  |                         |  
|Consumer Specialties      |  | 30                      | %
|Polyamide                 |  | 19                      |  
|Fine Organics             |  | 15                      |  
|Industrial Specialties    |  | 16                      |  
|Services and Specialties  |  | 14                      |  
|Other(1)                  |  | 6                       |  
|                          |  |                         |  
|Total                     |  | 100                     | %
|                          |  |                         |  

---

|                    |  | Year ended December 31, |  
|------------------- |  | ----------------------- | -
|
|
|Europe              |  | 49                      | %
|North America       |  | 22                      |  
|Latin America       |  | 16                      |  
|Asia/Pacific/Africa |  | 13                      |  
|                    |  |                         |  
|Total               |  | 100                     | %
|                    |  |                         |  

---

Net
sales declined by 9.1% to €6,617 million in 2002 from €7,279 million the previous year. Changes in the scope of consolidation and
changes in exchange rates accounted for the bulk of the decline. Changes in the scope of consolidation, corresponding essentially to the divestment of non-strategic assets in 2001 and
2002, had a 3.8% negative impact on sales. The main changes, in declining order of importance, were:



Changes
in exchange rates had a net negative impact of 3.9% on consolidated net sales, including 1.6% related to the U.S. dollar and 1.9% related to the Brazilian real.

On
a comparable basis (i.e. excluding changes resulting from the scope of consolidation and changes in exchange rates), net sales declined 1.5% for the year. Lower average selling prices
had a 2.4% negative impact. Polyamide prices were weakened by the continued depressed state of the textile market. In Services and Specialties, Eco Services prices in the United States are linked to
gas prices, which declined in 2002. Volume growth boosted net sales by 0.9%. All Divisions reported higher

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volumes,
with the exception of Consumer Specialties, which focused on building sales of higher margin products.

Consumer Specialties

Consumer Specialties net sales decreased by 13.2% to €1,878 million in 2002 from €2,163 million in 2001. Changes in
the scope of consolidation, including principally the divestment in 2001 of Albright & Wilson European surfactants business and the Empicryl lubricant additives businesses and the consolidation
in 2002 of new businesses in China, had a 5.6% negative
impact. Changes in exchange rates had a negative impact of 3.5%. All of the Division's businesses were adversely affected by the weaker U.S. dollar, which reduced their net sales in the same
proportions.

On
a comparable basis, net sales declined 4.4%, including 3.0% attributable to lower volumes and 1.4% due to lower average prices. Phosphorus Derivatives volumes rose sharply during the
year, especially in Asia. Volumes declined, however, across all other Consumer Specialties businesses, due principally to their increased focus on selling higher margin products. This was the case, in
particular, for the Cosmetics & Detergents business.

Polyamide

Polyamide net sales declined by 6.3% to €1,353 million in 2002 from €1,444 million in 2001. Changes in exchange
rates (mainly the decrease in the value of the Brazilian real) accounted for 3.7% of the decline, while changes in scope of consolidation (corresponding to the August 2002 divestiture of
Kermel) had a 0.4% negative impact.

On
a comparable basis, net sales decreased by 2.2%, reflecting a 1.7% positive impact of higher volumes and a 3.9% negative impact of lower average prices, due principally to increased
competitive pressure in a depressed market. The Division's net sales started to improve in the second quarter, led by the action plans launched in late 2001. Sales and marketing initiatives
contributed to an increase in volumes, especially for engineering plastics and polyamide intermediates, despite a persistently difficult business environment. In particular, the absence of any
improvement in the textile market weakened intermediates sales by the Division's Brazilian subsidiary. However, higher volumes in other end markets permitted the Division to use the additional
capacity of the recent extension of Butachimie's production facility.

Fine Organics

Fine Organics net sales remained relatively stable at €1,213 million in 2002, compared to €1,219 million in 2001.
The consolidation of Ruohai in China had a 0.5% positive impact while changes in exchange rates had a negative impact of 4.7%. All businesses were affected by unfavorable exchange rates to varying
degrees, depending on their relative exposure to the U.S. dollar (Rhodia ChiRex, Pharmaceutical Ingredients, Perfumes & Specialties) or the U.S. dollar and the Brazilian real (Intermediates).
For the Life Sciences business, the effect of the weaker U.S. dollar was offset by a favorable currency effect on transactions in pound sterling.

On
a comparable basis, net sales increased 3.9%, including 3.7% attributable to higher volumes and 0.2% attributable to higher prices. Pharmaceutical Ingredients and Perfumes &
Specialties experienced a fall-off in volumes caused by increased competition, especially in the United States. By contrast, Rhodia ChiRex, Life Sciences and Intermediates all enjoyed higher volumes
for the year. Average Fine Organics prices declined slightly, but prices trended upwards in Intermediates and Perfumes & Specialties. In the case of phenol-based intermediates, the increase had
no impact on margins because prices are indexed to phenol prices.

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Industrial Specialties

Industrial Specialties net sales declined by 7.5% to €1,129 million in 2002 from €1,220 million in 2001. Changes in
exchange rates had a 4.8% negative impact, due principally to the weaker Brazilian real and U.S. dollar, while changes in scope of consolidationcorresponding to the 2001 divestment of the
Metal Organics business and the 2002 divestment of the Commodity Latex businesshad a negative impact of 4.9%.

On
a comparable basis, net sales increased 2.5%, including a 2.1% increase attributable to higher volumes and a 0.4% rise attributable to higher average prices. With the exception of
Silicones, all of the Division's businesses increased their sales volumes. Average prices rose in the Silicones and Silicas businesses, but were slightly down in the Paint, Paper & Building
Materials business.

Services and Specialties

Services and Specialties net sales declined by 5.8% to €954 million from €1,013 million in 2001. Changes in exchange
ratesprincipally the U.S. dollar and the Brazilian realhad a 3.6% negative impact. Higher volumes had a 2.3% positive impact, and lower average prices had a negative impact
of 3.4%. Changes in scope of consolidation mainly concerned the Eco Services business. All of the Division's businesses were affected by the unfavorable currency effect in roughly the same
proportions.

Acetow
sales declined to €447 million from €455 million in 2001. Sales increased 2.6% on a comparable basis, due principally to growth in
Russia, China and Brazil.

Eco
Services sales decreased by 9.6% to €358 million from €396 million in 2001. The 3.9% decline on a comparable basis mainly concerned the
sulfuric acid regeneration business in the United States and was due to the fact that under the terms of this business's long-term contracts, reductions in raw material costs are
automatically passed on to customers. A restructuring plan was launched at the end of 2002 to restore the competitiveness of European operations.

After
a difficult year in 2001, Electronics & Catalysis continued to suffer the effects of severely depressed demand in the electronics market. Sales declined by 8.0% to
€149 million from €162 million in 2001. On a comparable basis, the decline was 4.3%.

Other

"Other" includes sales by Rhodia's other businesses, including principally Rhodiaster, commercial resales made on behalf of non-Group companies and
elimination of interdivision revenues. Net sales by Rhodia's other businesses decreased 34.4% to €284 million in 2002 from €433 million in 2001. For the nine months
ended September 30, 2002, Rhodiaster recorded sales of €227 million. Rhodiaster was deconsolidated as of October 1, 2002.

Operating expenses

The table below sets forth management's estimates of the effect of changes in the scope of consolidation and exchange rates on Rhodia's production costs,
administrative and selling expenses and

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research
and development expenses between 2001 and 2002. The method of calculating these estimates is described under "Presentation of Financial and Other Information".

|                                    |  | 2001 Historical
Expenses |  | Scope of
Consolidation |    | Exchange Rates |    | 2001
Comparable Basis |  | 2002 Historical
Expenses
|----------------------------------- |  | ------------------------ |  | ---------------------- | -- | -------------- | -- | --------------------- |  | ------------------------
|
|Production costs and expenses       |  | 5,166                    |  | (4.0                   | )% | (3.9           | )% | 4,757                 |  | 4,489                   
|Administrative and selling expenses |  | 1,120                    |  | (2.1                   | )% | (3.0           | )% | 1,062                 |  | 1,104                   
|Research and development expenses   |  | 197                      |  | (1.0                   | )% | (2.0           | )% | 191                   |  | 201                     

The
table below sets forth financial data relating to Rhodia's operating expenses for fiscal years ended December 31, 2001 and 2002.

|                                      |  | Year ended December 31,
|------------------------------------- |  | -----------------------
|
|
|Production costs and expenses         |  | 5,166                  
|Administrative and selling expenses   |  | 1,120                  
|Research and development expenses     |  | 197                    
|Depreciation and amortization         |  | 542                    
|Restructuring and environmental costs |  | 163                    
|                                      |  |                        
|Operating expenses                    |  | 7,188                  
|                                      |  |                        

Production costs and expenses

Production costs declined 13.1% to €4,489 million in 2002, compared with €5,166 million in 2001. On a comparable
basis, production costs declined by 5.8%. The decline in raw material costs was responsible for an estimated €166 million of this reduction, and the restructuring programs
described above also had a significant impact. This decline was partially offset by an estimated €37 million increase in production costs relating to the start-up of
a new installation in the Fine Organics Division.

Administrative and selling expenses

Administrative and selling expenses declined slightly by 1.4%, from €1,120 million in 2001 to €1,104 million in
2002. On a comparable basis, administrative and selling expenses increased by 4.0%. Estimated savings generated by the Jump program for reducing fixed costs and the World Class Manufacturing program
(the "WCM program") for optimizing production capacity
both of which were launched in 1998 were offset by inflation and costs incurred by the Commercial Excellence and e-Business programs.

Research and development expenses

Research and development expenses remained relatively stable at €218 million (3.3% of net sales in 2002), compared with
€215 million in 2001 (3.0% of net sales). Excluding amortization, research and development expenses increased 2.0% from €197 million in 2001 to
€201 million in 2002. On a comparable basis, research and development expenses increased by 5.2%.

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Depreciation and amortization

Depreciation and amortization decreased by 17.5% to €447 million in 2002 from €542 million in 2001. This decline was
due in part to the decline in depreciation and amortization relating to restructuring, which declined from €65 million in 2001 to €5 million in 2002.

Restructuring and environmental costs

Restructuring and environmental costs decreased from €163 million in 2001 to €25 million in 2002, principally due to
the effect of Rhodia's restructuring program begun in late 2001. The €25 million in restructuring and environmental costs for 2002 principally concerned the Fine Organics
Division (with respect to restructuring Rhodia Chirex's pharmaceutical activities in the United Kingdom) and the Services and Specialties Division (with respect to Eco Services in Europe).

Operating income

Operating income rose to €351 million in 2002 from €91 million in 2001. 2001 operating income was reduced by
€163 million of restructuring and environmental costs and €65 million of restructuring-related depreciation and amortization. All Divisions contributed to
the improvement of operating income, including lower costs
recorded in "Other". Polyamide, Consumer Specialties and Fine Organics were the biggest contributors to the improvement. In addition, each Division also benefited from lower restructuring-related
depreciation and amortization.

Consumer Specialties

Consumer Specialties operating income increased 93.8% to €126 million in 2002 from €65 million in 2001. Operating
margin (operating income as a percentage of sales) increased from 3.0% in 2001 to 6.7% in 2002. In 2001, the Division's operating income was reduced by €19 million of
restructuring and environmental costs and €15 million of restructuring-related depreciation and amortization. The increase primarily reflected the benefits of the restructuring
launched at the end of 2001 in the Specialty Phosphates business, as well as the good manufacturing and sales performance of the Phosphorus Derivatives business. Cosmetics & Detergents
operating income remained stable due to innovation-driven improvements in product offerings. The Food business experienced start-up problems at a new plant in Europe and tougher
competition in the United States.

Polyamide

Polyamide operating income increased steadily from one quarter to the next, reaching €123 million in 2002 versus
€32 million in 2001. Operating margin increased from 2.2% in 2001 to 9.1% in 2002. In 2001, the Division's operating income was reduced by €36 million of
restructuring and environmental costs and €10 million of restructuring-related depreciation and amortization and approximately €26 million in exceptional
costs related to the extension of Butachimie's production capacity. The increase of operating income also resulted from the success of indexed contracts on raw materials and cost-cutting
initiatives. The restructuring programs launched at the end of 2001, involving the closure of five plants or production shops, resulted in a reduction in fixed costs in 2002, in line with
expectations.

Fine Organics

Fine Organics operating income increased to €36 million in 2002 from a loss of €34 million in 2001. Operating margin
increased from (2.8)% in 2001 to 3.0% in 2002. In 2001, the Division's operating income was reduced by €49 million of restructuring and environmental costs and
€24 million of restructuring-related depreciation and amortization. The increase reflected higher volumes at Rhodia ChiRex, as well as in Life Sciences and Intermediates,
coupled with lower raw materials costs. A restructuring plan was undertaken at Rhodia ChiRex UK in the fourth quarter, ahead of the market

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slowdown
expected in 2003. The profitability of the Pharmaceutical Ingredients and Perfumes & Specialties businesses improved following the restructuring carried out in 2001 in France and the
United States. The benefits of these measures were partly offset, however, by the effects of volume erosion experienced in increasingly competitive markets.

Since
early 2002, Intermediates operating income was weakened by the €37 million in additional costs generated by start-up problems at a plant operated
on behalf of another company. Several adjustments were made to the plant in the first half of 2002, while in the second half of 2002 more far-reaching process changes were made. The plant
was closed in November and December 2002 to allow the adjustment work to be carried out, paving the way for production to reach expected levels in the first half of 2003.

Industrial Specialties

Industrial Specialties operating income rose 29.3% to €75 million in 2002 from €58 million in 2001. Operating margin
increased from 4.8% in 2001 to 6.6% in 2002. In 2001, the Division's operating income was reduced by €12 million of restructuring and environmental costs and
€2 million of restructuring-related depreciation and amortization. Paint, Paper & Construction Materials operating income was lifted by increased sales in its core paint
and coating markets. Profitability of the Silicas business improved, thanks to higher sales volumes in the strategic tire and nutraceuticals markets. The Silicones business was weak in the second
half, while its profitability was also adversely affected by the closure of one of the main plants for debottlenecking.

Services and Specialties

Operating income for the Services and Specialties Division increased 14.5% to €95 million in 2002, compared with
€83 million in 2001. Operating
margin increased from 8.2% in 2001 to 10.0% in 2002. Restructuring charges amounted to €9 million in 2002 versus €20 million in 2001, including a
€12 million charge for depreciation and amortization. Acetow's good performance offset the impact of the difficulties faced by the other businesses.

Other

Operating loss of Rhodia's other businesses improved from a loss of €113 million in 2001 to a loss of €104 million
in 2002. Rhodiaster was sold in the latter part of 2002 and therefore contributed to consolidated earnings only for the first nine months of the year. Rhodiaster's contribution to operating income for
the period amounted to €19 million, representing 8.2% of Rhodiaster's sales for the period compared with 16.0% for the full twelve months of 2001. The lower margin reflects the
gradual deterioration of the South American polyester market during the course of the year. The costs of corporate functions continued to decline in 2002, and ended the year at nearly
€116 million.

Financial expenseNet

Financial expensenet was sharply reduced to €123 million in 2002 from €186 million in 2001, reflecting
the combined benefits of lower interest rates and a decline in average net debt. Financial expense-net represented 5.2% of average net debt for the year versus 5.8% in 2001. Average net
debt is calculated using the net debt at the end of each quarter. In addition, the reduction of capital expenditure led to a corresponding decline in related capitalized interest. Capitalized interest
is interest paid on indebtedness incurred to finance capital expenditures. The interest is capitalized and then amortized over the useful life of the asset financed.

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Other income/(expense)Net

Other income/(expense)net represented a net expense of €72 million in 2002, versus €108 million in
2001. This decline was due principally to the decrease in gains from asset disposals. Asset disposals generated a net loss of €34 million in 2002, including
€38 million from the main divestments described under "Scope of Activities Included in the Consolidated Financial Statements". With the exception of Rhodiaster, all of the
businesses divested during the year were sold at a profit, but these gains were not sufficient to offset the €109 million loss before tax on the sale of Rhodiaster. The
year-on-year improvement, which is analyzed in Note 21 to the consolidated financial statements, mainly reflects the fact that the 2001 amount includes two items
totaling €50 million, the first related to the closing of a site in Brazil and the second related to an arbitration proceeding in China. In addition, a net gain on foreign
currency of €14 million was recorded in 2002 as opposed to a net loss on foreign currency of €7 million the previous year. In 2001, asset disposals
yielded a net gain of €15 million.

Income taxes

In 2002, the Group recorded a tax charge of €66 million compared to an €86 million benefit in 2001 after
reclassifying the tax benefit arising on the Group's equity in the losses of affiliated companies, which amounted to nearly €8 million that year. The Group's effective tax rate
was 42.3%. The effective rate was higher than the statutory tax rate in France of 33.3% due principally to the fact that certain capital losses resulting from divestitures were not recognized for tax
deduction purposes.

In
2001, a deferred tax asset was recorded in respect of tax losses generated during the year. This led to recognition of a total tax benefit of €86 million,
excluding the tax benefit arising on the losses of affiliated companies.

Equity in earnings/(losses) of affiliated companies

Equity affiliates made a negative contribution of €38 million in 2002 compared with a negative contribution of
€16 million the previous year. The sharp deterioration stemmed from the ongoing crisis in the textile market, which caused the losses from Nylstar (a textile yarns joint venture
with SNIA) to worsen by €42 million.

Amortization of goodwill

Amortization of goodwill decreased 37% to €47 million in 2002, compared with €75 million in 2001. In 2001, this item
included accelerated amortization in the amount of €25 million.

Minority interests

Minority interests amounted to €(9) million in 2002, compared to €(5) million in 2001. The increase in minority
interests was largely due to the profits generated by Rhodia Heng-Chang, which has been consolidated globally since January 2002 and held by Rhodia at 70%.

Net loss

Rhodia ended the year with a net loss of €4 million, or €0.02 per share, versus a loss of
€213 million, or €1.19 per share, in 2001. The average number of shares used to calculate loss per share was 178,765,518 in 2002 and 179,103,640 in 2001.

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Consolidated Operating Results for 2000 and 2001

Net Sales

The table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's
consolidated net sales by division between 2000 and 2001. The method of calculating these estimates is described under "Presentation of Financial and Other Information".

|                            |  |       |  |      |    |      |   |       |  | On a comparable basis |    |     
|--------------------------- |  | ----- |  | ---- | -- | ---- | - | ----- |  | --------------------- | -- | ----
|
|
|
|Consumer Specialties(1)     |  | 2,192 |  | (1.0 | )% | 0.8  | % | 2,188 |  | (1.7                  | )% | 0.6 
|Polyamide(1)                |  | 1,589 |  | (0.3 | )  | (4.1 | ) | 1,520 |  | (6.5                  | )  | 1.5 
|Fine Organics(1)            |  | 1,185 |  | 7.5  |    | (2.2 | ) | 1,248 |  | (1.9                  | )  | (0.4
|Industrial Specialties(1)   |  | 1,239 |  | 0.0  |    | (3.5 | ) | 1,195 |  | 0.9                   |    | 1.2 
|Services and Specialties(1) |  | 984   |  | 0.7  |    | (0.6 | ) | 985   |  | (4.3                  | )  | 7.1 
|Other(2)                    |  | 230   |  | 10.4 |    | 7.0  |   | 271   |  | (19.9                 | )  | 0.7 
|                            |  |       |  |      |    |      |   |       |  |                       |    |     
|Net sales                   |  | 7,419 |  | 1.2  |    | (1.3 | ) | 7,407 |  | (3.3                  | )  | 1.6 
|                            |  |       |  |      |    |      |   |       |  |                       |    |     

---

69

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The tables below set forth Rhodia's consolidated net sales and contribution by Division and contribution to net sales by geographic region for the
fiscal years ended December 31, 2000 and 2001.

|                          |  | Year ended December 31, |  
|------------------------- |  | ----------------------- | -
|
|
|
|Net sales                 |  | 7,419                   |  
|Contribution by Division: |  |                         |  
|Consumer Specialties      |  | 30                      | %
|Polyamide                 |  | 21                      |  
|Fine Organics             |  | 14                      |  
|Industrial Specialties    |  | 16                      |  
|Services and Specialties  |  | 13                      |  
|Other(1)                  |  | 6                       |  
|                          |  |                         |  
|Total                     |  | 100                     | %
|                          |  |                         |  

---

|                    |  | Year ended December 31, |  
|------------------- |  | ----------------------- | -
|
|
|Europe              |  | 50                      | %
|North America       |  | 21                      |  
|Latin America       |  | 16                      |  
|Asia/Pacific/Africa |  | 13                      |  
|                    |  |                         |  
|Total               |  | 100                     | %
|                    |  |                         |  

---

Net
sales declined by 1.9%, from €7,419 million in 2000 to €7,279 million in 2001. Changes in scope of consolidation, relating primarily to
the full-year consolidation of Albright & Wilson and ChiRex and disposals of the European surfactants, Empicryl and metal organics businesses, contributed 1.2%. Changes in exchange
rates had a negative impact of 1.3%, reflecting the negative impact of the Brazilian real, the pound sterling and Asian currencies and the positive impact of the dollar/euro exchange rate. On a
comparable basis, net
sales declined 1.7%, representing a 3.3% drop in volume (primarily reflecting severe downturns in the textile and electronics markets) and a 1.6% increase in prices.

Consumer Specialties

Net sales by the Consumer Specialties Division declined by 1.3% in 2001, to €2,163 million from €2,192 million in
2000, primarily due to the disposal of Albright & Wilson's European surfactants business and Empicryl lubricant additives businesses in April 2001 and June 2001, respectively. Changes in
exchange rates had a positive effect of 0.8%.

70

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On
a comparable basis, net sales declined 1.1%, comprising a 1.7% decline in volumes and 0.6% due to lower average prices. With a large part of its of net sales generated in North
America, the Division was particularly affected by the slowdown in the U.S. economy during the second half of 2001, worsened by the events of September 11th. Over the full year, the weakness in
demand was especially noticeable in sodium tripoly-phosphates (STPP) and low value-added phosphorus derivatives. Food ingredients continued to expand, without feeling any effects from the North
American slowdown. Growth in the cosmetics, detergent and food markets was driven by new product introductions.

Polyamide

Net sales by the Polyamide Division declined by 9.1% in 2001, to €1,444 million from €1,589 million in 2000. Changes
in exchange rates, related primarily to the Brazilian real, accounted for 4.1% of the decline.

On
a comparable basis, sales declined 5%, comprising a 6.5% decline in volume and a 1.5% positive impact of higher average prices. The decrease reflected difficulties encountered in
textile markets, which slipped into deep recession in 2001 following a worldwide collapse in demand. In addition, the slump in the electronics market, which negatively affected connectors and
electrical equipment, considerably weakened sales in the Engineering Plastics business. However, despite the exceptionally depressed market conditions, the Division as a whole gained new market share
during the year.

Fine Organics

Net sales by the Fine Organics Division amounted to €1,219 million in 2001, up 2.9% from the €1,185 million reported
in 2000. The increase was primarily due to the consolidation of ChiRex, acquired in the fourth quarter of 2000. Changes in exchange rates had a negative impact of 2.2%.

On
a comparable basis, sales decreased 2.3%, comprising a 1.9% decline in volumes and a 0.4% decline in prices. The year's overall performance reflected a significant slowdown in all the
Division's businesses during the second half. In particular, Pharmaceutical Ingredients was adversely affected by market over-capacity and highly aggressive competition from Asian aspirin
and paracetamol producers. Rhodia ChiRex confirmed the growth potential of its Contract Research business, but technical difficulties during start-up of a production plant caused delays in
sales of exclusive pharmaceutical molecules in the fourth quarter.

Industrial Specialties

Net sales by the Industrial Specialties Division declined by 1.5% in 2001, to €1,220 million from €1,238 million in
2000. Changes in exchange rates had a 3.5% negative effect related primarily to the Brazilian real.

On
a comparable basis, net sales increased by 2.1%, comprising a 0.9% increase in volumes and 1.2% attributable to higher average prices. Overall, sales showed resistance to a
deteriorating business environment. The Paint, Paper and Construction Materials business increased sales, despite the unfavorable impact of the U.S. economic slowdown. The pricing power of the three
core businesses, aliphatic di-isocyanates, specialty latex and solvents, contributed to the gain, during this period of slow volume growth. Silica sales were stable overall, with increases
in Europe and the United States in the tires, toothpaste, nutraceutics and other specialty markets and sales decline in the Asian shoe market. Silicone sales demonstrated strong resilience in the face
of challenging conditions in the main markets, particularly in North America.

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Services and Specialties

Net sales by the Services and Specialties Division rose by 2.9% in 2001, to €1,013 million from €984 million in
2000, but results varied in its three businesses.

Acetow
sales rose 11.8% to €455 million in 2001 from €407 million in 2000, led by sustained strong growth in volumes and prices,
particularly in Russia, China and Brazil. At the same time, Acetow began redeploying its cellulose acetate procurement, by halting production in Brazil and increasing operations in the United States
via Primester, a joint venture with Eastman Chemical Co. Sales at Rhodia Eco Services increased 1.5% during the year, to €396 million from €390 million in
2000. This business maintained market share while increasing prices, particularly through the sulfuric acid regeneration business in the United States and the waste treatment business. In Europe, on
the other hand, this business had to deal with a serious deterioration of the sulfuric acid market following the entry of new British competitors. After a favorable year in 2000, Rhodia
Electronics & Catalysis sales fell 13.4% in 2001, to €162 million from €187 million in 2000, due principally to a nearly 50% drop in demand from
the electronics industry. This unfavorable market environment temporarily offset the impact of two years of restructuring the business portfolio and manufacturing base and disrupted the turnaround
that had begun in 2000. Nevertheless, Electronics & Catalysis consolidated market share during the year and confirmed its leadership position in automotive emissions control solutions.

Other

Net sales of Rhodia's other businesses amounted to €433 million in 2001, compared with net sales of €451 million in
2000. In 2001, Rhodiaster posted sales of €337 million, down 5.3% in relation to 2000, and its operating margin remained stable at 16.0%.

Operating expenses

The table below sets forth financial data relating to Rhodia's operating expenses for the fiscal years ended December 31, 2000 and 2001.

|                                      |  | Year ended December 31,
|------------------------------------- |  | -----------------------
|
|
|Production costs and expenses         |  | 5,053                  
|Administrative and selling expenses   |  | 1,138                  
|Research and development expenses     |  | 194                    
|Depreciation and amortization         |  | 492                    
|Restructuring and environmental costs |  | 14                     
|                                      |  |                        
|Operating expenses                    |  | 6,891                  
|                                      |  |                        

Production costs and expenses

Production
costs totaled €5,166 million, up €113 million in relation to 2000. Raw material costs, which are included in this category, were
responsible for an additional €166 million. Also contributing to this increase were charges of approximately €26 million incurred by the Polyamide
Division related to the launching of a new production unit at the Chalampé site in France, including €11 million corresponding to non-capitalized
projects and start-up expenses, plus additional expenses of €15 million for purchases and external storage linked to the temporary production shutdown.

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However,
the Jump program and the WCM program provided relief on certain structural costs, limiting their impact on declining sales and partially offsetting the impact of unusual
charges.

Administrative and selling expenses

Administrative and selling expenses declined by 1.6%, from €1,138 million in 2000 to €1,120 million in 2001.
Estimated savings generated by the Jump program offset costs incurred by the Commercial Excellence and e-Business programs.

Research and development expenses

Research and development expenses increased to €215 million (or €197 million excluding amortization). Research and
development expenses as a percentage of sales increased from 2.9% in 2000 to 3.0% in 2001.

Depreciation and amortization

Depreciation and amortization increased by 10.2% to €542 million in 2001 from €492 million in 2000. The increase in
both depreciation and amortization was due principally to the exceptional amortization described above under "Restructuring charges."

Restructuring and environmental costs

Restructuring and environmental costs increased from €14 million in 2000 to €163 million in 2001, for the reasons
described above under "Restructuring charges and related amortization charges" and in Note 17(d) to the Consolidated Financial Statements.

Operating income

Operating income for 2001 amounted to €91 million compared with €528 million in 2000, after charges for
restructuring costs (€253 million) and other items.

Consumer Specialties

Operating income declined 35.0% from €100 million in 2000 to €65 million in 2001. Operating margin declined from
4.6% in 2000 to 3.0% in 2001. Former Albright & Wilson facilities were restructured during the year, leading to an improvement in capacity utilization. This was particularly the case in the
Phosphates business, which closed four plants and head offices and reduced workforce levels. However, the impact of synergies arising on the integration of Albright & Wilson, which totaled
around €75 million by the end of 2001, was more than offset during the year by higher energy prices and prices for soda ash, elemental phosphorus and other raw materials.
Operating income was also reduced by the €20 million in restructuring expense originally scheduled for 2002 and 2003 but incurred in 2001 in the Phosphates and Phosphorus
Derivatives businesses.

Polyamide

Operating income declined 82.0% from €178 million in 2000 to €32 million in 2001 due principally to the decline in
business, reserves for restructuring (€36 million), exceptional expenses related to capacity expansion at the Butachimie upstream plant (€26 million) and
the impact of higher raw materials prices (partly offset by the reduction in fixed costs). Operating margin declined from 11.2% in 2000 to 2.2% in 2001. The restructuring programs are targeted at
optimizing the industrial base to a best-cost position. In 2001, this involved the closure of five plants and production facilities in order to increase utilization of the Division's
competitive plants, particularly those located in Eastern Europe.

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Fine Organics

Operating income declined from €82 million in 2000 to a loss of €34 million in 2001. Operating margin declined from
6.9% in 2000 to (2.8)% in 2001. In response to the challenging environment, the Division restructured operations to improve competitiveness by adjusting production capacity to market needs. The
Division recorded €92 million of restructuring charges and accelerated amortization and depreciation, and also experienced with high raw materials costs. In the fourth quarter
of 2001, however, the Division noted for the first time a positive impact from lower petrochemical feedstock prices, which had begun to ease in the second half of 2001.

Industrial Specialties

Operating income declined 37.0% from €92 million in 2000 to €58 million in 2001, primarily due to the impact of
restructuring and environmental costs (€12 million) and higher raw materials and energy prices. Operating margin declined from 7.4% in 2000 to 4.8% in 2001. Margins were
adversely impacted by high raw materials prices in the first half of 2001 and by greater price competition in the second half of 2001.

Services and Specialties

Operating income declined 31.4% from €121 million in 2000 to €83 million in 2001, due principally to restructuring
charges. Operating margin
declined from 12.3% in 2000 to 8.2% in 2001. The performance in 2001 was led by sustained growth at Rhodia Acetow and breakeven results at Rhodia Eco Services, which offset the difficulties at Rhodia
Electronics & Catalysis over the year.

Other

Other businesses recorded an operating loss of €113 million in 2001, compared with an operating loss of €45 million
in 2000. This decrease was due principally to €27 million of restructuring charges. The corporate functions were reorganized in 2001. Most corporate management and support
functions that had been included in Division structures were centralized at the Group level, enabling the Divisions to focus more effectively on their specific businesses.

Financial expenseNet

The marginal increase in net financial expense, from €177 million in 2000 to €186 million in 2001, is primarily due
to the impact of acquisitions. Acquisitions carried out in 2000 (Albright & Wilson and ChiRex, consolidated as from April 1, 2000 and October 1, 2000, respectively) affected
financial expense for only part of 2000 whereas in 2001 these charges were incurred on a full-year basis.

Despite
this burden, 2001 net financial expense represented 5.8% of the Group's average net debt, compared with 5.9% in 2000. The series of interest rate cuts in 2001the
positive effects of which take several months before being reflected in financial expensecontributed to a reduction in debt servicing, especially at the end of the year.

Other income/(expense)Net

After an expense of €7 million in 2000, this item increased to an expense of €108 million in 2001. The additional
€101 million expense principally reflects:



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Net
gains on the disposal of assets, which rose from €13 million in 2000 to €15 million in 2001, came primarily from the sale of real estate
in Brazil and the Empicryl lubricant additives businesses (Consumer Specialties Division) in June 2001. In 2000, net gains on disposals primarily concerned the sale of the Kallo company.

Income taxes

A deferred tax asset has been recognized, corresponding primarily to the expected tax savings from the application of tax loss carry-forwards generated in 2001.
As a result, Rhodia recorded a tax benefit of €86 million in 2001, compared with a provision of €95 million in 2000.

Equity in earnings/(losses) of affiliated companies

Income from companies accounted for by the equity method fell from €8 million in 2000 to a loss of €16 million in
2001. This sharp decline resulted from the collapse of the polyamide markets as reflected in the performance of Nylstar, a joint venture with SNIA to produce textile yarns. The increase in the
contribution made by Teris (Services and Specialties Division), a joint venture with Suez in the industrial waste treatment sector, were not sufficient to offset this decline.

Amortization of goodwill

Amortization of goodwill increased to €75 million in 2001, compared with €32 million in 2000 due principally to
accelerated goodwill amortization related to the restructuring program.

Net income/(loss)

The Group reported a net loss of €213 million in 2001, compared with net income of €216 million in 2000. In addition
to items affecting operating income, net income was adversely affected by losses of companies accounted for by the equity method (€16 million) and provisions for risks and
exceptional items (€80 million).

Earnings
per share, calculated on the basis of the average number of outstanding shares in 2001 (179,103,640), represented a loss of €1.19 compared with income of
€1.23 in 2000.

Liquidity and Capital Resources

In 2002, Rhodia's principal sources of liquidity were cash flow generated from operations, asset disposals and various sources of external financing, including
the issuance of commercial paper, other debt securities, private placement notes and borrowings under revolving credit facilities. In addition to these sources of financing, Rhodia companies also sell
trade receivables in order to provide cash for their operations. Rhodia believes that its operating cash flows, borrowings under existing committed lines of credit and the proceeds of the offering
will be adequate to allow it to meet its current debt service obligations as they become due, working capital needs, and anticipated capital expenditures.

As
of December 31, 2002, €645 million of Rhodia's debt was maturing in 2003, €404 million in 2004,
€537 million in 2005 and €488 million in 2006. These amounts relate principally to the maturities of debt securities issued under Rhodia's Euro
medium-term note program (with €500 million maturing in 2005 and €300 million maturing in 2006), and amounts drawn under committed credit
facility agreements.

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As
of December 31, 2002, Rhodia had €2,116 million of committed credit facilities. €565 million of these facilities expire in 2003,
€1,065 million in 2004, €220 million in 2005 and €177 million in 2006. The amounts expiring in 2004 include a syndicated credit
facility of €600 million. Since December 31, 2002, Rhodia has negotiated new committed credit facilities and certain facilities have expired. As a result, the total
amount of Rhodia's committed credit facilities as of March 31, 2003 was €2,094 million. As of December 31, 2002 Rhodia's short-term borrowings included
€175 million of commercial paper and €269 million of other short-term financings. The commercial paper program consists principally of sales
of Frenchbillets de trésorerie. The €269 million of other short-term borrowings are generally
uncommitted revolving financings granted to Rhodia SA and to various subsidiaries.

Another
important source of Rhodia's financial liquidity is the monthly or quarterly sale of some of its uncollected trade receivables. Certain Rhodia companies sold uncollected trade
receivables during 2002 and 2001, in accordance with multi-year asset securitization agreements entered into with various banks under which receivables can be sold, on a
non-recourse basis, either to qualifying special purpose entities (QSPEs) or directly to banks, and are settled against cash payments and undivided interests in a defined pool of
receivables (residual interests). The QSPEs then sell the interests they purchased in those receivables to commercial paper conduits. In 2002, Rhodia entered into a new multi-year asset
securitization agreement under which certain European subsidiaries can fund up to €240 million of trade receivables through a QSPE that then sells the interests it purchased in
those receivables to a commercial paper conduit. As of December 31, 2002, trade receivables outstanding of €627 million had been sold, with respect to which Rhodia received cash
payments of €531 million. The balance is paid to Rhodia after the collection of the trade receivables is made, ordinarily within three months of the sale. See Notes 11 and 29(f)
to the Consolidated Financial Statements.

Some
of Rhodia's committed credit lines are subject to certain financial covenants regarding a maximum level of net debt to EBITDA, a minimum level of EBITDA to net interest expense, a
minimum level of stockholders' equity and/or a maximum level of consolidated net indebtedness to capitalization. Financial covenant calculations are based on French GAAP financial information. As of
December 31, 2002, Rhodia satisfied all of its financial covenants. Most of Rhodia's committed credit facility agreements and the agreement governing the U.S. private placement notes contain a
covenant requiring the Company to maintain a ratio of net debt to EBITDA of less than 3.5 and a ratio of EBITDA to net financial expense of greater than 5.0. In facilities for which the ratio of
EBITDA to net financial expense is tested after December 31, 2004, such ratio will be 4.5 or less for such testing dates. Net Debt, EBITDA and net financial expense are defined in the
agreements and differ from similar measures used elsewhere in this annual report on Form 20-F. At December 31, 2002 Rhodia's ratio of net debt to EBITDA amounted to 3.3 and its ratio of
EBITDA to net financial expense amounted to 6.8. These covenants are tested annually, and under some agreements, semi-annually. Rhodia's ability to comply with these covenants will depend on its
operating performance and level of indebtedness. If Rhodia's operating performance is insufficient to comply with these covenants, Rhodia could be required to take other measures to reduce its
indebtedness, including asset disposals. Rhodia might not be successful in completing such disposal. Five of the committed credit facility agreements (with combined commitments of
€672 million) contain a covenant, to be tested on December 31, 2003 and 2004, as applicable, requiring Rhodia to maintain a minimum stockholders' equity of
€1,829 million. €410 million of these facilities expire in 2004 and €96 million expire in 2005. Rhodia has signed a binding agreement to amend one of
these facilities to, among other things, remove the stockholders' equity covenant and reduce the ratio of EBITDA to net financial expense to 4.0. As of December 31, 2002 total stockholders'
equity amounted to €1,835 million and as of March 31, 2003 it amounted to €1,700 million. In addition, the agreement governing the $290 million U.S. private
placement notes contains a covenant requiring Rhodia to maintain a minimum stockholders' equity of €1,600 million on an ongoing basis. Future drawings under the credit facilities will
be available only if, among other things, Rhodia meets the various financial covenants included in these facilities. Rhodia is currently in

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discussions
with the lenders under several of these credit facilities to renegotiate or extend the facilities and modify the terms of these financial covenants. Such discussions may not be successful.

Consolidated Balance Sheet

Operating working capital

Rhodia's operating working capital decreased from €1,401 million at December 31, 2001, to €892 million at
December 31, 2002. This change in operating working capital was due principally to a group-wide effort to lower inventory levels and improve the collection of accounts receivable.
At December 31, 2002, cash and cash equivalents were
€143 million, of which €65 million was held in euro and the equivalents of €34 million was held in Brazilian real, €22 million in
U.S. dollars, €8 million in Swiss francs, €7 million in pounds sterling and €7 million in other currencies.

Consolidated net debt

Consolidated net debt (defined as long-term debt, plus short-term borrowings and current portion of long-term debt, minus cash
and cash equivalents and marketable securities) was reduced to €2,133 million at December 31, 2002 from €2,572 million at year-end
2001. Liquid assets (cash and cash equivalents and marketable securities) totaled €251 million at December 31, 2002, and short-term financial debt
(short-term borrowings and current portion of long-term debt) amounted to €645 million. At December 31, 2001, Rhodia had liquid assets of
€413 million and short-term financial debt of €1,036 million. The decrease stemmed from the use of cash flow from operations and the
deconsolidation of debt relating to business disposals, as well as from a favorable currency effect. This was partially offset by advances made to joint-venture partners, consolidation of businesses
recently acquired in China and Venezuela, continued investments in intangible assets and the distribution of dividends. At December 31, 2002, the net
debt-to-stockholders' equity (including minority interests) ratio stood at 1.15 versus 1.09 one year earlier.

Other long-term liabilities

Long-term contingency reserves amounted to €1,233 million at December 31, 2002 compared with
€1,239 million at December 31, 2001. Reserves at December 31, 2002 consisted mainly of reserves for pension and retirement costs
(€788 million) and deferred income taxes (€217 million). Other long-term liabilities amounted to €141 million,
virtually unchanged from €149 million a year earlier.

Stockholders' equity and minority interests

Stockholders' equity including minority interests stood at €1,858 million at December 31, 2002, a decrease of
€493 million compared with the year-earlier figure. The decline primarily corresponds to the €397 million negative translation adjustment (due
principally to the devaluation of the Brazilian real), recognition of the 2002 net loss of €4 million, 2001 dividend payments of €21 million and purchases
of treasury stock amounting to €10 million.

Consolidated Statements of Cash Flow

Net cash provided by operating activities

Net cash provided by operating activities decreased from €1,002 million in 2000 to €676 million in 2001 and to
€506 million in 2002. The decline was due principally to the evolution of net results over the three years, which declined from net income of €216 million in
2000 to net losses of €213 million in 2001 and €4 million in 2002. Net cash provided by operating activities declined in 2002 due to cash expenditures relating
to restructuring reserves accrued in 2001. The change in other operating assets and liabilities, principally due to exceptional pension contributions also contributed to this decline.

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In
France, retirement indemnities arise pursuant to labor agreements, internal conventions and applicable local legal requirements. Retirement indemnities in France are funded from
current cash flows, and there is no legal requirement to maintain assets to fund these liabilities. As of December 31, 2002, Rhodia had projected benefit obligations of
€674 million with respect to our French retirement indemnities.

In
the United States and the United Kingdom, liabilities arise pursuant to labor agreements, pension schemes and plans and other employee benefit plans, some of which are required to
maintain assets to fund their liabilities. As a result of stock market declines in 2002, the market value of the assets in our funded pension plans, including our nonqualified and foreign plans, has
declined. In 2002, the pension plan assets for certain of our foreign pension plans fell below required levels with respect to their related accumulated benefit obligation. Applicable laws and
regulations would have allowed us to spread contributions to cover the shortfall over 3 to 5 years. However, Rhodia chose to cover most of the shortfall by making an exceptional cash contribution of
€145 million to U.S. and U.K. pension plans in September and December 2002. With respect to our foreign plans, as of December 31, 2002, Rhodia had projected benefit
obligations of €1,382 million and plan assets of €1,122 million.

Net cash used by investing activities

Net cash used by investing activities amounted to €60 million for 2002, €154 million for 2001 and
€2,049 million in 2000. The factors affecting the decline in net cash used by investing activities included:



Net cash provided (used) by financing activities

Net cash provided by financing activities comprises mainly changes in short-term and long-term borrowings.



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Long-term
borrowings decreased over the three-year period due principally to repayment of certain long-term debts coming to maturity and the
application of proceeds from the disposal of assets.

Commitments

The tables below set forth gross financial debt, capital lease obligations and operating leases as of December 31, 2002, as well as the maturity/payment
schedules for each of these items. See Notes 18 and 23(b) to the Consolidated Financial Statements.

|                          |  | As of December 31, 2002
|------------------------- |  | -----------------------
|
|Gross financial debt      |  | 2,384                  
|Capital lease obligations |  | 6                      

|                 |  | As of December 31, 2002
|---------------- |  | -----------------------
|
|Operating leases |  | 258                    

Rhodia's gross financial debt includes €1,087 million in bonds and €1,297 million in other
instruments. At December 31, 2002, Rhodia held €1,209 million of its long-term debt (including capital leases) in euro, €972 million in
U.S. dollars and €203 million in other currencies. This breakdown does not reflect Rhodia's exposure to these currencies' interest rates. As of December 31, 2002,
maturities in 2003 are comprised of €201 million of current maturities of long-term debt and €175 million of commercial paper and other
short-term financings granted to Rhodia and to various subsidiaries.

At
December 31, 2002, the net present value of total future minimum lease payment (at an assumed discount rate of 6%) was €214 million. Operating leases are
payments in relation to the leasing of movable equipment, such as barges and rail cars, the sale-leaseback of real estate and the rental of office buildings.

Off-balance sheet and other commitments

Sale of Rhodiaster

In
October 2002, Rhodia sold its investment in Rhodiaster to Gruppo Mossi & Ghisolfi. Since it was impossible in Brazil to obtain approvals from the competition authorities (CADE)
and the stock exchange administration (CVM) before closing, Rhodia granted Gruppo Mossi & Ghisolfi an option to resell the shares acquired to Rhodia if these authorizations were denied. Both
the CADE and CVM authorizations have subsequently been granted.

Rhodia
and Mossi & Ghisolfi entered into an agreement granting a purchase price increase to Rhodia if a certain EBITDA level is exceeded for the four quarters after the date of
sale, or a purchase price adjustment in favor of the purchaser if this EBITDA level is not reached. The maximum price adjustment, positive or negative, for the four quarters combined is
€13 million. Rhodia and

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Mossi &
Ghisolfi are currently in discussions concerning the application of the aforementioned purchase price adjustment clause. In addition, adjustments may be made to the purchase price after
the date of sale based on trade payable amounts and the value of certain finished goods of the sold businesses. Total consideration for this transaction includes a €13 million
payable to Rhodia, of which €7 million is payable upon Rhodia delivering to the purchaser final documentation on an investment project and €6 million is
payable within three years of the closing when the investment starts. On the date of the sale, Rhodia entered into an agreement with Rhodiaster under which Rhodia will pay to Rhodiaster an
$18 million incentive over the twelve-month period following the sale. In return for these incentives, Rhodiaster will not terminate a steam supply agreement before September 30, 2003.
On the basis of the economics of this arrangement, Rhodia considered that this incentive was a price reduction and accordingly recorded a short-term accrual for the amount of the incentive. Finally,
Rhodia recorded a receivable of €5.3 million from the purchaser payable either in cash, or in receivables to be collected from current customers of Rhodiaster. In relation to
environmental matters, Rhodia is responsible for (i) remediation of pollution arising from the activities conducted by Rhodia prior to the date of sale and (ii) damages arising out of
any breach of representations and warranties made by Rhodia with respect to certain environmental matters, in each case subject to certain limitations as to amount and duration. Rhodia's maximum
liability under the sale agreement is €97.5 million except with respect to certain remediation actions identified and agreed upon on the date of sale, discontinued activities
and title to the transferred shares. The sale included standard guarantees related to accounting, tax, employee and other matters.

Sale of phenol, HCl and soda ash businesses

In October 2002, Rhodia sold its phenol, HCl (hydrochloric acid) and soda ash businesses to Bain Capital and retained an 18.2% holding of the new group.
Guarantees are limited as to the time period and amount involved. In connection with the transfer, Rhodia recorded a vendor note from the purchaser for a total of €22 million
which payment is subordinated to the repayment of the new group's bank debt from the acquisition.

The
commitments and specific guarantees are:



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This
sale also includes customary warranties related to accounting, tax, environmental, employee and other matters.

In
connection with other divestitures, Rhodia has also given certain representations, warranties and indemnities to purchasers and some divestitures are subject to purchase price
adjustments.

Other off-balance sheet commitments

From time to time, Rhodia guarantees the obligations of its joint ventures and other non-consolidated companies. Guarantees of debt of joint ventures amounted to
€171 million as of December 31, 2002, compared with €186 million as of December 31, 2001. The decrease was due principally to the divestitures of Rhodia's
stake in Teris and in Latexia and to exchange rate variations. Rhodia's principal guarantee to joint-ventures is its guarantee of certain debts of Primester. Guarantees of indebtedness of other
non-consolidated companies amounted to €26 million at December 31, 2002, compared with €74 million at December 31, 2001, principally due to the
consolidation of some affiliates in Asia as from January 1, 2003. See Note 23 to the Consolidated Financial Statements.

Rhodia
has also granted residual value guarantees under equipment operating leases, totaling €70 million (net of deferred profits of €69 million)
as of December 31, 2002. An independent appraiser has projected that the fair values of the leased equipment are in excess of the amounts guaranteed. See Note 29 to the
Consolidated Financial Statements.

Net Income and Stockholders' Equity Under U.S. GAAP

The following table summarizes net sales, operating income, net income and stockholders' equity under French GAAP and U.S. GAAP for the three years ended
December 31, 2002, as well as an explanation of the principal differences. A reconciliation to U.S. GAAP is provided in Note 29 to the Consolidated Financial Statements.

|                         |             | 2000                                       |       | 2001 |       | 2002 |      
|------------------------ | ----------- | ------------------------------------------ | ----- | ---- | ----- | ---- | -----
|
|Net sales:               |             |                                            |       |      |       |      |      
|                         | French GAAP |                                            | 7,419 |      | 7,279 |      | 6,617
|                         | U.S. GAAP   |                                            | 6,647 |      | 6,554 |      | 6,061
|Operating income(1):     |             |                                            |       |      |       |      |      
|                         | French GAAP |                                            | 528   |      | 91    |      | 351  
|                         | U.S. GAAP   |                                            | 404   |      | (172  | )    | 261  
|Net Income/(loss):       |             |                                            |       |      |       |      |      
|                         | French GAAP |                                            | 216   |      | (213  | )    | (4   
|                         | U.S. GAAP:  |                                            |       |      |       |      |      
|                         |             | Income/(loss) from continuing operations   |       | 222  |       | (232 | )    
|                         |             | Income/(loss) from discontinued operations |       | (6   | )     | 19   |      
|                         |             | Net income/(loss)                          |       | 216  |       | (213 | )    
|Stockholders' equity(2): |             |                                            |       |      |       |      |      
|                         | French GAAP |                                            | 2,593 |      | 2,267 |      | 1,835
|                         | U.S. GAAP   |                                            | 2,409 |      | 2,014 |      | 1,446

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The
accounting for discontinued operations under U.S. GAAP changed in 2002. Financial Accounting Standards No. 144,Accounting for the Impairment or
Disposal of Long-Lived Assets, ("FAS 144") requires that a disposal of a business that qualifies as a component of an entity must be accounted for as a
discontinued operation. The results of operations of these disposals, including financial expenses, income taxes and the gain/(loss) on the disposal are all reflected as discontinued operations and
prior periods must be restated in a comparable manner. Under French GAAP, the results of operations of businesses sold are included until their respective dates of disposal.

The
differences in net sales in 2002, 2001 and 2000 of €556 million, €725 million and €772 million, respectively, are
the result of applying FAS 144 for the accounting for discontinued operations for U.S. GAAP in 2002.

Differences
in operating income in 2002, 2001 and 2000 of €47 million, €85 million and €59 million, respectively, are
the result of applying FAS 144 for the accounting for discontinued operations for U.S. GAAP in 2002. Differences in operating income in 2001 and 2000 of €75 million and
€32 million, respectively, result from including the amortization of goodwill (including accelerated amortization of goodwill) in operating income for U.S. GAAP. Differences in
operating income in 2002, 2001 and 2000 of €43 million, €103 million and €33 million, respectively, are the result of including the
loss on the sales of receivables and other income/(expense) in operating income for U.S. GAAP. In addition, Rhodia has reclassified certain income statement line items in 2001 and 2000 to
conform to the presentation in 2002 of operating income in accordance with U.S. GAAP. The amounts reclassified included "Loss on sales of receivables" amounting to
€27 million in 2001 and €17 million in 2000 and "Other income/(expense)" amounting to €76 million in 2001 and €16 million
in 2000. These items were previously classified below operating income and are now included in operating income. These items are identical under French GAAP and U.S. GAAP and are presented in
Note 21 (Other Income/ExpenseNet) to the Consolidated Financial Statements. This reclassification did not affect net income under U.S. GAAP.

The
difference in net income in 2002 of €47 million is from adopting Statement of Financial Accounting Standards No. 142,Accounting
for Goodwill and Other Intangible Assets, ("FAS 142"). The accounting for goodwill under U.S. GAAP changed in 2002. FAS 142 requires that Rhodia cease the
amortization of goodwill and indefinite-lived intangible assets and replace it with periodic tests of the impairment of these assets. French GAAP requires that Rhodia amortize goodwill and
indefinite-lived assets.

The
presentation of income from continuing operations and discontinued operations is as a result of adopting FAS 144 in 2002 for U.S. GAAP.

The
differences in stockholders' equity result from the following:



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Restatement of Reconciliation to U.S. GAAP

As part of its preparation of Note 29 (Reconciliation to U.S. GAAP and New U.S. Accounting Standards) to the Consolidated Financial Statements, Rhodia
determined that it was necessary to
restate financial information presented in the U.S. GAAP reconciliation note included in Rhodia's previously issued financial statements. The restatement was made in order to correctly reflect the
minimum pension liability, net of tax, in accordance with FAS 87Employers' Accounting for Pensions. The effect of the restatement on Stockholders'
equity as of December 31, 2001 was a reduction of €218 million under U.S. GAAP. The effect on Comprehensive income/(loss) was an increase in comprehensive loss of
€34 million in 2001 and a reduction of comprehensive income of €7 million in 2000. These changes had no effect on Rhodia's primary financial statements
and related notes, since they are prepared in accordance with French GAAP.

Environmental Matters

Rhodia's businesses must comply worldwide with a vast body of changing and increasingly stringent laws and regulations in such areas as emissions, the storage,
manufacture of, disposal or discharge of regulated substances, environmental protection, health and safety. In most jurisdictions in which Rhodia operates, industrial activities are subject to
obtaining permits, licenses and other authorizations, or to prior notification. As in the past, Rhodia intends to continue to make investments each year in order to comply with these regulations and
standards. Some regulations could restrict Rhodia's ability to modify or expand its facilities or continue production. The installation of expensive pollution monitoring and control equipment or other
major expenditures may be necessary. Rhodia may also have to bear considerable costs if new regulations require that hazardous waste (including slightly radioactive waste) that is currently stored on
its own sites be disposed at off-sites locations. Furthermore, many of Rhodia's currently or formerly owned or operated plants were or have been in operation for many years, and the soil
and ground water at some sites have been contaminated, as is frequently the case in the chemical industry. Other sites may also become contaminated in the future or other contamination may be
discovered at present or former locations. Rhodia invests in equipment to treat or prevent soil and ground water contamination at various sites. The on-site treatment of industrial waste
or its off-site disposal may also require Rhodia to undertake costly remediation work. When Rhodia was formed, Rhône-Poulenc (now Aventis) commissioned an independent expert
to conduct an environmental audit of the main operations of its two Chemicals and Fibers & Polymers businesses. This audit was updated in 1999, and since that date the Group continues to carry
out audits of its sites.

As
of December 31, 2002, Rhodia's accrued reserve for probable future remediation expenses amounted to €146 million, compared to
€183 million in 2001. In addition, Rhodia and Aventis were parties to an Environmental Indemnification Agreement, dated May 26, 1998, which entitled Rhodia to
indemnification from Aventis in case of unexpected environmental liabilities. On March 27, 2003 Rhodia and Aventis entered into an agreement to settle Rhodia's present and future claims under
the Environmental Indemnification Agreement. Pursuant to the settlement, Aventis agreed to pay Rhodia a total of €88 million, which amount includes €26 million
previously received by Rhodia in 2002 and €31 million received in the first quarter of 2003. The remaining €31 million will be paid no later than

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June
2007 upon the making of any future environmental claims by Rhodia, and bears interest through the date of payment. On the basis of current information, provisions established for environmental
matters and amounts Rhodia has received and expects to receive pursuant to the environmental indemnity, the Group's obligations to comply with environmental regulations or undertake remedial action
are not expected to have a material adverse effect on its operations, earnings or financial situation. The terms of the Aventis environmental indemnity arrangements are described in "Item 7.
Major Stockholders and Related Party TransactionsAgreements with Aventis". However, the occurrence of new events, such as a modification of existing regulations, the promulgation of new
regulations or the development or discovery of new facts or conditions, could result in substantial additional expenditures that Rhodia would have to bear, and could have a material adverse effect on
its operations, earnings or financial situation.

In
addition, Rhodia has been and may in the future be liable to contribute to the cleanup of facilities to which it has sent wastes for disposal, pursuant to the U.S. Comprehensive
Environmental Response, Compensation and Liability Act (commonly known as "Superfund") and other similar laws. Under these laws, the owner or operator of contaminated properties and the generator of
wastes sent to a contaminated disposal facility can be jointly and severally liable for the remediation of such properties, regardless of fault.

Outlook

The statements below are forward-looking statements based on management's current knowledge and beliefs. Actual results may differ
significantly from those indicated below for a number of reasons, including those set forth under "Item 3. Key InformationForward-looking Statements" and "Item 3. Key
InformationRisk Factors".

The
outlook for 2003 is currently uncertain, particularly in light of international geopolitical instability, and its potential repercussions on the global economy. Rhodia believes that
these factors are likely to have a significant effect on currency exchange rates and petrochemical commodities prices, which in turn materially affect our operating results.

Rhodia
expects growth of sales to be limited to slightly above expected growth in average gross domestic product of OECD countries. Sales are expected to remain weak during the first
half, and improve gradually through the second half of 2003. This growth is expected to result principally from increases in sales volumes, as well as price increases for some of Rhodia's products.

Rhodia
believes that all divisions should see an increase in their sales in terms of volume, with the exception of Pharmaceuticals and Agrochemicals whose volumes are expected to decline
compared to 2002, due principally to weakness in end-market demand. Industrial Care and Services should achieve further growth in all its businesses. Although the Silicones business should continue to
be adversely affected by depressed market conditions in the first half of the year. Automotive, Electronics and Fibers should continue to deliver sales growth, primarily through sustained increases in
selling prices for Rhodia's products, launch of new products in Engineering plastics, increased sales in polyamide intermediates and the growing market for Eolys in the autocatalysis market for diesel
engines. Consumer Care and Food is expected to show some volume growth driven principally by innovation across its core markets and increased available capacity for its Acetow and food businesses.
Prices for Rhodia's products are expected to increase only slightly at the Group's consolidated level and should be generated principally from Automotive, Electronics and Fibers. In all other
divisions, prices should be flat on a year on year basis.

Rhodia
expects that continued strength of the euro versus the US dollar in 2003 would have a negative translation and transaction foreign exchange impact, affecting all Divisions. Rhodia
expects that the gradual decline in raw materials costs following the decline in oil prices observed since the end of March together with a recovery in certain selling prices should result in improved
operating margins as the year progresses, if such decline in oil prices is sustained over the year. The two divisions which will be most affected by oil price fluctuations are Automotive, Electronics
and Fibers and to a lesser extent, Pharmaceuticals and Agrochemicals.

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Item 6. Directors, Senior Management and Employees

Board of Directors, Chairman and/or Chief Executive Officer

In accordance with French corporate law governing asociété anonyme, Rhodia's
affairs are managed by its board of directors, its chairman and its chief executive officer.

French
corporate law, as amended by the French Company Law No. 2001-420 dated May 15, 2001, published on May 16, 2001 (the "Law of May 15, 2001"),
gives the board of directors, pursuant to the company's by-laws, the right to elect one person to assume the position of chairman and chief executive officer or to split the function
between two different persons. Rhodia's extraordinary stockholders' meeting held on May 21, 2002 modified its by-laws granting its board of directors the authority to make this
choice. A majority vote of two-thirds of the directors present or represented at the board meeting held on July 4, 2002 decided that one person, Mr. Jean-Pierre
Tirouflet, would assume the position of chairman and chief executive officer. Such a decision will remain applicable as long as the board has not decided otherwise under similar voting conditions.

Board of Directors

Pursuant to French corporate law and Rhodia's by-laws (statuts), the board of directors must consist
of at least three but no more than eighteen directors (except following a merger). Following the annual stockholders' meeting of April 29, 2003, Rhodia's board of directors consists of eleven
members. Rhodia's board of directors met seven times in 2002 (with an average attendance rate of 80%).

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Directors

The table below sets forth, as of the date hereof, the names and ages of the directors of Rhodia, their current positions with Rhodia, the date of their initial
appointment as directors, the expiration dates of their current terms and their current principal occupation or employment.

|Name (Age)                      |  | Current Position with
Rhodia                   |  | Initially
Appointed |  | Term
Expires |  | Present Principal Occupation
or Employment                                                           
|------------------------------- |  | ---------------------------------------------- |  | ------------------- |  | ------------ |  | -----------------------------------------------------------------------------------------------------
|Jean-Pierre Tirouflet (52)      |  | Director,
Chairman and
Chief Executive Officer |  | 1993(1)             |  | 2005         |  | Chairman of the Board and Chief Executive Officer of Rhodia                                          
|Jean-Marc Bruel(3) (67)         |  | Director                                       |  | 2002                |  | 2005         |  | Member of the Supervisory Board of Aventis                                                           
|Walter Cirillo (60)             |  | Director                                       |  | 2002                |  | 2008         |  | Chairman of the Board of Rhodia Brasil Ltda                                                          
|Michel de Fabiani(2) (57)       |  | Director                                       |  | 2003                |  | 2004         |  | Chairman of the Board and Chief Executive Officer of BP France and Regional President Europe BP Group
|Pierre-Gilles de Gennes(2) (70) |  | Director                                       |  | 1999                |  | 2005         |  | Professor of theCollège de France, Director of theEcole de Physique et de Chimie                     
|Patrick Langlois(3) (57)        |  | Director                                       |  | 2002                |  | 2005         |  | Vice Chairman of the Management Board and Chief Financial Officer of Aventis                         
|Pierre Lévi(2) (48)             |  | Director                                       |  | 1999                |  | 2005         |  | Chairman and Chief Executive Officer of Faurecia and Chairman of SAI AG (Germany)                    
|Klaus Mangold(2) (60)           |  | Director                                       |  | 2001                |  | 2007         |  | Member of Management Board of DaimlerChrysler AG                                                     
|Yves-René Nanot(2) (66)         |  | Director                                       |  | 2002                |  | 2004         |  | Chairman of the Board and Chief Executive Officer ofCiments Francais                                 
|Hubertus Sulkowski (60)         |  | Director                                       |  | 1999                |  | 2004         |  | Partner at Shearman & Sterling LLP(4)                                                                
|Pierre de Weck(2) (52)          |  | Director                                       |  | 1998                |  | 2004         |  | Member of the Group Executive Committee of Deutsche Bank                                             

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Pierre Letzelter, Chief Executive Officer of Sephora Monde (LVMH Group), resigned from Rhodia's board of directors on April 23, 2003 for
personal reasons. Mr. Letzelter was co-opted in October 2002 to serve the remaining term of a resigning director. His appointment would have been submitted for ratification at the
annual stockholders' meeting of April 29, 2003. In addition, Edouard Stern, Vice-Chairman of IRR Capital, was co-opted in July 2002 to serve the remaining term of
another resigning director. Following the recommendation of Rhodia's board of directors, the annual stockholders' meeting of April 29, 2003 voted not to ratify the co-option of
Mr. Stern.

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Biographies

Jean-Pierre Tirouflethas been Chairman and Chief Executive Officer of Rhodia since January 1,
1998. Mr. Tirouflet has been a member of the executive committee of Rhône-Poulenc since 1990. Since joining Rhône-Poulenc (which became Aventis) in 1983,
Mr. Tirouflet has served in a variety of positions, including Group Chief Financial Officer from 1987 to 1992, Group Executive Vice President from 1992 to 1997 and Chief Executive Officer of
the Fibers and Polymers segment from 1997 to 1998. Prior to joining Rhône-Poulenc, Mr. Tirouflet served in various positions in the French Ministry of Finance, including head of
the African Division of the Economic External Relations Department from 1982 to 1983. In addition to serving as director of Axa Corporate Solutions, Mr. Tirouflet currently serves as a member
of the supervisory board of Crédit Agricole Indosuez.

Jean-Marc Bruelis President of the Villette-Entreprises Foundation and of Firmenich. He has been a member of the board of
directors at Rhodia since July 2002 and currently serves on the compensation and selection committee and on the strategy committee. Mr. Bruel is also a member of the Board of
Surveillance of Aventis and he is a Director atV.E.V. Wilson Gestion, Ecole Centrale de Paris, Institut Curie. Prior to his current positions, he
served as Vice-President of Groupe Rhône-Poulenc.

Walter Cirillois Regional Director for Rhodia's Latin American Activities and President of Rhodia Brazil Ltda, Rhodia Poliamida e
Especialidades Ltda, Rhodia Venezuela and Rhodiaster SA. He has been a member of the board of directors at Rhodia since May 2002 and currently serves on the risks advisory committee.
Mr. Cirillo is also a Director at ABIQUIM (Associaço Brasileira da Industria, Quimica) and CCFB (Câmara de Comercio França-Brasil) as well as a
member of the FDC (Funadçao Dom Cabral) and the CTE (Centro de Tecnologia Empresarial).

Michel de Fabianiis Chairman and Chief Executive Officer of BP France and Regional President of Europe BP Group. Mr. de Fabiani
was appointed to the board of directors of Rhodia in April 2003
and also serves as a Director atInstitut Français du Pétrole. Prior to his current positions, Mr. de Fabiani
served as Chief Executive Officer of BP Oil Europe.

Pierre-Gilles de Gennesis a Professor at theCollège de France, Director
of theEcole de Physique et de Chimie, a member of the French Academy of Sciences since 1979 and a scientific consultant at both Rhodia and Flamel
Technologies. Mr. de Gennes has been a member of the board of directors at Rhodia since May 1999 and also serves as a Director at Air Liquide and Sanofi-Synthelabo.

Patrick Langloisis Vice-Chairman and Chief Financial Officer of Aventis and Chairman and Chief Executive Officer of Aventis
Agriculture S.A. He has been a member of the board of directors at Rhodia since October 2002 and currently serves on the accounts committee. Mr. Langlois is also a Director at
Rhône-Poulenc Pharma in France and at Aventis subsidiaries in Germany, the United States, Great Britain and Ireland. Prior to his current positions Mr. Langlois served as Chief
Financial Officer of Groupe Rhône-Poulenc and Groupe Aventis.

Pierre Léviis Chairman and Chief Executive Officer of Faurecia S.A. and President of Faurecia Automotive Holdings. He has
been a member of the board of directors at Rhodia since October 1999 and currently serves on the accounts committee. Mr. Lévi also serves as President of the management
board of Faurecia Investissements in France and of SAI AG in Germany, as well as a Director at Faurecia Industries and Faurecia Sièges d'Automobiles S.A. in France and Faurecia Exhaust
Systems, Inc. in the United States. Prior to his current positions, Mr. Lévi had executive roles at Rhône-Poulenc, Rhodia and Faurecia.

Klaus Mangoldhas been a member of the board of directors at Rhodia since April 2001 and currently serves as Chairman of the
Strategy Committee. Mr. Mangold also serves as a member of the board of management of DaimlerChrysler AG and as Chairman of the management board of DaimlerChrysler Services AG in Germany and he
serves on the supervisory board at HVB Real Estate

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Bank
AG, Jenoptik AG and Leipziger Messe GmbH in Germany as well as the Chubb Corporation in the United States.

Yves René Nanotis President of Ciments Français. He has been a member of the board of directors at Rhodia
since October 2002 and currently serves on both the risks advisory committee and on the accounts committee of which he is Chairman. Mr. Nanot is also a Director of Céreol,
Imérys, Sidel and Italcementi in Italy, as well as Italcementi's foreign subsidiaries in the United States, Morocco, India, Thailand and Egypt.

Hubertus Sulkowskiis a senior partner at the Paris office of Shearman & Sterling LLP. He has been a member of the board of
directors at Rhodia since October 1999 and currently serves as Chairman of the risks advisory committee.

Pierre de Weckis an executive officer at Deutsche Bank in Germany. He has been a member of the board of directors at Rhodia since
April 1998 and currently serves as Chairman of the compensation and selection committee. Prior to working at Deutsche Bank, Mr. de Weck served as an executive officer at UBS S.A.

By-laws

Rhodia's by-laws do not specify any age of retirement for directors. Where the by-laws do not specifically provide otherwise, French
corporate law stipulates that the number of directors over 70 years old must not exceed one-third of the total number of directors. Any appointment made in breach of this
requirement is null and void. If the number of directors over 70 years old exceeds the one-third limit, the oldest director automatically resigns by operation of law.

Rhodia's
by-laws provide that each director is elected for a term of six years, which may be renewed. Each director must also be a stockholder. Pursuant to Rhodia's
by-laws, each of its directors must hold at least 100 of Rhodia's shares. Under French law, a director may be an individual or a legal entity, but the chairman and/or the chief executive
officer must be an individual.

In
accordance with French corporate law, Rhodia's directors are elected by the stockholders at an ordinary general meeting of the stockholders and serve until their respective terms
expire or until they resign, die or are removed, with or without cause, by the stockholders. None of Rhodia's stockholders have the exclusive right to appoint a member of the board of directors. As
provided for in Rhodia's by-laws, vacancies on the board of directors may, under certain conditions, be filled by the board of directors, pending the next ordinary stockholders' meeting,
which will be asked to ratify such appointment.

Rhodia's
by-laws, as amended on May 21, 2002, invest the board of directors with all the power conferred upon it by law, specifically (i) to determine the
direction of the Company's operation and see to its implementation; (ii) to approve the company's annual financial statements for submission to the annual stockholders' meeting; (iii) to
consider any issue related to the functioning of the Company and make decisions regarding these issues at its meetings, within the limits of the powers specifically granted to the stockholders and the
corporate objectives; (iv) to engage in controls and verifications it deems appropriate; (v) to create committees to examine issues as defined by the board of directors or its chairman
as well as to determine the composition and the mission of such committees under the board's authority; and (vi) to grant to one of its members or third party, special mandates with one or more
objectives, with or without the right to delegate in part or in full. At its February 3,
2003 meeting, the board approved the annual financial statements with all directors present voting in favor, except one.

Pursuant
to Rhodia's by-laws, meetings of the board of directors are convened and presided over by the chairman. The chief executive officer or, if the board of directors has
not met for more than two months, at least one-third of the members of the board of directors may request the chairman to

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convene
the board of directors on a specific agenda. The directors may be convened by any means, even orally.

A
quorum consists of at least one-half of the members of the board of directors, and decisions are taken by a vote of the majority of members present either in person or
represented by other members of the board of directors. To be represented, a director must give a written proxy to another director but a director cannot represent more than one other member at any
particular meeting. Members of the board of directors represented by another member at meetings do not count for purposes of determining the existence of a quorum. French corporate law allows
directors to participate in board meetings by videoconference if provided for in the by-laws, and such participation will be included in the determination of the relevant quorum and
majority, except in relation to certain decisions. Rhodia's by-laws provide for the possibility of participating in a meeting by videoconference. A director may not vote for an arrangement
or contract in which he or she is materially interested. In case of a tie, the vote of the chairman will be the deciding vote. Rhodia's board of directors met seven times in 2002.

French
corporate law strictly prohibits loans by the company to a director. Nor may any company provide overdrafts for directors or guarantee any director's obligations. This prohibition
also applies to chief executive officers("directeurs
généraux")and specified executive officers ("directeurs généraux
délégués"),permanent representatives of companies on the board of directors,
spouses and heirs of such persons, and other intermediaries.

French
corporate law requires the chairman of the board, the chief executive officer, any specified executive officers, any directors and any stockholders holding more than 5% of the
voting rights and intermediaries thereof who are considering entering into an agreement or arrangement which is not prohibited as set forth above with the company, either directly or indirectly,
personally or through an intermediary, to inform the company's board of directors before the transaction is consummated. The chairman of the board of directors will inform in turn the company's
auditors. French corporate law requires such an agreement to be authorized by the board of directors and prohibits the director in question from voting on the issue. Any agreement entered into in
violation of these requirements may be voided by the Commercial Court at the request of the company or of any stockholder, if such agreement has caused damage to the company. French corporate law
further requires such an agreement to be submitted to an ordinary general stockholders' meeting for approval once entered into, upon presentation of a special report from the company's auditors.

In
consideration for their services on the board, directors are entitled to receive director's fees("jetons de
présence").The total annual amount of directors' fees is fixed by the stockholders' meeting, but the board determines their allocation among the directors. In
addition, remuneration may be granted to directors on a case-by-case basis for special assignments. A director may not vote for his or her own remuneration. The board may also
authorize the reimbursement of travel and accommodation expenses as well as other expenses incurred by directors in the corporate interest.

Under
French corporate law, directors elected by Rhodia's stockholders are responsible for violations of French laws and regulations applicable to sociétés anonymes, violation of Rhodia's
by-laws, or mismanagement. They may be held liable for such actions
both individually and jointly with the other directors.

Chairman of the Board

The chairman of the board of directors represents the board. He organizes and manages the duties performed by the board and reports to the stockholders' meeting.
He is also responsible for the proper functioning of the corporate bodies and ensures that the directors are capable of fulfilling their assignments.

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In
the event that the chairman is temporarily indisposed or dies, the board may appoint a director as acting chairman. In the event of temporary indisposition, the said appointment will
be made for a limited term and it will be renewable. In the event of death, the appointment will remain until the election of a new chairman.

The
board sets the chairman's remuneration.

Chief Executive Officer

The chief executive officer is vested with the broadest powers to act in any circumstance in Rhodia's name, within the limits of its corporate purpose, and
subject to the powers expressly conferred by law upon stockholders' meetings and upon the board of directors. The chief executive officer represents Rhodia in dealings with third parties. Rhodia is
bound even by acts of the chief executive officer that are not within the scope of the corporate purpose unless Rhodia proves that the third party knew that
the act was outside the corporate purpose or that under the circumstances the third party could not have been unaware of this. However, mere publication of the by-laws is not sufficient to
constitute such proof. The board may limit the powers of the chief executive officer. However, the limitation of his powers is not binding on third parties.

The
board of directors establishes the duration of the chief executive officer's term. The board sets the chief executive officer's remuneration. The chief executive officer may be
removed at any time by the board of directors. In the event this dismissal is not justified, the chief executive officer may claim damages, except if the chief executive officer is also the chairman
of the board.

Specified Executive Officers

At the instigation of the chief executive officer, the board of directors is entitled to appoint up to five specified executive officers, whose role is to assist
the chief executive officer.

The
board of directors establishes in accordance with the chief executive officer the duration of the specified executive officers' term and the limit of their powers. The board sets the
specified executive officers' remuneration.

The
specified executive officer has the same powers as the chief executive officer in dealing with third parties. At the instigation of the chief executive officer, the specified
executive officers may be removed at any time by the board of directors. In the event this dismissal is not justified, the specified executive officer may claim damages. There are currently no
specified executive officers.

Board Committees

Accounts Committee

The board of directors has an accounts committee, comprised of Messrs. Yves René Nanot (chairman), Pierre Lévi and Patrick
Langlois. The accounts committee is responsible for ensuring that necessary and appropriate procedures are put in place to identify and manage risk. The accounts committee is also responsible for the
examination of Rhodia's financial reporting, the implementation and respect of internal procedures, among which the Group compliance policy controls the implementation of the recommendations of
Rhodia's independent auditors and examines the organization, functioning and actions of the internal auditors. The relationship between the accounts committee and the risks advisory committee shall be
assured by shared meetings and by the participation of Yves René Nanot in both committees. The accounts committee met two times in 2002 (with an average attendance rate of 60%).

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Risks Advisory Committee

The board of directors has a risks advisory committee, comprised of Messrs. Hubertus Sulkowski (chairman), Walter Cirillo and Yves René
Nanot. The risks advisory committee is responsible for the oversight of the ensemble of procedures designed to improve the prevention and control of all the different types of risk Rhodia may face in
its activities. It assures that all guidelines for ethical conduct are understood and applied; that internal and external auditing practices assess Rhodia's full compliance to such guidelines; and
that insurance measures have been optimized within this framework. Created in October 2002, the risks advisory committee met one time in 2002 (with full attendance).

Compensation and Selection Committee

The board of directors also has a compensation and selection committee, comprised of Messrs. Pierre de Weck (chairman) and Jean-Marc Bruel,
which is responsible for proposing to the board employee stock plans, the salaries and incentives of Rhodia's officers and key personnel, capital increase transactions directed exclusively at
employees, as well as nominees for top management posts. It is equally responsible for presenting nominees for top management posts, delineating their independence and selecting the members of the
committees. The compensation and selection committee met five times in 2002 (with an average attendance rate of 80%).

Strategy Committee

In addition, the board of directors has a strategy committee, comprised of Messrs. Klaus Mangold (chairman) and Jean-Marc Bruel, which is
responsible for advising the board of directors with regard to contemplated external growth opportunities, asset disposals or major alliances proposed by the office of the president. Meetings are open
to attendance by other members of the board of directors. Created in September 2002, the strategy committee met four times in 2002 (with an average attendance rate of 87.5%).

Compliance Policy

Since its initial public offering in June 1998, Rhodia has maintained a policy of anticipating and integrating public and private regulatory initiatives
into its corporate governance. In February 2000, Rhodia decided to formalize certain guidelines of procedure. These guidelines, published as Rhodia's compliance policy, defined the principles
that all employees must apply on the job, namely with regard to the respect of free competition, buying and selling shares, and protecting confidential information.

Board of Directors Internal Rules

Since June 2000, Rhodia's board of directors has operated according to Rhodia's board of directors internal rules. Neither a replacement of French law nor
Rhodia's by-laws, the internal rules are set forth in an internal document that defines the composition, role and powers of the board of directors and its accounts committee. These rules
are aimed at optimizing the efficiency of meetings and discussions. The internal rules are also geared at taking precautionary measures and maintaining confidentiality. In addition, the internal rules
require directors to delay the purchase or sale of shares until 45 days after Rhodia officially publishes its quarterly or yearly results.

To
conform with recent legal developments regarding corporate governance, the board of directors revised the internal rules on December 17, 2002, incorporating recommendations
from the Report of the Corporate Governance Committee, chaired by Daniel Bouton (dated September 2002), and provisions of the Sarbanes-Oxley Act of 2002.

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Executive Officers

The table below sets forth, as of the date hereof, the names and ages of Rhodia's executive officers, and their current positions with Rhodia. These executive
officers are all members of the executive committee, which is Rhodia's principal management body. The executive committee defines and executes at its regular monthly meetings Rhodia's global
orientations established by the board of directors and office of the president and makes key decisions with respect to strategy, human resources, legal finance, international development, environment
and safety, and corporate communications.

|Name (Age)                        |  | Principal position with Rhodia                                                   
|--------------------------------- |  | ---------------------------------------------------------------------------------
|Jean-Pierre Tirouflet (52)        |  | Chairman and Chief Executive Officer                                             
|Gilles Auffret (54)               |  | President and Chief Operating Officer                                            
|Jean-Julien Baronnet (43)         |  | Group Executive Vice President, Commercial, Marketing and External Communications
|Jacques Bécuwe (54)               |  | President, Industrial Specialties Division                                       
|André Blazquez (46)               |  | President, Polyamide Division                                                    
|Yves Boisdron (57)                |  | President, Asia-Pacific Zone                                                     
|Jean-Claude Bravard (54)          |  | Group Executive Vice President, Science, Innovation and Technology               
|Yves Brissy (58)                  |  | Senior Vice President and General Counsel                                        
|Bernard Chambon (54)              |  | Group Executive Vice President, Human Resources and Internal Communications      
|Jean-Pierre Clamadieu (43)        |  | President, Fine Organics Division                                                
|Olivier de Clermont-Tonnerre (50) |  | President, Rhodia Silicones                                                      
|Myron Galuskin (56)               |  | President, North America Zone                                                    
|Alberto Pedrosa (47)              |  | Senior Vice President, Purchasing                                                
|Pierre Prot (46)                  |  | Senior Vice President and Chief Financial Officer                                
|Michel Ybert (51)                 |  | President, Consumer Specialties Division                                         

The
chairman and chief executive officer is also assisted by a four-member office of the president, comprised of Messrs. Gilles Auffret, Jean-Julien
Baronnet, Jean-Claude Bravard and Bernard Chambon. Because of its smaller size and the qualifications and positions of its members, this group offers Rhodia a more responsive and rapid
group decision-making mechanism when needed. Yves Brissy, General Counsel, serves as the secretary of the executive committee.

Biographies

Gilles Auffrethas been President and Chief Operating Officer since February 2001. He joined Rhodia on
September 1, 1999 as Deputy President responsible for the Polyamide Division. Mr. Auffret started his professional career in 1975 as auditor at the French Cour des Comptes (the
equivalent of the U.S. General Accounting Office) before moving to the French Ministry of Industry, where he served aschargé de missionreporting to the General Director for Industry. In January 1982 he was appointed public auditor(conseiller
référendaire)at the Cour des Comptes. He joined Pechiney in September 1982, where he held a series of senior management posts, including
Director of Pechiney's aluminum metals department.

Jean-Julien Baronnethas been Group Executive Vice President of Commercial, Marketing and External Communications of Rhodia
since April 2002 after having served as President of the Services & Specialties Division, and then President of the HPCII Enterprise since the creation of Rhodia in 1998.
Mr. Baronnet started his career in the Marketing Department of Procter & Gamble and, subsequently, in the Marketing Department of Glaxo before joining Bernard Krief Consulting in 1986,
where he became Vice President in 1988. Appointed to Rhône-Poulenc's Chemical Products

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Division
in 1993, he became President of the Cosmetics, Detergents & Industrial Formulations Enterprise in 1995.

Jacques Bécuwehas been President of the Industrial Specialties Division since January 1, 1998. Prior to being named
to his current position, Mr. Bécuwe served as Head of Eco Services in 1998 and President of the Environmental Services-Europe Enterprise from 1996 to 1997 and as Head of the
Environmental Services Strategic Business Group from 1993 to 1995. Mr. Bécuwe managed various other chemicals operations during his career with Rhône-Poulenc,
including the sulfur/carbonate unit, the acetics unit and the chlorine unit. Mr. Bécuwe began his career as a research engineer with the Rhône-Poulenc group in
1970.

André Blazquezhas been President of the Polyamide Division since March 2001. He began his career with
Rhône-Poulenc, where he joined the production department of Nyltech (engineering plastics) in 1981 before moving to the industrial management department of Silicones in 1985. In 1988 he
was appointed President of Rhône-Poulenc's silicones activities in Spain. In 1991 he became President of Rhodiamul and Erkol and in 1993 he was appointed Executive Vice President of
Rhône-Poulenc Quimica in Barcelona. In 1994 he became an analyst in Rhône-Poulenc's Corporate Economic Control Department, and in 1997 he became Executive Vice President
of Rhône-Poulenc.

Yves Boisdronhas been President of the Asia-Pacific Zone since January 1, 1998. Prior to assuming this position,
Mr. Boisdron served as Senior Vice President of Rhône-Poulenc Chimie from 1994 to 1996, Senior Vice President of Rhône-Poulenc IOM from 1990 to 1994, Vice
President of Rhône-Poulenc Inc. from 1987 to 1990 and Vice-President of Rhodia Bresil from 1981 to 1987. Mr. Boisdron has also served as General Manager of the
enzyme division of Gist Brocades and as a project engineer at Badger.

Jean-Claude Bravardhas been Group Executive Vice President of Science, Innovation and Technology since February 2001.
Mr. Bravard was previously Deputy President of the Fine Organics Division. Mr. Bravard began his career with the Rhône-Poulenc group in 1971 and served in various
positions in its Chemicals segment. From 1995 to 1997, he was President of the Paper, Paint and Construction Materials Enterprise, after having served in various senior management positions within the
Organic and Inorganic Intermediates segments, the Specialty Chemicals segment and the petrochemicals businesses of Rhône-Poulenc.

Yves Brissyhas been Senior Vice President and General Counsel of Rhodia since December 16, 1999. Prior to being named to his
current position, Mr. Brissy served as Head of Legal Affairs, then General Counsel of the Rhône-Poulenc group from 1987 to 1999. Before joining the Rhône-Poulenc
group, Mr. Brissy was Head of the Legal Department of the Fiat Glass Unit of the Saint-Gobain Group.

Bernard Chambonhas been Group Executive Vice President of Human Resources and Internal Communications since April 2002, after
having served as Executive Vice President in charge of Human Resources and Communication since January 1, 1998. Prior to being named to his current position, Mr. Chambon served as
President of Human Resources and Communication for the Chemicals segment's European operations, Senior Vice-President of Rhône-Poulenc's Organic and Inorganic Intermediates
segment and Director of Development of Human Resources for the Rhône-Poulenc group. Prior to joining the Rhône-Poulenc group in 1989, Mr. Chambon held senior human
resources positions at Bouygues, Aerospatiale and Fiat.

Jean-Pierre Clamadieuhas been President of the Fine Organics Division since January 2002. From 1996 to 1999 he served
as President of the Chemical Sector in the Latin American Zone for Rhodia and as Manager of the Automotive Pollution Control Project in the Chemical Sector of Rhône-Poulenc. He began
his career in 1984 in the Champagne-Ardennes regional office of the French Ministries of Industry and Environment.

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Olivier de Clermont-Tonnerrehas been President of Rhodia Silicones since 1998. He joined Rhodia in 1980 to take charge of Strategy and
Management Control of the Fine Chemicals Division. Mr. de Clermont-Tonnerre then held a series of management positions in the United States and Europe before becoming President of Rhodia
Surfactants and Specialties in 1991 and subsequently, in 1996, President of Rhodia Food.

Myron Galuskinhas been President of the North America Zone as well as President of Rhodia Inc. since September 1998.
Mr. Galuskin served as Rhodia Inc.'s Vice-President of Operation Services from January 1, 1998. Mr. Galuskin joined the Rhône-Poulenc Group in
1992 as Vice-President and General Manager for Environmental Services at Rhône-Poulenc Inc. Prior to 1992 Mr. Galuskin has held numerous positions in the
chemical industry.

Alberto Pedrosahas been Senior Vice President of Purchasing since early 2002. In 1985, Mr. Pedrosa was appointed Director
worldwide, Silicone Sealants of Rhône-Poulenc Specialty Chemicals in Paris. In 1990, he became General Manager of the Diphenols, Industrial Coatings, Aroma Ingredients division of
Rhône-Poulenc Chemicals. In 1995, he became Vice-President, worldwide Secondary Industrial Operations of Rhône-Poulenc Rorer. In 1999, he became President of
Rhodia Polyamide South America.

Pierre Prothas been Senior Vice President and Chief Financial Officer (Vice-President in charge of Finance Function) of
Rhodia since January 1, 1998. From 1996 to 1998, Mr. Prot served as Financial Director of the Rhône-Poulenc chemicals segment's European operations and was Corporate
Finance Director of Rhône-Poulenc from 1986 to 1996. Mr. Prot began his career with Rhône-Poulenc in 1978.

Michel Yberthas been President of the Consumer Specialties Division since March 2001 after having served as Deputy President of
Rhodia in charge of Strategy since January 1, 2000. He began his career in 1972 at Saint-Gobain, where he was Financial Director of the Brazilian subsidiary Santa Marina and, subsequently, of
Saint-Gobain Emballage. From 1986 to 1988 he was President of Buitoni S.A. He joined Rhône-Poulenc in 1988 and held a series of positions as Deputy President of the Health Sector, of
the Agro Sector and of the Organic & Inorganic Intermediates Sector. After working for Moulinex from 1995 to 1997, he moved back to Rhône-Poulenc as President of the Polyester
Division. In January 1999 he was appointed Deputy President of Rhodia in charge of competitiveness programs and later of corporate strategy, as well as Supervisor of the Services &
Specialties Division.

Compensation

The aggregate amount of compensation paid to the executive officers, including the CEO, of Rhodia as a group (15 persons total in 2002) for services in all
capacities in respect of the 2002 fiscal year was €7,038,260.

The
aggregate amount set aside or accrued by Rhodia to provide pension, retirement or similar benefits for the same executive officers as a group in respect of the 2002 fiscal year was
€617,073.

The
compensation of Rhodia's directors is proposed by the Compensation and Selection Committee of the board of directors. Such aggregate amount of compensation includes approximately
€432,360 in Rhodia directors' fees for the year 2002. A further €239,182 in directors' fees for other companies within the Rhodia group have been paid in 2002.

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The
table below sets forth the total compensation and benefits paid in fiscal year 2002 by Rhodia and companies in which it exercises control to Rhodia's directors, in accordance with
the provisions of article L 225-102-1 of the French Commercial Code.

|                                         |  | 2002    |          
|---------------------------------------- |  | ------- | ---------
|
|Current Directors                        |  |         |          
|Jean-Pierre Tirouflet                    |  | 938,527 | (2)(3)(4)
|Jean-Marc Bruel                          |  | 16,612  | (1)      
|Walter Cirillo                           |  | 289,224 | (2)(3)(5)
|Pierre-Gilles de Gennes                  |  | 0       | (3)      
|Patrick Langlois                         |  | 20,412  | (1)      
|Pierre Lévi                              |  | 47,850  | (1)      
|Klaus Mangold                            |  | 41,850  | (1)      
|Yves René Nanot                          |  | 24,212  | (1)      
|Hubertus Sulkowski                       |  | 50,000  | (1)      
|Pierre de Weck                           |  | 50,000  | (1)      
|Former Directors (Termination Date)      |  | (€)     |          
|Edouard Stern (April 29, 2003)           |  | 17,412  | (1)      
|Pierre Letzelter (April 23, 2003)        |  | 16,612  | (1)      
|Thierry Breton (September 24, 2002)      |  | 33,450  | (1)      
|Jean-René Fourtou (October 25, 2002)     |  | 37,250  | (1)      
|Igor Landau (October 25, 2002)           |  | 26,650  | (1)      
|Aimery Langlois-Meurinne (June 14, 2002) |  | 25,025  | (1)      
|Thierry de Rudder (June 13, 2002)        |  | 25,025  | (1)      

---

Except
as set forth above, the Company's affiliated directors are not compensated for their services as directors. The Company's directors are eligible to receive an annual fee plus fees
for attendance at meetings of the board of directors and for attendance at committee meetings. The board of directors of Rhodia has decided to limit the maximum amount of fees payable to each director
for his services to €50,000 per year.

Senior
management has entered into agreements with Rhodia that provide for payment of up to three years of salary in the event of termination or substantial reduction of responsibility
following a change of control of Rhodia.

Rhodia
does not have any service contracts with members of its board of directors, acting in their capacity as directors, providing for benefits upon termination of their position as a
director.

As
part of Rhodia's strategy to reinforce a result-oriented management approach, each member of senior management has been required to invest one year's salary in Rhodia shares. In
addition, management salaries are composed of fixed and variable portions, with amounts payable under the

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variable
portion to be determined on the basis of achievement of semi-annual performance objectives, except for the chairman and chief executive officer, whose objectives are set annually
by the board of directors upon proposal of the compensation and selection committee.

Employees

The table below sets forth the number of Rhodia's employees by geographic location as of December 31, 2000, 2001 and 2002.

|                         |  | As of December 31, |  
|------------------------ |  | ------------------ | -
|
|Total                    |  | 29,448             |  
|By Division:             |  |                    |  
|Consumer Specialties     |  | 24                 | %
|Polyamide                |  | 23                 |  
|Industrial Specialties   |  | 11                 |  
|Fine Organics            |  | 15                 |  
|Services and Specialties |  | 12                 |  
|Others                   |  | 15                 |  
|                         |  |                    |  
|Total                    |  | 100                | %
|                         |  |                    |  
|By Geographic Zone:      |  |                    |  
|Europe                   |  | 62                 | %
|North America            |  | 12                 |  
|Latin America            |  | 19                 |  
|Asia/Pacific             |  | 7                  |  
|                         |  |                    |  
|Total                    |  | 100                | %
|                         |  |                    |  

Membership
of Rhodia's employees in trade unions varies from country to country, and Rhodia has entered into various collective bargaining agreements. In France, the five principal
French labor unions are represented at Rhodia's facilities. As required by French law, management holds annual meetings with a delegation of union representatives in order to negotiate salaries and
working conditions. Management also holds other periodic consultations with representatives of the employees. In recent years, there have been no significant strikes or work stoppages. Rhodia believes
that relations with its employees and unions are satisfactory.

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Employee and Director Share Ownership

Director and Executive Share Ownership

The table below lists, to the best of Rhodia's knowledge, the total number of shares owned by the members of Rhodia's board of directors and by the executive
committee (as a group) as of December 31, 2002.

|                                                                         |  | At December 31, 2002
|------------------------------------------------------------------------ |  | --------------------
|
|Identity of person or group                                              |  |                     
|Jean-Pierre Tirouflet                                                    |  | 86,953              
|Jean-Marc Bruel                                                          |  | 7,967               
|Walter Cirillo                                                           |  | 5,000               
|Pierre-Gilles de Gennes                                                  |  | 100                 
|Patrick Langlois                                                         |  | 8,832               
|Pierre Letzelter                                                         |  | 400                 
|Klaus Mangold                                                            |  | 100                 
|Pierre Levi                                                              |  | 14,560              
|Yves René Nanot                                                          |  | 3,000               
|Edouard Stern                                                            |  | 1,000               
|Hubertus Sulkowski                                                       |  | 100                 
|Pierre de Weck                                                           |  | 100                 
|Members of the executive committee (15 persons, including Mr. Tirouflet) |  | 274,323             

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Rhodia
does not report the individual shareholdings of executive committee members. The individual amount held by any member of this group is less than 1% of Rhodia's share capital,
including any shares held indirectly.

Options

Pursuant to a resolution adopted by the stockholders on April 18, 2000, the board of directors was authorized to grant to certain salaried employees and
executive officers of Rhodia options to subscribe or to purchase up to an aggregate of 7,330,000 ordinary shares at an exercise price of no less than 95% of the average opening price per share for the
20 trading days preceding the date of the grant.

Pursuant
to this authorization, the board of directors granted under the March 16, 2001 plan, options to subscribe to a maximum of 2,580,267 shares at an exercise price of
€15.70 and under the March 20, 2002 plans, options to subscribe to a maximum of 3,000,000 shares at an exercise price of €12.04.

Under
the March 16, 2001 plan, the board of directors granted 300,000 stock subscription options to Jean-Pierre Tirouflet as Chairman and CEO of the Company. The exercise price of
these options, which are exercisable for a period of eight years effective March 16, 2005, was set by the board at €15.70 in accordance with the authorization of the annual
stockholders' meeting of April 18, 2000. At the same board meeting, an aggregate of 580,000 stock subscription options were also granted by the board of directors to the twelve top managers
other than the CEO, who received the largest individual number of total options granted. The exercise price of these options was set at €15.70.

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Under
the March 20, 2002 plan, the board of directors granted options to subscribe up to 150,000 shares to Jean-Pierre Tirouflet, in his capacity as Chairman and Chief Executive
Officer of Rhodia. In addition, Rhodia granted options to subscribe to 15,000 shares to Walter Cirillo, in his capacity as Regional Director of Rhodia's Latin America Zone. Further to a personal
commitment, Jean-Pierre Tirouflet has agreed to have the exercise price for his 150,000 options fixed at €15.00 (compared to €12.04 for all other beneficiaries).

The
table below sets forth the number of options granted, the names and positions of the ten wage-earners of Rhodia and other group companies who received the most options under the 2002
plan other than the Chairman and CEO.

|Name                  |  | Position                                                                             |  | Number
of Options
|--------------------- |  | ------------------------------------------------------------------------------------ |  | -----------------
|Gilles Auffret        |  | President and Chief Operating Officer                                                |  | 60,000           
|Laurent Schmitt       |  | President, Rhodia Technical Fibers                                                   |  | 50,000           
|Jean-Claude Bravard   |  | Group Executive Vice President, Science, Innovation and Technology                   |  | 49,500           
|Jean-Julien Baronnet  |  | Group Executive Vice President, Commercial and Marketing and External Communications |  | 46,500           
|Bernard Chambon       |  | Group Executive Vice President, Human Resources and Internal Communications          |  | 46,500           
|Michel Ybert          |  | President, Consumer Specialties Division                                             |  | 45,000           
|Yves Brissy           |  | Senior Vice President and General Counsel                                            |  | 37,500           
|Pierre Prot           |  | Senior Vice President and Chief Financial Officer                                    |  | 37,500           
|Jean-Pierre Clamadieu |  | President, Fine Organics Division                                                    |  | 34,500           
|Jacques Bécuwe        |  | President, Industrial Specialties Division                                           |  | 31,500           

The
general stockholders' meeting held on May 21, 2002, cancelled the April 18, 2000 authorization for the non-used part and authorized the board to grant to certain
salaried employees and executive officers of Rhodia options to subscribe or to purchase up to an aggregate of 6,000,000 ordinary shares at an exercise price of no less than 95% of the average price
per share for the 20 trading days preceding the date of grant.

Pursuant
to the authorization granted by the May 21, 2002 general stockholders' meeting, the board of directors meeting of May 28, 2003 decided to establish two stock
subscription option plans. Under the first plan, the board of directors granted options to subscribe to a maximum of 1,312,948 shares at an exercise price of €5.50 to 556
beneficiaries. Under the second plan, which is subject to the achievement of a specific economic ratio as an exercise condition, the board of directors granted options to subscribe to a maximum of
643,400 shares at an exercise price of €5.50 to 108 beneficiaries.

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The
table below sets forth certain information relating to Rhodia's share subscription plans.

|Stock Option Plans                              |  | 1998(2)            |  | 1998/1999          |  | 1999/2000          |  | 2000               |  | Special
ChiRex
Allotment |     | 2001               |     | 2002(6)            |     | 2003               |     | 2003               |    
|----------------------------------------------- |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------------ | --- | ------------------ | --- | ------------------ | --- | ------------------ | --- | ------------------ | ---
|Date of stockholders' meeting approval          |  | 05/13/1998         |  | 05/13/1998         |  | 05/13/1998         |  | 05/13/1998         |  | 04/18/2000               |     | 04/18/2000         |     | 04/18/2000         |     | 05/21/2002         |     | 05/21/2002         |    
|Date of grant, as set by the board of directors |  | 06/24/1998         |  | 02/23/1999         |  | 02/23/1999         |  | 03/30/2000         |  | 09/27/2000               |     | 03/16/2001         |     | 03/20/2002         |     | 05/28/2003         |     | 05/28/2003         |    
|Number of options outstanding                   |  | 17,810             |  | 1,486,700          |  | 1,096,005          |  | 1,906,275          |  | 150,000                  |     | 2,457,347          |     | 1,985,125          |     |                   |     |                   |    
|Number of participants (at December 31, 2002)   |  | 15                 |  | 361                |  | 360                |  | 526                |  | 3                        |     | 787                |     | 564                |     | 556                | (8) | 108                | (8)
|Options granted(1)                              |  | 1,600,000          |  | 1,580,000          |  | 1,200,000          |  | 2,100,000          |  | 150,000                  |     | 2,580,267          |     | 2,000,000          |     | 1,312,948          |     | 643,400            |    
|Exercise price(9)                               |  | €21.34             |  | €15                |  | €15                |  | €17.14             |  | €16.26                   |     | €15.70             |     | €12.04             | (5) | €5.50              | (7) | €5.50              | (7)
|Discount compared to the reference price        |  | None               |  | None               |  | None               |  | None               |  | None                     |     | None               |     | None               |     | None               |     | None               |    
|Maximum term (years)                            |  | 10 yrs             |  | 10 yrs             |  | 10 yrs             |  | 10 yrs             |  | 10 yrs                   |     | 12 yrs             |     | 12 yrs             |     | 12 yrs             |     | 12 yrs             |    
|Exercise period for French tax residents        |  | 5 yrs from 6/24/03 |  | 5 yrs from 2/23/04 |  | 5 yrs from 2/23/04 |  | 5 yrs from 3/30/05 |  |                         |     | 8 yrs from 3/16/05 | (3) | 8 yrs from 3/20/06 | (3) | 8 yrs from 5/28/07 | (3) | 8 yrs from 5/28/07 | (3)
|Exercise period for Non-French tax residents    |  | 7 yrs from 6/24/01 |  | 7 yrs from 2/23/02 |  | 7 yrs from 3/1/02  |  | 7 yrs from 3/30/03 |  | 7 yrs from 09/27/03      | (4) | 9 yrs from 3/16/04 |     | 9 yrs from 3/20/05 |     | 9 yrs from 5/28/07 |     | 9 yrs from 5/28/07 |    
|Total number of exercised options               |  | 0                  |  | 0                  |  | 0                  |  | 0                  |  | 0                        |     | 0                  |     | 0                  |     | 0                  |     | 0                  |    

---

For a more detailed discussion of Rhodia's share option plans, see Note 27 to the Consolidated Financial Statements.

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Item 7. Major Stockholders and Related Party Transactions

The table below sets forth ownership in Rhodia's ordinary shares.

|                            |  | Shares      |  | % of Shares |  
|--------------------------- |  | ----------- |  | ----------- | -
|Artisan                     |  | 9,073,000   |  | 5.1         | %
|Aventis(1)                  |  | 27,460,052  |  | 15.3        | %
|Crédit Lyonnais(2)          |  | 17,752,562  |  | 9.9         | %
|Groupe Bruxelles Lambert(3) |  | 9,038,000   |  | 5.0         | %
|Employees                   |  | 11,011,319  |  | 6.1         | %
|Public                      |  | 104,974,255 |  | 58.6        | %
|                            |  |             |  |             |  
|Total                       |  | 179,309,188 |  | 100.0       | %
|                            |  |             |  |             |  

---

Rhodia
is not aware of any other person owning directly or indirectly more than five percent of Rhodia's share capital. To the best of Rhodia's knowledge, as of January 31, 2003,
the officers and directors of Rhodia collectively owned 349,156 ordinary shares of Rhodia, representing 0.2% of its share capital.

To
Rhodia's knowledge, at December 31, 2002, there were 179,309,188 ordinary shares issued and outstanding, of which the portion of Rhodia's outstanding shares held by U.S.
persons was approximately 11.2%. At December 31, 2002, 2,348,300 ordinary shares were in the form of ADSs, representing 1.3% of the total share capital and held by 393 registered
holders, of which approximately 367 were U.S. persons.

In
October 1999, Aventis issued approximately 44 million notes exchangeable for Rhodia shares, maturing on October 22, 2003. Following the successful completion of a
cash tender offer for the notes in December 2002, Aventis redeemed the notes prior to maturity at par plus accrued interest, effectively canceling all outstanding notes. Aventis has announced its
intention to dispose of the shares by any means, including by disposing of the shares on the market or over-the-counter, whether by way of financial transactions or in the
context of a transaction with industrial or other parties. Aventis has also indicated its intention not to sell on the market the shares underlying the notes that it has repurchased pursuant to the
offer if it appears that such disposal would have a negative impact on the market price of Rhodia's shares. On May 2, 2003, Aventis reduced its stake in Rhodia to 15.3% from 25.2% pursuant to a
sale and purchase agreement with Crédit Lyonnais concerning 17.8 million Rhodia shares (40% of its Rhodia shareholding).

In
connection with receiving regulatory approval from the antitrust directorate of the European Commission for the merger of Rhône-Poulenc and Hoechst in 1999,
Rhône-Poulenc undertook to engage an independent auditor to certify to the European Commission on a quarterly basis the separation of the managements of Rhodia and
Rhône-Poulenc.

In
addition, Aventis appointed BNP Paribas (formerly Paribas) in its capacity as accredited financial intermediary, to receive and verify its instructions relating to the voting of the
Rhodia shares held in Aventis's name. In this regard, Aventis agreed to send to BNP Paribas, on the occasion of each general meeting of the stockholders of Rhodia, a signed blank proxy to vote the
Rhodia shares held in Aventis's name in favor of all resolutions proposed or approved by Rhodia's board of directors and

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against
all others. BNP Paribas has agreed to verify that such signed blank proxy has been given by Aventis in this manner and to forward it to Rhodia or its accredited financial intermediary
responsible for organizing such general meeting. BNP Paribas has also agreed to notify the European Commission in writing each time it receives and has verified and forwarded a blank proxy. This
appointment took effect from June 30, 2001. Aventis has agreed with the European Commission that it will not revoke these instructions, except in certain circumstances. In particular, upon the
occurrence of an extraordinary financial event (such as a merger or tender offer), Aventis would regain control of its voting rights, subject to prior notification to the European Commission. BNP
Paribas's appointment will expire once Aventis holds less than 5% of Rhodia's share capital. The European Commission approved the divestment plan described above on September 15, 1999.

The
major stockholders of Rhodia do not have voting rights different than those of other stockholders.

Related Party Transactions

In the ordinary course of business, Rhodia purchases materials, supplies and services from numerous suppliers throughout the world, including from time to time
companies with which members of Rhodia's board of directors are affiliated including Aventis. See Note 3 to the Consolidated Financial Statements for a description of Rhodia's transactions with
Aventis. Rhodia does not consider the amounts involved in such transactions to be material to its business and believes that these amounts are not material to the business of the firms involved. See
"Item 6. Directors, Senior Management and Employees" for information on the outside affiliations of Rhodia's directors.

Agreements with Aventis

For the purpose of governing certain of the on-going relationships between Rhodia and Aventis at the time Rhodia was formed in 1998, Rhodia and
Aventis or their respective subsidiaries, as applicable, entered into various agreements described below (the "Aventis Agreements") prior to Rhodia's initial public offering. Because such agreements
were reached while Rhodia was wholly owned by Aventis, the Aventis Agreements and certain of the terms and transactions provided for therein may have differed from those which could have resulted from
negotiations between fully independent parties. In connection with Aventis's divestiture of its interest in Rhodia, Aventis and Rhodia agreed on October 14, 1999 to certain principles set forth
in a "Heads of Agreement" under which the Aventis
Agreements were to be modified or terminated. The summaries of the Aventis Agreements set forth below describe the material provisions of such agreements as modified by the terms of the Heads of
Agreement.

Environmental Indemnification Agreement

Rhodia and Aventis entered into an Environmental Indemnification Agreement dated May 26, 1998, which provided for indemnifications between Rhodia and
Aventis principally with respect to certain environmental liabilities that could arise in connection with Rhodia's chemicals business at sites transferred to Rhodia effective January 1, 1998.
The agreement provided for termination of the indemnification obligations of Rhodia and Aventis on December 31, 2007.

Pursuant
to the Environmental Indemnification Agreement, the total amount of indemnification by Aventis would not exceed €122 million in the aggregate. In 2001,
Rhodia made claims to Aventis pursuant to this agreement for several sites and recorded a receivable for €35 million. In 2002, Rhodia recorded an additional
€3 million receivable and collected €26 million from Aventis in connection with the Environmental Indemnification Agreement. Following approval from
Rhodia's board of directors and Aventis' supervisory board, Rhodia and Aventis entered into a settlement agreement on March 27, 2003 pursuant to which Aventis will pay to Rhodia an
indemnification settlement of €88 million, which amount includes the €26 million received in 2002 and €31 million received in the first
quarter of 2003.

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The
remaining €31 million will be paid no later than June 2007 upon the making of any future environmental claims by Rhodia, and bears interest through the date of payment. The
agreement settles Rhodia's present and future claims under the Environmental Indemnification Agreement and terminates the agreement.

Cross-Indemnification Obligations

In connection with the reduction of Aventis's ownership interest in Rhodia in October 1999, Rhodia and Aventis agreed to include a cross-indemnification
provision in the Heads of Agreement. Pursuant to this provision, Aventis will indemnify Rhodia against any damages incurred by Rhodia arising out of an action or claim brought by a third party against
Rhodia to the extent such action or claim results solely from the business operations of Aventis or those of its subsidiaries. Similarly, Rhodia will indemnify Aventis against any damages incurred by
Aventis arising out of an action or claim brought by a third party against Aventis to the extent such action or claim results solely from the business operations of Rhodia or of those of its
subsidiaries.

Item 8. Financial Information

See "Item 18. Financial Statements" for a list of financial statements and other financial information filed with this annual report. Other than as disclosed in
this annual report on Form 20-F, there have been no significant changes since the date of the financial statements.

Legal Proceedings

Rhodia is involved in certain claims and lawsuits as part of its ordinary course of business involving primarily claims made by the buyers of businesses
previously sold by Rhodia and civil liability compensation claims related to chemical products sold in the marketplace. Some of Rhodia's North American subsidiaries have potential liabilities under
the U.S. federal "Superfund" laws and federal or state environmental regulation. However, in light of the nature of the claims made, the number of defendants and the volume of waste at issue, Rhodia
believes that these claims will not result in significant liabilities for Rhodia.

Rhodia
Polyamide Intermediates, a wholly-owned group subsidiary, has been involved in arbitration proceedings with DuPont China Holding and LYPFC (Lioyang Petrochemical Fiber Company, an
affiliate of Sinopec). The proceedings related to a joint venture formed by Rhodia and these two partners in 1996 in Sanlong, People's Republic of China, for the production of nylon salt. Rhodia
settled the proceedings with both DuPont China Holding and LYPFC in 2002.

Rhodia
Fosfatados de Mexico was involved in a tax dispute with the Mexican tax authorities concerning alleged failure by Albright & Wilson, prior to its acquisition by Rhodia, to
pay duties on certain imported products. The initial claim amounted to approximately $24 million in December 1998. Rhodia contested this claim before the court of first instance, which
decided in Rhodia's favor.

Rhodia
is not involved in any other legal or arbitration proceedings, including environmental proceedings, that management expects to have a material adverse effect on Rhodia's business,
financial condition or results of operations, either individually or in the aggregate.

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Dividend Policy

Rhodia has declared dividends for each of the three fiscal years completed since its formation. The following table sets forth the total dividends paid per share
and per ADS for each year indicated, with and without the Frenchavoir fiscaland before deduction of any French withholding tax.

|Year to which Dividend Related |  | Dividend per Share |  | Dividend per Share Including Avoir fiscal
|------------------------------ |  | ------------------ |  | -----------------------------------------
|
|1998                           |  | .20                |  | .30                                      
|1999                           |  | .40                |  | .60                                      
|2000                           |  | .40                |  | .60                                      
|2001                           |  | .12                |  | .18                                      
|2002(1)                        |  | .12                |  | .18                                      

---

The payment and amount of dividends on the ordinary shares, if any, are subject to the recommendation of Rhodia's board of directors and approval
by the stockholders at the stockholders' annual meetings. Rhodia will only be able to pay dividends if its financial performance, general business conditions and our management's business plans permit
it. Consolidated net income in each fiscal year (after deduction for depreciation and provisions), as increased or reduced, as the case may be, by any income or loss of Rhodia carried forward from
prior years, less any contributions to the reserve accounts pursuant to law or its by-laws, is available for distribution to the stockholders of Rhodia as dividends.

Under
French corporate law, Rhodia is required to allocate 5% of its unconsolidated statutory net income in each fiscal year (after reduction for losses carried forward from previous
years, if any) to a legal reserve fund before a dividend may be paid with respect to that year. Funds must be allocated until the amount in such reserve funds is equal to 10% of the aggregate nominal
amount of the issued and outstanding share capital as increased or reduced from time to time. The legal reserve constitutes a legal guarantee for third parties dealing with Rhodia and, accordingly, it
may not be distributed to stockholders, nor used by Rhodia to purchase treasury shares. In the event of loss, the reserve funds will be used to compensate such loss in the absence of any other
available reserve. As of December 31, 2002, Rhodia's legal reserve was equal to approximately 18% of the nominal value of its share capital. This restriction on the payment of dividends also
applies to each of Rhodia's French subsidiaries on an unconsolidated basis.

Upon
recommendation of Rhodia's board of directors, Rhodia's stockholders may at the annual general meeting decide to allocate all or part of the distributable profits of Rhodia, if any,
to one or more special or general reserves, to carry them forward as retained earnings to the next fiscal year, or to allocate them the stockholders as dividends. Rhodia's board of directors may
propose a dividend for approval by the stockholders at the annual general meeting of stockholders.

Rhodia
must distribute dividends to its stockholders pro rata according to their share holdings.

In
addition, if Rhodia has earned distributable income since the end of the preceding fiscal year, as reflected in an interim income statement certified by Rhodia's auditors, Rhodia's
board of directors may, without stockholder approval, distribute interim dividends, to the extent such distributable income is available, subject to French corporate law and regulations.

In
addition, Rhodia's by-laws authorize the stockholders, in an ordinary general meeting, to authorize the grant to each stockholder of an option to receive all or part of
any annual or interim

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dividends
in either cash or in Rhodia's shares. For dividends or interim dividends paid in shares, prior authorization by a stockholders' meeting is required.

The
actual dividend payment date is decided by Rhodia's stockholders at an ordinary general meeting or by Rhodia's board of directors, if no decision is taken by its stockholders. Rhodia
must pay any dividends within nine months of the end of its fiscal year. Dividends not claimed within five years of the date of payment revert to the French State.

The
record holders of the ADSs on the dividend record date will be entitled to receive payment in full of the dividend declared in respect of the year for which it is declared. Cash
dividends payable to such holders will be paid to the depositary in euro and, subject to certain exceptions, be converted to dollars by the depositary.

Any
dividends paid to U.S. holders of shares or ADSs who are not residents of France will generally be subject to French withholding tax at a rate of 25% or, if such holders qualify for
benefits under the applicable U.S.-France tax treaty and comply with the procedures for claiming treaty benefits, a reduced rate of 15%. Certain U.S. holders of shares or ADSs who are residents of the
United States may be entitled to receive a subsequent payment representing the Frenchavoir fiscal, or tax credit, less applicable French withholding
tax at a rate of 15%. Payment equivalent to the Frenchavoir fiscal, less applicable French withholding tax, will generally be made by the French State
only following receipt of a claim for such payment and, in any event, not before January 15 of the year following the calendar year in which the dividend is paid. Certain U.S.
tax-exempt holders of shares or ADSs will be entitled only to partial payments of the Frenchavoir fiscal. See "Item 10. Additional
InformationTaxation" for a summary of these and other French and U.S. tax consequences to holders of shares or ADSs. Prospective purchasers of shares or ADSs should consult their own tax
advisers with respect to the tax consequences of an investment in the shares or ADSs.

Item 9. The Offer and Listing

Markets

The ordinary shares of Rhodia are traded on thePremier Marchéof Euronext Paris, their principal
trading market, under the Euroclear code 12013. In the United States, the ordinary shares trade in the form of American Depositary.

Shares
issued by Citibank N.A., as depositary, each representing one ordinary share (the "ADSs"). The ADSs are listed on the New York Stock Exchange where they trade under the symbol
"RHA."

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The
table below sets forth, for the periods indicated, the reported high and low sales prices in euro for Rhodia's ordinary shares on Euronext Paris and the high and low sales prices in
dollars for the ADSs on the NYSE (source: Dow Jones).

|                            |  | Euronext Paris
Price Per Share |  | NYSE Price
ADS
|--------------------------- |  | ------------------------------ |  | --------------
|
|
|
|June 2003 (through June 25) |  | 5.90                           |  | 4.92          
|May 2003                    |  | 6.09                           |  | 4.79          
|April 2003                  |  | 6.20                           |  | 4.82          
|March 2003                  |  | 6.60                           |  | 4.25          
|February 2003               |  | 7.04                           |  | 4.84          
|January 2003                |  | 8.43                           |  | 6.18          
|December 2002               |  | 8.60                           |  | 6.90          
|2003 First quarter          |  | 8.43                           |  | 4.25          
|2002 Full Year              |  | 12.40                          |  | 5.75          
|First quarter               |  | 11.63                          |  | 8.87          
|Second quarter              |  | 12.40                          |  | 8.11          
|Third quarter               |  | 9.99                           |  | 6.11          
|Fourth quarter              |  | 8.81                           |  | 5.75          
|2001 Full Year              |  | 17.00                          |  | 5.01          
|First quarter               |  | 17.00                          |  | 12.60         
|Second quarter              |  | 15.25                          |  | 11.50         
|Third quarter               |  | 13.00                          |  | 5.75          
|Fourth quarter              |  | 11.72                          |  | 5.01          
|2000                        |  | 23.63                          |  | 11.90         
|1999                        |  | 23.10                          |  | 10.35         
|1998(1)                     |  | 28.16                          |  | 9.88          

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Stock Options

Rhodia's stock option plans are described in "Item 6. Directors, Senior Management and EmployeesEmployee and Director Share Ownership" and in
Note 27 of the Consolidated Financial Statements included elsewhere herein.

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Trading Practices and Procedures on Euronext Paris Markets

Euronext Paris

Effective September 22, 2000, after the successful completion of an exchange offer, the ParisBourseSBF S.A. or the "SBF," the Amsterdam
Exchanges and the Brussels Stock Exchanges merged to create Euronext, the first pan-European stock exchange. Euronext is comprised of Euronext Paris, Euronext Amsterdam and Euronext
Brussels. Through the exchange offer, all the stockholders of the SBF, the Brussels exchanges and the Amsterdam exchanges contributed their shares to Euronext N.V., a Dutch holding company. Following
the creation of Euronext, the SBF changed its name to Euronext Paris S.A. on October 27, 2000. Securities quoted on exchanges participating in Euronext will be traded over a common Euronext
platform, with central clearinghouse, settlement and custody structures. However, these securities will remain listed on their local exchanges. As part of Euronext, Euronext Paris S.A. retains
responsibility for the admission of shares to Euronext Paris's trading markets as well as the regulation of those markets.

Securities
approved for listing by Euronext Paris are traded in one of three markets. The securities of most large public companies are listed on thePremier
Marché,with theSecond Marchéavailable for small and medium-sized companies. Trading on the Nouveau Marchéwas introduced in 1996 to allow companies seeking development capital to access the stock market. In addition, securities
of certain other companies are traded on a non-regulated over-the-counter market, theMarché Libre
OTC.

The Premier Marché

ThePremier Marchéis a regulated market managed and operated by Euronext Paris S.A.

Admission
to thePremier Marchéis subject to certain capital adequacy and liquidity requirements determined by Euronext
Paris S.A. In addition, companies applying for listing on thePremier Marchéare
required to publish comprehensive information regularly and to keep the public informed of events likely to affect the market price of their securities.

Securities
listed on thePremier Marchéare traded through authorized financial institutions that are members of Euronext
Paris. Trading takes place continuously on each business day from 9:00 a.m. to 5:25 p.m. (Paris time), with a pre-opening session from 7:15 a.m. to 9:00 a.m.
and a pre-closing session from 5:25 p.m. to 5:30 p.m. with a closing auction at 5:30 p.m. Any trade of securities that occurs after a stock exchange session closes is
recorded on the next business day at the previous session's closing price for that security. Euronext Paris has introduced continuous electronic trading during trading hours for most actively traded
securities. Euronext Paris publishes a daily official price list that includes, among other things, price information on listed securities.

Euronext
Paris places securities listed on thePremier Marchéin the category "Continu"or the category"Fixing",depending on the trading volume of the securities. Rhodia's ordinary
shares are placed in the category"Continu",which includes the most actively traded securities.

Trading
in securities listed on thePremier Marchémay be suspended by Euronext Paris S.A., if quoted prices exceed certain
price limits defined by the relevant regulations. In particular, if the quoted price of a Continu security varies by more than 10% from theprix de
référence(reference price, which is generally the previous day's closing price or the opening price of the trading session), trading may be
suspended for up to 4 minutes. Further suspensions for up to 4 minutes are also possible if the price again varies by more than 10% from a new reference price equal to the price, which caused the
first trading suspension. If the quoted price of aContinusecurity varies by more than 2% from the last quoted price, trading may be suspended for up
to 4 minutes. On its own initiative or upon justifiable request of the issuer, Euronext Paris S.A. may also suspend trading of a security listed on thePremier
Marchéin certain other limited circumstances, including, for example, the occurrence of unusual trading

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activity
in such security. In addition, in exceptional cases, theConseil des marchés financiersor CMF, the self-regulatory
authority over French stock exchanges, may also suspend trading.

Since
September 25, 2000, trades of securities listed on thePremier Marchéare settled on a cash settlement basis ("au comptant").However, market
intermediaries are also permitted to offer investors a deferred settlement service(Ordre
stipulé à réglement livraison différé, or OSRD)for a
fee.The OSRD allows stockholders to benefit from certain leverage and other special features of the previous monthly settlement market (marché à règlement
mensuel).The OSRD is only available for trades in securities that either
(1) are a component of the Index SBF 120 or (2) have both a total market capitalization of at least € 1 billion and a daily average volume of trades
of at least € 1 million on Euronext Paris S.A. and that are cited on the list published by Euronext Paris. Investors in shares eligible for OSRD service can elect
on the determination date(date de liquidation),which is at the latest the fifth trading day before the end of the month, either to settle
by the last trading day of the month or to pay an additional fee and postpone the settlement to the determination date of the following month. Rhodia's shares are eligible for the OSRD service.

Equity
securities traded on a deferred settlement basis are considered to have been transferred only after they have been registered in the purchaser's account. Under French securities
regulations, any sale of securities executed with a deferred settlement basis during the month of a dividend payment date is deemed to occur after the dividend has been paid. If the sale takes place
during the month preceding a dividend payment date, the purchaser's account will be credited with an amount equal to the dividend paid and the seller's account will be debited by the same amount.

Prior
to any transfer of securities held in registered form on thePremier Marché,the securities must be converted into
bearer form and accordingly inscribed in an account maintained by an accredited intermediary with Euroclear France S.A., a registered clearing agency. Transactions in securities are initiated by the
owner giving instruction (through an agent, if appropriate) to the relevant accredited intermediary. Trades of securities listed on thePremier
Marchéare cleared and settled through Euroclear France S.A. using a continuous net settlement system. A fee or commission is payable to the broker-dealer or
other agent involved in the transaction.

Purchase and Trading by Rhodia in its Own Shares

Purchase of Rhodia's Own Shares

Under French law, Rhodia may not issue shares to itself.

However,
Rhodia may, either directly or through a financial intermediary acting on its behalf, purchase its shares for one of three purposes:



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Rhodia
may not cancel more than 10% of its outstanding share capital over any 24-month period. In addition, Rhodia may not repurchase under either option 2 or 3 listed above
an amount of shares that would result in its company holding, directly or through a person acting on its behalf, more than 10% of its outstanding share capital, or if Rhodia has different classes of
shares, 10% of the shares in each class.

Rhodia
must hold any shares it repurchases in registered form. These shares also must be fully paid up. Shares repurchased by Rhodia are deemed outstanding under French law but are not
entitled to dividends or voting rights, and Rhodia may not exercise the pre-emptive subscription rights attached to them.

The
stockholders, at an extraordinary general meeting, may decide not to take these shares into account in determining the pre-emptive subscription rights attached to the
other shares. However, if the stockholders decide to take them into account, Rhodia must either sell the rights attached to the shares Rhodia holds on the market before the end of the subscription
period or distribute them to the other stockholders on a pro rata basis.

In
the event that the buyback program provides for the shares to be specifically allocated, either for stabilization purposes, or for employee stock option plans, they will be entered
into the balance sheet as assets.

At
the general meeting on April 29, 2003, Rhodia's stockholders granted a share repurchase authorization to Rhodia's board, which previously obtained the visa
no. 03-208 dated April 1st, 2003 from the COB. The board may use this authorization for the purpose of (i) stabilizing the price of Rhodia's shares by
systematically intervening to reverse trends; (ii) purchasing or selling shares depending on market conditions; (iii) retaining the repurchased shares or transferring them by any means,
including block trades or assimilated transactions; (iv) granting stock options to employees of Rhodia and/or its group; (v) canceling the repurchased shares in order to optimize
management of
Rhodia's assets and finances; (vi) using shares as payment or exchange in transactions, particularly acquisitions; and (vii) distributing shares to current owners of Rhodia's securities
who exercise any rights they may have to acquire additional shares. The stockholders set a price ceiling for the purchased shares of € 24 (subject to adjustments) per
share and a price floor for the sold shares of € 4 per share (subject to adjustments). The authorization was granted for a period until the annual general meeting that
would review the financials for the year ending December 31, 2003 and, in any event, until no later than October 29, 2004.

Trading in Rhodia's Own Shares

Pursuant toRèglementNo. 90-04, as amended, of the COB, Rhodia may not trade in
its own shares for the purpose of manipulating the market, and trading should under no circumstance aim at hindering the regular functioning of the market or misleading third parties. There are three
requirements for trades by a company in its own shares to be considered valid. Specifically, in order to be valid:



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Since
Rhodia's shares are continuously quoted(cotation en continu),a trade must meet the following additional requirements to be
considered valid:



However,
there are two periods during which Rhodia is not permitted to trade in its own securities:



This
requirement does not apply to trades executed on behalf of the issuer by an intermediary acting pursuant to a liquidity agreement(contrat de
liquidité)complying with a charter of ethics approved by the COB.

The
use of the repurchased shares to finance an acquisition is deemed justified to the extent the acquisition is performed after a three-month abstention period and an independent expert
has been designated to verify the value of the shares, the value of the acquisition and the fairness of the exchange ratio.

After
making an initial purchase of Rhodia's own shares, Rhodia must file monthly reports with the COB and the CMF, the self-regulatory authority over French stock exchanges,
that contain specified information about subsequent transactions. The CMF makes this information available to the public.

Item 10. Additional Information

Ownership of Shares by Non-French Persons

Under French corporate law, there is no limitation on the right of non-residents or non-French stockholders to own or, where applicable,
to vote securities of a French company.

A
French law dated February 14, 1996 abolished the requirement that a person who is not a resident of the European Union ("E.U.") obtain anautorisation
préalable,or prior authorization, prior to acquiring a controlling interest in a French company. However, both E.U. and non-E.U. residents must
file adéclaration administrative,or administrative notice, with French authorities in connection with the acquisition of a
controlling interest in any French company. Under existing administrative rulings, ownership of 20 percent or more of a listed company's share capital is regarded as a controlling interest, but
a lower percentage may be held to be a controlling interest in certain circumstances (depending upon such factors as the acquiring party's intentions, its ability to elect directors or financial
reliance by the French company on the acquiring party).

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Exchange Controls

Under current French exchange control regulations, there are no limitations on the amount of payments that may be remitted by a French company to
non-residents. Laws and regulations concerning foreign exchange controls do require, however, that all payments or transfers of funds made by a French resident to a
non-resident be handled by an accredited intermediary. In France, all registered banks and substantially all credit establishments(établissements de
crédit)are accredited intermediaries.

Material Contracts

For a summary of Rhodia's material contracts see "Item 7. Major Stockholders and Related Party TransactionsAgreements with Aventis."

Articles of Association

Rhodia is asociété anonyme,a form of French corporation, incorporated under the
laws of France.

Rhodia's
registered office is located at 26, quai Alphonse Le Gallo, 92512 Boulogne-Billancourt Cedex. Rhodia is registered with the Register of Commerce and Companies of Nanterre under
the number 352 170 161. For more information about the Company, please see "Item 4. Information on the CompanyCorporate History."

The
information below is a summary of the material information concerning Rhodia's share capital, together with material provisions of applicable French corporate law and of Rhodia's
by-laws(statuts),as amended by Rhodia's stockholders on May 21, 2002. An unofficial English translation of the by-laws
is included as an exhibit to this annual report. You may obtain copies of Rhodia'sstatutsin French from its registered office. Please refer to those
full documents for additional details.

Board of Directors

For a discussion of directors' powers under French corporate law and Rhodia's by-laws, see "Item 6. Directors, Senior Management and
EmployeesBoard of Directors, Chairman and/or Chief Executive Officer."

Stockholders' Meetings and Voting Rights

In accordance with French corporate law, there are three types of stockholders' general meetings: ordinary, extraordinary and special.

Ordinary
general meetings are required for matters such as the election, replacement and removal of directors, the appointment of statutory auditors, the approval of annual financial
statements and
consolidated financial statements, the declaration of dividends or authorization of dividends to be paid in shares and the issuance of debt securities.

Extraordinary
general meetings are required for the approval of matters such as amendments to Rhodia's by-laws, approval of mergers, the change of Rhodia's corporate name or
its corporate purpose, increases or decreases in share capital, the contribution of a substantial part of its assets, the creation of a new class of equity securities and the authorization of the
issuance of investment certificates or securities convertible, exchangeable or otherwise giving rights to subscribe equity securities and the voluntary liquidation of the Company.

Special
meetings of stockholders of a certain category of shares (such as, among others, shares with double voting rights or preferred shares without voting rights) are required for any
modification of the rights derived from such category of shares. The resolutions of the stockholders' general meeting affecting these rights are effective only after approval by the relevant special
meeting.

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French
corporate law requires Rhodia's board of directors to convene an annual ordinary general meeting of stockholders for approval of the annual and consolidated accounts. This meeting
must be held within six months of the end of each fiscal year. This period may be extended by an order of the President of theTribunal de commerce(Commercial Court). The board of directors may also convene an ordinary or extraordinary general meeting of stockholders upon proper notice at any time during the year. If the board of directors fails
to convene a stockholders' meeting, Rhodia's statutory independent auditors or stockholders holding the majority of the share capital or the voting rights following a block trade or a public offer may
call the meeting. Rhodia's liquidator in the event of a bankruptcy or court-appointed agent may also call a stockholders' meeting in some instances. Any of the following may request the court to
appoint an agent to convene a stockholders' meeting:



The
notice of a meeting must state the agenda for the meeting.

Notice of Stockholders' Meetings

Annual stockholders' meetings are called in accordance with the law for the holders of fully paid-up stock, regardless of the number of shares they
own on the date of the meeting. In accordance with French corporate law, Rhodia must announce general meetings at least 30 days in advance by means of a preliminary notice published in the Bulletin des Annonces
Légales Obligatoires(the "BALO"). Such preliminary notice must first be sent to the Commission des opérations de bourse(the "COB"), the administrative agency
responsible for overseeing the French securities markets. The
COB also recommends that the preliminary notice be published in a newspaper of national circulation in France. It must contain, among other things, the time, date and place of meeting, the preliminary
agenda, a draft of the resolutions to be submitted to the stockholders, a description of the procedures that holders of bearer shares must follow to attend the meeting and the procedure for voting by
mail or by proxy.

At
least 15 days prior to the date set for the meeting on first call, and at least six days before any second call, Rhodia must send a final notice containing the final agenda and
other information for the meeting. A notice must be sent by mail to all registered stockholders who have held shares for more than one month prior to the date of publication of the final notice in a
newspaper authorized to publish legal announcements in the local administrative county(département)in which Rhodia is registered as
well as in the BALO, with prior notice to the COB.

Typically,
stockholders can only vote on matters included in the agenda for the meeting. However, stockholders may vote on the dismissal of directors under certain circumstances and on
certain miscellaneous matters even if they are not included on the agenda. Additional resolutions to be submitted for approval by the stockholders at the meeting may be submitted to the board of
directors within ten days of the publication of the preliminary notice in the BALO by one or several stockholders holding a specified percentage of shares calculated on the basis of a formula relating
to Rhodia's share capital, by the workers committee, or by a duly qualified association of stockholders who have held their shares in registered form for at least two years and who together hold at
least a specified percentage of the voting rights of Rhodia. The board of directors must submit these resolutions to a vote of the stockholders.

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In
addition to rights to certain information regarding Rhodia, any stockholder may, from the publication of the final notice to convene the stockholders' meeting until the date of the
meeting, submit to Rhodia's board of directors written questions relating to the agenda for the meeting. Rhodia's board of directors must respond to such questions during the general meeting.

Attendance and Voting

Each share confers on the stockholder the right to one vote. Participation of stockholders at a stockholders' meeting is not restricted in any way. In particular,
a stockholder does not need to have a minimum number of shares in order to be able to attend or be represented at a general meeting.

Holders
of registered shares may participate in a general meeting only if they are registered in a stockholder account maintained by Rhodia, or by Société
Générale, service relations sociétés émettrices, assemblées générales, BP 81236,
32 rue du Champ de Tir, 44312 Nantes Cedex 3, France, acting as financial intermediary appointed by Rhodia, at least two days before the meeting. A holder of bearer shares must obtain a certificate ("certificat
d'immobilisation")from the financial intermediary with whom the holder has deposited its shares. This certificate must indicate the number
of bearer shares the holder owns and must indicate that these shares are not transferable until the time fixed for the meeting. The holder must deposit this certificate at the place specified in the
notice of the meeting at least two days before the meeting.

Rhodia's
by-laws provide that stockholders may participate in and vote at any general or special meetings by video-conference or any other electronic means of
telecommunication or remote transmission that permits their identification under the conditions provided for by applicable regulations and pursuant to terms defined by the board of directors.
Stockholders are thus deemed present at these meetings for the calculation of quorum and majority.

Proxies and Votes by Mail

In general, all stockholders who have properly registered their shares or duly presented a certificate from their accredited financial intermediary may
participate in general meetings. Stockholders may participate in general meetings either in person, by proxy or by mail or, if provided for by the by-laws, by video conference. As
mentioned above, Rhodia's by-laws, as amended, provide for the possibility of participation by video-conference or any other means of telecommunication that allows the stockholders to be
identified. Stockholders' votes are counted in proportion to the number of shares they hold.

Rhodia
will send proxy forms and postal vote forms to any stockholder on request. In order to be counted, the completed form must be returned at Rhodia's registered office or at any
other address indicated on the notice convening the meeting, no later than two days prior to the date of the general meeting. French corporate law and Rhodia's by-laws provide that
stockholders may send their proxy form and postal vote form for any general meetings either in paper form or, subject to a prior decision of the board of directors published in the preliminary notice
of meeting and final notice, by remote transmission.

A
stockholder may grant a proxy to his or her spouse, to another stockholder, or, if the stockholder is a corporation, to a legal representative. Alternatively, the stockholder may send
Rhodia a blank proxy without nominating any representative. In this case, the chairman of the meeting will vote the blank proxies in favor of all resolutions proposed by Rhodia's board of directors
and against all others.

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Representation of non-French residents

A stockholder who is not a French resident may be represented at the general meeting by an intermediary under the name of which he or she is registered and who is
acting on his or her behalf (see "Form, Holding and Transfer of SharesHolding of Shares") if:



An
intermediary who complies with the above-mentioned requirements, may exercise the voting rights or transmit the relevant proxies pertaining to the shares for which they have received
a general power of attorney. However, such voting rights or proxies will not be taken into account if the intermediary has not registered or has not disclosed the identity of the
non-resident holders of the shares for whom such voting rights or proxies are exercised.

Quorum

Under French corporate law, a quorum requires the presence, in person, by mail or by proxy, of stockholders holding at least (i) 25% of the shares entitled
to vote, in the case of an ordinary general meeting or an extraordinary general meeting deciding upon any capital increase by incorporation of reserves, profits or share premiums, or
(ii) 331/3% of the shares entitled to vote, in the case of any other extraordinary general meeting.

If
a quorum is not present at any meeting, the meeting is adjourned. There is no quorum requirement when an ordinary general meeting is reconvened. However, when an extraordinary general
meeting is reconvened, the quorum required is 25% of the shares entitled to vote, except where the reconvened meeting is considering an increase in Rhodia's share capital through incorporation of
reserves, profits or share premiums. If a quorum is not present, the reconvened meeting may be adjourned for a maximum of two months. No deliberation by the stockholders may take place without a
quorum. However, only questions that were on the agenda of the adjourned meeting may be discussed and voted upon.

Majority

Approval of any resolution at an ordinary general meeting or an extraordinary general meeting deciding upon any capital increase by incorporation of reserves,
profits or share premiums requires a simple majority of the votes cast. Approval of any other resolution at an extraordinary general meeting requires a two-thirds majority of the votes
cast. Notwithstanding these rules, any proposal to increase stockholders' liabilities requires a unanimous vote. Abstention from voting by those present in person or represented by proxy or voting by
mail counts as a vote against any resolution submitted to a vote.

In
general, each of Rhodia's stockholders is entitled to one vote per share, subject to the limitations described above and under "Requirements for Holdings Exceeding
Certain Percentages" below.

Under
French corporate law, any of Rhodia's shares held by Rhodia or by entities controlled directly or indirectly by us have no voting rights and do not count for quorum or majority
purposes.

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Financial Statements and Other Communications with Stockholders

In connection with any stockholders' meeting, Rhodia must provide a set of documents including Rhodia's annual report and a summary of the results of the five
previous fiscal years in French GAAP to any stockholder who so requests.

French
corporate law requires that a special report be provided to the ordinary stockholders' meeting regarding stock options authorized and/or granted by the company.

Dividends

Rhodia may only distribute dividends to its stockholders from its stand-alone net income in each fiscal year (after deductions for depreciation and provisions),
as increased or reduced by any profit or loss carried forward from prior years, less any contributions to the reserve accounts pursuant to law or Rhodia's by-laws.

Legal reserve

French corporate law provides that Frenchsociétés anonymessuch as Rhodia must
allocate 5% of their unconsolidated statutory net profits in each fiscal year, after reduction for losses carried forward from previous years, if any, to a legal reserve fund before dividends may be
paid with respect to that year. Funds must be allocated until the amount in that fund equals 10% of the aggregate nominal amount of the issued and outstanding share capital. This restriction on the
payment of dividends also applies to each of Rhodia's French subsidiaries on an unconsolidated basis. The legal reserve constitutes a legal guarantee for third party dealing with Rhodia and, in this
respect, they may not be distributed to stockholders, nor used by Rhodia to purchase treasury shares. In the event of loss, the legal reserve funds will be used to compensate such loss in the absence
of any other available reserve. At December 31, 2002, Rhodia's legal reserve was €32 million.

Approval of dividends

Upon recommendation of Rhodia's board of directors, Rhodia's stockholders may at the annual general meeting decide to allocate all or part of distributable
profits among special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to the stockholders as dividends. Rhodia's board of directors may
propose a dividend for approval by the stockholders at the annual general meeting of stockholders.

Rhodia
must distribute dividends to its stockholders pro rata according to their share holdings.

Interim dividends

In addition, if Rhodia has earned distributable income since the end of the preceding fiscal year, as reflected in an interim income statement certified by its
auditors, Rhodia's board of directors may distribute interim dividends, to the extent of the distributable income without stockholder approval, subject to French corporate law and regulations.

Option to receive dividends in shares

In addition, Rhodia's by-laws authorize the stockholders, in an ordinary general meeting, to authorize the grant to each stockholder of an option to
receive all or part of any annual or interim dividends in either cash or in its shares. For dividends or interim dividends paid in shares, prior authorization by a stockholders' meeting is required.

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Date of payment of dividends

The actual dividend payment date is decided by Rhodia's stockholders at an ordinary general meeting or by its board of directors, if no decision is taken by its
stockholders. Rhodia must pay any dividends within nine months of the end of its fiscal year. Dividends not claimed within five years of the date of payment revert to the French State.

Increases in Share Capital

As provided by French corporate law, Rhodia may increase its share capital only with its stockholders' approval at an extraordinary general meeting upon the
recommendation of its board of directors. Rhodia may increase its share capital by issuing additional shares, by issuing a new class of equity securities or by increasing the nominal value of its
existing shares. Increases in share capital by issuing additional securities may be effected by issuing such securities:



Decisions
to increase the share capital through the capitalization of reserves, profits and/or share premiums require the approval of an extraordinary general meeting, acting under the
quorum and majority requirements applicable to ordinary stockholders' meetings. Increases affected by an increase in the nominal value of shares require unanimous approval of the stockholders, unless
effected by capitalization of reserves, profits or share premiums. All other capital increases require the approval of an extraordinary general meeting. See "Stockholders' Meetings and
Voting Rights."

Rhodia's
stockholders may delegate to its board of directors the right to carry out any increase in share capital previously authorized by its stockholders. Rhodia's board of directors
may further delegate these powers to its chairman and chief executive officer.

Each
time the stockholders decide on a capital increase or decide to delegate to the board of directors the right to carry out a capital increase, they must decide whether or not to
proceed with a capital increase reserved to employees of Rhodia and its subsidiaries or on whether or not delegate to the board of directors the right to carry out such reserved capital increase.

Decreases in Share Capital

According to French corporate law, Rhodia may decrease its share capital only with its stockholders' approval at an extraordinary general meeting. In the case of
a capital reduction, other than a reduction to absorb losses or a reduction as part of a program to purchase its own shares, all holders of shares must be offered the possibility to participate in
such a reduction. There are two ways by which Rhodia may reduce its share capital: by decreasing the nominal value of its outstanding shares or by reducing the number of outstanding shares. Rhodia may
reduce the number of outstanding shares either by exchanging shares or, if the reduction is not due to losses incurred by it, by repurchasing and canceling shares. Holders of each class of shares must
be treated equally unless each affected stockholder agrees otherwise.

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The
Stockholders' meeting of May 21, 2002 after reviewing the Board of Director's management report and the statutory auditor's special report, decided to reduce the capital, for
reasons other than for losses, by an amount of € 2,510,328,632 by reducing the nominal value of the shares from € 15 to
€ 1. The amount of the capital reduction, i.e., the difference between the former and the new nominal value, will be recorded on the balance sheet in the "issue premium"
account. Such amount shall not be distributable but may be subsequently capitalized or serve to write off corporate losses.

Preferential Subscription Rights of Stockholders

Under French corporate law, current stockholders have preferential rights to subscribe on a pro rata basis for issuances of new shares or other securities giving
rights, directly or indirectly, to new shares issued by us for cash. These preferential rights require Rhodia to give priority treatment to its stockholders. Stockholders may waive their preferential
rights in respect of a particular offering, either individually or as a group at an extraordinary general meeting. During the subscription period relating
to a particular offering of shares, stockholders may transfer their preferential subscription rights, if they have not previously waived these rights. Also, during this period preferential
subscription rights may be quoted on Euronext Paris or any relevant stock exchange.

A
two-thirds majority of the shares entitled to vote at an extraordinary general meeting may vote to waive pre-emptive subscription rights with respect to any
particular offering. French corporate law requires that Rhodia's board of directors and its independent auditors present reports that specifically address any proposal to waive preferential
subscription rights. In the event of a waiver, the issue of securities must be completed within the period prescribed by law. If stockholders waive their preferential rights at an extraordinary
general meeting, they may authorize Rhodia's board of directors to grant to existing stockholders a non-transferable priority right to subscribe for new equity securities issued during a
limited period of time. Stockholders also may notify us that they wish to waive their own preferential rights with respect to any particular offering if they so choose.

For
additional information see "Item 3. Key InformationRisk FactorsRisks Related to our Shares and to our ADSs."

Form, Holding and Transfer of Shares

Form of Shares

Rhodia's by-laws provide that its shares may at the stockholder's option be held either (i) in bearer form and recorded in its name in an
account maintained by an accredited financial intermediary, such as a French broker, bank or other authorized financial institution or (ii) in registered form in its name in an account
maintained by Société Générale for Rhodia and on its behalf. It may, at its expense, change from one form of holding to the other.

Holding of Shares

In accordance with French corporate law concerning dematerialization of securities, ownership rights of stockholders are represented by book entries instead of
share certificates. Rhodia maintains a share account with Euroclear France S.A., which is administered by Société Générale. In addition,
Rhodia maintains separate accounts in the name of each stockholder either directly, or, through the stockholder's accredited intermediary. Each stockholder's account shows the name of the holder and
the number of shares held and, in the case of shares held through an accredited intermediary, shows that they are so held. Société Générale,
as a matter of course, issues confirmations to each registered stockholder as to shares registered in the stockholder's account, but these confirmations are not documents of title.

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Shares
held in bearer form are held on the stockholder's behalf in an account maintained by an accredited intermediary and are registered in an account maintained by such accredited
intermediary with Euroclear France S.A., which is separate from Rhodia's share account with Euroclear France S.A. Each accredited intermediary maintains a record of shares held through it and will
issue certificates of registration for the shares that it holds. If this alternative is adopted, the shares are referred to as being in bearer form, although no bearer document of title is issued by
Rhodia or on its behalf with respect to them. Shares held in bearer form may only be transferred through accredited intermediaries and Euroclear France S.A.

Rhodia's
by-laws permit Rhodia to request at any time that Euroclear France S.A. provide Rhodia with the identity of the holders of its shares or other securities granting
immediate or future voting rights, held in bearer form, and with the number of shares or other securities so held. In addition, according to French corporate law, shares held by any
non-French resident may be held in a collective account or in several individual accounts by an intermediary acting on the stockholder's behalf.

Transfer of Shares

Rhodia's by-laws do not contain any restrictions relating to the transfer of shares, other than those provided for by law, regulation or statute.
Registered shares must be converted into bearer form before being transferred on Euronext Paris and, accordingly, must be inscribed in an account maintained by an accredited intermediary. A
stockholder may initiate a transfer by giving instructions to the relevant accredited intermediary with respect to shares held in bearer form ("au
porteur") or in administered registered form ("au nominatif pur") and to Société
Générale with respect to shares held in pure registered form ("au nominatif pur").

For
dealings on Euronext Paris, a tax assessed on the price at which the securities were traded, calledimpôt sur les opérations de
bourse,is payable at the rate of 0.3% on transactions of up to € 153,000 and at a rate of 0.15% on transactions exceeding this amount, capped at
€ 610 per transaction. This tax is subject to a rebate of € 23 per transaction. Non-residents of France are not required to pay
this tax. In addition, a fee or commission is payable to the broker involved in the transaction, regardless of whether the transaction occurs within or outside France. Normally, no registration duty
is payable in France, unless a transfer instrument has been executed in France.

Identification of Stockholders

With respect to shares in bearer form, Rhodia's by-laws permit, in accordance with applicable legislation, the use of a procedure known as titres au porteur
identifiables,according to which Euroclear France (or any clearing agent that may replace Euroclear France) will, upon Rhodia's
request at any time, disclose all or selected information regarding Rhodia's stockholders, including name, date of birth (or, in the case of a legal person, name and date of organization),
nationality, address and the amount of shares or securities that have or may in the future have a voting right held by such stockholder which have, or may in the future acquire, voting rights, and, as
the case may be, the restrictions that may apply to these shares or securities.

Pursuant
to applicable law, the accredited intermediary that holds shares or securities in bearer form on behalf of a stockholder must transmit the above requested information to
Euroclear France within 10 business days following the request. If the time limit is not complied with or if the information is inaccurate or incomplete, Euroclear France may ask French courts to
compel the accredited intermediary to comply with its duties. Within 5 days after such transmission, the information is provided by Euroclear France to Rhodia on a confidential basis.

If
Rhodia considers that in turn the holder of bearer shares or securities whose identity has been disclosed holds shares or securities on behalf of third parties, Rhodia may renew its
request indefinitely through Euroclear France until Rhodia finds the actual owner of the shares or securities.

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With
respect to shares or securities in registered form, Rhodia may at any time request from any intermediary to disclose, within 10 business days following the request, the identity of
the person its acts for. If Rhodia considers that in turn this person whose identity has been disclosed holds shares on behalf of third parties, Rhodia may renew its request indefinitely until Rhodia
finds the actual owner of the shares or securities.

If
the person does not transmit the above requested information in due time or transmits incomplete or inaccurate information pertaining to its status or to the owners of the securities,
the voting rights of the securities giving immediate or future access to the share capital for which such person is registered cannot be exercised until such date as such information has been
disclosed or rectified, and the payment of the corresponding dividend is postponed until such date. In addition, if the person knowingly fails to comply with the obligation to disclose the identity of
the relevant security owner, a court may, at Rhodia's request or at the request of one or several stockholders representing at least 5% of Rhodia's share capital, deprive the shares held by the
security holder whose identity was not disclosed from any voting rights and dividends, for a period not to exceed 5 years.

According
to the French Commercial Code, any entity holding more than 2.5% of Rhodia's share capital or voting rights must disclose upon Rhodia's request, the identity of any individual
or entity holding, directly or indirectly, more than 331/3% of its share capital or voting rights attached hereto.

Requirements for Holdings Exceeding Certain Percentages

French corporate law provides that any individual or entity (including a holder of ADSs) acting alone or in concert with others, that directly or indirectly makes
an acquisition that causes the individual or entity to surpass an ownership threshold of 5%, 10%, 20%, 331/3%, 50% or 662/3% of the outstanding shares or voting rights of
a listed company in France, such as Rhodia, or whose holdings fall below any of these thresholds, must notify Rhodia within 15 calendar days of crossing the threshold of the number of shares and
voting rights it holds. The individual or entity also must notify theConseil des Marchés Financiers(the "CMF") within 5 trading days of
crossing any of these thresholds. The CMF is the self-regulatory organization that has general regulatory authority over French financial markets. A stockholder who, when increasing its
stockholdings, violates these notification requirements will lose the voting rights attached to the undeclared shares above the relevant threshold. The stockholder will not regain these voting rights
until 2 years following the date that it notifies the CMF of having crossed this threshold. Also, a stockholder who does not comply with the notification requirements may have all or part of its
voting rights suspended for up to 5 years by the commercial court at the request of Rhodia's chairman, any of its stockholders or the COB, or may be subject to criminal penalties, and fines.

In
addition, Rhodia's by-laws provide that any individual or legal entity that acquires, acting alone or jointly with others, directly or indirectly 0.5%, or any multiple of
0.5% up to 50%, of (i) the total number of Rhodia's shares and/or voting rights at the time of the acquisition; (ii) the total number of Rhodia's shares and/or voting rights on a fully
diluted basis; or (iii) any class of other securities granting access immediately or subsequently to Rhodia's capital or voting rights, must notify Rhodia within 15 days by registered
mail, return receipt requested, of the total number of current and potential shares and voting rights it holds. The holder will also indicate the date of acquisition of such securities. The same
notification requirement applies to each subsequent increase and to any decrease in ownership of 0.5% or any multiple of 0.5%. Mutual fund management companies must report this information for the
aggregate number of Rhodia's shares held by the funds they manage.

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If a person does not comply with this notification requirement, one or more stockholders holding 0.5% or more of Rhodia's share capital or voting rights may, upon request recorded at a
stockholders' meeting, require the suspension of the voting rights attached to the shares or the securities in excess of the relevant threshold for 2 years following the date on which the owner
complies with the notification requirement. This loss of voting rights shall only be effective as of the date of the acquisition of the shares in excess of the relevant threshold. In addition, any
stockholder who fails to comply with these requirements may have all or part of its voting rights suspended for up to 5 years by the Commercial Court at the request of Rhodia's chairman, any
stockholder or the COB.

To
permit stockholders to give the notice required by French law, Rhodia must publish information regarding the total number of current and potential shares and voting rights and the
number of securities granting access immediately or subsequently to capital or voting rights available as of the date of Rhodia's annual general meeting in the BALO within 15 calendar days after this
meeting and inform the CMF thereof. In addition, if the number of available votes changes by at least 5% between two ordinary general meetings, Rhodia must publish the number of votes then available
in the BALO within 15 calendar days of this change and provide the CMF with a written notice. The CMF publishes the total number of voting rights so notified by all listed companies in a weekly notice (avis),mentioning the date each such number was last updated. In order to facilitate compliance with the notification requirements, a holder of ADSs
may deliver to Citibank notifications regarding shares represented by ADRs and Citibank will forward the notification to Rhodia and to the CMF as soon as practicable.

Under
French law and COB regulation no 88-02, any person or persons, acting alone or in concert with others, who acquires more than 10% or 20% of Rhodia's outstanding share
capital or our voting rights, either through shares or ADSs, must disclose its future intentions within fifteen calendar days following the threshold crossing to us, the CMF and the COB. The CMF makes
the notice public and the person or persons who have acquired the voting rights must publish a press release in a financial newspaper having national circulation in France, stating whether or not they
intend, within the 12-month period following the acquisition, to increase their stockholdings and to request a seat on Rhodia's board of directors and whether they are acting in concert
with others. The acquirer may amend its stated intentions, provided that it does so on the basis of significant changes in its own situation or stockholders. Upon any change of intention, it must
file a new disclosure report. The sanctions regarding failure to comply with these rules are identical to those regarding threshold crossings described above.

Under
the stock market regulations of the CMF, and subject to limited exemptions granted by the CMF, any person or persons acting in concert owning in excess of 331/3% of
the share capital or voting rights of Rhodia must initiate a public tender offer for the balance of its share capital (including, for these purposes, all securities convertible into or exchangeable
for equity securities).

Purchase of Rhodia's Own Shares

Under the French Commercial Code, Rhodia may not issue shares to itself. However, Rhodia may purchase its own shares in the limited cases described in "Item 9.
The Offer and ListingPurchase and Trading by Rhodia in its Own Shares."

Taxation

French Taxation

The following is a general summary of the principal French tax consequences of purchasing, owning and disposing of Rhodia's shares. This summary may only be
relevant to you if you are not a resident of France and you do not hold your shares in connection with a business conducted in France.

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This
discussion is intended only as a descriptive summary. It does not address all aspects of French tax laws that may be relevant to you in light of your particular circumstances. It is
based on the applicable laws, conventions and treaties in force as of the date of this prospectus, all of which are subject to change, possibly with retroactive effect, or different interpretations.
If you are considering buying Rhodia shares, you should consult your own tax advisor about the potential tax effects of owning or disposing of shares in your particular situation.

Taxation on Sale or Disposal of Shares

Generally, you will not be subject to any French income tax or capital gains tax when you sell or dispose of Rhodia shares if both of the following apply to you:



If
a double tax treaty between France and your country contains more favorable provisions, you may not be subject to any French income tax or capital gains tax when you sell or dispose
of any Rhodia shares.

If
you transfer shares using a written agreement, that agreement must generally be registered. You will be required to pay a registration duty of 1% of either the purchase price or the
market value of the shares transferred, whichever is higher. The maximum duty is € 3.049 per transfer. However, in some circumstances, if the agreement is executed outside
France, you will not be required to pay this duty.

Taxation of Dividends

In France, companies may only pay dividends out of income remaining after tax has been paid. When stockholders resident in France receive dividends from French
companies, they are generally entitled to a tax credit, known as theavoir fiscal.

The
amount of theavoir fiscalis generally equal to:



In
addition, if the distribution of dividends by us gives rise to theprécompte, stockholders entitled to the avoir fiscalat the rate of 15%, and then
10%, will generally be entitled to an additional amount ofavoir
fiscalequal to:



As
indicated below, theprécompteis a tax that is paid by French companies when they distribute dividends out of certain
profits and such dividends carry anavoir fiscal.

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Under
French domestic law, stockholders who are not resident in France are not eligible for theavoir fiscal,and French companies must
normally deduct a 25% French withholding tax from dividends paid to non-residents.

Under
most tax treaties between France and other countries, the rate of this withholding tax may be reduced in specific circumstances. The stockholder can generally subsequently be
entitled to a tax credit in his or her country of residence for the amount of tax actually withheld. Under some tax treaties, the withholding tax is eliminated altogether.

The
following countries, French overseas territories, known asTerritoires d'Outre-Mer,and other territories have made
treaties with France that provide for the arrangements summarized below:

|Australia
Austria
Belgium
Bolivia
Brazil
Burkina Faso
Canada
Estonia
Finland
Gabon
Germany(1) |  | Ghana
Iceland
India
Israel
Italy
Ivory Coast
Japan
Latvia
Lithuania
Luxembourg
Malaysia |  | Mali
Malta
Mauritius
Mexico
Namibia
Netherlands
New Zealand
Niger
Norway
Pakistan
Senegal |  | Singapore
South Korea
Spain
Sweden
Switzerland
Togo
Turkey
Ukraine
United Kingdom
United States
Venezuela |  | FrenchTerritoires d'Outre-Merand Other:
Mayotte
New Caledonia
Saint-Pierre and Miquelon
|--------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------

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Under
these treaties, a stockholder who fulfills specific conditions may generally apply to the French tax authorities for the following:



If
these arrangements apply to a stockholder, Rhodia will withhold tax from the dividend at the lower rate, provided that the stockholder has previously established that he or she is
entitled to the lower rate and has complied with the filing formalities. Otherwise, Rhodia must withhold tax at the full rate of 25%, and the stockholders may subsequently claim the excess tax paid.

Some
of the countries and territories listed above impose additional conditions for corporate entities wishing to receive theavoir fiscal.
Inother countries and territories, individual residents may receive theavoir fiscalbut corporate entities may not.

Provided
the distributed dividends carry anavoir fiscal, a French company must generally pay an equalization tax known as the précompteto the French tax
authorities if it distributes dividends out of:



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The
amount of theprécompteis 50% of the net dividend before withholding tax.

A
stockholder who is not a French resident may obtain a refund of the amount of anyprécompteactually paid in cash, net of
applicable withholding tax, in two cases:



Estate and Gift Tax

France imposes estate and gift tax where an individual or entity acquires shares of a French company from a nonresident of France by way of inheritance or gift.
France has entered into estate and gift tax treaties with a number of countries. Under these treaties, residents of those countries may be exempted from this tax or obtain a tax credit, assuming
specific conditions are met. You should consult your own tax advisor about whether French estate and gift tax will apply to you and whether you may claim an exemption or tax credit.

Wealth Tax

You will not be subject to French wealth tax, known asimpôt de solidarité sur la
fortune,on your Rhodia shares if both of the following apply to you:



If
a double tax treaty between France and your country contains more favorable provisions, you may not be subject to French wealth tax.

Taxation of U.S. Investors

The following is a general summary of certain material U.S. federal income and French tax consequences to U.S. holders. You will be a U.S. holder if you are the
beneficial owner of Rhodia shares or ADSs and all of the following five points apply to you:



122

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If
a partnership holds shares or ADSs, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If you are a partner in
a partnership that holds shares or ADSs, you are urged to consult your own tax advisor regarding the specific tax consequences of owning and disposing of your shares or ADSs.

Special
rules may apply to United States expatriates, insurance companies, tax-exempt organizations, financial institutions, persons subject to the alternative minimum tax,
securities broker-dealers and persons holding their shares or ADSs as part of a straddle, hedging or conversion transaction, among others. Those special rules, except certain rules applicable to
certain tax-exempt investors, are not discussed in this summary. Furthermore, this discussion is based upon current United States and French law and practice. This summary is subject to
any changes
or changes in interpretation to United States or French law or practice occurring after the date hereof and such changes may have retroactive effect. In addition, this summary is based, in part, upon
representations made by the Depositary to Rhodia and on the assumption that each obligation in the Deposit Agreement and any related agreements will be performed in accordance with its terms. You
should consult your own tax advisors concerning the U.S. federal, state or local tax consequences in light of your particular situation as well as any consequences arising under the laws of any other
taxing jurisdiction.

For
purposes of the U.S.- France tax treaty and the United States Internal Revenue Code of 1986, as amended, if you own ADSs evidenced by ADRs, you will be treated as the owner of the
shares represented by such ADSs. Accordingly, in the following discussion, references to shares shall include ADSs unless the context specifically requires otherwise.

Taxation of Dividends

Withholding Tax and Avoir Fiscal.In France, companies may only pay dividends out of income remaining after tax has been
paid. When stockholders resident in France receive dividends from French companies, they are generally entitled to a tax credit, known as theavoir
fiscal.

The
amount of theavoir fiscalis generally equal to:



In
addition, if the distribution of dividends by us gives rise to theprécompte, stockholders entitled to the avoir fiscalat the rate of 15%, and then
10%, will generally be entitled to an additional amount ofavoir
fiscalequal to:



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As
indicated below, theprécompteis a tax that is paid by French companies when they distribute dividends out of certain
profits and such dividends carry anavoir fiscal.

Under
French domestic law, stockholders who are not resident in France are not eligible for theavoir fiscaland French companies normally
must deduct 25% French withholding tax from dividends paid to non-residents of France.

Under
the U.S.-France tax treaty, this withholding tax is reduced to 15% if your ownership of Rhodia shares or ADSs is not effectively connected with a permanent establishment or a fixed
base that you have in France.

Additional
provisions apply if you are considered an "eligible" U.S. holder of shares or ADSs. You are "eligible" if your ownership of Rhodia shares or ADSs is not effectively connected
with a permanent establishment or a fixed base that you have in France and any one of the following four points applies to you:



If
you are an eligible U.S. holder, Rhodia will withhold tax from your dividend at the reduced rate of 15%, provided that you have previously established that you are a resident of the
United States under the U.S.-France tax treaty in accordance with the following procedures:



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If
you are an eligible U.S. holder of ADSs, you can obtain the form or certificate from the Depositary and also the U.S. Internal Revenue Service, and the Depositary will file it with
French tax authorities as long as you deliver the completed form or certificate to the Depositary within the time period specified in the distribution to registered U.S. holders of ADSs.

If
you are not an eligible U.S. holder or if you have not completed Form RF1 A EU-No. 5052 or the five-point certificate before the dividend payment date,
Rhodia will deduct French withholding tax at the rate of 25%. In that case, you may claim from the French tax authorities a refund of any excess withholding tax.

If
you are an eligible U.S. holder, you may also claim theavoir fiscal,by completing Form RF1 A EU-No. 5052 and
sending it to the French tax authorities before December 31 of the second year following the year during which the dividend is paid. You will be entitled to a payment equal to the avoir fiscal,less a 15% withholding tax on theavoir fiscal. Asnoted below, you will not receive this
payment until after the close of the calendar year in which the dividend was paid. To receive the payment, you must submit a claim to the French tax authorities and attest that you are subject to U.S.
federal income taxes on the payment of theavoir fiscaland the related dividend. For partnerships or trusts, the partners, beneficiaries or grantors
must make the attestation.

Specific
rules apply to the following:



Entities
in these two categories are eligible for the reduced withholding tax rate of 15% on dividends, subject to the same withholding tax filing requirements as eligible U.S. holders,
except that they may have to supply additional documentation evidencing their entitlements to these benefits.

These
entities are not entitled to the fullavoir fiscal.They may claim a partialavoir
fiscalequal to 30/85 of the grossavoir fiscal,provided that they own, directly or indirectly, less than 10% of the Rhodia's
capital and they satisfy certain filing formalities.

Theavoir fiscalor partialavoir fiscaland any French withholding tax refund are
generally expected to be paid within 12 months after you file Form RF1 A EU-No. 5052. However, they will not be paid before January 15 following the end of the
calendar year in which the related dividend is paid.

For
U.S. federal income tax purposes, the gross amount of any dividend and any relatedavoir fiscal,including any French withholding tax,
will be included in your gross income as ordinary income to the extent they are paid or deemed paid out of Rhodia's current or accumulated earnings and profits as calculated for U.S. federal income
tax purposes. You must include these amounts in income on the date payment is received by you, which, if you hold ADSs, will be the date payment is received by the Depositary. To the extent, if any,
that the amount of any such distribution exceeds Rhodia's current and accumulated earnings and profits as calculated for U.S. federal income tax purposes, it will be treated first as a
tax-free return of capital and thereafter any excess will be treated as capital gain. Dividends paid by Rhodia will not give rise to any dividends received deduction. They will generally
constitute foreign source "passive" income for foreign tax credit purposes (or, for some holders, foreign source "financial services" income).

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In
addition, for U.S. federal income tax purposes, the amount of any dividend paid to you in euro, including any French withholding taxes, will be equal to the U.S. dollar value of the
euro amount received calculated by reference to the spot rate in effect on the date the dividend is received by you, in the case of shares, or by the Depositary in the case of ADSs, regardless of
whether the payment is in fact converted into U.S. dollars. If you do not convert any such foreign currency that is distributed to you into U.S. dollars on the date you receive it, you will
have a basis in that foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or loss resulting from currency exchange fluctuations during the period from the date the
dividend is includible in your gross income to the date
such payment is converted into U.S. dollars will be treated as U.S. source ordinary income or loss. You may also be required to recognize foreign currency gain or loss if you receive a
refund of tax withheld from a dividend in excess of the 15% rate provided for under the U.S.-France tax treaty. This foreign currency gain or loss generally will be U.S. source ordinary income or
loss.

French
withholding tax imposed on the dividends you receive on your shares or ADSs and on anyavoir fiscalat 15% under the U.S.-France
tax treaty is treated as payment of a foreign income tax. You may claim this amount as a credit against your U.S. federal income tax liability, subject to detailed conditions and limitations, or you
may instead claim an itemized deduction for all of the foreign taxes you pay in a particular year.

The Précompte.Provided the distributed dividends carry anavoir
fiscal, a French company must generally pay an equalization tax known as theprécompteto the French tax
authorities if it distributes dividends out of:



The
amount of theprécompteis 50% of the net dividends before withholding tax.

If
you are not entitled to the fullavoir fiscal,you may generally obtain a refund from the French tax authorities of any précomptepaid by Rhodia
with respect to distributions paid to you. Under the U.S.-France tax treaty, the amount of the précompterefunded to U.S. residents is reduced by 15% withholding tax applicable to dividends and
by the partial avoir fiscal,if any. You are entitled to a refund of anyprécompteactually paid in
cash, but not to anyprécomptethat is paid by off setting French and/or foreign tax credits. To apply for a refund of the précompte, you
should file French Treasury Form RF1 B EU-No. 5053 before the end of the second year following the year
in which the dividend was paid.

The
form and its instructions are available from the Internal Revenue Service in the United States or from the FrenchCentre des Impôts des
Non-Résidentswhose address is 9, rue d'Uzès, 75094 Paris Cedex 2, France.

For
U.S. federal income tax purposes, the amount of theprécomptewill be included in your gross income as ordinary income
in the year it is received. It will generally constitute foreign source "passive" income for foreign tax credit purposes (or, for some holders, foreign source "financial services" income). The amount
of anyprécomptepaid in euro, including any French withholding taxes, will be equal to the U.S. dollar value of the euro amount received
on the date theprécompteis included in income, regardless of whether you convert the payment into U.S. dollars. If you hold ADSs, this
date will be the date the payment is received by the Depositary. Any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend is includible in your gross
income to the date such payment is converted into U.S. dollars will be treated as U.S. source ordinary income or loss.

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Taxation of Capital Gains

If you are a resident of the United States for purposes of the U.S.-France tax treaty, you will not be subject to French tax on any capital gain if you sell or
exchange your shares or ADSs, unless you have a permanent establishment or fixed base in France and the shares or ADSs you sold or exchanged were part of the business property of that permanent
establishment or fixed base. Special rules apply to individuals who are residents of more than one country.

In
general, for U.S. federal income tax purposes, you will recognize capital gain or loss if you sell, exchange or otherwise dispose of your shares or ADSs in an amount equal to the
difference between the amount realized on the disposition and your tax basis in the shares or ADSs. Any gain or loss generally will be U.S. source gain or loss, and will be treated as
long-term capital gain or loss if your holding period in the shares or ADSs exceeds one year at the time of disposition. If you are an individual, any capital gain generally will be
subject to U.S. federal income tax at preferential rates if you meet the specified minimum holding periods. The deductibility of capital losses is subject to significant limitations.

Further,
any deposit or withdrawal of shares by you for ADSs will not be subject to U.S. federal income tax.

Recent U.S. Tax Law Changes Applicable to Individuals

Recent U.S. tax legislation generally has reduced the rates of tax payable by individuals (as well as certain trusts and estates) on many items of income. Under
the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "2003 Act"), the marginal tax rates applicable to ordinary income generally have been lowered effective January 1, 2003.
Furthermore, for capital assets held for over one
year and sold or exchanged on or after May 6, 2003 but in taxable years beginning before January 1, 2009, the maximum rate of tax generally will be 15% (rather than the higher rates of
tax generally applicable to items of ordinary income). Finally, "qualified dividend income" received in taxable years beginning after December 31, 2002 and beginning before January 1,
2009, generally will be taxed at the rates applicable to these capital gains (i.e., a maximum rate of 15%) rather than the rates applicable to other items or ordinary income. For this purpose,
"qualified dividend income" generally includes dividends received from U.S. corporations as well as from certain non-U.S. corporations. The exact extent to which dividends paid by non-U.S.
corporations will constitute "qualified dividend income" and the effect of such status on the ability of a taxpayer to utilize associated foreign tax credits is not entirely clear at present, but it
is anticipated that a number of uncertainties will be clarified through administrative pronouncements throughout the remainder of 2003. In the meantime, investors are urged to consult their own tax
advisors regarding the impact on their particular situations of the provisions of the 2003 Act.

Passive Foreign Investment Company Status

A non-U.S. corporation will be classified as a Passive Foreign Investment Company (a "PFIC") for any taxable year if at least 75% of its gross income
consists of passive income (such as dividends, interest, rents, royalties, or gains on the disposition of certain minority interests), or at least 50% of the average value of its assets consist of
assets that produce, or are held for the production of, passive income. Rhodia believes, based on its operations and assets, that it was not a PFIC for 2002. This conclusion is a factual determination
that must be made at the close of each year and is based on, among other things, a valuation of its assets, which will likely change from time to time. If Rhodia were characterized as a PFIC for any
taxable year, you would suffer adverse tax consequences. These consequences may include having gains realized on the disposition of shares or ADSs treated as ordinary income rather than capital gains
and being subject to punitive interest charges on certain dividends and on the proceeds of the sale or other disposition of the shares or ADSs. Furthermore,

127

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dividends
paid by a PFIC are not eligible to be treated as "qualified dividend income" (as discussed above).

You
should consult your own tax advisor regarding the potential application of the PFIC rules to your ownership of Rhodia's shares or ADSs.

French Estate and Gift Taxes

Under the Convention Between the United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
Respect to Taxes on Estates, Inheritance and Gifts of November 24, 1978, if you transfer your shares or ADSs by gift, or if they are
transferred by reason of your death, that transfer will be subject to French gift or inheritance tax only if one of the following applies:



French Wealth Tax

The French wealth tax generally does not apply to your shares of Rhodia if you are a resident of the United States for purposes of the U.S.-France tax treaty.

United States Information Reporting and Backup Withholding

Distributions paid to you and proceeds from the sale or disposal of your shares or ADSs may be required to be reported to the Internal Revenue Service. U.S.
federal backup withholding at the current rate of 28% may be imposed on specified payments made to persons that fail to furnish required information. Generally, backup withholding will not apply to
you if you furnish a correct taxpayer identification number or certificate of foreign status or make any other required certification. Backup withholding also does not apply to you if you are exempt
from backup withholding (for example, if you are a corporation). U.S. persons who are required to establish their exempt status generally must provide Internal Revenue Service
Form W-9, (Request for Taxpayer Identification Number and Certification). Non-U.S. holders generally will not be subject to U.S. information reporting or backup
withholding. However, such holders may be required to provide certification of non-U.S. status in connection with payments received in the United States or through certain U.S.-related
financial intermediaries. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability. You may obtain a refund of
any erroneous amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service and furnishing any required information.

Dividends and Paying Agents

Not applicable.

Statements by Experts

Not applicable.

Documents on Display

The documents referred to in this annual report can be read at the U.S. Securities and Exchange Commission's public reference facilities at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549.

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Please
call the SEC at 1-800-SEC-0330 for more information on the public reference room and their copy charges.

Subsidiary Information

Not applicable.

Fees for Professional Audit Services

The following table sets forth the aggregate fees for professional audit services performed for Rhodia for the fiscal year ended December 31, 2002.

|                                                                                             |           | Year ended
December 31, 2002 |      
|-------------------------------------------------------------------------------------------- | --------- | ---------------------------- | -----
|
|
|
|Audit                                                                                        |           |                              |      
|Statutory audit, certification and audit of individual and consolidated financial statements |           | 4,834                        |      
|Other audit-related fees                                                                     |           | 921                          |      
|                                                                                             |           |                              |      
|                                                                                             | Sub-total |                              | 5,755
|                                                                                             |           |                              |      
|Other Services                                                                               |           |                              |      
|Legal, tax-related and social fees(2)                                                        |           | 508                          |      
|                                                                                             |           |                              |      
|Sub-total                                                                                    |           | 508                          |      
|                                                                                             |           |                              |      
|                                                                                             | Total     |                              | 6,263
|                                                                                             |           |                              |      

---

Item 11. Quantitative and Qualitative Disclosure About Market Risk

The information below is based on certain assumptions and expectations that, by their nature, may prove to be incorrect, particularly due to changes in foreign
exchange rates and interest rates, and changes in Rhodia's exposure to these risks.

Exchange Rate Exposure

Rhodia's policy with respect to limiting its exposure to short-term fluctuations in exchange rates is to calculate on a daily basis its net foreign currency
exposure based on its transactions, including both sale and purchase transactions, and to use financial instruments to reduce such exposure against rate changes with respect to the euro. Positions are
recorded at market value, for U.S. GAAP purposes. The main instruments Rhodia currently uses are over-the-counter forward exchange contracts with maturities of generally less
than six months.

Interest Rate Exposure

Rhodia is most exposed to interest rate risk on the euro, the U.S. dollar and the pound sterling. Swaps are used to manage this risk and control the cost of short
and medium-term debt. Interest-rate swaps are used primarily to restructure variable-rate debt and substitute it with fixed-rate debt until

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maturity.
The maturities of these swaps range from three months to five years depending on the underlying debt. The interest-rate sensitivity of these instruments is calculated regularly.

Exposure to Commodity Prices

Rhodia's exposure to commodity prices relates essentially to purchases of fuel, natural gas and raw materials (principally oil-derived). Over-the-counter
derivative instruments do not exist for the majority of Rhodia's oil-derived raw materials. In order to reduce this indirect exposure to oil prices Rhodia uses swaps, options and futures on the Brent
and Gasoil markets. Hedging instruments do not exceed 30% of estimated needs for the next 18 months. These instruments, which are listed on organized and liquid markets, are marked to market.
On December 31, 2002, the maturity of these instruments did not exceed two years. The nominal value of these contracts (in Brent-based equivalents) corresponded to the hedging of
4.4 million barrels of oil at December 31, 2002.

Derivative Financial Instruments

Rhodia's business and financial transactions expose it to various market risks, primarily exchange rate and interest rate fluctuations. For several years,
Rhodia's policy has been to systematically hedge exchange risks. A system for regularly reviewing and anticipating market trends to hedge against interest rate risk has also been established. Rhodia's
policy for managing market risk is based on centralizing both systematic hedging and continuous monitoring, which enables the Group to take advantage of the best available market conditions.

Sensitivity Analysis

Rhodia uses derivatives to hedge its interest and exchange rate exposures. Since January 1, 2001, Rhodia has calculated the sensitivity of these
instruments to financial markets over a one-year period on the basis of possible reasonable price fluctuations. The calculations below are evaluated at pre-tax levels.

Financial
instruments held by Rhodia that are sensitive to changes in interest rates include short-term debt and financial assets, interest rate swaps and derivatives traded
in organized over-the-counter markets. The analysis of the sensitivity is calculated on the basis of an instantaneous 100 basis point interest rate increase in relation to year-end levels
and all other things being equal. A 100 basis point variation on December 31, 2002 and 2001 would have resulted in a maximum variation of net interest expense of
€18.48 million and €29.53 million, respectively.

Financial
instruments held by Rhodia that are sensitive to fluctuations in exchange rates include forward exchange contracts, options, and payables and receivables in foreign currency.
The analysis of the sensitivity is based on an instantaneous 10% variation in the value of the euro with respect to these currencies in relation to year-end exchange rates, and all other
things being equal. A 10% variation in exchange rates on December 31, 2002 and 2001 would have a maximum impact on the
fair value of the instruments measured by €8.61 million and €54.09 million respectively.

Financial
instruments held by Rhodia that are sensitive to changes in oil prices (Brent), include options and swaps. The analysis of the sensitivity is calculated on the basis of a 10%
variation in the Brent barrel price curve for the year in relation to year-end levels, all other things being equal. In the case of a 10% variation in the price of oil on
December 31, 2002 and 2001, these financial instruments would have had a maximum negative impact on earnings of €9.02 million and €6.18 million
respectively.

Financial
instruments held by Rhodia that are sensitive to changes in stock market prices were not significant at the end of 2002 and 2001.

Item 12. Description of Securities Other than Equity Securities

Not Applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Rhodia's chief executive officer and chief financial officer have evaluated the effectiveness of the design and operation of Rhodia's disclosure controls and
procedures (as defined in Exchange Act Rule 13a-14(c)) as of a date within 90 days of the filing of this Annual Report on Form 20-F. Based on that
evaluation, Rhodia's chief executive officer and chief financial officer have concluded that, as of the evaluation date, Rhodia's disclosure controls and procedures were effective to ensure that
material information relating to Rhodia and its consolidated subsidiaries would be made known to them by others within these entities, particularly during the period in which this annual report was
being prepared.

There
have been no significant changes in Rhodia's internal controls or to Rhodia's knowledge, other factors that could significantly affect Rhodia's internal controls subsequent to the
evaluation date. Therefore, no corrective actions were taken.

Item 16. [Reserved]

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PART III

Item 17. Financial Statements

Not Applicable.

Item 18. Financial Statements

The following Consolidated Financial Statements are filed as part of this annual report.

Report of Independent Auditors

F-3Consolidated Balance Sheets

F-4Consolidated Statements of Income

F-6Consolidated Statements of Stockholders' Equity

F-7Consolidated Statements of Cash Flows

F-8Notes to the Consolidated Financial Statements

F-9Consolidated Subsidiaries

F-59


Item 19. Exhibits

|1.1  |  | By-Laws of Rhodia (unofficial English translation), as amended through May 21, 2002 (incorporated by reference to Exhibit 1.1 to Rhodia's Annual Report on Form 20-F filed on June 27, 2002).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.1  |  | List of Subsidiaries (incorporated by reference to the list of principal subsidiaries included in the Consolidated Financial Statements of this annual report).                              
|10.1 |  | Consent of Independent Auditors.                                                                                                                                                             
|99   |  | Certifications pursuant to Section 906 of the Sarbanes Oxley Act of 2002.                                                                                                                    

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INDEX TO FINANCIAL STATEMENTS

The following Consolidated Financial Statements are included as part of this annual report.

|Report of Independent Auditors                  |  | F-3 
|----------------------------------------------- |  | ----
|Consolidated Balance Sheets                     |  | F-4 
|Consolidated Statements of Operations           |  | F-6 
|Consolidated Statements of Stockholders' Equity |  | F-7 
|Consolidated Statements of Cash Flows           |  | F-8 
|Notes to the Consolidated Financial Statements  |  | F-10
|Consolidated Subsidiaries                       |  | F-59

F-1

---

(This
page has been left blank intentionally.)

F-2

---



RHODIA AND SUBSIDIARIES        Report of Independent Auditors

To the Stockholders of Rhodia,

We have audited the accompanying consolidated balance sheets of Rhodia as of December 31, 2002 and December 31, 2001, and the related consolidated
statements of operations, stockholders' equity and cash-flows for each of the three years in the period ended December 31, 2002 which, as described in Note 1, have been
prepared on the basis of accounting principles generally accepted in France. These financial statements are the responsibility of Rhodia's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to below (page F-4 to F-63) present fairly, in all material respects, the financial position of Rhodia and
its subsidiaries at December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in France.

Accounting
principles generally accepted in France vary in certain important respects from accounting principles generally accepted in the United States of America. The application of
the latter, as restated, would have affected the determination of consolidated net income for each of the three years in the period ended December 31, 2002 and the determination of consolidated
stockholders' equity at
December 31, 2002 and 2001, to the extent summarized in Note 29 to the consolidated financial statements.

As
explained in note 4 to these financial statements, one of the company's reporting units is still in a development stage and the carrying value of the related assets could be impacted
if there were further delays in launching new drugs.

Paris,
France
April 4, 2003

PricewaterhouseCoopers

F-3

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RHODIA GROUP

CONSOLIDATED BALANCE SHEETS

December 31,

(In millions of €)

|                              |                                                | Note |   | 2002  |     | 2001  |     | 2000 
|----------------------------- | ---------------------------------------------- | ---- | - | ----- | --- | ----- | --- | -----
|Assets                        |                                                |      |   |       |     |       |     |      
|Goodwill                      |                                                | 4    |   | 1,186 |     | 1,354 |     | 1,404
|Other intangible assets       |                                                | 5    |   | 177   |     | 206   |     | 180  
|Tangible assets               |                                                | 6    |   | 2,743 |     | 3,561 |     | 3,759
|Investments and other assets: |                                                |      |   |       |     |       |     |      
|                              | Deposits and long-term receivables             |      |   |       | 120 |       | 98  |      
|                              | Investments accounted for by the equity method |      | 7 |       | 172 |       | 238 |      
|                              | Investments at cost                            |      | 8 |       | 67  |       | 75  |      
|                              | Deferred charges and other assets              |      | 9 |       | 841 |       | 584 |      
|                              |                                                |      |   |       |     |       |     |      
|Total long-term assets        |                                                |      |   | 5,306 |     | 6,116 |     | 6,224
|                              |                                                |      |   |       |     |       |     |      
|Inventories                   |                                                | 10   |   | 835   |     | 1,044 |     | 1,185
|Accounts receivable           |                                                | 11   |   | 378   |     | 524   |     | 819  
|Other current assets          |                                                | 12   |   | 917   |     | 916   |     | 1,079
|Marketable securities         |                                                | 14   |   | 108   |     | 180   |     | 94   
|Cash and cash equivalents     |                                                |      |   | 143   |     | 233   |     | 165  
|                              |                                                |      |   |       |     |       |     |      
|Total current assets          |                                                |      |   | 2,381 |     | 2,897 |     | 3,342
|                              |                                                |      |   |       |     |       |     |      
|Total Assets                  |                                                |      |   | 7,687 |     | 9,013 |     | 9,566
|                              |                                                |      |   |       |     |       |     |      

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-4

---

|                                                                                                           |  | Note |  | 2002  |   | 2001  |   | 2000  |  
|---------------------------------------------------------------------------------------------------------- |  | ---- |  | ----- | - | ----- | - | ----- | -
|Liabilities and Stockholders' Equity                                                                       |  |      |  |       |   |       |   |       |  
|Common stock; par value €1 in 2002, €15 in 2001 and 2000; 179,309,188 shares issued in 2002, 2001 and 2000 |  |      |  | 179   |   | 2,690 |   | 2,690 |  
|Additional paid-in capital                                                                                 |  |      |  | 2,514 |   | 3     |   | 3     |  
|Retained earnings/(deficit)                                                                                |  |      |  | (418  | ) | (374  | ) | (74   | )
|Cumulative translation adjustment                                                                          |  |      |  | (440  | ) | (52   | ) | (26   | )
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total stockholders' equity                                                                                 |  | 15   |  | 1,835 |   | 2,267 |   | 2,593 |  
|Minority interests                                                                                         |  | 16   |  | 23    |   | 84    |   | 87    |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total stockholders' equity and minority interests                                                          |  |      |  | 1,858 |   | 2,351 |   | 2,680 |  
|Commitments and contingencies                                                                              |  | 23   |  |       |   |       |   |       |  
|Reserves for pensions, deferred income taxes and other costs in excess of one year                         |  | 17   |  | 1,233 |   | 1,239 |   | 1,149 |  
|Other long-term liabilities                                                                                |  |      |  | 141   |   | 149   |   | 57    |  
|Long-term debt                                                                                             |  | 18   |  | 1,739 |   | 1,949 |   | 2,077 |  
|Short-term borrowings and current portion of long-term debt                                                |  | 18   |  | 645   |   | 1,036 |   | 1,248 |  
|Accounts payable                                                                                           |  |      |  | 948   |   | 885   |   | 1,123 |  
|Short-term reserves for pensions, deferred income taxes and other costs                                    |  | 17   |  | 301   |   | 474   |   | 332   |  
|Other current liabilities                                                                                  |  | 19   |  | 822   |   | 930   |   | 900   |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total current liabilities                                                                                  |  |      |  | 2,716 |   | 3,325 |   | 3,603 |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total Liabilities and Stockholders' Equity                                                                 |  |      |  | 7,687 |   | 9,013 |   | 9,566 |  
|                                                                                                           |  |      |  |       |   |       |   |       |  

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-5

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31,

(In millions of €)

|                                                               |  | Note |  | 2002        |   | 2001        |   | 2000        |  
|-------------------------------------------------------------- |  | ---- |  | ----------- | - | ----------- | - | ----------- | -
|Net sales                                                      |  |      |  | 6,617       |   | 7,279       |   | 7,419       |  
|                                                               |  |      |  |             |   |             |   |             |  
|Production costs and expenses                                  |  |      |  | (4,489      | ) | (5,166      | ) | (5,053      | )
|Administrative and selling expenses                            |  |      |  | (1,104      | ) | (1,120      | ) | (1,138      | )
|Research and development expenses                              |  | 25   |  | (201        | ) | (197        | ) | (194        | )
|Depreciation and amortization                                  |  |      |  | (447        | ) | (542        | ) | (492        | )
|Restructuring and environmental costs                          |  |      |  | (25         | ) | (163        | ) | (14         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Operating income                                               |  |      |  | 351         |   | 91          |   | 528         |  
|Financial expensenet                                          |  | 20   |  | (123        | ) | (186        | ) | (177        | )
|Other income/(expense)net                                     |  | 21   |  | (72         | ) | (108        | ) | (7          | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) of consolidated subsidiaries before income taxes |  |      |  | 156         |   | (203        | ) | 344         |  
|Income taxes                                                   |  | 22   |  | (66         | ) | 86          |   | (95         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) of consolidated subsidiaries                     |  |      |  | 90          |   | (117        | ) | 249         |  
|Equity in earnings/(losses) of affiliated companies            |  |      |  | (38         | ) | (16         | ) | 8           |  
|Amortization of goodwill                                       |  |      |  | (47         | ) | (75         | ) | (32         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) before minority interests                        |  |      |  | 5           |   | (208        | ) | 225         |  
|Minority interests                                             |  |      |  | (9          | ) | (5          | ) | (9          | )
|                                                               |  |      |  |             |   |             |   |             |  
|Net income/(loss)                                              |  |      |  | (4          | ) | (213        | ) | 216         |  
|                                                               |  |      |  |             |   |             |   |             |  
|Earnings/(loss) per share (in €)                               |  |      |  |             |   |             |   |             |  
|  Basic                                                       |  |      |  | (0.02       | ) | (1.19       | ) | 1.23        |  
|Average shares outstanding                                     |  |      |  | 178,765,518 |   | 179,103,640 |   | 175,843,305 |  
|                                                               |  |      |  |             |   |             |   |             |  
|  Diluted                                                     |  |      |  | (0.02       | ) | (1.19       | ) | 1.23        |  
|Average shares after dilution                                  |  |      |  | 178,765,518 |   | 179,103,640 |   | 176,351,932 |  
|                                                               |  |      |  |             |   |             |   |             |  

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-6

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31,

(In millions of €)

|                                                      |  | Common stock
(note 15a) |   | Additional
paid-in
capital
(note 15a) |  | Retained
earnings/
(deficit)
(note 15c) |   | Net income/
(loss) |   | Cumulative
translation
adjustment
(note 15d) |   | Total
Stockholders'
Equity
(note 15) |  
|----------------------------------------------------- |  | ----------------------- | - | ------------------------------------- |  | --------------------------------------- | - | ------------------ | - | -------------------------------------------- | - | ------------------------------------ | -
|Balance, December 31, 1999                            |  | 2,621                   |   | 3                                     |  | (462                                    | ) | 227                |   | 1                                            |   | 2,390                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | 227                                     |   | (227               | ) |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (70                                     | ) |                    |   |                                              |   | (70                                  | )
|Net income                                            |  |                         |   |                                       |  |                                         |   | 216                |   |                                              |   | 216                                  |  
|Treasury stock transactions                           |  |                         |   |                                       |  | 16                                      |   |                    |   |                                              |   | 16                                   |  
|Translation                                           |  |                         |   |                                       |  | (1                                      | ) |                    |   | (27                                          | ) | (28                                  | )
|Capital increase                                      |  | 69                      |   |                                       |  |                                         |   |                    |   |                                              |   | 69                                   |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2000                            |  | 2,690                   |   | 3                                     |  | (290                                    | ) | 216                |   | (26                                          | ) | 2,593                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | 216                                     |   | (216               | ) |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (85                                     | ) |                    |   |                                              |   | (85                                  | )
|Net loss                                              |  |                         |   |                                       |  |                                         |   | (213               | ) |                                              |   | (213                                 | )
|Treasury stock transactions                           |  |                         |   |                                       |  |                                        |   |                    |   |                                              |   |                                     |  
|Translation                                           |  |                         |   |                                       |  | (2                                      | ) |                    |   | (26                                          | ) | (28                                  | )
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2001                            |  | 2,690                   |   | 3                                     |  | (161                                    | ) | (213               | ) | (52                                          | ) | 2,267                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | (213                                    | ) | 213                |   |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (21                                     | ) |                    |   |                                              |   | (21                                  | )
|Net loss                                              |  |                         |   |                                       |  |                                         |   | (4                 | ) |                                              |   | (4                                   | )
|Reclassification                                      |  | (1                      | ) | 1                                     |  |                                         |   |                    |   |                                              |   |                                     |  
|Treasury stock transactions                           |  |                         |   |                                       |  | (10                                     | ) |                    |   |                                              |   | (10                                  | )
|Translation                                           |  |                         |   |                                       |  | (9                                      | ) |                    |   | (388                                         | ) | (397                                 | )
|Reduction in par value of common stock from €15 to €1 |  | (2,510                  | ) | 2,510                                 |  |                                         |   |                    |   |                                              |   |                                     |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2002                            |  | 179                     |   | 2,514                                 |  | (414                                    | ) | (4                 | ) | (440                                         | ) | 1,835                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-7

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31,

(In millions of €)

|                                                                                         |                                                               | 2002   |      | 2001   |      | 2000   |     
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------ | ---- | ------ | ---- | ------ | ----
|Net income/(loss)                                                                        |                                                               | (4     | )    | (213   | )    | 216    |     
|Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |                                                               |        |      |        |      |        |     
|Minority interests                                                                       |                                                               | 9      |      | 5      |      | 9      |     
|Depreciation and amortization of assets and changes in reserves                          |                                                               | 415    |      | 750    |      | 515    |     
|Equity in (earnings)/losses of affiliated companies                                      |                                                               | 42     |      | 41     |      | (4     | )   
|Dividends received from affiliated companies                                             |                                                               | 3      |      | 21     |      | 16     |     
|Net (gains)/losses from disposals of assets                                              |                                                               | 35     |      | (15    | )    | (13    | )   
|Other (gains)/losses from operating activities                                           |                                                               | 36     |      | (184   | )    | (9     | )   
|Change in working capital:                                                               |                                                               |        |      |        |      |        |     
|                                                                                         | (Increase)/decrease in inventories                            |        | 14   |        | 123  |        | (82 
|                                                                                         | (Increase)/decrease in accounts receivable                    |        | (19  | )      | 219  |        | 272 
|                                                                                         | Increase/(decrease) in accounts payable                       |        | 204  |        | (185 | )      | 240 
|                                                                                         | Increase/(decrease) in other operating assets and liabilities |        | (229 | )      | 114  |        | (158
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash provided by operating activities                                                |                                                               | 506    |      | 676    |      | 1,002  |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Additions to property, plant and equipment                                               |                                                               | (374   | )    | (483   | )    | (503   | )   
|Other capital investments                                                                |                                                               | (52    | )    | (102   | )    | (138   | )   
|Acquisition of Albright & Wilson and Chirex                                              |                                                               |       |      |       |      | (1,383 | )   
|Proceeds from disposals of assets                                                        |                                                               | 363    |      | 500    |      | 124    |     
|(Increase)/decrease in loans and short-term investments                                  |                                                               | 3      |      | (69    | )    | (149   | )   
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash used for investing activities                                                   |                                                               | (60    | )    | (154   | )    | (2,049 | )   
|                                                                                         |                                                               |        |      |        |      |        |     
|Capital increase                                                                         |                                                               |       |      | 6      |      | 63     |     
|Dividends paid to Rhodia stockholders                                                    |                                                               | (21    | )    | (85    | )    | (70    | )   
|Share (purchases)/sales                                                                  |                                                               | (15    | )    |       |      | 16     |     
|New long-term borrowings                                                                 |                                                               | 3,156  |      | 1,927  |      | 2,222  |     
|Repayments of long-term borrowings                                                       |                                                               | (3,424 | )    | (1,770 | )    | (1,697 | )   
|Increase/(decrease) in short-term borrowings                                             |                                                               | (194   | )    | (535   | )    | 479    |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash provided by/(used for) financing activities                                     |                                                               | (498   | )    | (457   | )    | 1,013  |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Net effect of exchange rate changes on cash                                              |                                                               | (38    | )    | 3      |      | 5      |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Increase/(decrease) in cash and cash equivalents                                         |                                                               | (90    | )    | 68     |      | (29    | )   
|Cash and cash equivalents at beginning of year                                           |                                                               | 233    |      | 165    |      | 194    |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Cash and cash equivalents at end of year                                                 |                                                               | 143    |      | 233    |      | 165    |     
|                                                                                         |                                                               |        |      |        |      |        |     

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-8

---



RHODIA GROUP        INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|Note |  |                                                               |  | Page
|---- |  | ------------------------------------------------------------- |  | ----
|1.   |  | Accounting policies                                           |  | F-10
|2.   |  | Comparability and evolution of consolidation scope            |  | F-15
|3.   |  | Transactions with Aventis Group                               |  | F-17
|4.   |  | Goodwill                                                      |  | F-17
|5.   |  | Other intangible assets                                       |  | F-19
|6.   |  | Tangible assets                                               |  | F-19
|7.   |  | Investments accounted for by the equity method                |  | F-20
|8.   |  | Investments at cost                                           |  | F-22
|9.   |  | Deferred charges and other assets                             |  | F-22
|10.  |  | Inventories                                                   |  | F-23
|11.  |  | Accounts receivable                                           |  | F-23
|12.  |  | Other current assets                                          |  | F-23
|13.  |  | Valuation allowances                                          |  | F-24
|14.  |  | Marketable securities                                         |  | F-24
|15.  |  | Stockholders' equity                                          |  | F-25
|16.  |  | Minority interests                                            |  | F-26
|17.  |  | Reserves for pensions, deferred income taxes and other costs  |  | F-26
|18.  |  | Financial debt (short-term and long-term)                     |  | F-32
|19.  |  | Other current liabilities                                     |  | F-35
|20.  |  | Financial expensenet                                         |  | F-35
|21.  |  | Other income/(expense)net                                    |  | F-36
|22.  |  | Income taxes                                                  |  | F-36
|23.  |  | Commitments and contingencies                                 |  | F-38
|24.  |  | Information by segment and geographical area                  |  | F-45
|25.  |  | Research and development expenses                             |  | F-48
|26.  |  | Wages, benefits and number of employees                       |  | F-49
|27.  |  | Stock option plans                                            |  | F-49
|28.  |  | Subsequent events                                             |  | F-51
|29.  |  | Reconciliation to U.S. GAAP and new U.S. accounting standards |  | F-51
|30.  |  | Consolidated subsidiaries end of 2002                         |  | F-59

F-9

---



RHODIA GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in € millions, unless otherwise stated)

1.     ACCOUNTING POLICIES

The consolidated financial statements of Rhodia are prepared in accordance with rule no 99-02 issued by the
Comité de la Réglementation Comptable (CRC) relating to the consolidated financial statements of commercial societies and public companies.
Rule no 00-06, issued by the CRC in January 2002, which defines how companies account for liabilities, has been applied by Rhodia since January 1,
2000. Note 29 provides a reconciliation between accounting principles generally accepted in France (French GAAP) and accounting principles generally accepted in the United States
(U.S. GAAP). The accounting policy disclosed in note 1p) differs from French GAAP. However, this policy has no material effect on Rhodia's consolidated financial statements.

(a)   Consolidation policies

The consolidation is prepared from the accounts as of December 31.

Rhodia's
consolidated financial statements include the accounts of its significant majority-owned subsidiaries (more than 50%). Minority investments in companies where Rhodia's interest
is more than 20% are accounted for under the equity method. This method is also applied to 50%-owned joint ventures operationally managed by the other partner (see note 7).

All
significant intercompany transactions are eliminated.

The
results of companies acquired are included from their respective date of acquisition. The results of companies sold are included until their respective date of sale.

(b)   Translation of foreign currencies

For countries other than those with high inflation:



F-10

---



For
countries with high inflation:



(c)   Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of net identifiable assets of businesses acquired on the date of the transaction.
Goodwill is amortized on a straight-line basis over a period of not more than forty years.

(d)   Other intangible assets

Other intangible assets, consisting principally of patents, trademarks and software, are carried at cost, including capitalized interest, and are amortized on a
straight-line basis over their
estimated useful lives. For patents and trademarks this period is generally twenty-five years and for software from three to five years.

(e)   Tangible assets

Land, buildings and equipment are carried at cost, including capitalized interest. Depreciation is calculated on a straight-line basis over the
estimated useful lives of the assets.

The
principal useful lives employed are:

| | Buildings            |                          | 1040 years
| | --------------------- | ------------------------ | -----------
| | Plant and equipment: |                          |            
| |                       | Machinery and equipment |            
| |                       | Other equipment         |            
| | Vehicles             |                          | 420 years 
| | Furniture            |                          | 1015 years

Assets
leased under a long-term contract or other arrangement that transfers substantially all of the benefits and risks of ownership to Rhodia are capitalized based on their
fair market value and depreciated as described above, and a corresponding financial debt is recorded.

F-11

---

(f)    Asset impairment tests

Goodwill:

For
each enterprise of Rhodia, which corresponds to a reporting unit, Rhodia annually compares the net book value of the assets and liabilities that are associated with the enterprise,
including goodwill, with the fair value of the enterprise, which corresponds to the discounted cash flows of the enterprise, in the absence of an active market. Rhodia updates this comparison whenever
events or circumstances indicate that the net book value of goodwill may not be recoverable. The methodology of valuing the reporting units is described in note 4. When the market value is less
than the book value, the market value of all assets relative to the enterprise is taken into account in determining the amount of the accelerated amortization of goodwill.

Other
long-lived assets:

The
book values of other long-lived assets are reviewed whenever events or circumstances indicate that the future cash flows of these assets may not support their carrying
value. Rhodia compares the net book values of these assets with the undiscounted future cash flows. When this comparison indicates that accelerated depreciation must be recorded, the amount recorded
is the difference between the net book value and the discounted future cash flows.

(g)   Research and development expenses

Research and development expenses are recorded net of subsidies and are expensed as incurred.

(h)   Investments at cost

Other investments are carried at the lower of cost or net realizable value; such net realizable value being assessed on the basis of the equity of the entity,
forecasts and earnings projections and share price.

(i)    Inventories

Inventories are stated at the lower of average cost or net realizable value. Due to the rate of inventory turnover, average cost approximates current cost.

(j)    Investments in debt and equity securities and short-term deposits

Investments in debt and equity securities are stated at quoted market value (if publicly traded) or at the lower of cost or net realizable value (if not publicly
traded). Net realizable value is determined by reference to various criteria, including net equity and future financial results of the related company. Short-term deposits are stated at
the lower of cost or market.

(k)   Deferred income taxes

Deferred income taxes are determined at the level of each tax entity. Deferred income taxes are recorded based on the differences between the tax bases of assets
and liabilities and their carrying values for financial reporting purposes. Tax rates applicable to future periods are used to calculate

F-12

---

year-end
deferred income tax amounts. Any non-recoverable withholding taxes on undistributed earnings of consolidated companies are also recorded. No tax accrual is recorded on
undistributed earnings as Rhodia intends to reinvest these earnings.

Deferred
tax assets resulting from net operating losses and deductible temporary differences are systematically recognized. A valuation allowance is also recorded when their future
realization is not likely.

(l)    Pension, retirement and other post-employment obligations

Rhodia accounts for commitments with respect to pension, retirement and other post-employment obligations based on the "projected unit credit method"
including assumptions for discount rates, expected long-term rates of return on plan assets and rates of increase in compensation levels which vary from country to country. Rhodia funds
its obligations through pension fund assets or, if not funded, records its obligations through balance sheet accruals, net of unrecognized net gains or losses. The unrecognized gains or losses are
amortized over the remaining service lives of active employees for the portion in excess of 10% of the total projected benefit obligation.

(m)  Financial instruments

Rhodia uses various financial instruments to manage its exposure to interest rate and currency risks. Generally, these instruments are valued on a
mark-to-market basis with gains or losses recorded in the statement of operations. In the case of effective hedges of specific assets or liabilities, the exchange gains or
losses are included in the measurement of the related transaction. In the case of hedging the net investment of a foreign subsidiary, the revaluation of the investment is recorded in cumulative
translation adjustments, net of tax.

(n)   Environmental and product liabilities

Rhodia recognizes losses and accrues liabilities relating to environmental and product liability matters if available information indicates that the event of loss
is probable and can reasonably be estimated. With respect to environmental liabilities, Rhodia estimates losses on a case by case basis using available information. With respect to product
liabilities, Rhodia estimates losses on the basis of current facts and circumstances, prior experience with similar matters, the number of claims and the anticipated cost of administering, defending
and (in some cases), settling such claims. If an event of loss is reasonably possible but cannot be reasonably estimated, Rhodia provides appropriate disclosure in note 23a to its consolidated
financial statements if such contingency is material. Rhodia records anticipated recoveries from third parties as an asset only when realization is deemed probable.

(o)   Cash and cash equivalents in the Consolidated Statements of Cash Flows

"Cash and cash equivalents" include the following items: cash on hand, cash in banks, and short-term investments with original maturity of less than
three months. The market value of these items is similar to their book value due to their very short-term maturity.

F-13

---

(p)   Stock options

Stock option and stock purchase plans are accounted for in accordance with the intrinsic value method. This method consists of measuring compensation expense
based on the difference between the market value and exercise price of the options at the grant (measurement) date. The effect on net income that would have resulted from the use of the fair value
approach is disclosed in note 29g.

(q)   Sales of accounts receivable

Transfers of accounts receivable are accounted for as sales when the transferred assets have been isolated from Rhodia and are beyond the reach of its creditors,
when each transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and when Rhodia does not maintain
effective control over the transferred assets. Residual interests are recorded at fair value.

(r)   Special purpose entities

In the management of its operations, if the need arises, Rhodia may use and own shares of special purpose entities, especially in connection with the sales of
accounts receivable. Consolidation of these entities is not required since they meet the specific criteria for non-consolidation.

(s)   Estimates and assumptions

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosures of contingent assets and liabilities. Actual amounts could differ from these estimates.

(t)    Revenue recognition

Rhodia's policy is to recognize revenue upon transfer of title and risks of loss, and when persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, the customer's price is fixed or determinable, and collectibility is reasonably assured. Revenue for services are recognized when services are performed.

(u)   Earnings per share

Basic earnings per share are computed by dividing net earnings by the average number of shares outstanding during the period, net of shares held by Rhodia.
Diluted earnings per share are computed by dividing net earnings by the average number of shares outstanding during the period, increased by the number of additional shares that would have been
outstanding if the dilutive potential common shares (corresponding primarily to stock subscription options) had been issued. Dilutive potential common shares are determined by calculating the number
of common shares that could be purchased on the open market using the funds obtained from the exercise of stock subscription options.

F-14

---

(v)   Operating income

Operating income consists of revenues and expenses resulting from operations. It excludes income and expenses related to investments, to financing or tax
strategies and to disposals of activities.

(w)  Treasury stock

Rhodia S.A. has been authorized by the general stockholders' meeting to trade in Rhodia's shares on the open market. The costs of acquiring any shares under these
stockholder authorizations that are not intended to be used for a specific purpose are deducted from stockholders' equity. If these shares are subsequently sold on the open market, the gain or loss is
credited or charged to stockholders' equity. Any shares purchased under these stockholder authorizations that are intended to be used for a specific purpose, or to maintain the share market price, or
for distribution to employees are recorded as an asset.

2.     COMPARABILITY AND EVOLUTION OF CONSOLIDATION SCOPE

2.1.  Comparability

2.1.1.  Accounting principles

Rhodia, after taking into account the quotation of its shares on the Paris and New York stock exchanges, and the divergence between French GAAP and U.S. GAAP,
particularly relating to the accounting for the amortization of goodwill, has reclassified Amortization of goodwill below Operating income in accordance with
regulation no 99-02.

Accordingly, the Operating income for 2001 and 2000 reflects a reclassification of €75 million and €32 million,
respectively.

In
addition, in order to reflect the net results of affiliated companies, Rhodia has reclassified the income tax provision relating to the associated companies from Income taxes to
Equity in earnings/(losses) of affiliated companies.

Accordingly, Income taxes and Equity in earnings/(losses) of affiliated companies for 2001 and 2000 reflect a reclassification of €(8) million and
€9 million, respectively.

Goodwill
and Other intangible assets are now shown separately on Rhodia's balance sheet. Certain intangible assets at December 31, 2001 and 2000 of
€52 million and €54 million, respectively, that were previously recorded as "Deferred charges and other assets" have been reclassified to "Other
intangible assets". Also, the negative equity of affiliated companies of €54 million and €53 million, respectively, at December 31, 2001 and 2000
that was previously recorded as a reduction of the balance sheet item "Investments accounted for by the equity method" has been reclassified to "Reserves for pensions, deferred income taxes and other
costs in excess of one year".

2.1.2.  Comparative information

No significant acquisitions or disposals occurred in 2002; therefore, no pro forma accounts are presented.

F-15

---

2.2.  Evolution

Significant divestments in 2002

During 2002, in line with Rhodia's previously announced objective to divest non-strategic businesses, the following businesses were divested:



Net
sales of these businesses in 2002, 2001 and 2000 were €556 million, €725 million and €772 million, respectively.

Significant divestments in 2001

In April 2001, the European surfactants businesses of Albright & Wilson's (A&W) (research, manufacturing and marketing) were sold to Huntsman
International LLC.

In
June 2001, the Empicryl lubricant additives businesses of A&W were sold to Group Degussa AG. Empicryl, which is used in the lubricants industry to improve viscosity, was
manufactured at Whitehaven.

Net
sales of A&W's European surfactants and Empicryl lubricant additives businesses for the period April 1, 2000 to December 31, 2000 were
€339 million.

Significant acquisitions in 2000

In March 2000, Rhodia acquired Albright & Wilson which has a global presence in phosphates, phosphorus byproducts and surfactants. A&W has been
fully consolidated in Rhodia's financial statements from April 1, 2000. Total cost of acquisition was €925 million, including transaction expenses. Goodwill of
€596 million is being amortized on a straight-line basis over 35 years.

In
September 2000, Rhodia acquired Chirex Inc. (Chirex). Chirex has been fully consolidated in Rhodia's financial statements from October 1, 2000. Chirex provides
high technological services to the pharmaceutical industry: contract research and development and outsourced manufacturing of active

F-16

---

ingredients.
Chirex was acquired for a total cost of €569 million, including transaction expenses, and has been consolidated based on the fair values of the assets acquired and
liabilities assumed. Goodwill of €461 million is being amortized on a straight-line basis over 30 years. The increase between the provisional and final
goodwill of €19 million is principally due to an adjustment of the fair value of net assets acquired.

3.     TRANSACTIONS WITH AVENTIS GROUP

(a)   Operational, administrative and financial transactions

As of December 31, 2002, 2001 and 2000, Aventis held 25.2% of Rhodia's capital. Up until October 15, 1999, Rhodia was controlled by Aventis. After
Rhodia's independence, operational, administrative and financial transactions are still carried out between these two groups. These transactions are not significant. All of these transactions are
conducted at similar conditions to market.

(b)   Other transaction

In accordance with the Environmental Indemnification Agreement with Aventis (note 23a), Rhodia recorded a receivable from Aventis of
€35 million as of December 31, 2001. In 2002, an additional €3 million was recorded and €26 million was collected.

4.     GOODWILL

|                                   |  | 2002  |   | 2001 |  
|---------------------------------- |  | ----- | - | ---- | -
|
|Balance, January 1                 |  | 2,287 |   | (933 | )
|Additions/(reductions) to goodwill |  | 20    |   | (7   | )
|Goodwill amortization              |  |      |   | (47  | )
|Translation                        |  | (267  | ) | 133  |  
|                                   |  |       |   |      |  
|Balance, December 31               |  | 2,040 |   | (854 | )
|                                   |  |       |   |      |  

Net goodwill as of December 31 relates to the following acquisitions:

|                       |  | 2002  |  | 2001 
|---------------------- |  | ----- |  | -----
|A&W                    |  | 503   |  | 557  
|Chirex                 |  | 354   |  | 432  
|RTZ                    |  | 53    |  | 61   
|Stauffer Chemicals Inc |  | 115   |  | 141  
|Kofran                 |  | 33    |  | 34   
|Other                  |  | 128   |  | 129  
|                       |  |       |  |      
|Total                  |  | 1,186 |  | 1,354
|                       |  |       |  |      

F-17

---



In
accordance with note 1f), asset impairment tests were performed for each enterprise of Rhodia.

The
methodology used consists of the development of discounted cash flows, using the following principal assumptions:



The
enterprise value determined as of December 31, 2002 for the Chirex reporting unit confirms that the goodwill is recoverable. However, this reporting unit, which experienced
operating losses in 2001 and 2002, is still in a development phase. Therefore, its forecasts are characterized by a level of uncertainty that will necessitate regular assessments that the assumptions
made in the fourth quarter of 2002, which are summarized below, are realized:



Considering
all these above assumptions, the terminal value represents essentially the total enterprise value of the Chirex reporting unit.

F-18

---

5.     OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following as of December 31:

|                       |  | 2002 |  | 2001
|---------------------- |  | ---- |  | ----
|
|Patents and trademarks |  | 101  |  | (63 
|Software               |  | 260  |  | (165
|Other                  |  | 80   |  | (36 
|                       |  |      |  |     
|Total                  |  | 441  |  | (264
|                       |  |      |  |     

---

Amortization charges relating to other intangible assets are as follows:

|                                 |  | 2002 |   | 2001 |   | 2000 |  
|-------------------------------- |  | ---- | - | ---- | - | ---- | -
|Patents, trademarks and software |  | (30  | ) | (34  | ) | (35  | )
|Other                            |  | (3   | ) | (5   | ) | (7   | )
|                                 |  |      |   |      |   |      |  
|Total                            |  | (33  | ) | (39  | ) | (42  | )
|                                 |  |      |   |      |   |      |  

6.     TANGIBLE ASSETS

(a)   Tangible assets consist of the following as of December 31:

|                          |  | 2002  |  | 2001  
|------------------------- |  | ----- |  | ------
|
|Land                      |  | 208   |  | (45   
|Buildings                 |  | 1,125 |  | (655  
|Plant and equipment       |  | 5,633 |  | (3,748
|Assets under construction |  | 225   |  |      
|                          |  |       |  |       
|Total                     |  | 7,191 |  | (4,448
|                          |  |       |  |       

---

F-19

---

Included in the above table are the following amounts related to assets subject to capital leases as of December 31:

|                              |  | 2002 |   | 2001 |  
|----------------------------- |  | ---- | - | ---- | -
|Land                          |  | 2    |   | 2    |  
|Buildings                     |  | 16   |   | 16   |  
|Plant and equipment           |  | 15   |   | 130  |  
|                              |  |      |   |      |  
|Gross valueat cost           |  | 33   |   | 148  |  
|Less accumulated depreciation |  | (22  | ) | (117 | )
|                              |  |      |   |      |  
|Net book value                |  | 11   |   | 31   |  
|                              |  |      |   |      |  

(b)   Movements

|                                          |  | 2002  |   | 2001  |   | 2000  |  
|----------------------------------------- |  | ----- | - | ----- | - | ----- | -
|Net book value, January 1                 |  | 3,561 |   | 3,759 |   | 2,947 |  
|                                          |  |       |   |       |   |       |  
|Additions                                 |  | 368   |   | 518   |   | 509   |  
|Disposals                                 |  | (157  | ) | (181  | ) | (103  | )
|Depreciation for the year                 |  | (409  | ) | (500  | ) | (450  | )
|Other (translation, changes in structure) |  | (620  | ) | (35   | ) | 856   |  
|                                          |  |       |   |       |   |       |  
|Net book value, December 31               |  | 2,743 |   | 3,561 |   | 3,759 |  
|                                          |  |       |   |       |   |       |  

7.     INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

|                                            |  | 2002 |   | 2001 |   | 2000 |  
|------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Balance, January 1(1)                       |  | 238  |   | 269  |   | 225  |  
|                                            |  |      |   |      |   |      |  
|Equity in income/(losses)                   |  | (38  | ) | (16  | ) | 8    |  
|Rhodia's share of Butachimie's income taxes |  | (2   | ) | (23  | ) |     |  
|Dividends paid                              |  | (3   | ) | (21  | ) | (16  | )
|Changes in scope of consolidation           |  | (26  | ) | 24   |   | 46   |  
|Translation                                 |  | 3    |   | 5    |   | 6    |  
|                                            |  |      |   |      |   |      |  
|Balance, December 31                        |  | 172  |   | 238  |   | 269  |  
|                                            |  |      |   |      |   |      |  

---

The useful lives of the tangible assets at Nylstar, accounted for by the equity method, have been revised to conform to the useful lives used by
Rhodia. The impact on income amounted to €3.8 million.

F-20

---

Distribution
of the investments accounted for by the equity method:

|                              |  | % Ownership |  | 2002 |  | 2001
|----------------------------- |  | ----------- |  | ---- |  | ----
|Nylstar Group                 |  | 50.00       |  | 51   |  | 81  
|Butachimie                    |  | 50.00       |  | 56   |  | 18  
|Teris Group(1)                |  |            |  |     |  | 54  
|Rhodia Hengchang(1)           |  |            |  |     |  | 11  
|Other (less than €10 million) |  |             |  | 65   |  | 74  
|                              |  |             |  |      |  |     
|Total                         |  |             |  | 172  |  | 238 
|                              |  |             |  |      |  |     

---

(a)   Joint-ventures accounted for by the equity method

Rhodia holds a 50% interest in Butachimie. Rhodia purchases 50% of Butachimie's production, and almost all of these purchases are sold on to Rhodia companies,
which produce nylon thread. Because Butachimie's production is closely integrated with the industrial process of Rhodia, the operating results of this entity are accounted for as a reduction of
Production costs and expenses in the consolidated statements of operations rather than being included in Equity in earnings/(losses) of affiliated companies. In addition, income taxes are not
presented in Equity in earnings/(losses) of affiliated companies but in Income taxes.

Besides
its interest in Butachimie, Rhodia has other joint-ventures with a 50% ownership interest, the most important of which are Nylstar (nylon thread business) and Primester
(cellulose acetate business) whose partners are SNIA (Italy) and Eastman Chemicals Company (USA), respectively.

Financial
information, aggregated relative to these joint-ventures, is presented below.

Statement
of operations (excluding Butachimie) and balance sheet as of December 31 (including Butachimie):

|                     |  | 2002  |   | 2001  |  | 2000 
|-------------------- |  | ----- | - | ----- |  | -----
|Net sales            |  | 873   |   | 1,357 |  | 1,263
|Operating income     |  | (7    | ) | 6     |  | 69   
|Current assets       |  | 600   |   | 740   |  | 810  
|Total assets         |  | 1,724 |   | 2,189 |  | 2,114
|Stockholders' equity |  | 276   |   | 355   |  | 457  
|Financial debt       |  | 783   |   | 1,199 |  | 988  

The variation in 2002, especially net sales, reflects the disposals of Teris and Latexia (see note 2.2).

F-21

---

(b)   Other affiliates accounted for by the equity method:

|                           |  | 2002 |   | 2001 |   | 2000
|-------------------------- |  | ---- | - | ---- | - | ----
|Net sales                  |  | 175  |   | 226  |   | 196 
|Net income/(loss)          |  | (4   | ) | (2   | ) | 5   
|Total assets (December 31) |  | 236  |   | 363  |   | 353 

(c)   Commercial transactions between Rhodia consolidated companies and affiliates accounted for by the equity method:

|                                                             |  | 2002 |  | 2001 |  | 2000
|------------------------------------------------------------ |  | ---- |  | ---- |  | ----
|Purchases from affiliates accounted for by the equity method |  | 167  |  | 160  |  | 174 
|Sales to affiliates accounted for by the equity method       |  | 139  |  | 188  |  | 184 

8.     INVESTMENTS AT COST

Investments at cost consist of the following as of December 31:

|                                |  | % Ownership |  | 2002 |  | 2001
|------------------------------- |  | ----------- |  | ---- |  | ----
|Phosphoric Fertilizers Industry |  | 8.41        |  | 9    |  | 6   
|Stilon                          |  | 14.80       |  | 6    |  | 7   
|Other (less than €5 million)    |  |             |  | 52   |  | 62  
|                                |  |             |  |      |  |     
|Total                           |  |             |  | 67   |  | 75  
|                                |  |             |  |      |  |     

Stilon is an affiliate of Nylstar Group (accounted for by the equity method). Rhodia owns an additional 14.80%. Rhodia's investment value equals
its share of Stilon's stockholders' equity. The Other category includes some entities that are majority owned or owned by more than 20%. However, these entities are not consolidated because they are
not significant.

9.     DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets consist of the following as of December 31:

|                                                |  | 2002 |  | 2001
|----------------------------------------------- |  | ---- |  | ----
|Long term receivables                           |  | 108  |  | 74  
|Long term deferred tax assets                   |  | 195  |  | 128 
|Minimum pension liability adjustment (note 17c) |  | 270  |  | 231 
|Prepaid pension cost (note 17c)(1)              |  | 252  |  | 137 
|Other                                           |  | 16   |  | 14  
|                                                |  |      |  |     
|Total                                           |  | 841  |  | 584 
|                                                |  |      |  |     

---

F-22

---



10.   INVENTORIES

Inventories
consist of the following as of December 31:

|                              |  | 2002 |   | 2001  |  
|----------------------------- |  | ---- | - | ----- | -
|Raw materials and spare parts |  | 350  |   | 457   |  
|Work in progress              |  | 50   |   | 78    |  
|Finished products             |  | 512  |   | 597   |  
|                              |  |      |   |       |  
|Gross book value              |  | 912  |   | 1,132 |  
|Valuation allowances          |  | (77  | ) | (88   | )
|                              |  |      |   |       |  
|Net book value                |  | 835  |   | 1,044 |  
|                              |  |      |   |       |  

11.   ACCOUNTS RECEIVABLE

Accounts
receivable consist of the following as of December 31:

|                                      |  | 2002 |   | 2001 |  
|------------------------------------- |  | ---- | - | ---- | -
|Accounts receivable                   |  | 417  |   | 567  |  
|Less: allowance for doubtful accounts |  | (39  | ) | (43  | )
|                                      |  |      |   |      |  
|Net receivables                       |  | 378  |   | 524  |  
|                                      |  |      |   |      |  

Certain Rhodia companies sold uncollected receivables during 2002 and 2001 in accordance with multi-year agreements entered into with
various banks. The amount of receivables sold as of December 31, 2002 and 2001 was €627 million and €718 million, respectively, which generated a
net cash collection of €531 million in 2002 compared with €617 million in 2001. The average amount of receivables sold in 2002 was
€635 million compared with €613 million in 2001, which generated an average net cash collection of €539 million in 2002 compared
with €519 million in 2001. Residual interests are stated at fair value, based on the present value of estimated cash flows.

12.   OTHER CURRENT ASSETS

Other current assets consist of the following as of December 31:

|                                                        |  | 2002 |  | 2001
|------------------------------------------------------- |  | ---- |  | ----
|Prepaid and recoverable taxes                           |  | 239  |  | 217 
|Prepaid expenses and accrued interest                   |  | 29   |  | 36  
|Short-term loans and current portion of long-term loans |  | 122  |  | 71  
|Assets held for sale                                    |  | 17   |  | 9   
|Deferred income taxes                                   |  | 152  |  | 242 
|Other receivables                                       |  | 261  |  | 255 
|Other                                                   |  | 97   |  | 86  
|                                                        |  |      |  |     
|Total                                                   |  | 917  |  | 916 
|                                                        |  |      |  |     

F-23

---

13.   VALUATION ALLOWANCES

Valuation allowances as of December 31 2002, 2001 and 2000, and the movements for the years ended December 31, 2002 and 2001 follow:

|                                                         |  | January 1,
2002 |   | (Charged)/
credited to
costs and
expenses |   | Change in
structure |   | Other
movements(1) |   | December 31,
2002 |  
|-------------------------------------------------------- |  | --------------- | - | ----------------------------------------- | - | ------------------- | - | ------------------ | - | ----------------- | -
|Deposits and long-term loans                             |  | (32             | ) | (2                                        | ) | 5                   |   | 3                  |   | (26               | )
|Deferred charges, long-term receivables and other assets |  | (149            | ) | (21                                       | ) |                    |   | 9                  |   | (161              | )
|Inventories                                              |  | (88             | ) | 1                                         |   | 3                   |   | 7                  |   | (77               | )
|Trade accounts receivable                                |  | (43             | ) | (3                                        | ) |                    |   | 7                  |   | (39               | )
|Other provisions                                         |  | (15             | ) | 11                                        |   | (7                  | ) | (1                 | ) | (12               | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  
|Total                                                    |  | (327            | ) | (14                                       | ) | 1                   |   | 25                 |   | (315              | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  

---

|                                                         |  | January 1,
2001 |   | (Charged)/
credited to
costs and
expenses |   | Change in
structure |   | Other
movements(1) |   | December 31,
2001 |  
|-------------------------------------------------------- |  | --------------- | - | ----------------------------------------- | - | ------------------- | - | ------------------ | - | ----------------- | -
|Deposits and long-term loans                             |  | (19             | ) | (12                                       | ) |                    |   | (1                 | ) | (32               | )
|Deferred charges, long-term receivables and other assets |  | (185            | ) | 30                                        |   |                    |   | 6                  |   | (149              | )
|Inventories                                              |  | (86             | ) | (1                                        | ) |                    |   | (1                 | ) | (88               | )
|Trade accounts receivable                                |  | (44             | ) | 1                                         |   | (1                  | ) | 1                  |   | (43               | )
|Other provisions                                         |  | (15             | ) |                                          |   |                    |   |                   |   | (15               | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  
|Total                                                    |  | (349            | ) | 18                                        |   | (1                  | ) | 5                  |   | (327              | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  

---

Deferred tax assets valuation allowances are reported in note 22.

14.   MARKETABLE SECURITIES

As of December 31, 2002 and 2001, respectively, marketable securities consisted of €108 million and €180 million of
short-term investments with a market value approximating book value.

F-24

---



15.   STOCKHOLDERS' EQUITY

(a)   Common stock

At the May 21, 2002 stockholders' meeting, the stockholders approved a reduction in capital (not motivated by losses) in an amount of
€2,510 million by way of reduction in the par value of the common stock from €15 to €1. The amount of the reduction in common stock, par value,
was credited to additional paid-in capital.

As
of December 31, 2002, Rhodia's total capital amounted to €179 million, composed of 179,309,188 shares, same as of December 2001 and 2000.

The
average number of shares outstanding in 2002 amounted to 178,765,518 shares. Basic earnings per share are determined directly on the basis of this amount. Diluted earnings per share
are determined based on the average number of shares outstanding increased by the number of shares that would be issued if all dilutive common stock instruments at year end were exercised, which
amounted to 178,765,518 shares in 2002. Diluted earnings per share is equal to basic earnings per share in 2002 and 2001 as the loss would result in dilutive common stock instruments being
anti-dilutive.

The
board of directors, at their June 20, 2000 meeting, in accordance with the authorization given by the stockholders at the stockholders' meeting of April 18, 2000,
initiated a capital increase reserved for employees with the obligation that the shares be placed in the employee savings plan for five years. The capital increase officially occurred on
September 1, 2000 with 4,568,147 new shares being issued.

As
of December 31, 2002, 2001 and 2000, Aventis owned 25.2% of the capital of Rhodia. Rhodia shares owned by Aventis allow Aventis to cover its obligation to reimburse holders of
Aventis bonds exchangeable for Rhodia shares. These bonds were issued by Aventis at the time of the secondary public offering. On November 29, 2002, Aventis made a cash tender offer to
repurchase all of these bonds. There are no longer any exchangeable bonds into Rhodia shares.

(b)   Treasury stock

In July 2000, Rhodia entered into a put option with a bank for 1,610,820 shares exercisable in 2002. On September 12, 2002, as a result of the
exercise of that option, Rhodia purchased the shares for cash and resold them on the open market for cash. In addition, Rhodia sold on the open market 216,599 shares acquired in previous years.

The
sale of these shares on the open market generated a charge to retained earnings of €10 million, net of tax. As of December 31, 2002, Rhodia does not
hold any of its own shares, nor is a party to options to purchase or sell its own shares.

(c)   Rhodia S.A. distributable retained earnings

The Rhodia S.A. distributable retained earnings amount to €381 million and €382 million as of December 31,
2002 and 2001, respectively. Dividend equalization tax (precompte mobilier) may be due in the case of distribution of distributable reserves.

F-25

---

(d)   Translation adjustments

The negative variance in the cumulative translation adjustments for 2002 is mainly attributed to the Brazilian real (€230 million), the
U.S. dollar (€105 million) and the U.K. pound sterling (€48 million).

16.   MINORITY INTERESTS

|                                        |  | 2002 |   | 2001 |  
|--------------------------------------- |  | ---- | - | ---- | -
|Balance, January 1                      |  | 84   |   | 87   |  
|                                        |  |      |   |      |  
|Minority interests in net income/(loss) |  | 9    |   | 5    |  
|Dividends distributed                   |  | (1   | ) | (5   | )
|Change in structure                     |  | (63  | ) | (6   | )
|Translation                             |  | (6   | ) | 3    |  
|                                        |  |      |   |      |  
|Balance, December 31                    |  | 23   |   | 84   |  
|                                        |  |      |   |      |  

The variation in 2002 relates essentially to the sale of Rhodia-Ster.

Minority
interests consist of the following as of December 31:

|                         |  | 2002 |  | 2001
|------------------------ |  | ---- |  | ----
|Osiris                   |  | 7    |  | 2   
|Rhodia Hengchang         |  | 6    |  |    
|A&W Chemicals            |  | 3    |  | 3   
|Rhodia-Ster              |  |     |  | 71  
|Other (below €3 million) |  | 7    |  | 8   
|                         |  |      |  |     
|Balance, December 31     |  | 23   |  | 84  
|                         |  |      |  |     

17.   RESERVES FOR PENSIONS, DEFERRED INCOME TAXES AND OTHER COSTS

(a)   Reserves for pensions, deferred income taxes and other costs consist of the following at December 31

|                             |  | 2002  |  | 2001
|---------------------------- |  | ----- |  | ----
|
|Pension and retirement costs |  | 788   |  | 50  
|Deferred income taxes        |  | 217   |  | 19  
|Restructuring                |  | 38    |  | 117 
|Environmental                |  | 78    |  | 17  
|Other                        |  | 112   |  | 98  
|                             |  |       |  |     
|Total                        |  | 1,233 |  | 301 
|                             |  |       |  |     

F-26

---

(b)   Movements

|                                |  | Balance,
January 1 |  | New
Measures |  | Expenditures
Charged
to Reserves(1) |   | Change in
Structure |   | Translation |   | Balance,
December 31
|------------------------------- |  | ------------------ |  | ------------ |  | ----------------------------------- | - | ------------------- | - | ----------- | - | --------------------
|Pension and retirement costs(2) |  | 790                |  | 120          |  | (56                                 | ) | (9                  | ) | (7          | ) | 838                 
|Deferred income taxes           |  | 238                |  | 55           |  |                                    |   | (9                  | ) | (48         | ) | 236                 
|Restructuring                   |  | 309                |  | 25           |  | (152                                | ) |                    |   | (27         | ) | 155                 
|Environmental                   |  | 121                |  | 3            |  | (12                                 | ) |                    |   | (17         | ) | 95                  
|Other                           |  | 255                |  | 172          |  | (183                                | ) | (2                  | ) | (32         | ) | 210                 
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Total 2002                      |  | 1,713              |  | 375          |  | (403                                | ) | (20                 | ) | (131        | ) | 1,534               
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Pension and retirement costs(2) |  | 701                |  | 132          |  | (49                                 | ) | 6                   |   |            |   | 790                 
|Deferred income taxes           |  | 237                |  |             |  | (4                                  | ) | 3                   |   | 2           |   | 238                 
|Restructuring                   |  | 238                |  | 163          |  | (113                                | ) | 15                  |   | 6           |   | 309                 
|Environmental                   |  | 97                 |  | 21           |  | (4                                  | ) | 5                   |   | 2           |   | 121                 
|Other                           |  | 208                |  | 121          |  | (86                                 | ) | 11                  |   | 1           |   | 255                 
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Total 2001                      |  | 1,481              |  | 437          |  | (256                                | ) | 40                  |   | 11          |   | 1,713               
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     

---

c)     Pension, retirement and other post-employment obligations

Rhodia provides pension and retirement benefits, including defined benefit pension plans which cover the majority of employees. The specific features of the plans
(benefit formulas, funding policies and types of assets held) vary depending on regulations and laws in the country in which the employees are located. Concerning defined benefit plans in France,
these plans are unfunded.

Actuarial
valuations of these obligations are calculated each year in most countries. These calculations are based on: (a) turnover assumptions for current personnel, mortality
assumptions for plan participants and assumptions concerning future salary increases; (b) a retirement age of 60 to 65 and other retirement assumptions reflecting local economic and demographic
factors; (c) discount rates (used in determining the actuarial present value of the projected benefit obligation) of 5.75% as of December 31, 2002 compared with 6% as of
December 31, 2001 for French plans, and 4% to 6.75% as of December 31, 2002 compared with 4.25% to 7.5% as of December 31, 2001 for foreign plans; and (d) expected
long-term rates of return on plan assets, ranging from 2% to 9% as of December 31, 2002 compared with 4% to 10% as of December 31, 2001.

As
of October 1, 1988, the vested benefits of retired and early-retired employees of French companies were irrevocably transferred to an insurance company.

F-27

---



The following tables reconcile the funded status of the plans with amounts recognized in the consolidated balance sheets as of December 31, 2002 and 2001.

|                                                                                      |                                 | Pension and retirement
benefits |      | Other post-employment
benefits |     
|------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------- | ---- | ------------------------------ | ----
|
|PROJECTED BENEFIT OBLIGATION                                                          |                                 |                                 |      |                                |     
|Benefit obligation, January 1                                                         |                                 | 2,173                           |      | 2,095                          |     
|                                                                                      |                                 |                                 |      |                                |     
|French companies                                                                      |                                 | 614                             |      | 621                            |     
|Foreign companies                                                                     |                                 | 1,559                           |      | 1,474                          |     
|                                                                                      |                                 |                                 |      |                                |     
|Service cost                                                                          |                                 | 37                              |      | 46                             |     
|Interest cost                                                                         |                                 | 131                             |      | 138                            |     
|Plan changes                                                                          |                                 | 5                               |      | 1                              |     
|Acquisitions and divestitures                                                         |                                 | (16                             | )    | 50                             |     
|Curtailments and settlements                                                          |                                 | 1                               |      | 2                              |     
|Actuarial (gains)/losses                                                              |                                 | 22                              |      | (34                            | )   
|Benefits paid                                                                         |                                 | (138                            | )    | (146                           | )   
|Translation                                                                           |                                 | (159                            | )    | 21                             |     
|                                                                                      |                                 |                                 |      |                                |     
|Benefit obligation, December 31                                                       |                                 | 2,056                           |      | 2,173                          |     
|                                                                                      |                                 |                                 |      |                                |     
|French companies                                                                      |                                 | 674                             |      | 614                            |     
|Foreign companies                                                                     |                                 | 1,382                           |      | 1,559                          |     
|PLAN ASSETS AT FAIR VALUE                                                             |                                 |                                 |      |                                |     
|Fair value, January 1                                                                 |                                 | 1,281                           |      | 1,407                          |     
|Actual return on plan assets                                                          |                                 | (73                             | )    | (121                           | )   
|Employer contributions                                                                |                                 | 158                             |      | 29                             |     
|Plan participant contributions                                                        |                                 | 4                               |      | 5                              |     
|Benefits paid                                                                         |                                 | (91                             | )    | (102                           | )   
|Acquisitions and divestitures                                                         |                                 |                                |      | 6                              |     
|Curtailments and settlements                                                          |                                 | (15                             | )    |                               |     
|Translation                                                                           |                                 | (142                            | )    | 57                             |     
|                                                                                      |                                 |                                 |      |                                |     
|Fair value, December 31                                                               |                                 | 1,122                           |      | 1,281                          |     
|                                                                                      |                                 |                                 |      |                                |     
|Projected benefit obligation in excess of (less than) plan assets                     |                                 | 934                             |      | 892                            |     
|Adjustment required to recognize minimum liability                                    |                                 | 270                             |      | 231                            |     
|Unamortized net gains/(losses):                                                       |                                 |                                 |      |                                |     
|                                                                                      | Unrecognized net gains/(losses) |                                 | (607 | )                              | (455
|                                                                                      | Net transition (debit)/credit   |                                 |     |                                |    
|                                                                                      | Plan amendments                 |                                 | (11  | )                              | (15 
|                                                                                      |                                 |                                 |      |                                |     
|PENSION LIABILITY (PREPAID PENSION COST) RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET |                                 | 586                             |      | 653                            |     
|                                                                                      |                                 |                                 |      |                                |     
|Long-term liability                                                                   |                                 | 788                             |      | 743                            |     
|Short-term liability                                                                  |                                 | 50                              |      | 47                             |     
|Prepaid pension cost                                                                  |                                 | (252                            | )    | (137                           | )   

F-28

---

The plans for which the accumulated benefit obligation, based on current salaries, is in excess of plan assets is summarized below:

|                               |  | 2002 |  | 2001
|------------------------------ |  | ---- |  | ----
|French companies               |  |      |  |     
|Accumulated benefit obligation |  | 626  |  | 575 
|Projected benefit obligation   |  | 667  |  | 614 
|Plan assets at fair value      |  |     |  |    
|Foreign companies              |  |      |  |     
|Accumulated benefit obligation |  | 229  |  | 328 
|Projected benefit obligation   |  | 233  |  | 343 
|Plan assets at fair value      |  | 69   |  | 206 

Net periodic pension cost includes the following components:

|                                              |  | 2002 |   | 2001 |   | 2000 |  
|--------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Benefits earned during the year               |  | 37   |   | 51   |   | 40   |  
|Interest cost on projected benefit obligation |  | 131  |   | 138  |   | 124  |  
|Expected return on plan assets                |  | (102 | ) | (128 | ) | (74  | )
|Net amortization and other deferrals          |  | 38   |   | 31   |   | (9   | )
|                                              |  |      |   |      |   |      |  
|Net pension expense                           |  | 104  |   | 92   |   | 81   |  
|                                              |  |      |   |      |   |      |  

(d)   Reserves for restructuring costs

Restructuring costs for the years ended December 31, 2002, 2001 and 2000 follow:

|                                         |  | 2002 |   | 2001 |   | 2000 |  
|---------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Reserves as of January 1                 |  | 309  |   | 238  |   | 188  |  
|                                         |  |      |   |      |   |      |  
|New measures                             |  | 29   |   | 178  |   | 32   |  
|Changes in estimates of earlier measures |  | (4   | ) | (15  | ) | (18  | )
|                                         |  |      |   |      |   |      |  
|Charged to operations                    |  | 25   |   | 163  |   | 14   |  
|                                         |  |      |   |      |   |      |  
|Expenditures charged to the reserve      |  | (152 | ) | (113 | ) | (84  | )
|Effect of changes in structure(1)        |  |     |   | 15   |   | 112  |  
|Effect of changes in exchange rates      |  | (27  | ) | 6    |   | 8    |  
|                                         |  |      |   |      |   |      |  
|Long-term reserves                      |  | 38   |   | 62   |   | 67   |  
|Short-term reserves                     |  | 117  |   | 247  |   | 171  |  
|                                         |  |      |   |      |   |      |  
|Reserves as of December 31               |  | 155  |   | 309  |   | 238  |  
|                                         |  |      |   |      |   |      |  

---

In 2002, new measures for €29 million principally concerned industrial restructuring at the Eco Services
activityServices & Specialties Division (€9 million), to the launch of industrial restructuring

F-29

---

at
ChirexFine Organics Division (€7 million) and productivity plans at various headquarters sites (€4 million).

In
2002, utilization of provisions for €152 million mainly corresponds to expenses relating to the 2001 restructuring plans in particular:



In
2001, Rhodia launched a major reorganization plan. New measures relating to this plan amounted to €178 million and mainly involve rationalization plans and
productivity improvements in the following countries:



F-30

---



In
2001, the changes of estimates mainly relate to reduced environmental costs at Lille, France (€7 million) and Pont de Claix
(€8 million).

The
utilization of reorganization provisions in 2001 relate mainly to:



In
2000, following the acquisition of A&W, Rhodia launched restructuring initiatives at several A&W sites. Restructuring provisions linked to these plans amount to
€101 million, principally relating to the following measures:



In
2000, new measures principally concerned plant rationalization at several European sites in the Fine Organics and Polyamide Divisions. In 2000, changes in estimates principally
concerned lower estimates of environmental costs in North America at Mt. Pleasant, Tennessee (€4 million) and Oil

F-31

---

City,
Pennsylvania (€7 million). In 2000, restructuring expenses principally related to the A&W plant and administrative sites (€20 million) and the
implementation of plant rationalizations in France.

|                              |  | 2002 |  | 2001
|----------------------------- |  | ---- |  | ----
|Employee termination benefits |  | 67   |  | 158 
|Closure costs                 |  | 37   |  | 89  
|Environmental costs           |  | 51   |  | 62  
|                              |  |      |  |     
|Total                         |  | 155  |  | 309 
|                              |  |      |  |     

Employee termination benefits include certain early retirement, severance and other benefits associated with termination plans. The plans
implemented by the non-French Rhodia companies include compulsory and voluntary measures. Compulsory severance benefits are reserved for as of the date of announcement of the plan by the
management having the appropriate authority to approve the plan, and voluntary severance benefits are reserved for upon acceptance by employees. Environmental costs included under this caption relate
to operations subject to restructuring measures (see also (e) and note 23(a)).

(e)   Environmental

Environmental liabilities decreased €(26) million compared with 2001. Expenditures charged to the reserve totalling €(12) million
and translation totalling €(17) million principally explain the decrease.

18.   FINANCIAL DEBT (SHORT-TERM AND LONG-TERM)

(a)   Financial debt consists of the following as of December 31

|                               |  | 2002  |  | 2001 
|------------------------------ |  | ----- |  | -----
|Bonds                          |  | 1,087 |  | 1,101
|Other loans and financial debt |  | 1,297 |  | 1,884
|                               |  |       |  |      
|Total                          |  | 2,384 |  | 2,985
|                               |  |       |  |      

In 2002, Rhodia pursued the same funding policy initiated in 2000 and 2001. In addition, Rhodia completed a private placement of
$290 million of notes with American investors. The notes are repayable in full in July 2009 and 2012. Several bank borrowings have been obtained or renewed.

F-32

---



(b)   Analysis by currency

|               |  | 2002  |  | 2001 
|-------------- |  | ----- |  | -----
|Euro           |  | 1,209 |  | 1,494
|U.S. dollar    |  | 972   |  | 1,220
|Japanese yen   |  | 94    |  | 90   
|U.K. sterling  |  | 29    |  | 11   
|Brazilian real |  | 3     |  | 13   
|Other          |  | 77    |  | 157  
|               |  |       |  |      
|Total          |  | 2,384 |  | 2,985
|               |  |       |  |      

This breakdown by currency of origin does not reflect Rhodia's exposure to these currencies' interest rates. A portion of these loans are drawn
down and hedged in various other currencies, notably pounds sterling.

(c)   Maturities of financial debt as of December 31 follows

|                 |  | 2002  |  | 2001 
|---------------- |  | ----- |  | -----
|2002             |  |      |  | 1,036
|2003             |  | 645   |  | 108  
|2004             |  | 404   |  | 597  
|2005             |  | 537   |  | 670  
|2006             |  | 488   |  | 536  
|2007             |  | 6     |  | 2    
|2008             |  | 5     |  | 7    
|Subsequent years |  | 299   |  | 29   
|                 |  |       |  |      
|Total            |  | 2,384 |  | 2,985
|                 |  |       |  |      

As of December 31, 2002, maturities in 2003 are comprised of €201 million of current maturities of
long-term debt and €175 million of commercial paper (with a stable amount outstanding during 2002), and other short-term financings granted to Rhodia or
less significantly to multiple subsidiaries. The short-term facilities are generally revolving credit agreements without a specific maturity date or are automatically renewed that Rhodia
in prudence classifies as short-term debt as in previous years.

F-33

---

(d)   Analysis by interest rate

Financial debt breaks down between fixed and floating rate debt (excluding the effect of interest rate swapssee note 23d) as of
December 31 follows:

|              |  | 2002  |  | 2001 
|------------- |  | ----- |  | -----
|Floating rate |  | 1,259 |  | 2,091
|Fixed rate    |  | 1,125 |  | 894  
|              |  |       |  |      
|Total         |  | 2,384 |  | 2,985
|              |  |       |  |      

After interest rate swaps, the fixed rate portion of Rhodia's financial debt is equal to €1,358 million as of
December 31, 2002 compared with €1,422 million as of December 31, 2001.

(e)   Obligations under capital leases

|                 |  | 2002 |  | 2001
|---------------- |  | ---- |  | ----
|2002             |  |     |  | 13  
|2003             |  | 2    |  | 3   
|2004             |  | 2    |  | 2   
|2005             |  | 1    |  | 1   
|2006             |  | 1    |  | 2   
|2007             |  |     |  |    
|Subsequent years |  |     |  |    
|                 |  |      |  |     
|Total            |  | 6    |  | 21  
|                 |  |      |  |     

(f)    Fair value of financial debt

The
fair value of Rhodia's long-term debt (including current portion) has been estimated based on market rates and terms available to Rhodia for issues with similar
maturities, which approximates book value.

(g)   Rating

Rhodia is rated by two international rating agencies. A possible change in these ratings cannot accelerate the repayment of any outstanding debt, nor increase in
the interest cost of any financings, except for an increase in the interest rate in the private placement discussed in note 18a). In the case of a change in the rating, interest costs could
increase a maximum of €3.5 million per year.

(h)   Available lines of credit

The undrawn amount of the total committed lines of credit at December 31, 2002 was €1,019 million.

F-34

---

Most
of these credit lines are subject to certain financial covenants regarding a maximum level of net financial debt/EBITDA or a minimum level of EBITDA/interest or on minimum
stockholders' equity level. As of December 31, 2002, all financial covenants were met by Rhodia, including the covenant based on a minimum level of stockholders' equity. Most of the credit
lines impacted by the minimum stockholders' equity covenant mature in 2003 or 2004. The minimum stockholders' equity covenant is measured annually, except for the private placement for which Rhodia
must maintain at all times a certain minimum consolidated net worth.

19.   OTHER CURRENT LIABILITIES

Other current liabilities consist of the following as of December 31:

|                                             |  | 2002 |  | 2001
|-------------------------------------------- |  | ---- |  | ----
|Payables related to fixed asset acquisitions |  | 59   |  | 81  
|Accrued payroll costs                        |  | 197  |  | 216 
|Accrued taxes                                |  | 169  |  | 178 
|Accrued interest payable                     |  | 46   |  | 42  
|Unrealized losses on financial instruments   |  | 23   |  | 45  
|Other                                        |  | 328  |  | 368 
|                                             |  |      |  |     
|Total                                        |  | 822  |  | 930 
|                                             |  |      |  |     

20.   FINANCIAL EXPENSENET

|                            |  | 2002 |   | 2001 |   | 2000 |  
|--------------------------- |  | ---- | - | ---- | - | ---- | -
|Interest expense            |  | (139 | ) | (179 | ) | (195 | )
|Interest income             |  | 31   |   | 24   |   | 24   |  
|Capitalized interest        |  | 8    |   | 19   |   | 8    |  
|Other financial chargesnet |  | (23  | ) | (50  | ) | (14  | )
|                            |  |      |   |      |   |      |  
|Financial expensenet       |  | (123 | ) | (186 | ) | (177 | )
|                            |  |      |   |      |   |      |  

Cash paid to third parties for interest expense in 2002 amounted to €127 million (2001:
€163 million; 2000: €157 million). The decrease of capitalized interest reflects the return to normal capital expenditures in 2002 after exceptional
capital expenditures during the period 1999 to 2001.

F-35

---

21.   OTHER INCOME/(EXPENSE)NET

|                                             |  | 2002 |   | 2001 |   | 2000 |  
|-------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Gains/(losses) on disposals of assetsnet(1) |  | (34  | ) | 15   |   | 13   |  
|Net gains/(losses) on foreign currency       |  | 14   |   | (7   | ) | 18   |  
|Dividends from other investments             |  | 3    |   | 4    |   | 4    |  
|Losses on financial assets                   |  | (12  | ) | (17  | ) | (9   | )
|Loss on sales of receivables                 |  | (29  | ) | (27  | ) | (17  | )
|Other income/(expense)net(2)                |  | (14  | ) | (76  | ) | (16  | )
|                                             |  |      |   |      |   |      |  
|Total                                        |  | (72  | ) | (108 | ) | (7   | )
|                                             |  |      |   |      |   |      |  

---

22.   INCOME TAXES

(a)   Analysis of income taxes

|                      |  | 2002 |   | 2001 |   | 2000 |  
|--------------------- |  | ---- | - | ---- | - | ---- | -
|
|French companies      |  | (72  | ) |     |   | (155 | )
|Foreign companies     |  | 228  |   | (66  | ) | (48  | )
|                      |  |      |   |      |   |      |  
|Total                 |  | 156  |   | (66  | ) | (203 | )
|                      |  |      |   |      |   |      |  
|Current income taxes  |  |      |   | (59  | ) |      |  
|Deferred income taxes |  |      |   | (7   | ) |      |  
|                      |  |      |   |      |   |      |  
|Total                 |  |      |   | (66  | ) |      |  
|                      |  |      |   |      |   |      |  

Current income taxes means cash paid or to be paid to tax administrations for the year based on the rules and rates applicable in the different
countries. Cash paid to tax administrations in 2002 amounted to €36 million (2001: €56 million; 2000: €48 million). For French
companies controlled more than 95% by Rhodia, current income taxes are calculated based on an integrated tax group in place since January 1, 1999 that is for a five-year period,
renewable by Rhodia. Rhodia does not discount deferred taxes.

(b)   Analysis of effective tax rate (in %)

Income before income taxes in 2002 was €156 million compared with €(203) million in 2001 and
€344 million in 2000.

F-36

---



The
effective income tax rate in 2002 was 42.3% compared with 42.4% in 2001 and 27.6% in 2000. An analysis of the effective incomes tax rate follows:

|                                                              |  | 2002  |   | 2001 |   | 2000  |  
|------------------------------------------------------------- |  | ----- | - | ---- | - | ----- | -
|
|Statutory tax rate in France                                  |  | (33.3 | ) | 33.3 |   | (33.3 | )
|                                                              |  |       |   |      |   |       |  
|Effect of French surtax                                       |  |      |   | 2.1  |   | (0.8  | )
|Effect of rate differences between France and other countries |  | 4.4   |   | 3.3  |   | (3.9  | )
|Loss carryforwards and other tax credits                      |  | 7.1   |   | 9.2  |   | 4.7   |  
|Permanent differences on losses on disposals of assets        |  | (10.0 | ) |     |   |      |  
|Other permanent differences                                   |  | (10.5 | ) | (5.5 | ) | 5.7   |  
|                                                              |  |       |   |      |   |       |  
|Effective tax rate                                            |  | (42.3 | ) | 42.4 |   | (27.6 | )
|                                                              |  |       |   |      |   |       |  

(c)   Deferred income taxes recorded on the balance sheet at December 31

|                                  |  | 2002 |   | 2001 |  
|--------------------------------- |  | ---- | - | ---- | -
|Long-term liabilities             |  | (217 | ) | (224 | )
|Short-term liabilities            |  | (19  | ) | (14  | )
|                                  |  |      |   |      |  
|Total                             |  | (236 | ) | (238 | )
|                                  |  |      |   |      |  
|Long-term assetsnet              |  | 195  |   | 128  |  
|Short-term assetsnet             |  | 152  |   | 242  |  
|                                  |  |      |   |      |  
|Totalnet of valuation allowances |  | 347  |   | 370  |  
|                                  |  |      |   |      |  
|Net                               |  | 111  |   | 132  |  
|                                  |  |      |   |      |  

Deferred tax liabilities principally relate to temporary differences between the book value and tax basis of tangible assets. Deferred tax assets
principally relate to pension and retirement provisions and to tax loss carryforwards.

The
temporary differences giving rise to deferred tax assets comprise mainly (tax effect): pension benefits and retirement indemnities which are generally not tax deductible until paid
€117 million in 2002 (€108 million in 2001), provisions not deductible until paid and other temporary differences €194 million in
2002 (€249 million in 2001), and tax loss carry-forwards €203 million in 2002 (€169 million in 2001).

F-37

---

The
tax loss carry-forwards remain available for use as follows:

|                 |  | 2002 |  | 2001
|---------------- |  | ---- |  | ----
|2002             |  |     |  | 17  
|2003             |  | 7    |  | 6   
|2004             |  | 8    |  | 13  
|2005             |  | 11   |  | 11  
|2006             |  | 56   |  | 53  
|2007             |  | 13   |  |    
|Subsequent years |  | 108  |  | 69  
|                 |  |      |  |     
|                 |  | 203  |  | 169 
|                 |  |      |  |     

(d)   Valuation allowances against deferred tax assets

Valuation allowances are recorded against deferred tax assets for temporary differences and tax loss carryforwards if these assets are not likely to be recovered.
In 2002, Rhodia recorded valuation allowances of €167 million (2001: €156 million) against deferred tax assets. They include deferred tax assets related
to tax losses (2002: €76 million; 2001: €72 million) that will be forfeited if the losses cannot be set off against taxable income within a specified
period.

23.   COMMITMENTS AND CONTINGENCIES

|                                                                                            |  | 2002 |  | 2001
|------------------------------------------------------------------------------------------- |  | ---- |  | ----
|Capital commitments for the acquisition of industrial assets                                |  | 18   |  | 39  
|Guarantees given in respect of indebtedness of companies accounted for on the equity method |  | 171  |  | 186 
|Guarantees given in respect of indebtedness of other non-consolidated companies             |  | 26   |  | 74  
|Recourse on sales of receivables                                                            |  | 30   |  | 29  
|Liens granted(1)                                                                            |  | 43   |  | 51  
|                                                                                            |  |      |  |     
|Total                                                                                       |  | 288  |  | 379 
|                                                                                            |  |      |  |     

---

(a)   Environmental matters

Rhodia's business is subject to extensive, evolving and increasingly stringent laws and regulations in the jurisdictions in which it does business and maintains
properties governing the release or discharge of regulated materials into the environment or otherwise relating to the environmental protection or human health and safety. Compliance with
environmental laws and regulations has resulted in significant ongoing costs for Rhodia, and could restrict its ability to modify or expand its facilities or continue production, or require Rhodia to
install costly pollution control equipment or incur significant expenses, including remediation costs and fines and penalties. Rhodia could also incur significant

F-38

---

expenses
in the event that new laws, regulations or governmental policies were to require that hazardous wastes, including radioactive wastes, currently stored on-site, be disposed of at
off-site locations.

In
addition, many manufacturing sites have an extended history of industrial use. As is typical for such businesses, soil and groundwater contamination has occurred in the past at some
sites, and might occur or be discovered at other sites in the future. Rhodia is currently in the process of investigating and remediating or monitoring soil and groundwater contamination at certain
sites. Rhodia has been and may in the future be liable to contribute to the cleanup of disposal facilities to which it has sent wastes for disposal, pursuant to the U.S. Comprehensive Environmental
Response, Compensation and Liability Act (commonly known as "Superfund") and other similar laws. Under these laws, the owner or
operator of contaminated properties and the generator of wastes sent to a contaminated disposal facility can be jointly and severally liable for the remediation of such properties, regardless of
fault.

Under
certain conditions, Rhodia may claim indemnification from Aventis, pursuant to the Environmental Indemnification Agreement with Aventis, dated May 26, 1998, with respect to
costs that may arise from certain unanticipated environmental liabilities. In 2001, Rhodia made a claim to Aventis pursuant to this agreement for several sites and recorded a receivable from Aventis
of €35 million. During 2002, an additional €3 million was recorded and €26 million was collected. The Environmental Indemnification
Agreement expires on December 31, 2007 and the aggregate amount of claims for indemnification is limited to €122 million.

On
December 27, 2002, Rhodia made a written offer to Aventis to settle all environmental claims in connection with the Environmental Indemnification Agreement upon the payment by
Aventis to Rhodia of €88 million.

Based
on current information and reserves established for environmental matters and the provisions of the Environmental Indemnification Agreement, management does not believe that
environmental compliance will have a material adverse effect on Rhodia's business, financial condition or results of operations. However, there can be no assurances that future events, such as changes
in existing laws, the promulgation of new laws or the development or discovery of new facts or conditions will not cause Rhodia to incur significant additional costs and liabilities that could have a
material adverse effect on its business, financial condition or results of operations. Based on available information, management estimates that reasonably possible losses related to environmental
contingencies (net of indemnification from Aventis) amount to approximately €50 million as of December 31, 2002.

F-39

---

(b)   Operating leases

Future minimum lease payments for operating leases as of December 31 are as follows:

|                                                                                       |  | 2002 |  | 2001
|-------------------------------------------------------------------------------------- |  | ---- |  | ----
|2002                                                                                   |  |     |  | 61  
|2003                                                                                   |  | 53   |  | 54  
|2004                                                                                   |  | 48   |  | 48  
|2005                                                                                   |  | 43   |  | 45  
|2006                                                                                   |  | 28   |  | 29  
|2007                                                                                   |  | 16   |  |    
|Thereafter                                                                             |  | 70   |  | 41  
|                                                                                       |  |      |  |     
|Total                                                                                  |  | 258  |  | 278 
|                                                                                       |  |      |  |     
|Net present value of total future minimum lease payments (assumed discount rate of 6%) |  | 214  |  | 232 
|                                                                                       |  |      |  |     

These payments are in relation to the leasing of movable equipment, including barges, rail cars, etc., leasing of real estate and the rental of
office buildings.

Rhodia
has issued residual value guarantees under equipment operating leases that totaled €70 million (net of deferred profits of
€69 million that are recorded in Other long-term liabilities) as of December 31, 2002. Rhodia does not expect to pay any amounts under the residual value guarantees since
the fair values of the leased equipment are projected, by an independent appraiser, to be in excess of the residual value guarantees.

(c)   Financial instruments

Rhodia's policy consists of systematically covering its overall exposure to currency risks on transactions. The risk of a loss of competitiveness and energy price
fluctuations are not systematically hedged. Interest rate risks are hedged based on Rhodia's estimated future exposure, which is periodically reviewed by financial management. The financial
instruments used by Rhodia are described in the section d) and e). The nominal amounts summarized in section d) do not represent the amounts exchanged between the parties, and thus are
not a measure of Rhodia's exposure through its use of such instruments.

(d)   Interest rate risk management

Rhodia's exposure to interest rate risk essentially relates to its indebtedness (note 18) and to a lesser extent its interest rate management activities.

As
of December 31, 2002 and 2001, Rhodia has firm contracts and options. These firm contracts and options are essentially for a duration between three months to six years.

F-40

---

As
of December 31, 2002 and 2001, Rhodia held the following nominal amounts of rate contracts and options (converted into euros at the closing rates). The category "Rate
contracts" include fixed rate contracts for purchases and sales. The category "Options" include purchase and sale options:

|                    |  | 2002  |  | 2001 
|------------------- |  | ----- |  | -----
|
|Swaps               |  |       |  |      
|Euro                |  | 4,350 |  | 550  
|U.S. dollar         |  | 1,112 |  |     
|Japanese yen        |  | 72    |  |     
|                    |  |       |  |      
|Subtotal            |  | 5,534 |  | 550  
|                    |  |       |  |      
|Futures and options |  |       |  |      
|Euro                |  | 170   |  | 2,150
|U.S. dollar         |  | 76    |  | 5,170
|Japanese yen        |  | 20    |  |     
|                    |  |       |  |      
|Subtotal            |  | 266   |  | 7,320
|                    |  |       |  |      
|Total               |  | 5,800 |  | 7,870
|                    |  |       |  |      

For
a better understanding of its interest rate position, Rhodia considers that its interest rate contracts and options with matching parameters (settlement dates, notional amounts and
reference rates) offset each other. After netting, the balances in the table above would be €840 million for interest rate contracts and €7,260 million for
options as of December 31, 2002, and €2,485 million for interest rate contracts and €3,176 million for options as of December 31, 2001.

The
amount of rate contracts and options refer to the nominal amount of these contracts and hence do not reflect the sensitivity of these operations. The sensitivity to interest rate on
such activities is controlled regularly.

(e)   Foreign exchange risk management

Rhodia principally uses fixed or open forward exchange contracts traded over-the-counter on organized markets to manage its foreign
exchange risk. The term of these contracts is generally less than six months.

F-41

---

The
nominal amounts of Rhodia's forward exchange contracts as of December 31 are summarized below. They have been converted into euros at the closing rate.

|                 |  | 2002  |  | 2001 
|---------------- |  | ----- |  | -----
|
|U.S. dollar      |  | 1,017 |  | 1,001
|Pound sterling   |  | 181   |  | 393  
|Japanese yen     |  | 182   |  | 315  
|Brazilian real   |  | 103   |  | 133  
|Other currencies |  | 94    |  | 96   
|                 |  |       |  |      
|Total            |  | 1,577 |  | 1,938
|                 |  |       |  |      

(f)    Fair value of financial instruments

The fair value of financial instruments as of December 31 is summarized below:

|                           |  | 2002 |  
|-------------------------- |  | ---- | -
|
|Foreign exchange contracts |  | (23  | )
|Interest rate contracts    |  | 3    |  
|                           |  |      |  
|Total                      |  | (20  | )
|                           |  |      |  

(g)   Management of risk of oil-based commodities

Rhodia's exposure to oil-based commodities relates essentially to its purchases of petrochemicals and natural gas. This exposure is hedged using
swaps, options and futures that are accounted for on a mark-to-market basis. The nominal value of these contracts as of December 31 (in Brent barrels based equivalents
is 3.5 million barrels) is equivalent to hedging 4.4 million barrels of oil.

(h)   Concentration of counterparty risk

The transactions that potentially generate a concentration of a counterparty risk for Rhodia include short-term deposits, derivative instruments and
other financial instruments, and accounts receivable.

Rhodia
places its short-term deposits and enters into interest and currency contracts with major banks and financial institutions. Counterparty risk related to accounts
receivable is limited due to the large number of customers, their diversification in many industries and their diverse geographic locations. Therefore, as of December 31, 2002 and 2001, Rhodia
believes that its counterparty risk in this respect is not significant.

F-42

---

(i)    Claims and litigation

Rhodia is involved in certain litigation in the normal course of business, involving primarily claims by the buyers of businesses sold by Rhodia and civil
liability compensation claims related to chemical products sold in the marketplace.

Some
of the North American subsidiaries have potential liabilities under the Superfund legislation, as well as other federal and state environmental remediation legislation. In light of
the nature of the claims made, the number of defendants and the volume of waste at issue, Rhodia believes that these claims will not result in significant liabilities for Rhodia.

Rhodia
also believes that there are no litigation or exceptional issues, taken individually or as a whole, that could have a significant negative impact on its business, financial
position or results of operations.

(j)    Commitments linked to the 2002 divestments

Sale of Rhodia-Ster

Rhodia sold its investment in the Rhodia-Ster entity on October 4, 2002. Since it was impossible in Brazil to obtain authorizations from the
competition authorities (CADE) and the stock exchange administration (CVM) before closing, Rhodia granted an option to resell to Rhodia the shares acquired from Rhodia if these authorizations were
denied. The CADE authorization has been granted and Mossi & Ghisolfi has applied for CVM authorization.

Rhodia
and Mossi & Ghisolfi have entered into an agreement that ensures additional purchase price to Rhodia if a certain EBITDA level is exceeded for the four quarters after the
date of sale, or a purchase price adjustment in favor of Mossi & Ghisolfi if this EBITDA level is not reached. The maximum price adjustment, positive or negative, for the four quarters combined
is €13 million.

Total
consideration for this transaction includes a €13 million payable to Rhodia, of which €7 million is payable upon Rhodia delivering to
the purchaser final documentation on an investment project and €6 million is payable within three years after the closing when this investment is started. On the date of the
sale, Rhodia entered into an agreement with Rhodia-Ster under which Rhodia will pay to Rhodia-Ster an $18 million incentive over the twelve-month period following the sale. In return for these
incentives, Rhodia-Ster will not terminate a steam supply agreement before September 30, 2003. On the basis of the economics of this arrangement, Rhodia considered that this incentive was a
price reduction and recorded accordingly a short-term accrual for the amount of such incentive.

In
relation to environmental matters, Rhodia is responsible for remediation efforts for unknown contamination through the date of sale based on the activities conducted by Rhodia.

The
sale included usual guarantees related to accounting, tax and employee matters.

Sale of phenol, HCL and soda ash

Rhodia sold the phenol, HCL (hydrochoric acid) and soda ash businesses to Bain Capital and retained an 18.2% holding of the new group. Guarantees are limited as
to the time period and amount involved and to Rhodia's knowledge, are not expected to be called.

F-43

---

In
connection with the transfer, Rhodia recorded a vendor note from the purchaser for a total of €22 million which payment is subordinated to the repayment of the
new group's bank debt from the acquisition.

The
commitments and specific guarantees are as discussed below:



This
sale also had the usual guarantees related to accounting, tax and employee matters.

F-44

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24.   INFORMATION BY SEGMENT AND GEOGRAPHICAL AREA

Rhodia has five global divisions and also had some remaining business interest in the Polyester activity, included in Other, until the sale of
Rhodia-Ster.

Segment information

|                                                                |  | Fine
Organics |   | Consumer
Specialties |   | Industrial
Specialties |   | Polyamide |   | Services &
Specialties |   | Other |   | Consolidated |  
|--------------------------------------------------------------- |  | ------------- | - | -------------------- | - | ---------------------- | - | --------- | - | ---------------------- | - | ----- | - | ------------ | -
|2002                                                            |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Statement of operations information:                            |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Net sales                                                       |  | 1,213         |   | 1,878                |   | 1,129                  |   | 1,353     |   | 954                    |   | 284   |   | 6,811        |  
|Intersegment revenues                                           |  | (113          | ) | (7                   | ) | (34                    | ) | (25       | ) | (15                    | ) |      |   | (194         | )
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Net salesexternal                                              |  | 1,100         |   | 1,871                |   | 1,095                  |   | 1,328     |   | 939                    |   | 284   |   | 6,617        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Depreciation and amortization (excluding goodwill amortization) |  | (92           | ) | (99                  | ) | (65                    | ) | (86       | ) | (78                    | ) | (27   | ) | (447         | )
|Operating income                                                |  | 36            |   | 126                  |   | 75                     |   | 123       |   | 95                     |   | (104  | ) | 351          |  
|Amortization of goodwill                                        |  | (17           | ) | (21                  | ) | (5                     | ) | (1        | ) | (3                     | ) |      |   | (47          | )
|Equity in earnings/(losses) of affiliated companies             |  |              |   | 5                    |   | (2                     | ) | (46       | ) | 5                      |   |      |   | (38          | )
|Cash flow and balance sheet information:                        |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Capital expenditures                                            |  | 62            |   | 58                   |   | 62                     |   | 90        |   | 74                     |   | 28    |   | 374          |  
|Investments accounted for by the equity method                  |  | 9             |   | 41                   |   |                       |   | 109       |   | 9                      |   | 4     |   | 172          |  
|Total segment assets                                            |  | 1,266         |   | 1,925                |   | 810                    |   | 1,062     |   | 774                    |   | (347  | ) | 5,490        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Assets not identifiable with segments                           |  |               |   |                      |   |                        |   |           |   |                        |   |       |   | 2,197        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Total assets                                                    |  |               |   |                      |   |                        |   |           |   |                        |   |       |   | 7,687        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  

F-45

---

|2001                                                            |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|--------------------------------------------------------------- |  | ----- | - | ----- | - | ----- | - | ----- | - | ----- | - | ---- | - | ----- | -
|Statement of operations information:                            |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Net sales                                                       |  | 1,219 |   | 2,163 |   | 1,220 |   | 1,444 |   | 1,013 |   | 433  |   | 7,492 |  
|Intersegment revenues                                           |  | (120  | ) | (10   | ) | (39   | ) | (26   | ) | (18   | ) |     |   | (213  | )
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Net salesexternal                                              |  | 1,099 |   | 2,153 |   | 1,181 |   | 1,418 |   | 995   |   | 433  |   | 7,279 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Depreciation and amortization (excluding goodwill amortization) |  | (107  | ) | (119  | ) | (67   | ) | (101  | ) | (89   | ) | (59  | ) | (542  | )
|Operating income                                                |  | (34   | ) | 65    |   | 58    |   | 32    |   | 83    |   | (113 | ) | 91    |  
|Amortization of goodwill                                        |  | (38   | ) | (21   | ) | (5    | ) | (1    | ) | (9    | ) | (1   | ) | (75   | )
|Equity in earnings/(losses) of affiliated companies             |  |      |   | 5     |   | (1    | ) | (28   | ) | 7     |   | 1    |   | (16   | )
|Cash flow and balance sheet information:                        |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Capital expenditures                                            |  | 108   |   | 109   |   | 72    |   | 104   |   | 63    |   | 27   |   | 483   |  
|Investments accounted for by the equity method                  |  | 9     |   | 49    |   | 8     |   | 102   |   | 67    |   | 3    |   | 238   |  
|Total segment assets                                            |  | 1,657 |   | 2,201 |   | 904   |   | 1,180 |   | 945   |   | (12  | ) | 6,875 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Assets not identifiable with segments                           |  |       |   |       |   |       |   |       |   |       |   |      |   | 2,138 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Total assets                                                    |  |       |   |       |   |       |   |       |   |       |   |      |   | 9,013 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  

F-46

---

|2000                                                            |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|--------------------------------------------------------------- |  | ----- | - | ----- | - | ----- | - | ----- | - | --- | - | --- | - | ----- | -
|Statement of operations information:                            |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Net sales                                                       |  | 1,185 |   | 2,192 |   | 1,238 |   | 1,589 |   | 984 |   | 451 |   | 7,639 |  
|Intersegment revenues                                           |  | (125  | ) | (17   | ) | (27   | ) | (30   | ) | (21 | ) |    |   | (220  | )
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Net salesexternal                                              |  | 1,060 |   | 2,175 |   | 1,211 |   | 1,559 |   | 963 |   | 451 |   | 7,419 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Depreciation and amortization (excluding goodwill amortization) |  | (79   | ) | (108  | ) | (63   | ) | (93   | ) | (75 | ) | (74 | ) | (492  | )
|Operating income                                                |  | 82    |   | 100   |   | 92    |   | 178   |   | 121 |   | (45 | ) | 528   |  
|Amortization of goodwill                                        |  | (6    | ) | (17   | ) | (5    | ) |      |   | (3  | ) | (1  | ) | (32   | )
|Equity in earnings/(losses) of affiliated companies             |  |      |   | 6     |   | (4    | ) | 4     |   | 3   |   | (1  | ) | 8     |  
|Cash flow and balance sheet information:                        |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Capital expenditures                                            |  | 94    |   | 99    |   | 62    |   | 105   |   | 67  |   | 76  |   | 503   |  
|Investments accounted for by the equity method                  |  | 5     |   | 39    |   | 16    |   | 157   |   | 45  |   | 7   |   | 269   |  
|Total segment assets                                            |  | 1,632 |   | 2,473 |   | 970   |   | 1,312 |   | 917 |   | 259 |   | 7,563 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Assets not identifiable with segments                           |  |       |   |       |   |       |   |       |   |     |   |     |   | 2,003 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Total assets                                                    |  |       |   |       |   |       |   |       |   |     |   |     |   | 9,566 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  

Segment assets reflect assets directly identifiable with the segments: goodwill, other intangible and tangible assets, investments accounted for
by the equity method, inventories and accounts receivable. They also include accounts receivable sold which are eliminated in the "Other" column since this operation is considered a Corporate
activity.

As
of December 31, 2002, assets not identifiable with segments correspond primarily to cash and cash equivalents and marketable securities (€251 million),
other current assets (€917 million), deposits and long-term receivables (€120 million), other investments
(€67 million) and deferred charges and other assets (€841 million). These assets are not available on a segment basis as they are managed on either a
legal entity basis or directly at the Corporate level.

Each
operating segment is individually managed and the measurement of the segments' profitability is operating income. Statements of Operations information include operating income and
related components that are directly identifiable with the segment. Reconciling information between

F-47

---

reportable
segment operating income and Rhodia's income/(loss) of consolidated subsidiaries before income taxes is shown in the following table:

|                                                               |                            | 2002 |      | 2001 |      | 2000 |     
|-------------------------------------------------------------- | -------------------------- | ---- | ---- | ---- | ---- | ---- | ----
|Total operating income                                         |                            | 351  |      | 91   |      | 528  |     
|Other information not directly identifiable with the segments: |                            |      |      |      |      |      |     
|                                                               | Financial expensenet      |      | (123 | )    | (186 | )    | (177
|                                                               | Other income/(expense)net |      | (72  | )    | (108 | )    | (7  
|                                                               |                            |      |      |      |      |      |     
|Income/(loss) of consolidated subsidiaries before income taxes |                            | 156  |      | (203 | )    | 344  |     
|                                                               |                            |      |      |      |      |      |     

Information by geographical area of production:

|                  |  | France |  | Rest of
Europe |  | North
America |  | South
America |  | Other |  | Elimina-
tions |   | Consoli-
dated
|----------------- |  | ------ |  | -------------- |  | ------------- |  | ------------- |  | ----- |  | -------------- | - | --------------
|2002              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,634  |  | 1,730          |  | 1,803         |  | 1,031         |  | 631   |  | (1,212         | ) | 6,617         
|Long-lived assets |  | 1,602  |  | 1,253          |  | 1,568         |  | 453           |  | 280   |  |               |   | 5,156         
|2001              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,685  |  | 2,296          |  | 1,945         |  | 1,181         |  | 656   |  | (1,484         | ) | 7,279         
|Long-lived assets |  | 1,700  |  | 1,194          |  | 1,857         |  | 974           |  | 262   |  |               |   | 5,987         
|2000              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,872  |  | 2,590          |  | 1,786         |  | 1,204         |  | 690   |  | (1,723         | ) | 7,419         
|Long-lived assets |  | 1,653  |  | 1,437          |  | 1,859         |  | 994           |  | 251   |  |               |   | 6,194         

Long-lived assets include goodwill, other intangible and tangible assets, investments accounted for by the equity method, other
investments and other long-term assets excluding deferred tax assets, and long-term deposits and receivables from Aventis companies.

25.   RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses, including depreciation and amortization, amounted to €218 million in 2002 (€215 million
in 2001 and €212 million in 2000). Research and development expenses on the Consolidated Statements of Operations are shown excluding depreciation and amortization.

F-48

---



26.   WAGES, BENEFITS AND NUMBER OF EMPLOYEES

(a)   Wage and benefits of employees

Wages and benefits amounted to €1,546 million in 2002 (€1,572 million in 2001,
€1,554 million in 2000).

(b)   Number of employees

The number of employees as of December 31:

|                |  | 2002   |  | 2001   |  | 2000  
|--------------- |  | ------ |  | ------ |  | ------
|
|France          |  | 9,148  |  | 9,847  |  | 10,300
|Other countries |  | 15,375 |  | 17,078 |  | 19,148
|                |  |        |  |        |  |       
|Total           |  | 24,523 |  | 26,925 |  | 29,448
|                |  |        |  |        |  |       

(c)   Compensation and benefits paid to the members of the board of directors and the Executive Committee

Compensation and benefits allocated to the members of the board of directors (including Directors' fees) and the Executive Committee totaled
€9.9 million (26 people) in 2002, €8.0 million (25 people) in 2001 and €6.1 million (25 people) in 2000. Contributions paid in 2002
with respect to pension for these persons amounted to €0.6 million (€0.5 million in 2001 and €0.6 million in 2000).

27.   STOCK OPTION PLANS

In accordance with the authorization of the stockholders at the stockholders' meeting of April 18, 2000, the board of directors decided at its
March 20, 2002 meeting to grant two options plans for the purchase of Rhodia shares. Options were granted for 2,000,000 and 1,000,000 shares, respectively, with the second plan having
conditions for exercising based on meeting certain financial targets at the end of 2002.

Options
granted under the 2001 and 2002 Plans are exercisable over a twelve-year period, with a vesting period of four years for tax residents of France and three years for
tax residents of other countries from the respective dates that the board of directors approved the stock option plans. Options granted under the 1998, 1999/1, 1999/2, 2000/1 and 2000/2 Plans are
exercisable over a ten-year period, with a five-year vesting period for tax residents of France and three years for tax residents of other countries from the respective dates
that the board of directors approved the stock option plans.

F-49

---

The
following table summarizes the status of the stock option plans as of December 31, 2002, 2001 and 2000:

|                                           |  | 2002       |   | 2001  |  | 2000     
|------------------------------------------ |  | ---------- | - | ----- |  | ---------
|
|Number of options outstanding, January 1   |  | 7,415,422  |   | 15.87 |  | 4,935,298
|                                           |  |            |   |       |  |          
|Options granted                            |  | 3,000,000  |   | 12.04 |  | 2,580,267
|Options cancelled/forfeited                |  | (1,316,160 | ) | 12.98 |  | (100,143 
|                                           |  |            |   |       |  |          
|Number of options outstanding, December 31 |  | 9,099,262  |   | 15.02 |  | 7,415,422
|                                           |  |            |   |       |  |          
|Number of options exercisable, December 31 |  | 828,688    |   | 15.10 |  | 13,460   
|                                           |  |            |   |       |  |          

The following table shows the main features of the stock option plans in place as of December 31, 2002:

|Stock Option Plan                                                 |  | Plan
1998 |   | Plan
1999/1 |   | Plan
1999/2 |   | Plan
2000/1 |   | Plan
2000/2 |  | Plan
2001 |   | Plan
2002  |  
|----------------------------------------------------------------- |  | --------- | - | ----------- | - | ----------- | - | ----------- | - | ----------- |  | --------- | - | ---------- | -
|Date of stockholders' meeting approval                            |  | 05/13/98  |   | 05/13/98    |   | 05/13/98    |   | 05/13/98    |   | 04/18/00    |  | 04/18/00  |   | 04/18/00   |  
|Date of board of directors' approval                              |  | 06/24/98  |   | 02/23/99    |   | 02/23/99    |   | 03/30/00    |   | 09/27/00    |  | 03/16/01  |   | 03/20/02   |  
|Date of grant                                                     |  | 06/24/98  |   | 02/23/99    |   | 02/23/99    |   | 03/30/00    |   | 09/27/00    |  | 03/16/01  |   | 03/20/02   |  
|Options granted                                                   |  | 1,600,000 |   | 1,580,000   |   | 1,200,000   |   | 2,100,000   |   | 150,000     |  | 2,580,267 |   | 3,000,000  |  
|Granted to the board of directors and Executive Committee (a)     |  | 550,000   |   | 558,000     |   | 369,000     |   | 800,000     |   |            |  | 925,000   |   | 970,000    |  
|Number of participants at December 31, 2002                       |  | 15        |   | 361         |   | 360         |   | 526         |   | 3           |  | 787       |   | 564        |  
|Exercise price (€)                                                |  | 21.34     |   | 15.00       |   | 15.00       |   | 17.14       |   | 16.26       |  | 15.70     |   | 12.04      |  
|Maximum term (years)                                              |  | 10        |   | 10          |   | 10          |   | 10          |   | 10          |  | 12        |   | 12         |  
|Weighted average remaining contractual life (years)               |  | 5.50      |   | 6.17        |   | 6.17        |   | 7.25        |   | 7.75        |  | 10.25     |   | 11.25      |  
|Options outstanding at beginning of year                          |  | 18,510    |   | 1,519,200   |   | 1,128,105   |   | 2,032,275   |   | 150,000     |  | 2,567,332 |   |           |  
|Options granted                                                   |  |          |   |            |   |            |   |            |   |            |  |          |   | 3,000,000  |  
|Options cancelled/forfeited                                       |  | (700      | ) | (32,500     | ) | (32,100     | ) | (126,000    | ) |            |  | (109,985  | ) | (1,014,875 | )
|Options outstanding at end of year                                |  | 17,810    |   | 1,486,700   |   | 1,096,005   |   | 1,906,275   |   | 150,000     |  | 2,457,347 |   | 1,985,125  |  
|Granted to the board of directors and Executive Committee (b)     |  |          |   | 425,500     |   | 241,500     |   | 742,000     |   |            |  | 905,000   |   | 660,000    |  
|Options exercisable at end of year                                |  | 12,960    |   | 474,600     |   | 341,128     |   |            |   |            |  |          |   |           |  
|Exercisable by the board of directors and Executive Committee (b) |  |          |   | 30,000      |   | 50,000      |   |            |   |            |  |          |   |           |  

---

F-50

---

The weighted average remaining contractual life of the outstanding options at the end of 2002 was 8.63 years, 8.91 years in 2001 and
8.65 years in 2000.

28.   SUBSEQUENT EVENTS

No significant transactions have occurred between December 31, 2002 and February 3, 2003 (the date when the board of directors approved Rhodia 2002
consolidated financial statements).

29.   RECONCILIATION TO U.S. GAAP AND NEW U.S. ACCOUNTING STANDARDS

Rhodia applies French GAAP in the preparation of the consolidated financial statements. The differences between French GAAP and U.S. GAAP that could have a
material effect on Rhodia's consolidated financial statements are described below. The 2001 and 2000 Stockholders' equity and Comprehensive income reconciliations have been restated as described
below.

(a)   Accounting for derivative instruments and hedging activities

Accounting for Derivatives and Hedging Activities (FAS 133) defines the accounting principles for derivative instruments and hedging activities.
FAS 133 requires that Rhodia measure all derivatives at fair value and to recognize them in the consolidated balance sheet as an asset or liability. Gains or losses resulting from changes in
the values of derivatives are accounted for depending on the intended use of the derivative and whether it qualifies for hedge accounting.

For
Rhodia, the principal difference between FAS 133 and French GAAP relates to the accounting for cash flow hedges. Under FAS 133, Rhodia would record the value of cash
flow hedges with an offset to
Other comprehensive income. Under French GAAP, cash flow hedges are commitments and are not recorded on the balance sheet.

The
effect on Stockholders' equity as of December 31, 2002 and 2001 of applying FAS 133 would be a reduction of Stockholders' equity. Upon realization of cash flow hedges,
Other comprehensive income would be reclassified into Net income. The application of this standard had no impact on Rhodia's net income for the years ended December 31, 2002 and 2001.

(b)   Goodwill and Other intangible assets

The accounting for goodwill and indefinite-lived assets under U.S. GAAP changed in 2002. Accounting for Goodwill and Other Intangible Assets
(FAS 142) is effective as of January 1, 2002 (July 1, 2001 with respect to acquisitions after June 30, 2001). FAS 142 requires that Rhodia cease the amortization of
goodwill and indefinite-lived intangible assets and replace it with periodic tests of the impairment of these assets. French GAAP requires that Rhodia amortize goodwill and indefinite-lived assets.
Rhodia has completed the transitional impairment test of its goodwill and there is no impairment of its goodwill.

(c)   Pensions

Under FAS 87, Employers' Accounting for Pensions, if the accumulated benefit obligation exceeds the fair value of plan assets, a liability equal to the
unfunded accumulated benefit obligation is

F-51

---

recognized
on the balance sheet. Recognition of an additional minimum liability is required when an unfunded accumulated benefit obligation exists and (a) an asset has been recognized as
prepaid pension cost, (b) the liability already recognized as unfunded accrued pension costs is less than the unfunded benefit obligation, or (c) no accrued or prepaid pension cost has
been recognized. If an additional minimum liability is recognized an equal amount shall be recognized as an intangible asset, provided that the intangible asset recognized does not exceed the amount
of unrecognized prior service costs. If the additional liability to be recognized exceeds unrecognized prior service costs, the excess shall be reported, net of tax, as a component of stockholders'
equity. The above described minimum liability requirement does not exist under French GAAP.

(d)   Reconciliation between French GAAP and U.S. GAAP



A reconciliation of net income/(loss) and earnings/(loss) per share between French GAAP and U.S. GAAP for the year ended December 31, 2002 follows:

|                                |  | 2002 |  
|------------------------------- |  | ---- | -
|Net income/(loss) (French GAAP) |  | (4   | )
|Amortization of goodwill        |  | 47   |  
|                                |  |      |  
|Net income/(loss) (U.S. GAAP)   |  | 43   |  
|                                |  |      |  

|                                                           |  | 2002  |  
|---------------------------------------------------------- |  | ----- | -
|
|Basic and diluted earnings/(loss) per share (French GAAP): |  | (0.02 | )
|Amortization of goodwill                                   |  | 0.26  |  
|                                                           |  |       |  
|Basic and diluted earning/(loss) per share (U.S. GAAP)     |  | 0.24  |  
|                                                           |  |       |  

There is no dilution as stock option prices exceed market prices. A reconciliation of net income/(loss) and earnings/(loss) per share between
French GAAP and U.S. GAAP for the years ended December 31, 2001 and 2000 has not been presented as no differences were present.

Rhodia's
net income/(loss) adjusted for amortization of goodwill and earnings/(loss) per share for the years ended December 31, 2002, 2001 and 2000, adjusted to exclude
amortization of goodwill were as follows:

|                                                        |  | 2002 |  | 2001 |   | 2000
|------------------------------------------------------- |  | ---- |  | ---- | - | ----
|Net income/(loss) (U.S. GAAP)                           |  | 43   |  | (213 | ) | 216 
|Amortization of goodwill                                |  |     |  | 50   |   | 32  
|                                                        |  |      |  |      |   |     
|Net income/(loss) adjusted for amortization of goodwill |  | 43   |  | (163 | ) | 248 
|                                                        |  |      |  |      |   |     

F-52

---



|                                             |  | 2002 |  | 2001  |   | 2000
|-------------------------------------------- |  | ---- |  | ----- | - | ----
|
|Basic and diluted earnings/(loss) per share: |  |      |  |       |   |     
|U.S. GAAP                                    |  | 0.24 |  | (1.19 | ) | 1.23
|Amortization of goodwill                     |  |     |  | 0.28  |   | 0.18
|                                             |  |      |  |       |   |     
|Adjusted for amortization of goodwill        |  | 0.24 |  | (0.91 | ) | 1.41
|                                             |  |      |  |       |   |     



The Stockholders' equity reconciliation as of December 31, 2001 has been restated to reflect the charge to equity, net of tax, of recognizing the minimum
liability in accordance with FAS 87. A reconciliation of Stockholders' equity between French GAAP and U.S. GAAP as of December 31, 2002 and 2001 follows:

|                                             |  | December 31, |  
|-------------------------------------------- |  | ------------ | -
|
|Stockholders' equity (French GAAP)           |  | 1,835        |  
|Derivatives (cash flow hedgesnet of tax)(1) |  | (38          | )
|Amortization of goodwill                     |  | 47           |  
|Pension liability over plan assets(2)        |  | (395         | )
|Translation                                  |  | (3           | )
|                                             |  |              |  
|Stockholders' equity (U.S. GAAP)             |  | 1,446        |  
|                                             |  |              |  

---



Comprehensive income/(loss) includes all changes in Stockholders' equity during a period except those resulting from investments by and distributions to
stockholders. The Comprehensive income reconciliation for the years ended December 31, 2001 and 2000 have been restated to reflect a charge

F-53

---

to
equity, net of tax, of recognizing the minimum liability in accordance with FAS 87. The following table presents Comprehensive income/(loss) for the years ended December 31, 2002,
2001 and 2000:

|                                   |  | 2002 |   | 2001 as restated |   | 2001 as reported |   | 2000 as restated |   | 2000 as reported |  
|---------------------------------- |  | ---- | - | ---------------- | - | ---------------- | - | ---------------- | - | ---------------- | -
|Net income/(loss) (U.S. GAAP)      |  | 43   |   | (213             | ) | (213             | ) | 216              |   | 216              |  
|Derivatives                        |  | (3   | ) | (35              | ) | (35              | ) |                 |   |                 |  
|Pension liability over plan assets |  | (177 | ) | (34              | ) |                 |   | (7               | ) |                 |  
|Translation                        |  | (400 | ) | (28              | ) | (28              | ) | (28              | ) | (28              | )
|                                   |  |      |   |                  |   |                  |   |                  |   |                  |  
|Comprehensive income/(loss)        |  | (537 | ) | (310             | ) | (276             | ) | 181              |   | 188              |  
|                                   |  |      |   |                  |   |                  |   |                  |   |                  |  



Amortization of goodwill (note 2.1.1.), and the loss on the sales of receivables and other income/(expense) (note 21) which are recorded below
Operating income/(loss) in accordance with French GAAP should be included in Operating income/(loss) for U.S. GAAP. Loss on sales of receivables and other income/(expense) have been
reclassified in 2001 and 2000 to conform with current year's presentation. A reconciliation of Operating income/(loss) between U.S. GAAP and French GAAP follows:

|                                         |  | 2002 |   | 2001 |   | 2000 |  
|---------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Operating incomeFrench GAAP             |  | 351  |   | 91   |   | 528  |  
|Operating incomediscontinued operations |  | (47  | ) | (85  | ) | (59  | )
|Amortization of goodwill                 |  |     |   | (75  | ) | (32  | )
|Loss on sales of receivables             |  | (29  | ) | (27  | ) | (17  | )
|Other income/(expense)                   |  | (14  | ) | (76  | ) | (16  | )
|                                         |  |      |   |      |   |      |  
|Operating income/(loss) U.S. GAAP        |  | 261  |   | (172 | ) | 404  |  
|                                         |  |      |   |      |   |      |  

(e)   Goodwill and Other intangible assetsFAS 142 additional disclosures

FAS 142 requires disclosures of the detail by operating segment and the changes in the carrying amount of goodwill for the year ended December 31,
2002, as well as the detail of other intangible assets by nature:

|                           |  | Fine Organics |   | Consumer Specialties |   | Industrial Specialties |   | Polyamide |   | Services & Specialties |   | Consolidated |  
|-------------------------- |  | ------------- | - | -------------------- | - | ---------------------- | - | --------- | - | ---------------------- | - | ------------ | -
|Balance, January 1, 2002   |  | 476           |   | 682                  |   | 102                    |   | 19        |   | 75                     |   | 1,354        |  
|Additions/(reductions)     |  |              |   | 16                   |   | (2                     | ) | (1        | ) |                       |   | 13           |  
|Translation                |  | (67           | ) | (54                  | ) | (6                     | ) |          |   | (10                    | ) | (137         | )
|                           |  |               |   |                      |   |                        |   |           |   |                        |   |              |  
|Balance, December 31, 2002 |  | 409           |   | 644                  |   | 94                     |   | 18        |   | 65                     |   | 1,230        |  
|                           |  |               |   |                      |   |                        |   |           |   |                        |   |              |  

F-54

---

Other intangible assets (all finite-lived) at December 31, 2002 and 2001 consist of the following:

|                                 |  | December 31, 2002 |  | December 31, 2001
|-------------------------------- |  | ----------------- |  | -----------------
|
|Patents, licenses and trademarks |  | 101               |  | (63              
|Capitalized software             |  | 260               |  | (165             
|Other intangible assets          |  | 80                |  | (36              
|                                 |  |                   |  |                  
|Total                            |  | 441               |  | (264             
|                                 |  |                   |  |                  

Anticipated amortization of patents, licenses and trademarks, and other intangible assets is estimated to be €10 million
for each of the next five years.

(f)    Transfers of accounts receivableFAS 140 additional disclosures

Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140) provides the accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities, and requires certain disclosures.

Transfers
of accounts receivable are accounted for as sales when the transferred assets have been isolated from Rhodia and are beyond the reach of its creditors, when each transferee
obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, or if the transferee is a qualifying special purpose entity,
each holder of beneficial interests obtains the right to pledge or exchange transferred beneficial interests, and when Rhodia does not maintain effective control over the transferred assets.

Rhodia
records the residual interests in receivables sold at fair value based on the present value of estimated cash flows, allocated between the portion of receivables sold and the
portion of receivables retained based on their relative fair values at the date of sale.

Rhodia
services the receivables sold and receives compensation for these services which approximates fair value.

Certain
Rhodia companies sold uncollected receivables during 2002 and 2001, on a monthly or quarterly basis, in accordance with multi-year asset securitization agreements
entered into with various banks under which receivables can be sold, on a non-recourse basis, either to qualifying special purpose entities (QSPEs) or directly to banks, and are settled
against cash payments and undivided interests in a defined pool of receivables (residual interests). The QSPEs then sell the interests they purchased in those receivables to commercial paper conduits.
In 2002, Rhodia entered into a new multi-year asset securitization agreement under which certain European subsidiaries can fund up to €240 million of receivables
through a QSPE that then sells the interests it purchased in those receivables to a commercial paper conduit.

F-55

---

Residual
interests were €96 million and €101 million as of December 31, 2002 and 2001, respectively, are stated at fair value, based
on the present value of estimated cash flows.

The
amount of receivables sold as of December 31, 2002 and 2001 was €627 million and €718 million, respectively, which generated a
net cash collection as of December 31, 2002 and 2001 of €531 million and €617 million, respectively, reflecting a dilution of 15.3% and 14.1%,
respectively. The average amount of receivables
sold in 2002 was €635 million compared with €613 million in 2001, which generated an average net cash collection of €539 million in
2002 compared with €519 million in 2001, reflecting an average dilution of 15.1% and 15.3%, respectively.

The
total amount of receivables sold in 2002 and 2001 to QSPEs was €3.4 billion and €3.5 billion, respectively. The total amount of cash
collected in 2002 and 2001 from QSPEs was €3.4 billion and €3.5 billion, respectively.

The
loss on the sales of receivables was €29 million, €27 million and €17 million for 2002, 2001 and 2000,
respectively, reflecting the economic costs of payment terms given to customers.

(g)   Stock optionsFAS 123 additional disclosures

If Rhodia had followed the fair value method for the stock option and stock purchase plans established in 2002, 2001 and 2000, net income/(loss) and
earnings/(loss) per share would have been as follows:

|                                                                                                                                                                                       |  | 2002 |   | 2001 |   | 2000 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Net income/(loss) as reported under U.S. GAAP                                                                                                                                          |  | 43   |   | (213 | ) | 216  |  
|Less total stock-based employee compensation expense determined under the fair value method described below for all awards at the respective date of grant, net of related tax effects |  | (4   | ) | (4   | ) | (3   | )
|                                                                                                                                                                                       |  |      |   |      |   |      |  
|Pro forma net income/(loss)                                                                                                                                                            |  | 39   |   | (217 | ) | 213  |  
|                                                                                                                                                                                       |  |      |   |      |   |      |  

|                                             |             | 2002 |      | 2001 |       | 2000
|-------------------------------------------- | ----------- | ---- | ---- | ---- | ----- | ----
|
|Basic and diluted earnings/(loss) per share: |             |      |      |      |       |     
|                                             | As reported |      | 0.24 |      | (1.19 | )   
|                                             | Pro forma   |      | 0.22 |      | (1.21 | )   

The fair value of Rhodia stock options granted in 2002, 2001 and 2000 was estimated under the Black-Scholes pricing model using the
following assumptions: duration of options 45 years (2002 and 2001) 46 years (2000), stock price volatility (37%, 34% and 35%, respectively), dividend rate
(2.55%, 2.50% and 2.20%, respectively), and risk free interest rate (5.30%, 4.80% and 4.90%5.20%, respectively).

F-56

---

(h)   Discontinued operationsFAS 144 additional disclosures

The accounting for discontinued operations under U.S. GAAP changed in 2002. Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144) requires that
a disposal of a business that qualifies as a component of an entity must be accounted for as a discontinued operation. The results of operations of these disposals, including financial expenses,
income taxes and the gain/(loss) on the disposal are all reflected as discontinued operations. Prior periods must be restated in a comparable manner.

Presented
below is consolidated summary financial information for the years ended December 31, 2002, 2001 and 2000 reflecting the 2002 disposals of businesses as discontinued
operations:

|                                                       |  | 2002  |   | 2001  |   | 2000  |  
|------------------------------------------------------ |  | ----- | - | ----- | - | ----- | -
|Net sales                                              |  | 6,061 |   | 6,554 |   | 6,647 |  
|Operating income                                       |  | 261   |   | (172  | ) | 404   |  
|Income/(loss) from continuing operations               |  | 67    |   | (232  | ) | 222   |  
|Discontinued operations(1)                             |  | (24   | ) | 19    |   | (6    | )
|                                                       |  |       |   |       |   |       |  
|Net income/(loss)                                      |  | 43    |   | (213  | ) | 216   |  
|                                                       |  |       |   |       |   |       |  
|Basic and diluted earnings/(loss) per share:           |  |       |   |       |   |       |  
|Earnings/(loss) per share from continuing operations   |  | 0.37  |   | (1.30 | ) | 1.26  |  
|Earnings/(loss) per share from discontinued operations |  | (0.13 | ) | 0.11  |   | (0.03 | )
|                                                       |  |       |   |       |   |       |  
|Earnings/(loss) per share                              |  | 0.24  |   | (1.19 | ) | 1.23  |  
|                                                       |  |       |   |       |   |       |  

---

(h)   Earnings/(loss) per shareFAS 128 additional disclosures

The following table sets forth the computation of diluted earnings per share:

|                                                    |  | 2002        |  | 2001        |  | 2000       
|--------------------------------------------------- |  | ----------- |  | ----------- |  | -----------
|Weighted-average shares outstanding                 |  | 178,765,518 |  | 179,103,640 |  | 175,843,305
|Effect of dilutive securitiesput option (note 15b) |  |            |  |            |  | 508,627    
|                                                    |  |             |  |             |  |            
|Diluted weighted-average shares                     |  | 178,765,518 |  | 179,103,640 |  | 176,351,932
|                                                    |  |             |  |             |  |            

(i)    New accounting standards for U.S. GAAP in 2003

Accounting for Asset Retirement Obligations (FAS 143) requires, as of January 1, 2003, that Rhodia recognize the fair value of a liability for an asset
retirement obligation in the period in which it is incurred if a reasonable estimate of the fair value can be made. Rhodia believes that such obligations cannot be determined and that it cannot make a
reasonable estimate of potential asset retirement obligations under existing regulations, since its industrial sites have long and indeterminable useful lives.

F-57

---

Accounting
for the Costs Associated with Exit or Disposal Activities (FAS 146) requires, as of January 1, 2003, that Rhodia account for these costs when incurred instead of at the
date of its commitment to an exit plan as permitted under current U.S. GAAP. Since the new standard only impacts the timing of the recognition and the initial measurement of the amount of the
liabilities relating to exit and disposal activities, Rhodia believes that the adoption of this standard will not have a significant effect on its consolidated financial position, results of
operations or cash flows.

Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45) requires that Rhodia recognized a liability at the
inception of the guarantee for guarantees issued or modified after December 31, 2002, for the fair value of the obligation Rhodia assumed in issuing the guarantee. Rhodia has issued guarantees
for its portion of indebtedness of companies accounted for on the equity method and other non-consolidated companies (note 23) and certain guarantees relating to the disposals of
Rhodia-Ster and the phenol, HCL and soda ash businesses in 2002 (note 23j). In addition, Rhodia has issued residual value guarantees under equipment operating leases
(note 23b) that totaled €70 million (net of deferred profits of €69 million that are recorded in Other long-term liabilities) as of
December 31, 2002. Rhodia does not expect to pay any amounts under the residual value guarantees since the fair values of the leased equipment are projected, by an independent appraiser, to be
in excess of the residual value guarantees.

Consolidation
of Variable Interest Entities (FIN 46) will require by July 1, 2003 for any variable interest entity in which Rhodia had acquired an interest before
February 1, 2003, that Rhodia consolidate any variable interest entity in which (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities
without additional subordinated financial support from other parties, or (b) the holders of the equity investment at risk lack any one of following three characteristics of a controlling
financial interest: (i) the direct or indirect ability to make decisions about the entity's activities through voting rights or similar rights, (ii) the obligation to absorb the expected
losses of the entity if they occur, and (iii) the right to receive the expected residual returns of the entity if they occur. Rhodia is currently in the process of assessing any potential
FIN 46 impact in particular in relation to operating leases and asset securitization agreements. However, management believes that no variable interest entity issue would be likely to exist
when FIN 46 will be effective.

F-58

---



30.   CONSOLIDATED SUBSIDIARIES END OF 2002

In 2002, Rhodia's perimeter of consolidation included 179 companies (2001: 196), 153 companies are fully consolidated (2001: 162) and 26 companies are accounted
for on the equity method (2001: 34).

The
companies are:

|Globally integrated subsidiaries                |  | Countries |  | % owned
|----------------------------------------------- |  | --------- |  | -------
|RHODIA ACETOW AG                                |  | GERMANY   |  | 100    
|RHODIA DEUTSCHLAND GMBH                         |  | GERMANY   |  | 100    
|RHODIA ENGINEERING PLASTICS GMBH                |  | GERMANY   |  | 100    
|RHODIA GERMANY INTERNATIONAL                    |  | GERMANY   |  | 100    
|RHODIA GMBH                                     |  | GERMANY   |  | 100    
|RHODIA GRUPPENUNT GMBH                          |  | GERMANY   |  | 100    
|RHODIA PERFORM.FIBRES GMBH                      |  | GERMANY   |  | 100    
|RHODIA SILICON GMBH                             |  | GERMANY   |  | 100    
|RHODIA SYNTECH GMBH                             |  | GERMANY   |  | 100    
|RECIPET ARGENTINA                               |  | ARGENTINA |  | 99.17  
|RHODIA POLIAMIDA SUCURSAL ARGENTINA             |  | ARGENTINA |  | 100    
|RHODIASTER FIPACK ARGENTINA                     |  | ARGENTINA |  | 99.99  
|A&W CHEMICALS PTY LTD AUSTRALIA                 |  | AUSTRALIA |  | 100    
|RHODIA AUSTRALIA PTY                            |  | AUSTRALIA |  | 100    
|RHODIA SILICONES AUSTRALIA PTY LTD              |  | AUSTRALIA |  | 100    
|RHODIA TRADING AUSTRALIA PTY LTD                |  | AUSTRALIA |  | 100    
|RHODIA BELGIUM                                  |  | BELGIUM   |  | 99.99  
|RHODIA CHEMIE NV                                |  | BELGIUM   |  | 100    
|RHODIA ACETOW LTDA                              |  | BRAZIL    |  | 100    
|RHODIA BRAZIL LTDA                              |  | BRAZIL    |  | 100    
|RHODIA PAR                                      |  | BRAZIL    |  | 100    
|RHODIA POLIAMIDA BRASIL                         |  | BRAZIL    |  | 100    
|RHODIA POLIAMIDA LTDA                           |  | BRAZIL    |  | 100    
|RHOPARTPART SERVICIOS E COMERCIO LTDA          |  | BRAZIL    |  | 100    
|RHODIA CANADA INC                               |  | CANADA    |  | 100    
|RHODIA ENGINEERING PLASTICS INC                 |  | CANADA    |  | 100    
|BAOTOU RHODIA RARE EARTHS CO LTD                |  | CHINA     |  | 55     
|BEIJING RP EASTERN CHEMICAL LTD                 |  | CHINA     |  | 70     
|RHODIA CHINA CO LTD                             |  | CHINA     |  | 100    
|RHODIA HENGCHANG ZH. SPECIALTY CHEMICALS CO LTD |  | CHINA     |  | 70     
|RHODIA SILICA QINGDAO CO LTD                    |  | CHINA     |  | 100    
|RHODIA SILICONES SHANGHAI CO LTD                |  | CHINA     |  | 100    
|RHODIA SPECIALITY CHEMICALS WUXI                |  | CHINA     |  | 70     
|RHODIA SUZHOU ANLI SC                           |  | CHINA     |  | 70     
|RUOHAI (ZHEJIANG) FINE CHEMICALS CO LTD         |  | CHINA     |  | 100    
|SHANGHAI LONG MA ENGINEERING PLACTICS CO LTD    |  | CHINA     |  | 66     
|                                                |  |           |  |        

F-59

---

|RHODIA POLYAMIDES CO LTD             |  | SOUTH KOREA   |  | 100  
|------------------------------------ |  | ------------- |  | -----
|RHODIA SILICA KOREA CO LTD           |  | SOUTH KOREA   |  | 100  
|CONUBEN SL                           |  | SPAIN         |  | 83.64
|RHODIA ENGINEERING PLASTICS SA       |  | SPAIN         |  | 100  
|RHODIA HPCII ESPANA                  |  | SPAIN         |  | 100  
|RHODIA IBERIA SA                     |  | SPAIN         |  | 100  
|RHODIA IBERLATEX                     |  | SPAIN         |  | 100  
|RHODIA SILICONAS ESPANA SA           |  | SPAIN         |  | 100  
|ALCOLAC INC                          |  | UNITED STATES |  | 100  
|HEAT ENERGY ADVANCED TECHNOLOGY INC  |  | UNITED STATES |  | 100  
|RHODIA CHIREX AMERICA INC            |  | UNITED STATES |  | 100  
|RHODIA CHIREX INC                    |  | UNITED STATES |  | 100  
|RHODIA ELECTRONICS & CATALYSIS INC   |  | UNITED STATES |  | 100  
|RHODIA ENGINEERING PLASTICS CORPUSA |  | UNITED STATES |  | 100  
|RHODIA FINANCIAL SERVICES INC        |  | UNITED STATES |  | 100  
|RHODIA HOLDING INC                   |  | UNITED STATES |  | 100  
|RHODIA INC                           |  | UNITED STATES |  | 100  
|RHODIA INDIA HOLDINGS INC            |  | UNITED STATES |  | 100  
|RP SPECIALITY CHEMICALS HLDG CO      |  | UNITED STATES |  | 100  
|GESMO                                |  | FRANCE        |  | 100  
|GIE OSIRIS                           |  | FRANCE        |  | 58.41
|GIE SAINT VICTOIRE                   |  | FRANCE        |  | 100  
|ICMDIND. CHIM. MULHOUSE DORNACH     |  | FRANCE        |  | 100  
|ORELIS                               |  | FRANCE        |  | 100  
|RHODIA ACETOL                        |  | FRANCE        |  | 100  
|RHODIA CAP                           |  | FRANCE        |  | 100  
|RHODIA CHIMIE                        |  | FRANCE        |  | 100  
|RHODIA ECO SERVICES                  |  | FRANCE        |  | 100  
|RHODIA ELECTRONICS & CATALYSIS       |  | FRANCE        |  | 100  
|RHODIA ENERGY                        |  | FRANCE        |  | 100  
|RHODIA ENGINEERING PLASTICS SA       |  | FRANCE        |  | 100  
|RHODIA ETANCHEITE                    |  | FRANCE        |  | 100  
|RHODIA FOOD SAS                      |  | FRANCE        |  | 100  
|RHODIA HPCII                         |  | FRANCE        |  | 100  
|RHODIA INTERMEDIAIRES                |  | FRANCE        |  | 100  
|RHODIA ORGANIQUE                     |  | FRANCE        |  | 100  
|RHODIA P.I. BELLE ETOILE             |  | FRANCE        |  | 100  
|RHODIA P.I. CHALAMPE                 |  | FRANCE        |  | 100  
|RHODIA PARTICIPATIONS                |  | FRANCE        |  | 100  
|RHODIA PERFORM.FIBRES SAS            |  | FRANCE        |  | 100  
|RHODIA POLYAMIDE INTERMEDIATES       |  | FRANCE        |  | 100  
|                                     |  |               |  |      

F-60

---

|RHODIA POLYAMIDES ENGINEERING        |  | FRANCE         |  | 65   
|------------------------------------ |  | -------------- |  | -----
|RHODIA PPMC SAS                      |  | FRANCE         |  | 100  
|RHODIA RECHERCHES                    |  | FRANCE         |  | 100  
|RHODIA SERVICES                      |  | FRANCE         |  | 100  
|RHODIA SILICES                       |  | FRANCE         |  | 100  
|RHODIA SILICONES                     |  | FRANCE         |  | 100  
|RHODIANYL SNC                        |  | FRANCE         |  | 100  
|RHODITECH                            |  | FRANCE         |  | 100  
|A&W CHEMICALS (INDIA)                |  | INDIA          |  | 72.93
|RHODIA ENGINEERING PLASTICS SRL      |  | ITALY          |  | 100  
|RHODIA GERONAZZO SPA                 |  | ITALY          |  | 100  
|RHODIA ITALIA SPA                    |  | ITALY          |  | 100  
|RHODIA PERFORM.FIBRES SRL            |  | ITALY          |  | 100  
|RHODIA SILICONI ITALIA SPA           |  | ITALY          |  | 100  
|SRN ITALIA SRL                       |  | ITALY          |  | 100  
|ANAN KASEI CO LTD                    |  | JAPAN          |  | 67.01
|RHODIA JAPAN LTD                     |  | JAPAN          |  | 100  
|RHODIA NICCA LTD                     |  | JAPAN          |  | 60   
|RHODIA INDUSTRIAL YARNS SIA          |  | LATVIA         |  | 100  
|RHODIA CONS SPEC MALAYSIA            |  | MALAYSIA       |  | 100  
|RHODIA MALAYSIA SND BHD              |  | MALAYSIA       |  | 100  
|RHODIA DE MEXICO SA DE C.V.          |  | MEXICO         |  | 100  
|RHODIA ESPECIALIDADES                |  | MEXICO         |  | 100  
|RHODIA FOSFATADOS                    |  | MEXICO         |  | 100  
|RHODIA MEXICANA SA DE C.V.           |  | MEXICO         |  | 100  
|RHODIA SERVICIOS SA DE C.V.          |  | MEXICO         |  | 100  
|TROY GRUPO INDUSTRIAL                |  | MEXICO         |  | 100  
|MEYPRO BV                            |  | NETHERLANDS    |  | 100  
|RHODIA ECO SERVICES NEDERLAND BV     |  | NETHERLANDS    |  | 100  
|RHODIA ENGIN. PLAST. NV (NYLTECH NV) |  | NETHERLANDS    |  | 100  
|RHODIA FINANCE INTERNATIONAL BV      |  | NETHERLANDS    |  | 100  
|RHODIA INTERNATIONAL HOLDINGS BV     |  | NETHERLANDS    |  | 100  
|RHODIA NEDERLAND BV                  |  | NETHERLANDS    |  | 100  
|RHODIA FOOD BIOLACTA SPZ             |  | POLAND         |  | 97.14
|INDALINDUSTRIAS DE ALFARROBA LTD    |  | PORTUGAL       |  | 100  
|HOLMES CHAPEL TRADING LTD            |  | UNITED KINGDOM |  | 100  
|RHODIA CHEMICALS LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX (ANNAN) LTD            |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX (DUDLEY) LTD           |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX HOLDINGS LTD           |  | UNITED KINGDOM |  | 100  
|RHODIA CONSUMER SPECIALTIES LTD      |  | UNITED KINGDOM |  | 100  
|                                     |  |                |  |      

F-61

---

|RHODIA ECO SERVICES LTD            |  | UNITED KINGDOM |  | 100  
|---------------------------------- |  | -------------- |  | -----
|RHODIA ENGINEERING PLASTICS LTD    |  | UNITED KINGDOM |  | 100  
|RHODIA FOOD UK LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA HOLDING LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA HPCII LTD                   |  | UNITED KINGDOM |  | 100  
|RHODIA INDUSTRIAL SPECIALTIES LTD  |  | UNITED KINGDOM |  | 100  
|RHODIA INTERNATIONAL HOLDINGS LTD  |  | UNITED KINGDOM |  | 100  
|RHODIA INVESTMENTS LTD             |  | UNITED KINGDOM |  | 100  
|RHODIA LTD                         |  | UNITED KINGDOM |  | 100  
|RHODIA ORGANIQUE FINE LTD          |  | UNITED KINGDOM |  | 100  
|RHODIA OVERSEAS LTD                |  | UNITED KINGDOM |  | 100  
|RHODIA REORGANISATION LTD          |  | UNITED KINGDOM |  | 100  
|RHODIA SEALANTS LTD                |  | UNITED KINGDOM |  | 100  
|RHODIA TEXEL LTD                   |  | UNITED KINGDOM |  | 100  
|RHODIA UK LTD                      |  | UNITED KINGDOM |  | 100  
|SERTOW SERPUKHOV                   |  | RUSSIA         |  | 97.01
|AW ASIA PACIFIC HOLDINGS PTE       |  | SINGAPORE      |  | 100  
|RHODIA ASIA PACIFIC PTE LTD        |  | SINGAPORE      |  | 100  
|RHODIA INDUSTRIAL YARNS AS         |  | SLOVAKIA       |  | 100  
|MEYHALL AG                         |  | SWITZERLAND    |  | 100  
|PARTICIPATIONS CHIMIQUES           |  | SWITZERLAND    |  | 99.99
|RHODIA CAPITAL MARKET              |  | SWITZERLAND    |  | 100  
|RHODIA INDUSTRIAL YARNS AG         |  | SWITZERLAND    |  | 100  
|SOPARGEST                          |  | SWITZERLAND    |  | 99.98
|RHODIA ENGIN. PLAST. TAIWAN CO LTD |  | TAIWAN         |  | 100  
|AW THAI HOLDINGS LTD               |  | THAILAND       |  | 100  
|RHODIA PPMC THAILAND LTD           |  | THAILAND       |  | 100  
|RHODIA THAI INDUSTRIE              |  | THAILAND       |  | 74   
|ALAVER SA                          |  | URUGUAY        |  | 100  
|ALEXIL S.A.                        |  | URUGUAY        |  | 100  
|FAIRWAY INVESTIMENTOS SA           |  | URUGUAY        |  | 100  
|ZAMIN COMPANY SA                   |  | URUGUAY        |  | 100  
|PETPACK S.A.                       |  | VENEZUELA      |  | 60   
|RHODIA ACETOW VENEZUELA C.A.       |  | VENEZUELA      |  | 100  
|RHODIA SILICES DE VENEZUELA C.A.   |  | VENEZUELA      |  | 100  

F-62

---

|Subsidiaries accounted for on the equity method |  | Countries     |  | % owned
|----------------------------------------------- |  | ------------- |  | -------
|WARMEVERBUNDKRAFTWERK FREIBURG GMBH             |  | GERMANY       |  | 47.50  
|A&W AUSTRALIA                                   |  | AUSTRALIA     |  | 50     
|GELYMAR                                         |  | CHILE         |  | 50     
|JADE FINE CHEMICALS WUXI CO LTD                 |  | CHINA         |  | 60     
|LUOPING PHOSPHORUS CHEMICAL CO LTD              |  | CHINA         |  | 50     
|YING LONG                                       |  | CHINA         |  | 73     
|PRODUCTORA ANDINA DE ACIDOS Y DERIVADOS         |  | COLOMBIA      |  | 100    
|AUXILIAR PAPELERA                               |  | SPAIN         |  | 50     
|NYCOA INC                                       |  | UNITED STATES |  | 50     
|OATRIM                                          |  | UNITED STATES |  | 50     
|PRIMESTER                                       |  | UNITED STATES |  | 50     
|BAIKOWSKI CHIMIE                                |  | FRANCE        |  | 30.22  
|BUTACHIMIE                                      |  | FRANCE        |  | 50     
|CEVCOCENTR.ELECTR.VAPEUR PT DE CLAIX           |  | FRANCE        |  | 40     
|COGENERATION CHALAMPE                           |  | FRANCE        |  | 50     
|CYCLEON                                         |  | FRANCE        |  | 50     
|GIE CHIMIE SALINDRES                            |  | FRANCE        |  | 50     
|GIE SPIRAL                                      |  | FRANCE        |  | 58.20  
|NOVANCE                                         |  | FRANCE        |  | 24.99  
|RHODIGAZ                                        |  | FRANCE        |  | 50.04  
|HINDUSTAN GUM & CHEMICALS LTD                   |  | INDIA         |  | 50     
|RHODIA MANYAR                                   |  | INDONESIA     |  | 50     
|RHODIA ORGANO FOOD TECH CO LTD                  |  | JAPAN         |  | 49     
|NYLSTAR NV                                      |  | NETHERLANDS   |  | 50     
|CHEMPHIL AW CORPORATION                         |  | PHILIPPINES   |  | 39.98  
|THAI POLYPHOSPHATES & CHEMICALS                 |  | THAILAND      |  | 30     

F-63

---

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | RHODIA
| |  | ------
| |  | By:   

Date:
June 26, 2003

---

CERTIFICATIONS

I,
Jean-Pierre Tirouflet, certify that:



Date:
June 26, 2003

| |  | /s/JEAN-PIERRE TIROUFLETChairman and Chief Executive Officer
| |  | ------------------------------------------------------------

---

CERTIFICATIONS

I,
Pierre Prot, certify that:



Date:
June 26, 2003

| |  | /s/PIERRE PROTSenior Vice President and Chief Financial Officer
| |  | ---------------------------------------------------------------

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