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Directors Report of ACC Ltd.

Dec 31, 2015

The Directors take pleasure in presenting the Eightieth Annual Report together with the audited accounts for the year ended December 31, 2015. The Management Discussion and Analysis has also been incorporated into this report.

1. FINANCIAL RESULTS

Consolidated Standalone

Rs, Crore Rs, Crore

2015 2014 2015 2014

Revenue from Operations (Net) and other income 11,916.94 11,995.42 11,916.18 12,006.49

Profit Before Tax (PBT) 765.53 1,119.54 783.97 1,135.20

Provision for Tax 189.98 (31.13) 192.40 (33.09)

Profit After Tax (PAT) 587.60 1,161.82 591.57 1,168.29

Balance brought forward from previous year 4,433.04 4,158.74 4,456.64 4,175.87

Profit available for Appropriations 5,020.64 5,320.56 5,048.21 5,344.16 Appropriations:

Interim Equity Dividend 206.52 281.62 206.52 281.62

Proposed Final Equity Dividend 112.65 356.72 112.65 356.72

Tax on Equity Dividends 64.97 119.18 64.97 119.18

Transfer to General Reserve 30.00 130.00 30.00 130.00

Surplus carried to the next year's account 4,606.50 4,433.04 4,634.07 4,456.64

2. OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE

Consolidated Income

Consolidated income, comprising Revenue from Operations (Net) and other income for the year was Rs, 11,916.94 crore, 1% lower as compared to Rs, 11,995.42 crore in 2014.

Total consolidated Revenue from Operations (Net) increased to Rs, 11,797.16 crore from Rs, 11,738.79 crore in 2014.

Other Operating Revenue

Other operating revenue for the year ended December 31, 2015 includes Rs, 139.74 crore being accrual of sales tax incentives at Chaibasa Plant, in the State of Jharkhand pertaining to the period August 2005 to March 2015.

Other Income

Other income reduced due to lower cash and cash equivalent on account of utilization of funds for various capex projects as compared to the previous year. Average rate of return on investment was also lower as compared to the previous year.

Finance Costs

Finance costs decreased mainly due to reduction in interest on income tax by Rs, 12.87 crore.

Depreciation and Exceptional Items

Pursuant to the provisions of Schedule II of the Companies Act, 2013 (hereinafter referred to as "the Act") becoming applicable to the Company w.e.f. January 1, 2015, the Company has reviewed and where necessary, revised estimates of the useful life of fixed assets. Accordingly, an additional charge of Rs, 164.45 crore, being the carrying amount as of January 1, 2015 of the fixed assets with no remaining useful life (as revised) as of that date, is recognized in the year ended December 31, 2015 and has been disclosed as an exceptional item.

With this change the current year's depreciation is also higher by Rs, 111.81 crore.

Consolidated Profit Before Tax

Consolidated profit before tax for the year was Rs, 765.53 crore as compared to Rs, 1,119.54 crore in 2014.

Consolidated Profit After Tax

Consolidated Profit after Tax for the year was Rs, 587.60 crore as compared to Rs, 1,161.82 crore in 2014.

In the previous year, on completion of assessments and review of certain tax positions, an amount of Rs, 309 crore had to be written back, whereas no such write backs were necessary in 2015.

In the year under review, as stated above, an additional depreciation charge of Rs, 181 crore (net of tax) was made on account of change in useful life of fixed assets in accordance with the provisions of Schedule II of the Act.

There are no material changes or commitments affecting the financial position of the Company, which have occurred between the end of the calendar year and the date of this Report.

3. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs, 6/- per equity share of Rs, 10 each. The Company had distributed an interim dividend of Rs, 11/- per equity share of Rs, 10 each in July 2015. The total dividend for the year ended December 31, 2015 would accordingly be Rs, 17/- per equity share of Rs, 10 each as compared to Rs, 34/- per equity share of Rs, 10 each. The total outgo for the current year amounts to Rs, 384.14 crore, including dividend distribution tax ofRs, 64.97 crore as against Rs, 757.52 crore including dividend distribution tax of Rs, 119.18 crore in the previous year.

A general slowdown in the cement industry impacted the performance of the Company. This, coupled with a provision for higher depreciation, as explained in the previous paragraph, led to lower profits and reduced Earnings Per Share. Consequently, dividend for the year is recommended at a lower rate as compared to the previous year. However, the dividend payout ratio has been maintained at previous year's level at 65% of the Profit After Tax (PAT) for the year 2015.

During the year, the unclaimed dividend pertaining to the 70th Final Dividend for the year ended December 31, 2007 and the 71st Interim Dividend for the year ended December 31, 2008 aggregating Rs,2.16 crore were transferred to the Investor Education & Protection Fund after sending due reminders to the shareholders.

4. TRANSFER TO RESERVES

The Company proposes to transfer an amount of Rs, 30 crore to the General Reserves. An amount of Rs, 4,606.50 crore is proposed to be retained in the Consolidated Statement of Profit and Loss.

5. SHARE CAPITAL

The paid up Equity Share Capital as on December 31, 2015 was Rs, 187.95 crore. The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme. As on December 31, 2015, none of the Directors of the Company hold shares or convertible instruments of the Company.

No disclosure is required under Section 67(3)(c) of the Act, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said Section are not applicable

6. FINANCIAL LIQUIDITY

The Company's cash and cash equivalent as at December 31, 2015 was Rs, 1,389 crore. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

7. CREDIT RATING

CRISIL, a reputed Rating Agency, has reaffirmed the highest credit rating of CRISIL AAA/ STABLE for long term and CRISIL A1 for short term financial instruments of the Company.

8. DEPOSITS

The Company had discontinued its fixed deposit scheme in the financial year 2001-2002. Despite sustained efforts to identify and repay unclaimed deposits, the total amount of fixed deposits matured and remaining unclaimed with the Company as on

December 31, 2015 was Rs, 0.02 crore. The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Act, and the Rules framed there under.

9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act, are given in the notes to the Financial Statements.

10. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company for the calendar year 2015 are prepared in compliance with the applicable provisions of the Act, Accounting Standards and as prescribed by Securities and Exchange Board of India (SEBI) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 'the SEBI Regulations'). The consolidated financial statements have been prepared on the basis of the audited financial statements of the Company, its subsidiaries, joint venture and associate companies, as approved by their respective Boards of Directors.

Pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, the Consolidated Financial Statements along with all relevant documents and the Auditors' Report thereon form part of this Annual Report. The Financial Statements as stated above are also available on the website of the Company and can be accessed at the we blink http://www.acclimited.com/newsite/ finance/an nual_report_2015.pdf

11. CONTINUANCE OF THE EXISTING FINANCIAL YEAR

Pursuant to a favorable Order from the Company Law Board, the Company will continue to have the calendar year (1st January - 31st December) as its financial year, in respect of itself as well as its subsidiaries.

12. ECONOMIC SCENARIO AND OUTLOOK

As compared to many other countries, India enjoyed relative macro economic stability in 2015.

Last year, Government realigned its methodology for compiling the country's GDP using value added data that makes it closer to accepted international practice. Based on this, India's economic growth in the calendar year 2015 is estimated to have risen to 7.5% as compared to the previous year 2014, making it among the world's fastest growing economies.

The rate of inflation, as per the wholesale price index, maintained its year-long negative trend and showed a decline of (-)2.8% as compared to the previous year's rate of inflation of 3.9%. This was on account of a high base rate effect and other factors such as the sharp fall in global oil and commodity prices, sluggish domestic demand conditions and some softening of food prices.

Notwithstanding some slackening in the last quarter, manufacturing growth in 2015 was strong at 7.5% as compared to 6% growth in 2014, although there was some loss of steam in certain sectors. This spurt in manufacturing resulted in higher industrial production and revival in urban consumer demand. However, the spurt in manufacturing activity did not translate into growth in the construction sector which was lower by 3.7% as compared to 2014. In turn, the cement sector also experienced dampened growth in cement production of 2% in 2015 as compared to the preceding year, the slowest in the last decade.

With a second consecutive year of a weak monsoon and unseasonal rains, agricultural growth and rural demand remained muted in 2015.

Official estimates for GDP growth expected in the fiscal year 2015-2016 is of the order of 7.6%. Disregarding some sect oral imbalances, the outlook for India's national economy in calendar year 2016 and beyond shows a strong emerging potential. It is expected that GDP growth in 2016 would be more positive, amid expectations of higher investments in infrastructure and industry. This would drive overall growth, generate incomes and lower inflation rate.

13. CEMENT INDUSTRY - OUTLOOK AND OPPORTUNITIES

The Indian Cement Industry has an installed capacity of Rs. 72 million tonnes per annum while domestic consumption of cement in 2015 was ~271 million tonnes. As already indicated, cement consumption grew at the rate of 2% in the calendar year 2015, the slowest rate of growth in a decade. As a result, the cement market in the country remained very competitive.

Consistent with the positive outlook for the Indian economy, we foresee a similar revival in demand for cement and concrete. Signs of increased construction activity have been witnessed in industrial and commercial segments as well as from mass housing and mid-income housing schemes across the country. Besides this, there are healthy indicators of an uptrend in demand for cement and concrete from projects such as concrete roads, flyovers & bridges, power plants, irrigation schemes, ports, railways and metro rail projects.

Overall cement demand in the calendar year 2016 is estimated to grow at a rate faster than the preceding year, if supported by a faster pace of infrastructure development, housing and industrial growth. Consumption could pick up well beyond 6% if investments in infrastructure development and ambitious projects such as "Make in India", Smart Cities Mission, Atal Mission for Rejuvenation & Urban Transformation (AMRUT), and Housing For All (including low cost housing) are accelerated. Demand in the housing sector may be stimulated with a gradual reduction in interest rates, wider supply of affordable housing, tax benefits and an increase in disposable incomes and household savings.

14. CEMENT BUSINESS - PERFORMANCE

20151 2014 Change %

Production - million 23.84 24.24 -1.7 tonnes

Sales Volume - million 23.62 24.21 -2.4 tonnes

Net Sale Value (Rs,crore) 10,652.60 10,842.82 -1.8

Operating EBITDA 1,482.88 1,473.13 0.7 (crore)

Operating EBITDA 13.92 13.59

Margin (%)

14.1 Sales Volume & Pricing

Cement sales volume in 2015 was 23.62 million tonnes as compared to 24.21 million tonnes in 2014, a decrease of 2.4%. Sales volume was impacted mainly in the Eastern region where production at Chaibasa and Bargarh was constrained on account of temporary suspension of mining operations during the earlier part of the year on account of regulatory changes.

During the year, the sales volume of the Company's premium products increased to 2.3 million tonnes in 2015 as compared to 2.1 million tonnes in 2014.

Selling prices of cement improved by 1% in 2015 over 2014.

Your Company's main focus areas included managing costs of distribution and logistics, promoting the sale of its premium products, enhancing customer service levels and various other customer excellence initiatives.

While Individual House Builders remained the major customer segment catered by an extensive dealer and retailer network, the ICI (Infrastructure, Commercial and Industrial) team of the Company's sales division has also been actively servicing the growing requirements from infrastructure, industrial and commercial projects. With increasing urbanization, demand from these sectors is also expected to accelerate.

14.2 Costs - Cement Business

During the year 2015, the Company maintained a close focus on effective cost management through various initiatives.

a) Cost of Materials consumed

Cost of materials consumed was reduced by 7% in 2015 over 2014, despite an additional cost burden of Rs, 23 crore towards purchase of clinker due to temporary suspension of limestone mining operations at Chaibasa and Bargarh mines during the earlier part of the year. Thus, the cost of materials consumed as share of total income from operations came down to 12.7% from 13.5% in 2014.

The landed cost of gypsum rose by 5% on account of an increase in the price of imported gypsum and also due to a shortage of wagons at Paradip port that necessitated costlier road transportation to some plants. To mitigate such cost increases, the Company is taking steps to optimize its gypsum mix by reducing its reliance on imported gypsum and instead increasing the consumption of phosphor-gypsum, chemical gypsum, activated gypsum and also the more cost effective variety of high purity domestic mineral gypsum.

The landed cost of flyash increased by 4% as it had to be procured over longer leads, following a drop in availability from sources close to our plants. Efforts were made to achieve cost reductions by entering into long term contracts with slag and flyash suppliers. Slag prices were negotiated to achieve a reduction of 27%.

b) Power & Fuel

Power & Fuel costs were reduced by 2% in 2015 as compared to 2014. The Power & Fuel spend in 2015 was Rs, 2,377.85 crore, as compared to Rs, 2,427.45 crore spent in 2014. This constituted 22% of the total income from operations, the same as in the previous year.

The Company continues to focus on reducing the overall cost of fuel as well as shifting its dependence on linkage and imported coal by optimizing the fuel mix to enhance the use of alternative fuels and petcoke. The supply of petcoke became attractive following a general decline in global oil prices. Taking advantage, the Company put plans in place to enable increased consumption of petcoke. During the year, this enabled petcoke consumption to rise from average consumption of 16% in 2014 to 27% during the last quarter of 2015.

As a result of various initiatives taken with respect to power & fuel, kiln thermal efficiency was maintained at 3050 MJ/per tonne of clinker, the same level as in the last year.

The generation cost per KW of our Captive Power Plants (CPP) in 2015 rose by 2% to Rs, 4.67 per unit against Rs, 4.59 per unit in 2014, mainly due to increase in rail freight on coal and electricity duty on generation of power.

Power generated by the Company's waste heat recovery plant of 7.5 MW at Gagal Plant delivered saving of Rs, 22 crore during the year, thus also helping reduce overall power and fuel costs.

c) Freight & Forwarding expenses

A general hike in rail tariffs impacted the cost of inward and outbound transportation in 2015, particularly because 44% of total cement despatches during the year were moved by rail.

Freight and forwarding expenses during theyear were Rs, 2,640.76 crore as compared to Rs, 2,530.30 crore in 2014, an increase of 4%. Freight and forwarding expenses constituted a significant share of 24% of the Company's total income from operations, up marginally from a share of 23% in the previous year.

Freight on clinker transfers, effected mainly by rail, increased by about 8% due to the rail tariff hikes and the movement of clinker over longer leads to Chaibasa and Bargarh occasioned by the curtailment of clinker production at these plants for reasons explained heretofore. Freight on cement despatches also rose by about 6% on account of the increase in rail tariffs.

Taking advantage of the decline in diesel prices, proactive efforts were made to bring down the cost of road transportation which accounts for about 56% of total despatches. Average road freight rates were cut by 6%. The Company is taking further steps to rationalize freight and C&F rates and pursue improvements in other operational levers such as lead distances and the share of direct despatches.

d) Employee Costs

Employee costs during the year were brought down by 2.7% on a like-for-like basis. Overall employee costs, as a share of total income from operations, declined to 6.5% in 2015 from 6.8% in 2014. In the forthcoming year, certain initiatives taken as part of the India Manufacturing Transformation programme, as explained later, are expected to reflect further improvement in employee costs.

e) Other Expenditure

Other expenditure constitutes 23% of total income from operations of the Company (as compared to 22% in 2014). This includes (i) provision for additional royalty on limestone of Rs, 52 crore necessitated by the Mines and Minerals (Development and Regulation) Amendment Act, 2015 for contributions to be made to the District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) in the districts where mining takes place,

(ii) increase in royalty rate from Rs, 63 to Rs, 80 per tonne of limestone mined effective September 2014 impacting an additional cost incidence of Rs, 24 crore and (iii) severance cost of Rs, 13 crore on account of rationalization of third party manpower. Despite these increases, the overall escalation in "Other Expenditure" was restricted to 1.4% in 2015 over 2014.

Packing material cost reduced by Rs, 79 crore on account of a fall in the prices of polypropylene granules and other initiatives like standardization of bags across plants.

15. READY MIXED CONCRETE (RMX)

20151 2014 Change %

RMX Production - 22.15 17.61 25.8 Lakh Cubic Metres

RMX Sales Volume - 23.44 18.34 27.8 Lakh Cubic Metres

Net Sale Value - 967.50 760.77 27.2 (7 crore)

Operating EBITDA - 54.29 34.12 59.1 (Rs, crore)

Operating EBITDA 5.61 4.48

Margin (%)

The Ready Mixed Concrete Business of the Company performed well. Concrete Sales Volume increased by 28% and Operating EBITDA grew at a much higher rate on account of volume growth and new value added products and solutions. EBITDA from RMX business for the year rose to Rs, 54 crore as compared to Rs, 34 crore in 2014, an increase of 59%. Your Company has a wide spread of RMX plants in the country; the number of RMX plants rose to 50 by the close of 2015 as compared to 48 plants in 2014.

A large share of the Company's concrete business comes from Infrastructure and Industrial projects in addition to mass housing schemes. In the last two years, this business has implemented a programme of widening its customer base, broadening its portfolio with a range of value-added products and customized solutions while simultaneously keeping a close focus on costs. This programme has yielded increased sales volumes and margins, despite an intensely competitive environment.

As part of its Endeavour to enrich customer service levels, the Company's concrete business introduced an on-line Customer Feedback system which has resulted in improved customer satisfaction and better customer retention, especially of large customers with good financial credentials.

While there was some uptake in a few markets, the concrete industry at large continues to face issues of tight liquidity and increased participation by unorganized local players.

The construction sector is expected to grow at a steady pace in 2016. Consistent growth is foreseen in housing, Infrastructure, commercial and Industrial projects in addition to the rapid urbanization taking place in the country. Accordingly, the Company's Concrete Business plans to extend its reach to address segments where the markets are promising.

16. CAPEX

The ongoing integrated Jamul Project in Chhattisgarh, which partly comprises a new clinkering line of capacity 2.79 million tonnes per annum at Jamul and grinding facilities of capacity 1.10 million tonnes at Jamul and 1.35 million tonnes at Sindri, is nearing completion and expected to be commissioned during the second quarter of 2016.

17. COAL BLOCKS

Pursuant to Orders of the Supreme Court passed in August 2014 and September 2014, the allocations of four coal blocks to Madhya Pradesh State Mining Corporation Limited (MPSMC) were cancelled. The Company had entered into through its wholly owned subsidiary company ACC Mineral Resources Limited (AMRL), a Joint Venture Agreement with MPSMC, for development of these four coal blocks viz. Bicharpur, Marki Barka, Semaria Piparia and Morga IV (all in the State of Madhya Pradesh) all of which stood cancelled.

The Ministry of Coal, Government of India completed the auction of Bicharpur Coal Block in February 2015 and the block was allotted to the successful bidder. The reimbursement of expenses incurred on development of coal blocks is awaited. The auction/allocation process of other three Coal Blocks viz. Marki Barka, Morga IV and Semaria Piparia are yet to be carried out by the Ministry of Coal, Government of India.

18. SUSTAINABLE DEVELOPMENT

The Company's Sustainable Development programme is comprehensive and robust. Your Company was felicitated with the prestigious CII-ITC Sustainability Award 2015 for "Outstanding Accomplishment" in recognition of its continuous effort and commitment to the cause of Sustainable Development and its improvement in all sustainability parameters. This is one of the Country's most coveted awards in the field of corporate sustainable development.

During the year, the Company released its 8th Sustainable Development Report - 2014 adhering to GRI G4 principles in accordance with comprehensive reporting. The Report is available on the Company's website www.acclimited.com. Significant advancements were made against targets set in its sustainable development roadmap for 2014-2017.

The brand "ACC" was one of those prominently displayed in the India Pavilion at the COP 21 (Conference of Parties) meet held in Paris in December 2015, organized by the United Nations Conference on Climate Change.

18.1 CO2 Emissions:

Your Company is committed to cut its carbon footprint in line with the Low Carbon Technology Roadmap for the Indian Cement Industry of the Cement Sustainability Initiative (CSI).

The Company maintained its best-in-class position in terms of its carbon footprint with specific C02 emissions per tonne of cement at 533 kg CO2 / tonne in 2015. However, there was a small increase of 1% in these emissions as compared to the previous year, which was due to some change in the pattern of cement production caused by the suspension of limestone mining at Chaibasa and Bargarh for part of the year.

The Company has been identified as one of the leading business houses in India, for the quality of climate change related information, which it has disclosed through the Carbon Disclosure Project (CDP), a non-profit global initiative, that shares information to help drive carbon reduction strategies for sustainable economies.

The reported data was independently assessed against CDP's scoring methodology and your Company is one of the few organizations that received a high score of 98 points out of 100 in respect of its disclosure.

18.2 Clinker Factor

Reducing the clinker factor in cement is an important pillar of the Low Carbon Technology Roadmap for the Indian Cement Industry. Your Company strives to achieve this through the promotion of blended cements using slag and flyash and plays a lead role in the Industry in this respect. Some shortfall in the availability of flyash from regular sources nearer the plants did have a small impact in the supply of flyash and hence on the clinker factor which showed a minor change of 1%. Despite this and the increasing demand for Ordinary Portland Cement (OPC), the share of Blended Cements in the total product portfolio was maintained at 84.5%.

18.3 Alternative Fuels and Resources (AFR):

Your Company takes pride in being one of the few in the forefront of the national effort to promote co-processing of both hazardous and non-hazardous industrial and municipal wastes in cement kilns in order to reduce dependence on fossil fuel.

The Company has two state-of-the-art pre- processing facilities at Wadi and at Kymore to enable safe handling of varied types and volumes of waste streams. These facilities added momentum to co-processing of hazardous wastes in a safer and more efficient manner. With the stabilization of these pre-processing facilities, we expect to enhance both the quality and quantity of waste feed processed in cement kilns and thus increase the thermal substitution rate in the forthcoming year.

18.4 Green Energy

(a) Wind Energy:

The Company has 19 MW capacity from wind farms in three states viz. 9 MW in Tamil Nadu, 7.5 MW in Rajasthan and 2.5 MW in Maharashtra. These wind farms helped the Company meet its non-solar renewable purchase obligations for Madukkarai, Lakheri, Thane Campus and the Kalamboli Bulk Cement Terminal Plant. Various options are being evaluated to enhance the renewable energy portfolio such as setting up new assets of renewable energy and by use of renewable energy through the Power Purchase Agreement route. During the year 2015, 29.2 million kilowatt hours (Kwh) of renewable energy was produced as compared to 32.5 million Kwh in 2014.

(b) Waste Heat Power generation from process waste heat

During the year 2015, the Waste Heat Recovery System (WHRS) at Gagal Cement Plant produced 51.8 million Kwh of electrical energy as compared to 46.6 million Kwh in 2014.

18.5 Controlling Emissions

Various measures were implemented across all operations of the Company to control fugitive emissions by installing dust extraction and dust suppression systems.

Kiln stack dust emissions data and ambient air quality data are uploaded on Central Pollution Control Board (CPCB) website and those of the respective State Pollution Control Boards wherever available. The installation of dust monitors as per the statutory requirement was completed at various plants. The Company also installed Continuous Ambient Air Quality Monitoring stations (CAAQMS) at Wadi and Chanda plants.

18.6 Water Performance:

With an objective to continuously improve water performance and to achieve a water positive status, the Company has focused its efforts on two approaches:

(i) Reduction of fresh water intake by lowering water demand in process and non-process areas and waste water recycling after treatment. Water metering and monitoring systems were installed at various plants.

(ii) Conservation of water by rain water harvesting in plants, mines, colonies, community areas and sustained water harvesting measures undertaken over the years has helped Kymore and Jamul Plants become self-reliant without being dependent on natural water sources like rivers and bore wells.

These two approaches have helped your Company reduce its specific water consumption per tonne of cement by 7.6% with respect to the previous year.

18.7 Biodiversity

Your Company is committed to the conservation of biodiversity and mine rehabilitation. Efforts on biodiversity conservation are focused on following areas:

(i) To study and assess the biodiversity around the limestone mines operated by the Company. During the year, biodiversity assessment studies were conducted by an independent third party at five mines.

(ii) On-ground implementation of activities which conserves biodiversity:

(iii) A forestation activities in and around our plant premises with native species of trees at all our plants.

(iv) Water harvesting in mined out pits. This is a regular practice at the plants.

19. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

Total CSR expenditure incurred by your Company during the year was Rs, 31.16 crore which was higher than the statutory requirement of 2% of the average profit of the last three years.

The CSR Projects of the Company mainly focus on Livelihood, Education, Water, Health and Sanitation. These projects fall under Schedule VII of the Act.

The Company's community development efforts reached out to more than 4 lakh people residing in 156 villages across the country.

Education initiatives in the vicinity of plants addressed 35,000 students during the year. Scholarships were awarded to 400 meritorious students belonging to weaker sections of society. Modern methods of learning such as smart classes and interactive kiosks benefitted students in 27 rural schools. Efforts were made to provide education to 1,500 girl children as part of the "ACC ki Ladli" Project. We continued to support seven government-run Industrial Training Institutes as part of the Public Private Partnership Scheme with Ministry of Labour and Employment, Government of India.

About 1,800 unemployed youth attended skill development training programmes and received job placements in various manufacturing and service sector enterprises. Support was provided for the establishment of 200 new Self Help Groups (SHGs) while existing SHGs were assisted in obtaining registration and formation of a "Farmers' Producer Companies".

Our health and nutrition initiatives benefitted to 58,000 people. About 8,000 children received access to better health and nutrition through support provided to 156 anganwadi centres. Our existing Anti Retroviral Treatment (ART) Centres provided valuable support to nearly 5,400 persons through counseling, testing and treatment for HIV/AIDS.

Your Company's CSR Footprint has been duly audited by a team of social auditors chaired by Executive Director, Global Compact Network of India. Your Company's CSR effort has been ranked twelfth amongthetop 100 listed companies and first among the Cement Sector companies therein as per the annual CSR ranking initiative by Economic Times and Indian Institute of Management, Udaipur.

The Company's CSR Policy has been re-stated making it more comprehensive and in alignment with the requirements of the Act, and United Nation's Sustainable Development Goals (SDGs). The CSR Policy Statement and Report on the activities undertaken during the year is annexed to the Board's Report in Annexure 'A'.

20. HEALTH & SAFETY (H&S) 20.1 H&S Policy and Rules

Health and Safety (H&S) of employees and all stakeholders is an overarching value of your Company. During the year, the Company's H&S Policy and H&S Rules were restated to be in alignment with the new Group global vision on H&S. The revised policy reiterates the pledge to conduct the Company's business in a manner that helps create a healthy and safe environment for all stakeholders (employees, contractors, communities and customers) based on the adoption of a true safety culture. It further directs that H&S be embedded in everything the Company does when it comes to its people, its processes, its customers, in delivering results and in leading sustainability. The H&S rules redefine essential behavior necessary to ensure safety. Identifying H&S not as a separate activity but as a critical success factor for operational performance, the policy places personal responsibility on every individual employee at all levels for ensuring safe working conditions in their respective work areas coupled with a fair and transparent consequence management process, in the event of negligence or willful disregard for safety rules. The policy and rules were widely communicated across the organization to employees and contractor workmen.

20.2 H&S Initiatives

The thrust on "Surakhsha Samvad" and Zone Improvement initiatives that were launched in the preceding year in the plants was maintained.

A new strategy was adopted to provide impetus to implementation of Fatality Prevention Elements (FPE) and requirements of Contractor Safety Management (CSM) directives, thereby creating an environment which strives to ensure "Zero harm to people". Nine facilitators were nominated from Corporate and Regional H&S teams to support plants in implementing the directive requirements with each facilitator assigned to work in these areas with two Cement Plants and the nearest RMX plant/s and thus help raise the implementation level of CSM and FPE requirements. The progress was closely monitored by top management with the facilitator team to review activities, sharing of learning and resolving bottlenecks.

H&S business processes and information systems across the Company were further strengthened with the launch of an online H&S application called "Click2Safety". This application helps streamline reporting in a manner that gives access to all employees, is standardized, is faster and enriches the H&S database.

As part of the UN Global Road Safety Week in May 2015, your Company extended wholehearted support to the "SaveKidsLives" campaign to demonstrate a serious commitment to road safety for children and to enhance general road safety awareness. The campaign was planned and implemented as a high- involvement campaign across the organization. In the course of this campaign, all units engaged with their key stakeholders comprising children of employees and the community, parents, schools, teachers, guardians, drivers and the general public. This campaign engaged over 32,000 people around our units, making it among the largest Employee Volunteering programmes.

Considering road safety to be an essential part of the Company's logistics excellence objective, your Company also decided to extend this to make it an ongoing three-year commitment to road safety to be implemented as a CSR project.

20.3 Logistics Safety

Logistics safety is one of the majorfocus areasfor your Company. Ongoing initiatives undertaken in this regard included provisions of various plant and parking level protocols, creation of certain hygiene factors for truck drivers and their crew such as amenities at truck parking yards, improving tarpaulin tying practices, improving Personal Protective Equipment usage, renewal of logistics contracts to include safety parameters and issue of "passports" for drivers as well as vehicles which are informal internal databases that provide details of individual identity, registration, roadworthiness and safety preparedness.

Your Company focused on six projects pertaining to the Indian logistics scenario which consisted of Driver Management Centre (DMC), Community road safety education with the help of CSR, use of technology (GPS & RFID) in logistics safety, engagement of drivers and transporters and reduced dependence on market trucks.

Another focus area was inclusion of safety awareness in warehouses. This involved display of standardized safety posters and observation of safety day/month at each warehouse with a fixed safety topic being discussed.

20.4 Health Initiatives

In the area of health, your Company worked to raise EMR (Emergency Medical Response) capabilities in mines and in Captive Power Plants (CPP) during the year. Each Cement Manufacturing Unit is now equipped with basic life-saving equipment in the health centre, well-equipped first aid room in mines and CPP. Each site has an Advanced Life Support (ALS) ambulance with stretchers and AEDs (Automated External Defibrillator). Your Company has trained all the shift supervisors at each plant in basic life support techniques, thus creating a companywide pool of 3,500 trained shift supervisors.

To reduce health risk factors among employees and their families a well-structured approach has been started which involves all stakeholders. The strategy includes use of Company's internal electronic portal for health sensitization programme and nomination of "Health Peers" from among Shop Floor Associates (SFA) cadre to spread health awareness among their colleagues, other employees and their families. This structured approach is yielding results and we estimate it to have helped reduce the health risk factor among employees by 2%.

During the year, your Company tied up with Air ambulance services, to expedite evacuation in the event of medical emergencies at remote plant locations. This will go a long way in ensuring timely medical care to the employees when needed.

21. HUMAN RESOURCES

The Company adopted a new functional organization structure with effect from April 1, 2015, replacing the earlier regional-based structure in a smooth swift transition. The new structure is intended to enable the organization to be more collaborative, agile and streamlined in implementing strategy, harnessing internal functional expertise to the fullest and in enhancing stakeholder value.

24. INTERNAL CONTROL SYSTEMS

24.1 Internal Control Systems and their adequacy

The Company has in place well defined and adequate internal controls commensurate with the size of the Company and the same were operating effectively throughout the year.

The Company has an in-house Internal Audit (IA) function. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the IA function reports to the Chairman of the Audit Committee of the Board. The IA Department evaluates the efficacy and adequacy of internal control system, its compliance with operating systems and policies of the Company and accounting procedures at all locations of the Company. Based on the report of IA function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

24.2 Internal Controls Over Financial Reporting

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

25. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate Affairs vide its notification dated February 16, 2015 has notified the Companies (Indian Accounting Standard) Rules, 2015.

In pursuance of this notification, the Company, its subsidiaries and joint venture company will adopt IND AS with effect from January 01, 2017, with the comparatives for the periods ending December 31, 2016.

The implementation of IND AS is a major change process for which the Company has established a project team and is dedicating considerable resources. The impact of the change on adoption of IND AS is being assessed.

26. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Ethical View Reporting Policy (EVRP) to report concerns about unethical behavior, actual/suspected frauds and violation of Company's Code of Conduct. Protected disclosures can be made by a whistle blower through several channels. An Ethical View Committee has been constituted to discuss the finding of the investigations of the complaints and to recommend remedial actions. The Audit Committee of the Board oversees the functioning of the Ethical View Committee. The Company has disclosed the details of the Ethical View Reporting Policy on its website www.acclimited.com.

Also during the year, your Company reached out extensively to employees to conduct greater awareness on Value Creation in Competitive

Environment (VCCE) and on Anti Bribery and Corruption Directive (ABCD) through e-learning modules and face to face sessions, achieving a high level of engagement and compliance. This reflects your Company's strong commitment to "Zero tolerance" for non-compliances in this regard and to doing business the right way and with integrity.

27. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES

27.1 SUBSIDIARIES

Bulk Cement Corporation (India) Limited (BCCI)

During the year under review, BCCI handled cement volumes of 1.00 million tonnes as against 1.03 million tonnes in 2014. The Profit before tax and exceptional items for the year 2015 was Rs, 3.04 crore as against Rs, 6.29 crore in the year 2014.

ACC Mineral Resources Limited (AMRL)

AMRL had entered into a Joint Venture for developing four coal blocks. Consequent upon the cancellation of these coal blocks during 2014, this Company does not have any operating income.

Other Subsidiaries

As regards the other three Subsidiary Companies, i.e Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited, these are limestone deposit companies and are currently not operational.

27.2 ASSOCIATE / JOINT VENTURE COMPANIES

As on December 31, 2015, the following are Associate Companies:

Alcon Cements Company Private Limited Aakaash Manufacturing Company Private Limited Asian Concretes and Cements Private Limited

During the year, the Company has invested Rs, 2.5 crore in equity shares of "One India BSC Private Limited" which is a jointly controlled entity with equal participation with Ambuja Cements Limited, a fellow subsidiary Company, with an aim to provide back office services with respect to routine processes.

27.3 Statement containing salient features of Accounts of the Company's Subsidiaries / Associate / Joint Venture Companies

Pursuant to Section 129(3) of the Act, a statement in Form "AOC 1" containing the salient features of the Financial Statements of each of the subsidiaries, associates and joint venture companies is attached.

Although the audited statements of account, relating to the Company's subsidiaries are no longer required to be attached to the Company's Annual Report, the same are enclosed as and by way of better disclosure practices. These are also available on the Company's website and can be accessed at the we blink http://www.acclimited. com/new site/finance/an nual_report_2015.pdf

28. LAFARGEHOLCIM LTD.

In April 2014, Holcim Limited (which represents your Company's promoter group) had announced its intention to combine with Lafarge S.A through a merger of equals to create the most advanced company in the global building materials industry. Holcim and Lafarge completed their global merger to create a new company called LafargeHolcim Ltd. which was launched on July 15, 2015 and which has emerged as a world leader in the building materials industry.

While the global merger has no immediate impact on your Company's operations, the Company has taken advantage of the opportunity to align itself with some of the group's policies in the areas of Health & Safety and Sustainable Development as also benefit from the access to a larger pool of global best practices.

29. DIRECTORS & KEY MANAGERIAL PERSONNEL

29.1 Appointment of Directors

Pursuant to the request received from Holcim (India) Private Ltd, to consider the appointment of their representatives on the Board of Directors and on the recommendation of the Nomination & Remuneration Committee, the Board of Directors has appointed:

Mr Eric Olsen, CEO of LafargeHolcim Ltd. (LH), as an Additional Director of the Company with effect from July 17, 2015 in the category of Non-Executive, Non-Independent Director.

Mr Christof Hassig, as an Additional Director of the Company with effect from December 9, 2015 in the category of Non-Executive, Non-independent Director. Mr Hassig, heads the Corporate Strategy and Mergers & Acquisitions function in LH.

Mr Martin Kriegner, as Additional Director of the Company with effect from February 11, 2016 in the category of a Non-Executive, Non-Independent Director. Mr Kriegner who is currently Area Manager for LH operations in Central Europe, will be taking over as Area Manager for India in the LH group with effect from March 1, 2016.

In accordance with Section 161 of the Act, the aforesaid Directors hold office upto the date of the forthcoming Annual General Meeting of the Company and being eligible offer their candidature for appointment as Directors. Your approval for their appointment as Directors in the category of Non-Executive, Non-independent Directors has been sought in the Notice convening the forthcoming Annual General Meeting of the Company.

The Board of Directors has elected Mr Eric Olsen, CEO of LafargeHolcim Ltd., as Deputy Chairman of the Board with effect from February 11, 2016.

29.2 Resignation of Directors

Consequent upon his resignation as CEO of former Holcim Limited, Mr Bernard Fontana, a Non-Executive and Non-independent Director of the Company resigned from the Board of Directors with effect from July 17, 2015.

Mr Aidan Lynam, a Non-Executive and a Non-Independent Director of the Company also resigned from the services of former Holcim Limited and consequently stepped down from the Board of Directors of the Company with effect from July 14, 2015.

Mr Bernard Terver, Deputy Chairman, a Non-Executive and Non-Independent Director decided to retire from the services of LafargeHolcim Ltd. and has therefore stepped down from the Board of Directors of the Company with effect from February 11, 2016.

The Board of Directors has placed on record its warm appreciation of the rich contribution made by Mr Fontana, Mr Lynam and Mr Terver during their respective tenures as Directors of the Company.

29.3 Directors coming up for retirement by rotation

In accordance with the provisions of the Act, and the Articles of Association of the Company, Mr Vijay Kumar Sharma retires by rotation and being eligible offers his candidature for re-appointment as a Director.

29.4 Independent Directors

The Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation.

In accordance with Section 149(7) of the Act, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Act and SEBI Regulations.

29.5 Board Effectiveness

a. Familiarization Programme for the Independent Directors

In compliance with the requirements of SEBI Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization programme are explained in the Corporate Governance

Report. The same is also available on the website of the Company and can be accessed by web link http://www.acclimited.com/ newsite/pdf/lnd uction_program.pdf

b. Board Evaluation

Pursuant to the provisions of the Act and the SEBI Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The criteria applied in the evaluation process are explained in the Corporate Governance Report.

29.6 Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with the Rules framed there under.

1. Mr Harish Badami, CEO & Managing Director

2. MrSunil Nayak, Chief Financial Officer

3. Mr Burjor D Nariman, Company Secretary & Head Compliance

None of the Key Managerial Personnel have resigned during the year under review.

29.7 Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior leadership positions

Your Company has laid down a well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and senior leadership positions. The relevant information has been given in Annexure 'B' which forms part of the Board's Report.

29.8 Remuneration Policy for Directors

The policy for remuneration of Directors, Key Managerial Personnel and Senior Management Personnel is set out in Annexure 'C which forms part of the Board's Report.

30. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Act:

a. that in the preparation of the annual accounts for the year ended December 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on December 31, 2015, and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis;

e. that proper internal financial controls laid down by the Directors were followed by the Company and such internal-financial controls are adequate and were operating effectively; and

f. that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.

31. MEETINGS

31.1 Board Meetings

During the year, six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.

31.2 Audit Committee

The Audit Committee comprises five Members of which four including the Chairman of the Committee are Independent Directors. During the year, six Audit Committee Meetings were convened and held. Details of the Committee are given in the Corporate Governance Report.

31.3 CSR Committee

The CSR Committee comprises five members of which three including the Chairman of the Committee are Independent Directors. The Committee met twice during the reporting period. Details of the Committee are given in the Corporate Governance Report.

32. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions with Related Parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a certificate from the CEO & MD and the CFO. Your Company has developed a Related Party Transactions Manual, Standard Operating Procedures for the purpose of identification and monitoring of Related Party Transactions.

The policy on Related Party Transactions as approved by the Board is available on the Company's website and can be accessed through we blink http://www. acclimited.com/new site/pdf/CG/PolicyonRPT.pdf All transactions entered into with related parties during the year were on an arm's length pricing basis and were in the ordinary course of business. There were no material related party transactions i.e transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements entered into during the year. Accordingly, there are no transactions that are required to be reported in Form AOC 2.

None of the Directors nor the Key Managerial Personnel has any pecuniary relationships or transactions vis-à-vis the Company.

33. ADOPTION OF NEW ARTICLES

The Companies Act, 2013 and The Companies (Amendment) Act, 2015 has necessitated changes in the Articles of Association of the Company. It is accordingly proposed that a new set of Articles of Association be adopted by the Members and a Resolution to this effect is included at Item No. 9 in the Notice of the Annual General Meeting. The Board recommends the resolution for adoption by the Members.

34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by the Regulators, Courts or Tribunals which impact the going concern status of the Company and its future operations. However, Members' attention is drawn to the following development.

Chaibasa Mining

The District Mining Officer, Chaibasa, by his letters dated January 2, 2015 and March 21, 2015, demanded amounts of Rs, 215 crore and Rs, 666 crore towards alleged illegal mining on the part of the Company in mining lease areas of 63.87 hectares and 598.88 hectares, respectively.

The basis for the State to issue these demands were two judgments of the Hon'ble Supreme Court viz. the Goa Foundation case (dated April 21, 2014) and Common Causes case (dated May 16, 2014). It was the contention of the State that in view of the aforesaid judgments the benefit of deemed renewal cannot be made available for second and subsequent renewals and the mining activity therefore subsequent to validity of the last renewals would attract penalties under Section 21(5) of the Mines & Mineral (Development & Regulation) Act (MMDR Act) and hence the levy of penalties as aforesaid.

The aforesaid demands were challenged by your Company by way of a Writ Petition before the Hon'ble High Court of Jharkhand at Ranchi on the grounds that pursuant to the Supreme Court Judgments, Parliament had introduced the MMDR Amendment Ordinance on 12.01.2015, which subsequently became the MMDR (Amendment) Act, 2015. As per Section 8A(5) of the MMDR (Amendment) Act, in those cases where application for renewal of mining leases were pending, the leases stood automatically extended from the date of the last expiry upto 2030.

The Hon'ble High Court, after hearing the Senior Counsel for the Company, has stayed both the demands upon the deposit of Rs, 48 Crore, which is without prejudice to the rights and contentions of both the parties. Members' attention is invited to Note No. 36(B)(f) of the Notes to the Financial Statements.

Members' attention is also invited to Notes on Contingent Liabilities, in the notes forming part of the Financial Statements.

35. AUDITORS

35.1 Statutory Auditors

The Company's Auditors Messrs S R B C & CO LLP, Chartered Accountants, Mumbai, who retire at the ensuing Annual General Meeting of the Company are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Act, and the rules framed there under for re-appointment as Auditors of the Company. As required under SEBI Regulations, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Auditors have given an unqualified Audit Report.

35.2 Cost Auditors

The cost audit records maintained by the Company in respect of its cement activity are required to be audited pursuant to Section 148 of the Act and the Rules framed there under. Your Directors have on the recommendation of the Audit Committee, appointed Messrs N I Mehta & Co. to audit the cost accounts of the Company for the financial year ended December 31, 2015. As required under the Act, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification.

Accordingly, a Resolution for seeking Members ratification for the remuneration payable to Messrs N I Mehta & Co., Cost Auditor, is included at Item No. 8 of the Notice convening the Annual General Meeting.

35.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Act, and the Rules framed hereunder, the Company has appointed Messrs. Pramod S Shah & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed to the Board's Report as Annexure'.

36. AWARDS

ACC has been recognized for Corporate Excellence in Sustainability and felicitated with the prestigious CII-ITC Sustainability Award 2015 for "Outstanding Accomplishment" in the Category A (large companies with turnover > Rs, 2000 crore). Winners of the CII-ITC Sustainability Award are considered as the country's best role models in sustainability practices.

Celebrating its 20th anniversary, National Stock Exchange of India Limited (NSE) felicitated your Company and fifteen other companies out of the 50 companies whose scrip constitutes the Nifty 50 Index and have been a part of the index from its inception.

Your Company's Annual Report for 2014 won the "Silver Shield" from the prestigious Institute of Chartered Accountants of India for "Excellence in Financial Reporting".

During the year under review, your Company also received several other awards and citations from reputed bodies for good performance in areas as diverse as Safety, Manufacturing, Energy Conservation, Logistics, Environment Management and Communication.

37. ENHANCING SHAREHOLDER VALUE

Your Company firmly believes that its success in the marketplace and a good reputation are among the primary determinants of value to the shareholder. The organizational vision is founded on the principles of good governance and by the resolve to be a customer-centric organization which motivates the Company's Management to be aligned to deliver leading-edge building products backed with dependable after sales services.

Your Company is committed to creating and maximizing long-term value for shareholders and essentially follows a four pronged approach to achieve this end.

a) by increasing all-round operational efficiencies,

b) by identifying strategies that enhance its competitive advantage,

c) by managing risks and pursuing opportunities for profitable growth, and

d) by cementing relationships with other important stakeholder groups through meaningful engagement processes and mutually rewarding associations that enable it to create positive impacts on the economic, societal and environmental dimensions of the Triple Bottom Line.

Underlying this is also a dedication to value-friendly financial reporting that assures the shareholder and investor of receiving transparent and unfettered information on the Company's performance.

38. CORPORATE GOVERNANCE

A separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance, forms a part of this Annual Report, as per SEBI Regulations.

39. BUSINESS RESPONSIBILITY REPORTING

A separate section on Business Responsibility forms part of this Annual Report as required by SEBI Regulations.

40. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Act, and the Rules framed hereunder is annexed herewith as Annexure 'E' to the Board's Report.

41. EXTRACT OF ANNUAL RETURN

As required by Section 92(3) of the Act and the Rules framed hereunder, the extract of the Annual Return in Form MGT 9 is enclosed as Annexure 'F' to the Board's Report.

42. PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed there under is enclosed as Annexure 'G' to the Board's Report.

The information on employees who were in receipt of remuneration of not less than Rs, 60 lakhs during the year or Rs, 5 lakhs per month during any part of the year forms part of this Report and will be provided to any Member on a written request to the Company Secretary. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting.

44. ACKNOWLEDGEMENTS

Your Directors are thankful to the Central and State Government Departments, Organizations and Agencies for their continued guidance and co-operation. The Directors are grateful to all valuable stakeholders of the Company viz. our customers, shareholders, dealers, vendors, banks and other business associates for their excellent support and help rendered during the year. The Directors also acknowledge the unstinted commitment and valued contribution of all employees of the Company.

For and on behalf of the Board of Directors

N S Sekhsaria

Chairman

Mumbai

February 10, 2016


Dec 31, 2014

Dear Members,

The Directors take pleasure in presenting the Seventy Ninth Annual Report together with the audited financial statements for the year ended December 31, 2014. The Management Discussion and Analysis has also been incorporated into this report.

1. HIGHLIGHTS OF PERFORMANCE

* Consolidated income for the year increased by 5% to Rs. 11,995.42 Crore as compared to Rs. 11,431.10 Crore in 2013;

* Consolidated net sales for the year was

Rs. 11,480.31 Crore as compared to

Rs. 10,889.08 Crore in 2013, a growth of 5.4%;

* Consolidated profit before tax for the year was Rs. 1,119.54 Crore as compared to Rs. 1,213.64 Crore in 2013;

* Consolidated Profit after tax for the year was Rs. 1,161.82 Crore (including tax write back of Rs. 309.23 Crore) as compared to Rs. 1,094.67 Crore in 2013 (including tax write back of Rs. 216.74 Crore).

2. FINANCIAL RESULTS

Consolidated

Rs. Crore

2014 2013



Revenue from Operations(Net) and other income 11,995.42 11,431.10

Profit Before Tax (PBT) 1,119.54 1,213.64

Provision for Tax (31.13) 131.91

Profit After Tax (PAT) 1,161.82 1,094.67

Balance brought forward from previous year 4,158.74 3,845.79

Profit available for Appropriations 5,320.56 4,940.46

Appropriations:

Interim Equity Dividend 281.62 206.52

Proposed Final Equity Dividend 356.72 356.72

Tax on Equity Dividends 119.18 95.72

Previous Year Tax on Equity Dividends - 2.76

General Reserve 130.00 120.00

Surplus carried to the next year''s account 4,433.04 4,158.74

Standalone

Rs. Crore

2014 2013



Revenue from Operations(Net) and other income 12,006.49 11,435.28

Profit Before Tax (PBT) 1,135.20 1226.96

Provision for Tax (33.09) 131.20

Profit After Tax (PAT) 1,168.29 1,095.76

Balance brought forward from previous year 4,175.87 3,861.83

Profit available for Appropriations 5,344.16 4,957.59

Appropriations:

Interim Equity Dividend 281.62 206.52

Proposed Final Equity Dividend 356.72 356.72

Tax on Equity Dividends 119.18 95.72

Previous Year Tax on Equity Dividends - 2.76

General Reserve 130.00 120.00

Surplus carried to the next year''s account 4,456.64 4,175.87

The Company proposes to transfer an amount of Rs. 130 Crore to the General Reserves. An amount of Rs. 4,456.64 Crore is proposed to be retained in the Statement of Profit and Loss.

3. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 19/- per equity share of Rs. 10 each. The Company had distributed an interim dividend of Rs. 15/- per equity share of Rs. 10 each in August 2014. The total dividend for the year ended December 31, 2014 would accordingly be Rs. 34/- per equity share of Rs. 10 each. The total outgo for the current year amounts to Rs. 757.52 Crore, including dividend distribution tax of Rs. 119.18 Crore as against Rs. 658.96 Crore including dividend distribution tax of Rs. 95.72 Crore in the previous year.

During the year, the unclaimed dividend pertaining to the 69th dividend for the year ended December 31, 2006 and the 70th Interim dividend for the year ended December 31, 2007 were transferred to the Investor Education & Protection Fund after giving due notice to the Members.

4. SHARE CAPITAL

The paid up Equity Share Capital as on December 31, 2014 was Rs. 187.95 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on December 31, 2014, none of the Directors of the Company hold shares or convertible instruments of the Company.

5. FINANCE

Cash and cash equivalent as at December 31, 2014 was Rs. 1,686 Crore. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

5.1 NON CONVERTIBLE DEBENTURES

During the year, the Non-Convertible Debentures aggregating Rs. 32 Crore were redeemed (Rs. 125 Crore were bought back/ redeemed in 2013). Accordingly all the debentures stand extinguished.

5.2 DEPOSITS

The Company had discontinued its fixed deposit scheme in the financial year 2001- 02. Despite efforts to identify and repay unclaimed deposits the total amount of fixed deposits matured and remaining unclaimed with the Company as on December 31, 2014 was Rs. 0.02 Crore. The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

5.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

6. ECONOMIC SCENARIO AND OUTLOOK

Indian economic growth in 2014 rose to ~5.2% from 4.7% last year as a result of the improving macro-economic situation. The wholesale and consumer price inflation has fallen to ~4.2% and 7.4% from last year''s 6.3% and 10.1% on the back of a strong base effect. Falling oil prices, lower food and commodity prices and the proactive measures taken by the Government helped in containing inflation in 2014.

Contrary to expectations, agricultural growth was strong at ~4.5% in 2014. However, the slow pace of reforms, lack of impetus for infrastructure projects, high interest rates and tightening of fiscal policies adversely impacted the capital goods sector. Industrial production / output was also sluggish.

The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in 2015. The medium term to long term growth prospects look positive in view of the Government''s determination to bring in reforms. For the year 2015, the economy is expected to grow at a higher rate than in 2014. The long term prospects for the economy is optimistic.

7. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES

The Indian Cement Industry has an installed capacity of ~360 million tonnes and the domestic consumption in the calendar year 2014 was

~264 million tonnes. Cement consumption grew at the rate of ~6% in the calendar year 2014.

The overall cement demand is estimated to grow at the rate of 6% in 2015. The consumption growth may go beyond 6% if investment is made in the infrastructure segment. With the gradual reduction in fiscal deficits and Consumer Price Index, it is expected that the interest rates would gradually come down which would stimulate demand in the housing sector. The Company''s continued focus on cost reduction, its thrust on increasing the sale of premium products and various other customer excellence initiatives should help in presenting an improved performance.

8. CEMENT BUSINESS - PERFORMANCE AT A GLANCE

2014 2013 Change

Production - 24.24 23.86 1.59 million tonnes

Sales Volume- 24.21 23.93 1.17 million tonnes

Sale Value (Rs. Crore) 10,720.28 10,233.17 4.76

(Operating EBITDA 1,473.13 1,609.19 -8.45 (Rs. Crore)

Operating EBITDA 13.74 15.73 Margin (%)

9. MARKET DEVELOPMENT

9.1 Volume

Domestic sales in 2014 increased by 1.5% to 24.14 million tonnes as compared to 23.80 million tonnes achieved in 2013. Cement exports in 2014 reduced to 0.07 million tonnes as compared to 0.13 million tonnes in 2013. Total cement sales (including exports) increased by 1.2% to 24.21 million tonnes as compared to 23.93 million tonnes achieved in 2013. The Company continues to focus on the Individual House Builder segment for higher profitability.

The sale volumes of premium products in 2014 was 2.73 MT as against 1.55 MT in 2013.

9.2 Selling Price

Selling price of cement improved by 4% in 2014 over 2013.

10. COSTS - CEMENT BUSINESS

During the year 2014, the economy witnessed an upward movement in the overall cost structure and the Company continued to focus on cost improvements through its excellence programmes.

10.1 Cost of materials consumed

Cost of materials consumed accounted for 15% of total income from operations (14.4% in 2013). Cost of material consumed increased by 11% in 2014 over 2013. Slag prices were lower by 17% in 2014 as compared to 2013 while gypsum prices remained almost flat. Fly ash prices increased by 11% in 2014 over 2013. The cost of material consumed during the year increased on account of purchase of clinker as a result of temporary suspension of limestone mining operation at Chaibasa and Bargarh.

10.2 Power & Fuel

The power and fuel spend was Rs. 2,441.82 Crore which constitutes 21% of the total income from operations of the Company (Rs. 2,375.97 Crore in 2013 i.e. 21% of the total income from operations of the Company). The various initiatives taken such as the usage of industrial waste and biomass as alternate fuels and optimization of fuel mix, has limited the power and fuel costs increases to 2.8% in 2014 over 2013. Coal cost for kilns increased by 3.6% in 2014 over 2013 mainly on account of a drop in supply of linkage coal due to shortage of rakes and resultant higher procurement of imported and e-auction coal. Use of imported coal increased to 24% in 2014 (21% in 2013) while linkage coal availability reduced to 57% in 2014 (67% in 2013). Coal cost for captive power plants increased by 10% mainly because of limited availability of CPP grade linkage coal and resultant higher procurement of market / imported coal. Improved operating efficiencies of kiln and captive power plants and benefits derived from Waste Heat Recovery System (WHRS) operations had a positive impact in limiting cost increases.

The Company continues to focus on maximizing Alternative Fuels & Raw Materials (AFR) consumption in the cement manufacturing process.

10.3 Freight & Forwarding expenses

Freight and forwarding expenses were Rs. 2,598.33 Crore which constitutes 22% of total income from operations of the Company (Rs. 2,308.87 Crore in 2013 i.e. ~21% of total income from operations). Freight and forwarding expenses went up by 12.5% in 2014 over 2013.

Freight on clinker transfer increased mainly on account of railway freight increase, freight rationalization by Railways and long lead inter unit movements of clinker.

Freight on cement despatches increased on account of higher cement sale volumes as also on account of hike in rail and road freight. This increase was partially offset by improvement in logistics operational efficiencies.

10.4 Other Expenditure

Other expenditure constitutes ~21% of total income from operations of the Company. The increase in other expenditure was restricted to 3.5% in 2014 over 2013.

Continued focus on reduction in fixed cost helped in restricting the fixed cost increases to ~3% in 2014 on a YoY basis.

11. INSTITUTIONALIZING EXCELLENCE

In 2012, an Institutionalizing Excellence programme was launched across all functions to sustain exceptional performance over time. The programme is now central to the Company''s growth initiatives and the whole organization is galvanized to accomplish targets. Over a period of two years, the programme has yielded encouraging results and has helped the Company balance inflationary pressures by improving efficiencies. The Institutionalizing Excellence journey continues with a strong focus on Safety.

In Manufacturing Excellence, two Plants, Chanda and Jamul, figured in the top fifteen amongst all Holcim Plants globally in terms of efficiency. Efforts are underway towards raising the Company''s overall efficiency parameters closer to aspirational targets and to pursue further reductions in input costs of coal, power generation and in mineral components like gypsum, slag and fly ash. A manufacturing academy was setup that drives continuous improvement in each Plant by regular training and skill enhancement.

The Customer Excellence programme focuses on the customer and seeks to achieve volume and price improvement and steps for the enhancement of brand equity.

The Logistics Excellence journey saw visible and significant initiatives to optimize cost-to- serve and time-to-serve, reduce lead distances, eliminate multiple handling and initiate the creation of modern infrastructure at the plants and warehouses. The Radio Frequency Identification Device (RFID) and Global Positioning Systems (GPS) modules which were successfully deployed at three plants are being replicated at all plants of the Company in a phased manner.

12. CAPEX

The ongoing Jamul Project in Chhattisgarh, which comprises a new state-of-the-art clinkering line of a capacity of 2.79 million tonnes per annum and grinding facilities of a capacity of 1.10 million tonnes at Jamul and of 1.35 million tonnes at Sindri are expected to be commissioned during 2015.

The pre-processing and co-processing Alternative Fuel and Raw Materials (AFR) platforms at Wadi in Karnataka and Kymore in Madhya Pradesh have been commissioned in December 2014.

13. COAL BLOCKS

During the year 2009, the Company through its wholly owned subsidiary, ACC Mineral Resources Limited (AMRL), had entered into four separate Joint Venture Agreements (JVA) with Madhya Pradesh State Mining Corporation Limited (MPSMC) for the development and operation of four coal blocks with an equity participation of 49% by AMRL and 51% by MPSMC. The coal from these four coal blocks was earmarked for supplies to cement plants of the Company.

Out of the four coal blocks being developed, the Bicharpur Coal Block in district Shahdol was in an advanced stage of development. The second coal block Marki Barka in district Singrauli was also ready for commencement of mine development activities with all its regulatory clearances in place.

While the development of coal blocks was in progress, on September 24, 2014, the Hon''ble Supreme Court of India cancelled the allocation of Coal Blocks by the Government of India to State and private sectors. Consequently, allocation of Marki Barka, Semaria/Piparia and Morga IV coal blocks to MPSMC stood cancelled with immediate effect. However, by virtue of an advanced stage of development, the Bicharpur coal block is liable for cancellation with effect from March 31,2015.

As of December 31, 2014, the amount incurred, invested and advanced (including deposits / advances to MPSMC and other parties) by the Company in this regard is ~ Rs. 153.79 Crore. Subsequently, the Government promulgated The Coal Mines (Special Provisions) Ordinance, 2014, which intends to take appropriate action to deal with the situation arising pursuant to the Hon''ble Supreme Court''s decision. The Management, based on its understanding of it''s contractual rights under its JV agreements, its interpretation of the Ordinance and on the basis of legal advice, believes that the financial loss or operational impact if any, will not be significant.

In addition to the above "Moira Madhujore North and South" Coal block in the State of West Bengal was allocated to six companies by Ministry of Coal in December 2009, wherein your Company holds equity of 14.37%. The allocation of the said coal block has also been cancelled by the aforementioned Order of Supreme Court. The Company has impaired its investment amounting to Rs. 0.69 Crore made in this Joint Venture Company.

14. LIMESTONE MINING - NEW REGULATORY CHANGES:

As a sequel to the Supreme Court''s Order dated May 16, 2014 in two separate Public Interest Litigations, policy changes were made by the Government with regard to renewal of mines and deemed mining rights.

As per the Supreme Court''s directive, such of the mines which were hitherto operating under "deemed renewal" without any express orders of renewal passed by the State Governments were not allowed to operate until express orders were passed by the respective State Governments in terms of Section 8(3) of the Mine and Mineral (Development and Regulation) Act, 1957. Pursuant thereto, the Government of India amended Sub Rule, 24A(6) of the Mineral Concession Rules which had the effect of disallowing deemed renewal status for second and subsequent mining leases and limiting the deemed renewal status even in case of the first renewal application to only two years. This development has temporarily impacted the mining operations at Bargarh and Chaibasa which in turn affected the clinker production at the said Plants and clinker was required to be procured from other sister plants as well as from outside. The Government has since passed the Mines and Minerals (Development and Regulation) Ordinance on January 12, 2015 in terms of which the mining leases would stand extended from the date of their last renewal upto March 31, 2030 in cases where the mines were being operated for captive consumption, such as in the case of the Company.

15. READY MIXED CONCRETE (RMX)

Ready Mixed Concrete business continues to perform well despite the fact that in 2014, the Industry witnessed the entry of more players and increased liquidity issues. The RMX market is greatly fragmented and with increased participation by the unorganized segments, there is pressure on pricing. Against this backdrop, the Operating EBITDA increased to Rs. 34.12 Crore in 2014 from Rs. 19.61 Crore in 2013. Sales volume improved by 18%.

The growth in business is attributed to the efforts made to enhance customer satisfaction. ACC Concrete is being perceived as a solutions provider rather than merely as a concrete supplier. This was made possible by continuous customer involvement in projects and by offering various products and providing value added services for its stakeholders. A new line of allied products which could be supplied in the form of ready to use mortar were developed, produced and marketed. The Centre of Excellence set up by the Company facilitates and supports capability demonstration initiatives, helps in engaging with customers and trains professionals in advanced construction techniques.

There is considerable focus by the Government on infrastructure development and in the year 2015, the construction sector is expected to grow at a higher rate than in 2014. Demand for RMX is expected to revive in almost all markets across the country and is likely to be stronger in metro markets like Mumbai, Bengaluru, Chennai, and Delhi. Major demand is expected to come from large investments in infrastructure and development of real estate across India in proposed future cities. Reduction in lending rates by banks and restructuring of loans should ease the liquidity position and help boost sales and profitability. Ready Mix Concrete is expected to maintain the momentum and contribute to the overall business with enhanced participation.

2014 2013 Change

Production - Lakh 19.65 15.96 23.12 Cubic Meters

Sales volume - Lakh 21.24 18.00 18.00 Cubic Meters

Sale value - (Rs. Crore) 760.77 655.91 15.99

Operating EBITDA - 34.12 19.61 73.99 (Rs. Crore)

Operating EBITDA 4.48 2.99 Margin (%)

16. SUSTAINABLE DEVELOPMENT

Sustainability has been deeply embedded into the Company''s business and has become an integral part of its decision making process while considering social, economic and environmental dimensions. During the year 2014, a Sustainability Development road map for the period 2014-2017 was developed with a focus on the following areas:

(a) Reduction of Specific CO2 emissions;

(b) Enhancing Thermal Substitution Rate (TSR);

(c) Reducing specific water consumption;

(d) Reduction of specific total energy intensity (Thermal & Electrical);

(e) Improving CSR footprint focusing on inclusive business projects.

The Company''s cement operations retained its certifications under various management systems for quality, environment, energy and safety.

16.1 CO2 Emissions:

The Company continued in its efforts towards achieving the commitments of Low Carbon Technology Roadmap for the Indian Cement Industry under the umbrella of the Cement Sustainability Initiative (CSI) in India of the World Business Council for Sustainable Development (WBCSD).

The various initiatives taken resulted in reducing the specific CO2 emissions per tonne of cement to 526 Kg CO2/tonne of cement from 538 Kg CO2/tonne of cement. The CO2 emission per tonne of cement including emissions from on site power generation has been reduced to 617 Kg CO2/ tonne of cement from 641 Kg CO2/tonne of cement.

16.2 Alternative Fuels and Raw Materials (AFR):

The Company provides co-processing and waste management services to over a hundred customers which facilitates disposal of a wide range of hazardous and non-hazardous industrial waste streams in the form of solids, sludges and liquids.

The pre-processing and co-processing platforms which were commissioned during the year at Kymore and at Wadi will add momentum to co-processing of larger volumes of wastes in an efficient manner. The AFR feeding and storage systems have also been ramped up in these plants to the required levels.

16.3 Reduction of Thermal Energy

Many initiatives for process optimization were taken to reduce specific thermal energy in the manufacturing of clinker. These efforts resulted in reduction of 16 MJ of specific thermal energy / tonne of clinker to 3050 MJ in 2014 as compared to 3066 MJ in 2013. Other measures such as enhancing the usage of industrial waste and biomass as alternative fuels and optimization of fuel mix has helped to contain the energy costs to some extent.

16.4 Clinker Factor

Through research and product innovation, the Company has been able to reduce clinker factor in both varieties of blended cements viz. Portland Slag Cement and Portland Pozzolana Cement. The use of slag and fly ash in cement manufacture helps the steel industry and power plants to dispose of their waste in an environmentally friendly manner.

The Company''s blended cement production activities at Wadi, Kymore, Chanda and Tikaria are registered with United Nations Framework Convention on Climate Change (UNFCCC) as a Clean Development Mechanism (CDM) Project. The blended cement project is one of the biggest CDM of its kind in the Indian Cement Industry.

16.5 Renewable Energy:

The Company''s renewable energy portfolio consists of 19 MW in the form of wind farms across three states viz. 9 MW in Tamil Nadu, 7.5 MW in Rajasthan and 2.5 MW in Maharashtra. These helped the Company meet its non-solar renewable purchase obligations for Madukkarai and Lakheri Plants.

Various options are being evaluated to enhance the renewable energy portfolio such as setting up new assets of renewable energy and by use of renewable energy through the Power Purchase Agreement route.

16.6 Waste Heat Power generation from process waste heat

During the year 2014, the Waste Heat Recovery System (WHRS) at Gagal Cement Works became fully operational and produced 46.64 million kWh of electrical energy.

16.7 Dust Emissions

The Company''s average kiln stack dust emissions were well below the statutory norms fixed by the States in which the Company operates. This has been achieved through various controls and maintenance measures which were implemented on a continuous basis. The Company has also implemented various measures across all its operations to control fugitive emissions.

16.8 Water Initiatives:

Multiple initiatives were taken in process and non process areas to improve the water performance which resulted in 15.6% reduction of specific water consumption/ tonne of cement.

These include:

* Increased use of recycled water for process and non-process applications;

* Minimizing leakages and wastages;

* Implementing water metering systems for accurate measurement of water consumption/withdrawal and to initiate more intense and focused measures for conserving water;

* Implementing rain water harvesting measures in mines, plant, colony and surrounding communities.

16.9 Biodiversity

A biodiversity risk assessment of all mines of the Company has been carried out. Afforestation and biodiversity conservation programmes have been initiated / implemented across all the Company''s plants and mines. The Company has become a member of Indian Business Biodiversity Initiative (IBBI) a collaborative initiative of Confederation of Indian Industry (CII) and Ministry of Environment Forest and Climate Change (MoEF & CC) and Leaders for Nature (LfN), an initiative led by International Union for Conservation of Nature (IUCN) India. It has agreed to their charters and is in the process of implementing various associated initiatives.

16.10 Green Products

The Company made efforts to promote and increase sales of various innovative cement products like ACC-Gold, ACC- F2R, ACC Plus, ACC Coastal and concrete products such as Permecrete, Stampcrete and Imprincrete, ready to use mortar, Thermocrete and Hi-densecrete which have lower environmental footprint.

16.11 Green Building Material Centres:

During the year 2014, four new Green Building Material Centres were setup in different parts of India. These centres provide a one-stop solution in housing expertise and building materials required for high quality low cost housing. These centres also offer architectural services, skilled masons for housing construction. The building material supplies include bricks, blocks, tiles, cement etc. These materials are produced from local resources and incorporate waste material like fly ash which help in reducing CO2 emissions. This initiative received global recognition for its environment and social benefits. The Company is planning to scale up these centres in the coming years.

17. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As part of its initiatives under "Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Livelihood, Health, Water and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013.

During the year 2014, the Company''s community development efforts successfully touched the lives of almost 5,00,000 people spanning ~150 villages across the country. Providing quality education initiatives in the plants'' neighborhood schools benefited ~29,000 students during the year. Scholarships were awarded to ~500 meritorious students from weaker sections of the society to help them continue with their education. Technology aided education initiatives like smart classes and interactive kiosks reached out to students in ~26 rural schools to keep pace with modern methods of learning. Specific support was provided to revive education for ~750 girl children under "ACC ki Ladli" Project. The Company continued to support 7 Government- run Industrial Training Institutes under the Public Private Partnership Schemes with Ministry of Labour and Employment, Government of India.

Skill development training programmes were imparted to unemployed youth in partnership with specialized NGOs, which helped ~3,800 youth get job placements in various manufacturing and service sector enterprises. The Company supported the formation of 486 Self Help Groups (SHGs) and in their strengthening through structured training activities. In matters of health and nutrition, the Company''s initiatives benefitted more than 1,00,000 people. Support to 134 "anganwadi centers" helped ~8,000 children get access to better health and nutrition. A Centre for awareness, prevention and treatment of Sexually Transmitted Infections (STI) was established at Tikaria Cement Works. Nearly 3042 HIV/ AIDS affected persons were supported through counselling, testing and treatment through Anti Retroviral Therapy (ART) and STI Centers.

Sanitation, being a national agenda, the Company has developed four affordable prototypes of toilets through the Green Building Center. It has also led the forum of Confederation of Indian Industries(CII) Sanitation Committee to promote the sanitation initiative of Government of India and has also actively participated in forums on Public Health & Education.

The Annual Report on CSR activities is annexed herewith as "Annexure A".

18. OCCUPATIONAL HEALTH & SAFETY (OH&S)

In pursuit of ensuring "No harm anywhere to anyone associated with ACC", Occupational Health & Safety (OH&S) remains the Company''s top priority. In continuation with the "Surakhsha Laher" initiative which was launched in 2013, "Suraksha Laher 2" and "Suraksha Laher 3" initiatives were launched. The "Suraksha Laher 2" aimed at building Line Ownership and OH&S Competency, establish forums for improving communication and focused on Fatality Prevention. Under this initiative "Suraksha Samvad" forum was set up for improving bottom up communication. This initiative successfully involved and positively engaged all levels of personnel on the shop floor including Shop Floor Associates (SFA) and the Company''s business partners in the process of identification and closure of hazards. Another major contribution of Suraksha Laher 2 was the OH&S Leadership Training Program for improving OH&S capabilities of Middle Management level employees. The Zone ownership structure was further enhanced to improve visible leadership with performance targets and reviews being conducted in the plant.

Suraksha Laher 3 aimed at revisiting the implementation of some of the important Fatality Prevention Elements (FPEs) such as working at heights, isolation and lockout with a view to close the gaps identified during audit assessments.

With regard to contractor safety, two key areas of focus identified were Facility Management for the contractors'' employees and Equipment, Tools & Material Management. The Facility Management initiative was implemented to ensure adequate welfare facilities for contract labour such as washrooms with bathing facilities, rest rooms, availability of drinking water etc. The Equipment, Tools & Material Management program ensured that the tools used by contractors were safe. The process of screening of contractors was made more stringent to ensure that the contractors were aligned with the Company''s objectives to ensure ''Zero Harm''.

18.1 Logistics Safety

The focus on Logistics Safety continued with a view to prevent vehicle related incidents through various planned interventions viz.:

* Defensive Driving training for drivers;

* vehicle inspection at plants;

* segregation of pedestrian and vehicular traffic inside plants;

* ''Suraksha Kawach'' campaign for seat belt usage aimed at truck drivers;

* installation of GPS in dedicated trucks in a phased manner for journey monitoring;

* entering into MOU''s on logistics safety with our authorized road transporters;

* engagement sessions with truck drivers and felicitating safe drivers.

A programme for improving safety in the warehouses has also been initiated. The Company was declared as Holcim''s Regional Award Winner for South Asia/ASEAN in recognition of its Logistics Safety Improvement Programme.

18.2 Occupational Health

In 2014, the Emergency Medical Response (EMR) capabilities in mines were further improved. Each mine site has an ALS ambulance, appropriate stretchers, Automated External Defibrillator (AEDs) units and proper first aid facilities. In each of the plants, at least 50% of the shift supervisors have been trained in basic life support techniques and a total 2000 shift supervisors have been trained in this regard.

To reduce health risk factors among employees and their families, various programmes were launched and implemented with the assistance of health peers selected and trained from Shop Floor Associates and through the extensive use of the Company''s intranet portal "Accelerate".

19. HUMAN RESOURCES

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

The Company''s HR processes such as hiring and on-boarding, fair transparent online performance evaluation and talent management process, state-of-the-art workmen development process, and market aligned policies have been seen as benchmark practices in the Industry. These state-of-the-art HR processes within the Organization, have enabled the Company to earn the No. 1 position of being the Best Company to work for in Cement Sector by Fortune India Magazine in 2014.

During the year under review, the following Human Resources initiatives received greater focus:

* Employer of Choice: The Company has positioned itself with leading educational institutes as one of the best companies to work for. Employees have an option to work with world class cement technology and have the flexibility to pursue different functions. Employees are encouraged to express their views and are empowered to work independently. Employees are given the opportunity to learn through various small projects which make them look at initiatives from different perspectives and thus provide them with a platform to become result oriented. This has helped greatly in overall development of the employee and has significantly arrested the attrition rate.

* Leadership Development: As a part of leadership development ~40 talented employees have been seconded to the senior leadership team to mentor them and prepare them for the next higher role. Apart from this, a large number of senior, middle and other employees are sent for leadership programmes or are assigned to small independent projects which are planned for identified talent.

* Industrial Relations: The Company''s Industrial Relations policy has been benchmarked by the manufacturing sector. The Company shares relevant business information with the Unions in order to enlighten them and make them sensitive towards business requirements. This has helped to build a healthy relationship and resolve issues through mutual dialogue.

* A unique dual educational program has been developed on the lines of the Swiss German vocational educational and training program (VET). The program has been successfully implemented in one of the Company''s technical institutes.

20. BUSINESS RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report.

The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments viz. cement and RMX. Risk management forms an integral part of the Company''s Mid-Term Planning cycle.

The key business risks identified by the Company and its mitigation plans are as under:

Project Risks:

The Cement Industry is capital intensive in nature. Its Compound Annual Growth Rate (CAGR) for the next five years is expected to be ~6.5 %. In the execution of large projects which are highly capital intensive in nature, there could be exposure to time and cost overruns. To mitigate these risks, the project management team and the project accounting and governance framework has been further strengthened. Whilst the Company continues to draw on Holcim''s expertise, a separate Organization structure at Project sites with defined roles and accountability is put in place for large projects.

Competition Risks:

The Cement Industry is becoming intensely competitive with the foray of new entrants and some of the existing players adopting inorganic growth strategies. To mitigate this risk, the Company is leveraging on its expertise, experience and its created capacities to increase market share, enhance brand equity / visibility and enlarge product portfolio and service offerings. It would also leverage on its Infrastructure, Commercial and Institutional Sales team to offer value to large customers.

OH&S Risks:

Safety of employees and workers is of utmost importance to the Company. To reinforce the safety culture in the Company, it has identified Occupational Health & Safety as one of its focus areas. Various training programmes have been conducted at the plants and sales units such as behavior based safety training program, Visible Safety Leadership program, Logistics Safety program etc. The accountability structure has also been strengthened with the introduction of a Zone Ownership concept and by integrating OH&S competencies into the job descriptions of all Top Management, Line Management and Safety Professionals.

21. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

22. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal with instance of fraud and mismanagement, if any. The details of the FRM Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

23. SUBSIDIARY COMPANIES

23.1 ACC Mineral Resources Limited (AMRL)

AMRL had entered into a Joint Venture Agreement with Madhya Pradesh State Mining Corporation Limited (MPSMC) for development of four coal blocks viz. Bicharpur, Marki Barka, Simaria Piparia and Morga IV. Pursuant to the Supreme Court''s Order as discussed in para 13 above, the allocation of three coal blocks to MPSMC viz. Marki Barka, Simaria Piparia and Morga IV were immediately cancelled. The fourth coal block viz. Bicharpur is liable for cancellation w.e.f. March 31, 2015. While work on Bicharpur Coal Block has been temporarily suspended following the Supreme Court''s Order, the safety and security of the block is being maintained and will continue to be maintained till the vesting of the coal block in accordance with the The Coal Mines (Special Provisions) Ordinance, 2014.

AMRL has neither operating nor trading activity. The Consolidated Other Income of Rs. 1.74 Crore represents the interest received on the loans advanced by it to its Joint Venture Companies. The Consolidated loss after depreciation, amortization and tax for the year ended December 31, 2014 was Rs. 5.85 Crore.

23.2 Bulk Cement Corporation (India) Limited (BCCI)

During the year under review, BCCI handled cement volumes of 10.30 lakh tonnes as against 9.60 lakh tonnes in 2013. The profit after tax for the year 2014 is Rs. 432.99 lakhs as against Rs. 270.94 lakhs in the year 2013.

23.3 As regards the other three Subsidiary Companies i.e. Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited, these are limestone deposit companies and are currently not operational.

23.4 Audited financial statements of the Company''s Subsidiaries

The audited financial statements, the Auditors Report thereon and the Board''s Report for the year ended December 31, 2014 for each of the Company''s subsidiaries viz. ACC Mineral Resources Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited are annexed.

24. DIRECTORS

The Board of Directors had appointed Mr Arunkumar Gandhi and Mrs Falguni Nayar as Additional Directors of the Company in the category of Independent Directors with effect from April 24,2014. Thereafter, at the Extraordinary General Meeting (EGM) of the Company held on September 10, 2014, the Members of the Company appointed the said Directors as Independent Directors under the Companies Act, 2013 for a period of 5 years with effect from April 24, 2014.

At the said EGM held on September 10, 2014, the Members had also appointed the existing Independent Directors viz. Mr N S Sekhsaria, Mr Shailesh Haribhakti, Mr Sushil Kumar Roongta, Mr Ashwin Dani, Mr Farrokh Kavarana as Independent Directors under the Act each for a term of five years with effect from July 24, 2014.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The Board of Directors had on the recommendation of the Nomination & Remuneration Committee appointed Mr Harish Badami as Chief Executive Officer & Managing Director (CEO & MD) Designate for the period August 1,2014 till August 12, 2014 and thereafter as the CEO & MD of the Company for a period of 5 years with effect from August 13, 2014. The Members of the Company had at the aforesaid EGM also approved the said appointment and terms of remuneration of Mr Harish Badami as CEO & MD.

Mr Kuldip Kaura former CEO & MD retired from the services of the Company with effect from August 13, 2014.

Mr M L Narula, a Non Executive Director of the Company retired from the Board of Directors with effect from July 25, 2014.

The Board has placed on record its appreciation for the outstanding contributions made by Mr Kuldip Kaura and Mr M L Narula during their respective tenures of office.

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr Bernard Fontana and Mr Aidan Lynam retire by rotation and are eligible for re-appointment.

24.1 Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

24.2 Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

24.3 Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year six Board Meetings and six Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

25. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended December 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2014 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

26. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a Certificate from the CEO & MD and the CFO. The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

27. TECHNOLOGY & KNOWHOW AGREEMENT

An Ordinary Resolution was passed by the Members of the Company by means of a Postal Ballot approving the Technology and Know-how Agreement with Holcim Technology Limited (HTL) which, inter alia, provided for the payment of technology and knowhow fees @ 1% of the net sales of the Company to HTL. Whilst the Agreement was valid for a period of five years, the technology and know-how fee was to remain in force for a period of two years with effect from January 1,2013. The Members had authorized the Board of Directors to review the technology and knowhow fee rate before the end of the financial year 2014. Accordingly, the Board of Directors had at its Meeting held on December 10, 2014 reviewed the rate of technology and know-how fee payable to HTL and have decided that the rate be retained @ 1% of the net sales till the end of the period of the agreement, i.e. upto and including December 31,2017.

28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. Pursuant to a complaint filed before the Competition Commission of India (CCI) by the Builders Association of India against some of the cement manufacturers including the Company, the CCI had in June 2012 held that the cement manufacturers had contravened the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act, 2002. The CCI had accordingly imposed a penalty on the cement manufacturers aggregating Rs. 6,300 Crore. The penalty imposed on the Company is Rs. 1,147 Crore. The cement manufacturers including the Company has filed an Appeal before the Competition Appellate Tribunal (COMPAT) and the matter is sub-judice. COMPAT has directed the cement manufacturers including the Company to deposit 10% of the penalty amount. Accordingly, the Company has deposited Rs. 114.7 Crore in the form of a bank fixed deposit with a lien in favour of COMPAT. Based on expert legal advice, the Company believes that it has a good case and expects a favourable decision in the appellate proceedings.

29. AUDITORS

29.1 Statutory Auditors

The Company''s Auditors, Messrs S R B C & CO. LLP, Chartered Accountants, Mumbai who retire at the ensuing Annual General Meeting of the Company are eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Members'' attention is invited to the observation made by the Auditors under "Emphasis of Matter" appearing in the Auditors Reports.

29.2 Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its cement activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs N I Mehta & Co. to audit the cost accounts of the Company for the financial year 2014 on a remuneration of Rs. 10 lakhs. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to Messrs N I Mehta & Co., Cost Auditors is included at Item No. 6 of the Notice convening the Annual General Meeting.

29.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs Pramod S Shah & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

30. AWARDS

During the year under review, your Company received many awards and felicitations conferred by reputable organizations for achievements in different areas such as Safety, Manufacturing Excellence and Environment Management. ACC ranked as "India''s Most Admired Companies" in Cement Sector in a Fortune India - Hay Group Survey for the second consecutive year. Your Company''s Annual Report for 2013 won the Gold Shield from the prestigious Institute of Chartered Accountants of India for "Excellence in Financial Reporting".

31. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders.

Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

32. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance forms an intergal part of this Report.

33. BUSINESS RESPONSIBILITY REPORTING

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting forms an intergal part of this Report.

34. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

35. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure C".

36. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure D".

37. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

38. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

39. CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

40. DISCLAIMER

The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated April 4, 2014 clarified that the financial statements and the documents required to be attached thereto, the Auditor''s and Boards'' Report in respect of the financial year under reference shall continue to be governed by the relevant provisions of the Companies Act, 1956, schedules and rules made thereunder. Accordingly, whilst the financial statements and the Auditor''s Report as aforesaid are prepared as per the requirements of the Companies Act, 1956, the Company, as per its commitment to transparency and good governance, has to the extent possible provided the information in the Board''s Report and the Corporate Governance Report as per the Companies Act, 2013.

For and on behalf of the Board of Directors

N S Sekhsaria Chairman Mumbai February 3, 2015


Dec 31, 2013

TO THE MEMBERS OF ACC LIMITED

The Directors take pleasure in presenting the Seventy Eighth Annual Report together with the audited financial statements for the year ended December 31, 2013. The Management Discussion and Analysis has also been incorporated into this report.

1. HIGHLIGHTS OF PERFORMANCE

Consolidated income for the year decreased by 2% to Rs. 11,389 crore as compared to Rs. 11,621 crore in 2012. Consolidated profit before tax in 2013 was Rs. 1,214 crore as against Rs. 1,441 crore in 2012. Similarly, consolidated profit after tax was Rs. 1,095 crore as against Rs. 1,059 crore in 2012.

2. FINANCIAL RESULTS

Consolidated Standalone Rs. Crore Rs. Crore 2013 2012 2013 2012

Revenue from Operations(Net) and other income 11,388.55 11,621.47 11,392.73 11,622.78

Profit Before Tax (PBT) 1,213.64 1,440.99 1,226.96 1,451.49

Provision for Tax 131.91 391.08 131.20 390.30

Profit After Tax (PAT) 1,094.67 1,059.28 1,095.76 1,061.19

Balance brought forward from previous year 3,845.79 3,591.12 3,861.83 3,821.54

Adjustment pursuant to Amalgamation - - - (216.29)

Profit available for Appropriations 4,940.46 4,650.40 4,957.59 4,666.44

Appropriations:

Interim Equity Dividend 206.52 206.52 206.52 206.52

Proposed Final Equity Dividend 356.72 356.72 356.72 356.72

Tax on Equity Dividends 95.72 91.37 95.72 91.37

Previous Year Tax on Equity Dividends 2.76 - 2.76 -

General Reserve 120.00 150.00 120.00 150.00

Surplus carried to the next year''s account 4,158.74 3,845.79 4,175.87 3,861.83

3. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 19/- per equity share of Rs. 10 each. The Company had distributed an interim dividend of Rs. 11/- per equity share of Rs. 10 each in August 2013. The total dividend for the year ended December 31, 2013 would accordingly be Rs. 30/- per equity share of Rs. 10 each which was the same as the dividend declared for the year ended December 31, 2012. The total outgo for the current year amounts to Rs. 658.96 crore, including dividend distribution tax of Rs. 95.72 crore as against Rs. 654.61 crore including dividend distribution tax of Rs. 91.37 crore in the previous year and Rs. 2.76 crore being the dividend distribution tax pertaining to previous year.

4. ECONOMIC SCENARIO AND OUTLOOK

Indian economic growth in 2013 had slowed down to 4.5%-5% which is the lowest in a decade. The high borrowing cost to combat inflation coupled with lower private consumption, low investment in infrastructure and other sectors were responsible for this. Although agriculture and allied sectors had shown improvement following a good monsoon and exports grew due to the depreciation in the value of the Indian Rupee, the economic growth was mainly pulled down by the contraction of the manufacturing sector.

The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected from the middle of 2014.

5. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES

The Indian Cement Industry has an installed capacity of ~350 million tonnes and the domestic consumption in the calendar year 2013 was ~260 million tonnes. Cement consumption had grown at the rate of 4% to 5% in the calendar year 2013. Although, cement consumption is believed to have a multiplying factor of 1.2 to the GDP growth, such lower than expected consumption growth was mainly due to the high cost of borrowing and low investment in the infrastructure and commercial segments.

Your Company had a marginally negative volume growth during the last calendar year as our large capacity in South and West could not be placed in the market due to overcapacity in these regions and also on account of negative consumption growth in our key markets of Maharashtra and Karnataka. The sales volume was however, in line with other large cement manufacturers in India.

The overall cement demand is estimated to grow at the rate of 4% to 5% in the calendar year 2014. The consumption growth may pick up beyond 5% if investment is made in the infrastructure segment. With the gradual reduction in fiscal deficits and Consumer Price Index, it is expected that the interest rates would gradually come down which would stimulate demand in the housing sector. Even with a modest increase in the consumption growth, the cement industry will continue to have a huge capacity surplus in 2014, particularly in the South. Your Company''s continued focus on cost reduction under the "Institutionalizing Excellence" programme, its thrust on increasing the sale of its premium products and various other customer excellence initiatives should help in presenting an improved performance.

6. CEMENT BUSINESS - PERFORMANCE AT A GLANCE_

2013 2012 Change %

Production - million tonnes 23.86 24.12 -1

Sales Volume - million tonnes 23.93 24.11 -1

Sale Value - (Rs. crore) 10,908.41 11,130.45 -2

Operating EBITDA - (Rs. crore) 1,628.79 2,195.57 -26

Your Company''s constant focus on cost reduction through various efficiency improvement measures taken at the plants and in the areas of logistics under "Institutionalizing Excellence" programme helped in partially covering the high cost of inflation.

Introduction of premium products such as F2R, Concrete , ACC Gold in the retail segment in many of our markets proved to be successful. It has been decided to replicate this success on an all India basis.

7. INSTITUTIONALIZING EXCELLENCE

In 2012, your Company had launched the Institutionalizing Excellence programme across all functions to sustain overall performance excellence so as to deliver superior value to customers and pursue cost leadership. The programme helped the Company offset inflationary pressure by managing its operating costs and enhancing customer value through improvements in manufacturing, sales, logistics and procurement processes. The Institutionalizing Excellence journey continues with a strong focus on Occupational Health

& Safety.

In Manufacturing Excellence, some plants have already achieved and have even surpassed their individual inspirational targets in respect of plant performance such as clinker factor, thermal and electrical energy efficiencies. Efforts are now directed towards raising the overall efficiency parameters closer to the inspirational targets and pursue further reductions in input costs of coal, gypsum, slag and flash.

The Customer Excellence programme continued to focus on measures to achieve volume and price improvement and steps for the enhancement of brand equity.

The Logistics Excellence journey saw visible and significant initiatives to optimize cost-to-serve and time-to-serve, reduce lead distances, eliminate multiple handling and enable the creation of modern infrastructure at our plants and warehouses. The RFID and GPS modules which were successfully deployed at three plants are being replicated at all plants of the Company in a phased manner.

8. CAPEX

The on-going Jamul project in Chhattisgarh, which comprises a new state-of-the-art clinkering line of 2.79 million tonnes per annum capacity and a grinding facility of 1.10 million tonnes per annum capacity is progressing well and has reached its halfway mark. The project will be completed in a phased manner by mid 2015. During the year, work also commenced on the Sindri grinding unit in Jharkhand, which will receive clinker from the new Jamul plant.

Your Company''s first Waste Heat Recovery Boiler plant, with an output of ~7.5 MW, was commissioned at the Gagal Cement Plant in Himachal Pradesh.

9. READY MIXED CONCRETE (RMX)

The Company''s RMX business turned around during the year with its operating EBITDA improving substantially to Rs. 19.61 crore from Rs. 2.1 crore in the previous year, though concrete sales volume increased marginally. The improvement in profitability was mainly a result of close monitoring of operating and logistic costs and offering our customers value added products and solutions. Customer focus has been sharpened by widening the customer base and by leveraging the cement sales network to target the retail segment.

The RMX market in the country has become more fragmented and competitive with many new entrants from the unorganized segment. Larger investments are foreseen in real estate and infrastructure projects across India in the coming year leading to growth in the construction sector. The increased demand is expected to come from the markets of Mumbai, Chennai and Bengaluru. The Company is taking suitable steps to consolidate its RMX business by striving to increase volumes from its existing assets, through on-site and commercial projects.

2013 2012 Change %

Production - Lakh Cubic Meters 15.96 16.54 -4

Sales Volume - Lakh Cubic Meters 18.00 17.97 -

Sale Value - (Rs. crore) 655.91 617.06 6

Operating EBITDA - (Rs. crore) 19.61 2.12 825

10. SUSTAINABLE DEVELOPMENT

Sustainability is an integral part of our business philosophy. The Company is in the process of consolidating inputs for a new roadmap for sustainable development for the period 2014- 2017.

The cement operations of your Company are certified under various management systems for quality, environment and safety. In addition to Corporate Social Responsibility (CSR), Human Resources (HR) and Occupational Health & Safety (OH&S), which are addressed later in this report, the important initiatives of your Company''s sustainable development agenda include reduction in CO2 emissions, reduction in stack and fugitive emissions, water management and biodiversity.

10.1 CO2 Emissions:

Your Company co-chaired the group involved in developing a Low Carbon Technology roadmap for the Indian Cement Industry under the aegis of the Cement Sustainability Initiative in India (CSI) of World Business Council for Sustainable Development (WBCSD). The roadmap comprises a comprehensive plan to achieve reduction in direct emissions leading upto the year 2050. This is the first plan of its kind which is a country-specific and sector-specific long term action plan to cut CO2 emissions and mitigate climate change risks. Keeping in mind these reduction targets, your Company is working on the following levers simultaneously:

- increasing the use of Alternative Fuels and Raw materials (AFR).

- reducing Thermal Energy and Electrical Energy.

- reducing clinker factor by producing blended cements using industrial waste materials like flash and slag.

- increasing the use of renewable energy.

- waste heat power generation from process waste heat.

Efforts in these areas helped your Company to maintain a leadership position in reduction of CO2 emissions in the country, as illustrated by the following:

- specific CO2 emissions for Portland Pozzolona Cement (PPC) during the year was 529 kg CO2 / tonne of cement as compared to 545 kg CO2 / tonne of cement in the previous year.

- specific CO2 emissions for Portland Slag Cement (PSC) during the year was 352 kg CO2 / tonne of cement as compared to 367 kg CO2 / tonne of cement in the previous year.

The above reduction helped the Company to maintain overall specific CO2 emissions, at 538 kg CO2 / tonne of cement despite increase in the production of Ordinary Portland Cement.

10.1.1 Alternative Fuels and Raw Materials (AFR):

Your Company''s initiatives in utilizing Alternative Fuels and Raw Materials (AFR) in the cement manufacturing process is gaining momentum in an effort to mitigate the rising cost of conventional fossil fuels and raw materials. Forty six co-processing trials of different waste materials have so far been carried out after obtaining necessary clearances from the concerned authorities at the State and Centre levels. These trials have demonstrated that co-processing is environmentally and ecologically a more sustainable technology for managing waste than other technologies that are in practice today, such as landfill and incineration. Our waste management services through cement kiln co-processing are gaining wider acceptance.

Based on the demonstrated success of the suitability of co-processing technology for waste streams, the Company has received clearances for co-processing 127 different waste streams generated by diverse industry segments such as automobiles, chemicals, engineering, power, steel, refineries and petrochemicals. During the year under review, the Company conducted seven co-processing trials of different waste materials. Twenty three new industries accepted the co-processing services offered by the Company as a result of which thirty two new streams for co-processing have been added in various plants. Currently, different types of waste streams are being co-processed from industrial, agricultural and municipal sources as AFR.

During the year 2013, a quantum leap was achieved in the usage of AFR, thereby enabling a Thermal Substitution Rate (TSR) of 4.36% against a target of 4.12%. The focus on AFR, enabled your Company to reduce fuel consumption in kilns, captive power plants and in dryers.

Your Company is also engaged in co-processing segregated non-recyclable plastic waste from municipal solid waste, thereby assisting Society with the disposal of plastic waste. Your Company is in an active engagement with fifteen municipalities and local bodies in this regard and has co-processed 433.38 tonnes of non- recyclable plastics during the year.

To increase the AFR utilization substantially, three pre-processing platforms are being set up at our plants which will prepare AFR material of uniform quality from various kinds of wastes that have different types of physical and chemical characteristics. Two of these facilities are expected to be ready during the course of this year.

10.1.2 Reduction of Thermal Energy:

Many initiatives were taken to reduce specific thermal energy in the manufacture of clinker as part of the Manufacturing Excellence initiatives, which resulted in a reduction of 10 MJ specific thermal energy / tonne of clinker as compared to 2012. In many plants, higher percentage of petcoke is being used to reduce the cost of thermal energy and coal costs.

10.1.3 Clinker Factor:

Clinker Factor in both varieties of blended Cements viz. Portland Pozzolana Cement (PPC) and Portland Slag Cement (PSC) was reduced through product innovation and research efforts.

Your Company''s blended Cement initiatives is one of the biggest Clean Development Mechanism (CDM) project of its kind in the Indian Cement Industry. Continuous efforts to control clinker content in PPC has helped in reducing CO2 emissions over a period of four years in four plants and this is currently under review for issuance of 8,46,313 CERs (Certified Emission Reductions) by United Nations Framework Convention on Climate Change (UNFCCC).

10.1.4 Renewable Energy:

Your Company''s Renewable Energy portfolio consists of 19 MW in the form of wind farms across three states viz. 9 MW in Tamil Nadu, 7.5 MW in Rajasthan and 2.5 MW in Maharashtra. Cumulatively, a total of 23.53 million units of wind power has been generated. These units helped the Company meet its non-solar renewable purchase obligation for Madukkarai and Lakheri Plants.

In Maharashtra, the Company was issued Renewable Energy Certificates (RECs), besides meeting the power needs of our Thane complex and part of the requirement of our Subsidiary Company, Bulk Cement Corporation (India) Limited at Kalamboli. The non-solar renewable power obligations of other plants viz. Wadi, Kymore, Bargarh, Tikaria and Jamul were met by purchasing RECs.

The Tamil Nadu Wind Mill Project realized 21,745 CERs from UNFCCC.

10.1.5 Waste Heat Power generation from process waste heat:

The Waste Heat Recovery System at Gagal is expected to reduce 44,180 tonnes of CO2 per annum. This is an important milestone in the Company''s sustainable development journey.

10.2 Stack Emissions and Fugitive Emissions:

The Company has implemented various initiatives/measures for improving the environmental performance of its Plants. The current average Kiln Stack emissions are <30mg/Nm3, as against the regulatory compliance requirement of 30mg/Nm3. The specific kiln dust emissions per tonne of cement have decreased by ~18% as compared to the previous year. This was achieved through various measures like conversion of Electrostatic Precipitators (ESPs) to Baghouse and installation of Polytetrafluoroethylene (PTFE) membrane filter bags in place of conventional filter bags. Many initiatives were undertaken to minimize fugitive as well as stack emissions across all Plants. These include installation of dust suppression systems, dust extraction systems for material handling, loading, unloading areas of raw materials, intermediate and finished products. In some plants, covered storage has been provided to prevent fugitive emissions. On- line continuous ambient air quality monitoring stations were installed in some plants to monitor environment parameters.

10.3 Water-positive initiatives:

Your Company has adopted a two pronged strategy i.e. working simultaneously on reducing fresh water intensity by reducing water demand in process / non-process needs and waste water recycling after treatment, whilst simultaneously working on rain water harvesting in plants, mines, housing colonies and community areas.

During the year 2013, the Company''s specific water consumption per tonne of cement was reduced by 2%. As part of its water-positive initiatives, the Company has taken up many water harvesting schemes during the year. Installation of water metering systems and increasing the usage of recycled water will help the Company to become water-positive in the near future.

10.4 Biodiversity:

As part of your Company''s overall objective to create a positive impact on biodiversity, a risk assessment exercise of all mines has been carried out and various initiatives are being undertaken in this regard. The green belt area in all cement plants is being increased to maintain at least 33% as green coverage. During the year 2013, approximately 1 lakh trees were planted under forestation programmes across all plants.

11. COMMUNITY DEVELOPMENT

The Board of Directors constituted a Corporate Social Responsibility (CSR) Committee which reviewed and restated the Company''s CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013. The new policy statement emphasizes the purpose of delivering superior and sustainable value to our stakeholders and simultaneously indicates key performance areas and specific deliverables mainly in respect of education, health & sanitation and sustainable livelihoods.

During the year 2013, the Company''s community development efforts successfully touched the lives of almost 6 lakh people spanning ~130 villages across the country. Overall CSR expenditure incurred during the year was Rs. 22.76 crore.

Efforts to enhance the quality of education in the plants neighborhood schools benefitted approximately 18,000 students during the year. Scholarships were awarded to 650 meritorious students from weaker sections of society to help them continue their education. Technology aided education initiatives like smart classes and interactive kiosks in rural schools reached out to about 12,700 rural children to keep pace with modern methods of learning. Specific support was provided to revive education to about 850 girl children who had dropped out of school. The Company continued to support

7 Government run ITIs under the Public Private Partnership Schemes with Ministry of Labour and Employment, Government of India.

Skill development training programmes were imparted to unemployed youth in partnership with specialized NGOs, which helped about 2,500 youth get job placements in various manufacturing and service sector enterprises. Your Company supported the formation of 737 Self Help Groups (SHGs) and their strengthening through structured training activities. Members of these SHGs saved close to Rs. 1.50 crore which helped them to secure matching grants from banks and other financial institutions to start micro-enterprises.

In matters of health and nutrition, your Company''s initiatives benefitted more than 1 lakh people. Support to 102 "anganwadi centers" helped approximately 3,000 children get access to better health and nutrition. Nearly 1,500 HIV/AIDS affected persons were supported through counseling, testing and treatment.

Your Company supported the process of Aadhaar enablement of the local communities to enhance their access to government subsidies and entitlements. A substantial part of the people living around our plants now have Aadhaar identification cards.

Your Company has also been engaged in leadership roles in CSR at various platforms. ACC has been nominated as an Industry representative in the Global Fund for India''s Country Co-ordination Mechanism on Health. The Company has also been appointed in the CII''s Sanitation Committee to promote initiative of Government of India on better sanitation coverage in India.

Your Company was quick to respond in providing timely relief to the people affected in two major disasters that struck the nation in 2013. The Chief Minister of Uttarakhand acknowledged the prompt efforts and unstinted help rendered by the Company''s employees to the victims of the landslide and flash floods in June 2013.

12. OCCUPATIONAL HEALTH & SAFETY (OH&S)

In pursuit of ensuring "No harm anywhere to anyone associated with ACC", Occupational Health & Safety (OH&S) remains the Company''s top priority. Accordingly, the Endeavour in 2013 was to instill OH&S as our license to lead. Through widely communicated initiatives such as "Suraksha Laher", efforts were directed to create an appropriate infrastructure, improve OH&S systems to make them more robust by identifying and addressing deficiencies and by building OH&S capabilities of line and functional personnel.

There was a new thrust on visible leadership in creating a structure within plants that ensures accountability and incorporates a concept of Zone ownership. A Centre of Excellence has been created to implement safety processes and systems uniformly at all plants, for capability building and for sharing experiences and best practices. The centre has three fulltime executives to implement OH&S priority areas. It is also intended to involve and engage Shop Floor Associates (SFAs) and contract workers to identify their safety concerns and execute safety projects with a view to achieve focused improvements in their respective work areas. The behavior based safety initiative "ACC Chetna", launched in 2012, continued to form part of the basic behavior expected as a practice from employees to prevent incidents.

Reaching beyond plant operations, your Company also addressed the subject of Logistics Safety to prevent vehicle related incidents. This programme included carefully planned interventions in people development and training in safe driving for drivers. Plant-level health and safety checks have been initiated in phases with the help of external consultants. The safety checks include examination of factors influencing vehicular safety such as overall plant layout, packing house layout, truck parking yards, inward and outward flow of traffic, storage areas and infrastructure for road and rail transport.

Various steps were taken to demonstrate that health constitutes an essential part of Occupational Health & Safety. The focus on occupational health in the areas of health surveillance, up gradation of emergency medical response and pro-wellness programmes helped save valuable lives while reducing health risk factors.

13. HUMAN RESOURCES

Success of any organization depends upon the engagement and motivation levels of its employees. In Human Resources, our emphasis was to give autonomy to people at different levels and create a sense of ownership in order to unleash their potential.

The Human Resources Division has played a significant role in achieving the overall business objectives by creating a common vision, building capability amongst people and more importantly, involve and engage employees in improvement programmes across the functions for achieving higher results. This process of engagement and involvement through special projects has created learning opportunities for the employees.

To support business, processes were re-engineered to bring about various changes in systems in order to provide proactive support. Some of the initiatives are as under:

- Recruitment and On-Boarding - Right-fit talent is hired and exposed to a year-long induction programme in newly created On- Boarding Centers.

- Employee Engagement Programmes - Employee feedback through various surveys conducted show that the employees are experiencing a greater sense of engagement. This has been achieved through various on- the-job engagement initiatives.

- Organization Excellence - The Company has carried out a variety of initiatives in this regard, after benchmarking Indian and Global best-in-class organization designs.

- Skill Enhancement - A plan has been put in place for upgrading the skills of SFAs through training and engaging them in a variety of improvement programmes to enable them to align with business and perform better. The unions and other stakeholders are highly appreciative of this initiative.

- Capability Building - Your Company believes that capability can be built by hands-on experience and exposure. Series of programmes are being conducted where under a large number of middle and senior level leaders are assigned various turnaround projects. A continuous monitoring as well as a recognition and reward model has also been created around this initiative to encourage and recognize people in larger forums.

- Creating a future leadership pipeline - With a view to motivating and retaining talent and providing growth opportunities for them in their respective work areas, identified talent has been given new challenges through engagement, mobility and special projects.

- Proactive Industrial Relations - A great deal of time is spent in engaging Unions and sharing relevant information with them to enable them to participate in the growth journey.

14. FINANCE

Your Company''s cash and cash equivalent as at December 31, 2013 was Rs. 2,621 crore. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters are kept under strict check through continuous monitoring. The Company''s debt programme continues to enjoy an "AAA" rating from CRISIL. During the year under review, the Company had given an option of premature redemption of Non-Convertible Debentures to the holders of its Privately Placed Debentures.

Non-Convertible Debentures of the aggregate value of Rs. 105 crore, stand prematurely redeemed whilst debentures of the aggregate value of Rs. 20 crore, stand redeemed on maturity as on December 31, 2013.

As on date, Non-Convertible Debentures aggregating Rs. 32 crore remain outstanding.

15. FIXED DEPOSITS

Despite efforts to identify and repay unclaimed deposits, the total amount of fixed deposits matured and remaining unclaimed as on December 31, 2013 was Rs. 0.02 crore.

16. SUBSIDIARY COMPANIES

16.1 ACC Mineral Resources Limited (AMRL)

The wholly owned Company ACC Mineral Resources Limited is a Joint Venture Partner in four Coal Blocks allotted by the Madhya Pradesh State Mining Corporation Limited (MPSMC).

Preliminary and pre-development activities in the three Coal Blocks out of four are in progress. The Bicharpur Coal Block in the Shahdol District is in an advanced stage of development and will cater to the coal requirement of some of your Company''s cement plants when it becomes operational. Various clearances for Marki Barka Coal Block in Singrauli are in an advanced stage and a detailed project report for the Block is under preparation. The exploration activity in Morga IV Coal Block is expected to take place after the clearance from the Ministry of Environment & Forests.

In January 2013, the Semaria Piparia Coal Block was de-allocated by the Ministry of Coal on the grounds of non-receipt of forest and environmental clearances from the Ministry of Environment and Forests, in view of the block''s proximity to the National Tiger Reserve at Bandhavgarh. On a Writ Petition filed by MPSMC and the Semaria Joint Venture Company, partial relief in the matter has been granted by the High Court at Jabalpur.

16.2 Bulk Cement Corporation (India) Limited (BCCI) During the year under review, BCCI handled cement volumes of 9.60 lakh tonnes as against 9.20 lakh tonnes in 2012. The profit after tax for the year 2013 is Rs. 270.94 lakhs as against Rs. 179.81 lakhs in the year 2012.

16.3 Audited Financial Statements of Subsidiary Companies

As required under Section 212 of the Companies Act, 1956, the audited financial statements along with the report of the Board of Directors relating to the Company''s subsidiaries viz. ACC Mineral Resources Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited together with the respective Auditors'' Reports thereon for the year ended December 31, 2013 are annexed.

17. DIRECTORS

The Board has appointed Mr Farrokh K Kavarana as an Additional Director of the Company with effect from May 3, 2013. In accordance with Section 161 of the Companies Act, 2013 (corresponding to Section 260 of the Companies Act, 1956), Mr Kavarana holds office upto the date of the forthcoming Annual General Meeting of the Company and his candidature for appointment as a Director has been included in the Notice convening the forthcoming Annual General Meeting of the Company.

The Board has appointed Mr Bernard Terver as an Additional Director of the Company with effect from December 4, 2013. In accordance with Section 161 of the Companies Act, 2013 (corresponding to Section 260 of the Companies Act, 1956), Mr Terver holds office upto the date of the forthcoming Annual General Meeting of the Company and his candidature for appointment as a Director has been included in the Notice convening the forthcoming Annual General Meeting of the Company.

At the request of Life Insurance Corporation of India, the Board has appointed Mr V K Sharma, Managing Director, Life Insurance Corporation of India, as an Additional Director of the Company with effect from February 6, 2014. In accordance with Section 161 of Companies Act, 2013 (corresponding to Section 260 of the Companies Act, 1956), Mr Sharma holds office upto the date of the forthcoming Annual General Meeting of the Company and his candidature for appointment as a Director has been included in the Notice convening the forthcoming Annual General Meeting of the Company.

The Board has re-appointed Mr Kuldip Kaura as Chief Executive Officer & Managing Director for a period of one year with effect from January 1, 2014. The Members of the Company had approved of the aforesaid re-appointment and the terms of remuneration of Mr Kaura by way of a postal ballot, pursuant to which the Company has entered into an agreement with Mr Kaura detailing therein his terms of re- appointment and remuneration.

In accordance with the provisions of the Companies Act, 1956, and in terms of the Memorandum and Articles of Association of the Company, the following Directors, viz. Mr Aidan Lynam, Mr Sushil Kumar Roongta and Mr M L Narula retire by rotation and are eligible for re-appointment.

18. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the IA function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all the Company''s locations, and its Subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

19. BUSINESS RISK MANAGEMENT

Your Company has a robust process to identify and assess business risks and opportunities. The Business Risk Management (BRM) activity is monitored both at the Corporate and at regional levels. Risks and opportunities so identified are integrated into the business plan and a detailed action plan to mitigate identified risks is drawn up and its implementation monitored. Key business risks identified by the Company fall into areas of fuels, projects, competition and OH&S. These risks together with plans for their mitigation are as under:

Fuels Risk:

Cement production is an energy-intensive process that requires large quantities of coal to meet its kiln and captive power generation requirements; hence, consistent supply of this fuel at reasonable and stable prices is a major concern for the Company. Erratic supplies of coal due to domestic production constraints and price fluctuations would adversely impact the input costs for an industry as dependent on coal as the Cement Industry. The Company is gradually increasing the use of alternative fuels and is optimizing its coal mix. To hedge this risk, your Company has through its Subsidiary Company ACC Mineral Resources Limited, entered into Joint Venture with Madhya Pradesh State Mining Corporation Limited for developing four coal block as earlier indicated. The Bicharpur Coal Block when developed would partly meet the coal requirement of some of the Company''s Cement Plants.

Project Risks:

The Cement Industry is capital intensive in nature. Its Compound Annual Growth Rate

(CAGR) for the next five years is expected to be ~7 %. In the execution of large projects which are highly capital intensive in nature, there could be exposure to time and cost overruns. To mitigate these risks, the Company has strengthened its project management team as well as its project accounting and governance framework. Whilst the Company continues to draw on Holcim''s expertise, a separate organizational structure at Project sites with defined roles and accountability has been put in place for large projects.

Competition Risks:

The Cement Industry is becoming intensely competitive with the foray of new entrants and some of the existing players adopting inorganic growth strategies. To mitigate this risk, the Company is leveraging its capacities to increase market share, enhance brand equity and visibility, enlarge product portfolio and service offerings. It would also leverage on its Infrastructure, Commercial and Institutional Sales teams to offer value to large customers.

OH&S Risks:

The Cement Industry is labor intensive and hence the safety of employees and workers is of utmost importance to the Company. To reinforce the safety culture in the Company, it has identified Occupational Health & Safety as a focus area of overriding importance. The Company already has a robust approach to tackle this risk through various programmes in all its Plants and Sales Units as detailed in para 12 of this Report.

20. AWARDS

During the year under review, your Company received many awards and felicitations conferred by reputable organizations for achievements in different areas such as Safety, Manufacturing Excellence and Environment Management. Your Company was recognized as one of India''s most sustainable companies and was presented the CII-ITC Sustainability Prize under the category of large manufacturing companies which is a notable recognition.

21. ENHANCING SHAREHOLDERS'' VALUE

The processes of the Secretarial & Compliance Division, Share Department and ISD Support, comply with ISO 9001:2008 as certified by Det Norske Veritas AS for the robustness of quality management processes.

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed in the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

22. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

- that in the preparation of the annual accounts for the year ended December 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and have been applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on December 31, 2013, and of the profit of the Company for the year ended on that date;

- that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- that the annual accounts have been prepared on a going concern basis.

23. AUDIT

The Company''s Auditors Messrs S R Batliboi & Co LLP, Chartered Accountants, who are the Statutory Auditors of the Company and who hold office upto the date of the Annual General Meeting, have, arising out of their internal restructuring, expressed their inability to continue as Auditors of the Company.

Messrs S R Batliboi & Co LLP, were appointed as Auditors of the Company in 2012. The Board has placed on record its appreciation of the services rendered by the Auditors.

The Members are requested to appoint S R B C & CO LLP (ICAI Firm Registration No. 324982E) one of the four firms in the overall S R Batliboi & Co network, as the Auditors of the Company for the year 2014 and to authorize the Board of Directors to fix their remuneration as per Item 6 of the Notice. S R B C & CO LLP have confirmed their eligibility under Section 224 of the Companies Act, 1956, for appointment as Auditors of the Company.

As per the requirement of the Central Government and in pursuance of Section 233B of the Companies Act, 1956, your Company carries out an audit of cost records relating to cement each year. Subject to the approval of the Central Government, your Directors have appointed Messrs N I Mehta & Co to audit the cost accounts of the Company for the financial year 2013.

24. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance, is set out in the Annexure forming part of this Report.

25. BUSINESS RESPONSIBILITY REPORTING

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility forms part of this Annual Report.

26. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

27. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 217(1)(e) of the Companies Act, 1956, are furnished in Annexure ''A'' to the Directors'' Report.

28. PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended, in respect of the employees of the Company, is provided in the Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

29. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, shareholders, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of ACC for their unstinted commitment and continued contribution to the Company.

30. CAUTIONARY STATEMENT

Statements in the Directors'' Report and the Management Discussion & Analysis, describing the Company''s objectives, expectations or forecasts, may be forward-looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. For and on behalf of the Board of Directors

N S Sekhsaria

Chairman

Mumbai

February 6, 2014


Dec 31, 2012

TO THE MEMBERS OF ACC LIMITED

The Directors take pleasure in presenting the Seventy Seventh Annual Report together with the audited accounts, for the year ended December 31, 2012. The Management Discussion and Analysis has also been incorporated into this report.

1. FOREWORD

The Indian economy experienced a slowdown in the year 2012, consequent to a deceleration in global economic growth. As a result, two important drivers of economic growth viz. infrastructure and industrial projects performed below expectations. Higher inflation and a depreciating rupee lead to a fall in domestic savings and consumption. Your Company faced these challenges with a new focus to achieve cost leadership and enhance value. This was enabled by planning for all-round improvements and innovativeness in productivity and profitability, leadership development and capability enhancement of its employees. In the process, many favourable trends were established.

Your Company closed the year by starting ground work on the next phase of the Company''s expansion programme.

2. HIGHLIGHTS OF PERFORMANCE

- Operating EBITDA increased in 2012 by 14% to Rs. 2197 crore, from Rs. 1921 crore in 2011.

- Consolidated income for the year increased by 11% to Rs. 11621 crore, as compared to Rs. 10428 crore in 2011.

- Consolidated profit before tax in 2012 was Rs. 1441 crore, against Rs. 1505 crore in 2011. Similarly, consolidated profit after tax was Rs. 1059 crore against Rs. 1301 crore in 2011.

Profit Before Tax and Profit After Tax would have been higher by Rs. 364.08 crore and Rs. 245.95 crore respectively, if there was no change in method of depreciation from Straight Line method to Written Down Value method in respect of Captive Power Plants.

3. FINANCIAL RESULTS

Consolidated Standalone Rs. Crore Rs. Crore 2012 2011 2012 2011

Revenue from Operations (Net) and Other Income 11621.47 10428.20 11622.78 9852.20

Profit Before Tax (PBT) 1440.99 1505.29 1451.49 1540.42

Provision for Tax 391.08 215.45 390.30 215.16

Profit after Tax (Pat) 1059.28 1300.80 1061.19 1325.26

Balance brought forward from previous year 3591.12 3175.45 3821.54 3381.41

Adjustment pursuant to Amalgamation - - (216.29) -

Profit available for Appropriations 4650.40 4476.25 4666.44 4706.67

Appropriations:

Interim Dividend 206.52 206.52 206.52 206.52

Proposed Final Dividend 356.72 319.17 356.72 319.17

Dividend Distribution Tax 91.37 85.28 91.37 85.28

Previous Year Dividend Distribution Tax - (1.49) - (1.49)

General Reserve 150.00 250.00 150.00 250.00

Debenture Redemption Reserve - 25.00 - 25.00

Amortization Reserves - 0.65 - 0.65

Surplus carried to the next year''s account 3845.79 3591.12 3861.83 3821.54

4. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 19 per equity share of Rs. 10 each. The Company had distributed an interim dividend of Rs. 11 per equity share of Rs. 10 each in August 2012. The total dividend for the year ended December 31, 2012 would accordingly be Rs. 30 per equity share of Rs. 10 each as against the total dividend of Rs. 28 per equity share of Rs. 10 each for the year ended December 31, 2011. The total outgo for the current year amounts to Rs. 654.61 crore, including dividend distribution tax of Rs. 91.37 crore, as against Rs. 610.97 crore including dividend distribution tax of Rs. 85.28 crore in the previous year.

5. ECONOMIC SCENARIO & OUTLOOK

The global economy experienced a slowdown especially noticed in developed economies, which had its impact on India as well. The Indian economy had to contend with high inflation in the year 2012 and increased lending rates. The tightening of the monetary policy further slowed the growth of the economy which affected all sectors including the cement industry.

There are signs that indicate the possibility of a revival in consumption and government spending in 2013. Coupled with expectations of a normal monsoon, this augurs well for the economy in the coming year.

6. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES

In 2012, the cement industry added ~34 million tonnes of capacity taking its installed capacity to ~360 million tonnes. The first half of the calendar year witnessed high demand for cement at 10% YoY. This demand fell in the second half of the year following a slowdown in the construction sector.

Cement Industry is expected to gather momentum driven by a revival in the general investment climate and by reduction in interest rates which will positively impact demand from housing, infrastructure and industry segments. We, therefore expect a favourable rate of growth in cement consumption. At the same time, there is a likelihood of mounting pressure on costs mainly arising out of increases in the cost of coal, diesel, rail freight and exchange rate fluctuations.

INSTITUTIONALIZING EXCELLENCE

In the beginning of 2012, the Company launched a new programme designed to deliver superior value to our customers while simultaneously seeking cost leadership through improvements in manufacturing, sales & marketing, logistics and procurement of major inputs. The programme called "Institutionalizing Excellence" is designed to further strengthen these processes so as to deliver and sustain enhanced performance levels. Built essentially around five pillars of core processes of the Organization, the overall objective of the programme is to achieve excellence in the functions comprising manufacturing, logistics, sales & marketing, people processes and certain strategic procurement projects.

The manufacturing excellence pillar includes efforts to reduce production cost through improvements in clinker factor, plant performance, thermal and electrical energy efficiencies. The sales and marketing teams aim to strengthen the Company''s brand advantage, sustain market share and strive for top-line growth. In logistics, the plan is to achieve best-in-class performance in terms of cost-to-serve and time-to-serve. The Company has deployed emerging technologies like RFID (Radio Frequency Identification) and GPS (Global Positioning Systems) for the first time in the Indian Cement Industry, to enable easy tracking of road transport vehicles in our plants and in transit to the end-consumer. The Institutionalizing Excellence journey has already shown signs of improvement across the Company with traction in all areas covered by it.

7. CEMENT BUSINESS - PERFORMANCE AT A GLANCE

2012 2011 Change %

Production - million tonnes 24.12 23.46 3%

Sales Volume - million 24.11 23.73 2% tonnes

Sale Value - Rs. crore 11130.45 9429.62 18%

Operating EBITDA Rs. crore 2195.57 1920.72 14%

8. EXPANSION CAPEX

Preliminary work on the new Jamul expansion project has commenced with ground-breaking at site and ordering out major plant equipment. Scheduled for completion in a phased manner in 2015, the project comprises a new clinkering line of 2.79 million tonnes capacity and grinding facility of 1.10 million tonnes at Jamul. In addition, it also includes the establishment of two other grinding plants in Eastern India, which will together enhance our capacity by 5 million tonnes of cement per annum. The total estimated cost of this expansion is Rs. 3300 crore and shall be funded through internal accruals.

9. READY MIXED CONCRETE (RMX)

During the year under review, the sales volume of RMX fell by 16%, mainly on account of a slowdown in the construction industry. Steps have been initiated to consolidate the Company''s RMX business through increased volumes from its existing assets. Vigorous efforts are being made to extend the customer base and leveraging the Company''s vast cement network.

The outlook for the construction sector in 2013 remains stable. Maximum demand for RMX is expected from Mumbai, Gurgaon and Bengaluru'', which are likely to attract larger investments in real estate and infra projects. We expect pricing to remain under pressure next year as a result of competition.

2012 2011 Change %

Production - lakh cubic 16.54 19.79 (16%) metres

Sales Volume - lakh 17.97 21.41 (16%) cubic metres

Sale Value - Rs. crore 617.06 687.66 (10%)

Operating EBITDA - 2.12 (3.29) 164% Rs. crore

10. SUSTAINABLE DEVELOPMENT

10.1 ALTERNATIVE FUELS AND RAW MATERIALS (AFR)

The Company continues to provide sustainable waste management solutions to various industries through co-processing. Our portfolio of clients has further increased with new waste streams. Efforts continued to be made to reduce dependence on fossil fuel and increase the use of biomass as a renewable source of energy.

Third party emission monitoring trial burns for hazardous waste, conducted in close co-ordination with regulatory authorities and industries, demonstrated that co-processing wastes in cement kilns did not have any adverse impact on the environment and on the quality of the end product.

10.2 RENEWABLE ENERGY & CLEAN DEVELOPMENT MECHANISM (CDM)

Your Company generated 42.33 million units of wind power from its three wind power stations located in Rajasthan, Tamil Nadu and Maharashtra. During the year, 1,77,299 Certified Emission Reductions (CERs) were received from the United National Framework Convention on Climate Change (UNFCCC) for the CDM Projects of blended cements and wind power generation in Tamil Nadu. During the year, we registered our wind power generation in Rajasthan as a new CDM project.

10.3 ENVIRONMENT PERFORMANCE

Your Company has installed Continuous Ambient Air Quality Monitoring Stations and Continuous Emission Monitoring Systems for kiln stacks at most of its plants. Online reporting of environment data to the Central Pollution Control Board was started in respect of seven of its plants. During the year, your Company reduced CO2 emission by ~2%. This was achieved through several initiatives like reduction of specific thermal energy, specific electrical energy, higher usage of blended materials like flyash and slag and the use of alternative fuels and raw materials.

Stack dust emissions were maintained well below statutory limits by installation of the state-of-the-art pollution control equipment in different plants of ACC and kiln stack emissions were lower by 15.49% as compared to the previous year.

Several initiatives have been undertaken across all plants to reduce specific water consumption for cement manufacturing and also enhance water harvesting efforts in different plants and mines.

The Company has under implementation a 7 MW Waste Heat Recovery Power generation unit at Gagal, Himachal Pradesh, which when completed, will be capable of generating ~45 million units of power per year of green energy, thereby further reducing the discharge of CO2 into the environment.

As a member of the Cement Sustainability Initiative, your Company made key contribution in developing a Low Carbon Technology roadmap for the Indian Cement Industry.

11. COMMUNITY DEVELOPMENT

As part of its Corporate Social Responsibility, your Company undertakes a range of activities to improve the living conditions of the weaker sections living near its plants. These include education, healthcare, vocational guidance and rural development. Some of these like agriculture development were carried out in partnership with government agencies.

During the year under review, efforts to improve the quality of education in village schools benefitted about 28000 students. Bridge Education Support was given to about 4200 students, and 100 Scholarships were awarded to meritorious students to help them continue their education. Technology aided education initiatives like smart classes and interactive kiosks in rural schools aided about 6100 rural children to keep pace with modern methods of learning. About 800 women members of Self Help Groups (SHG) participated in Adult Literacy Programs run by your Company.

Skill development training programmes were imparted to unemployedyouth in partnership with specialised NGOs which helped about 2376 youth get job placements in various manufacturing and service sector enterprises. Your Company also supported the formation of 604 SHGs and their strengthening through structured training activities. Members of these SHGs saved about Rs. 1.12 crore which helped them to secure matching grants from banks and other financial institutions to start micro-enterprises.

On the health and nutrition front, your Company''s initiatives for better health benefitted 1.35 lakh people. Support to 144 anganwadi centres helped 11,150 mothers and children get access to better health and nutrition. Nearly 17,000 people were supported through counselling, testing and treatment, wherever applicable, for HIV/AIDS.

The Company released its Externally Assured A rating Sustainable Development Report 2011 in the GRI (Global Reporting Initiative) framework.

12. OCCUPATIONAL HEALTH & SAFETY (OH&S)

Your Company engages its employees in OH&S matters through a policy of communication, involvement and competency build-up applied consistently and continually throughout its operation. Different programmes targeting critical areas are being implemented across all sites to address risks associated with operations. Effectiveness of these programmes is being constantly assessed by the Top Management. External audits are being conducted to check the level of implementation of these safety programmes.

A behaviour based safety training programme "ACC Chetna" was launched in June 2012. The programme trains people to practice 5 simple behaviours that can prevent injuries at the workplace and at home.

Visible Safety Leadership programmes are being conducted across business units for senior line managers. The programme comprises practical exercises and interactive sessions and prepares line managers to act as a role model to their subordinates by visibly leading safety in the field.

The concept of Safety Champions has been successfully established and aims to involve and engage line managers in safety by way of execution of short term safety projects.

Risk assessment is an integral part of any job/ activity. Our line managers are provided with different types of risk assessment tools to help them identify risk and decide on appropriate control measures. Hazard Identification and Risk Assessment (HIRA) workshops are being continued at sites to refine anticipation capability amongst the employees by enhancing their hazard observation skills. Apart from our employees, contractors are also being involved in HIRA workshops, which show an appreciable change in the attitude of contractors towards safety.

A concept of "Safety Circle" has been rolled out across the plants to promote safety ownership amongst line management. The intent of this concept is to involve as well as to engage shop floor employees including contractor workforce to identify safety concerns and execute safety projects for focused improvements in their respective work areas.

Our pro-wellness programmes reached more than 7,500 employees, contractors and community members during the year.

12.1 Logistics Safety

Logistics safety was given close attention with carefully planned interventions in people development and driver trainings. Health and safety checks have been initiated in the plants in phases with the help of external consultants. This includes examination of aspects such as plant packing house layouts, truck parking yards, inward and outward flow of traffic, storage areas and infrastructure for road and rail transport.

13. HUMAN RESOURCES

With an intent to create a future ready talent pool for managing our business growth, your Company has embarked on a journey towards People Excellence during the year. The aim of this journey is to re-engineer HR processes and ensure that each HR process is fine-tuned with current and future business requirement and an appropriate number of employees are groomed for future middle and senior leadership roles. Greater focus is given to hiring and retaining talent from different disciplines and streams.

Under a concept of ''On boarding Centres'', a complete functional orientation programme is in place which is expected to deliver competent cement engineers and functional specialists. The concept has been evaluated as one of the best practices across manufacturing companies in the industry.

As extension of faster learning for young talent, your Company has embarked on a plan to impart intensive learning through challenging functional/ cross-functional projects and coaching to improve analytical and decision making capability.

The new talent management process has adopted a bottom-up approach to conduct the talent review process, where immediate line managers are involved in identifying high-potential employees from their own teams. One-on-one Development Conversations have been conducted with the identified high potentials to create their individual development plan based on individual and Organization''s aspiration.

The industrial relations scenario was peaceful. Your Company embarked on a major programme for Shop Floor Associates Development with an emphasis on involving and engaging them in a variety of small improvement projects at the shop floor level so that their engagement level is enhanced. The Sumant Moolgaonkar Training Institute (SMTI) and ACC Cement Technology Institute (ACTI) are giving their full contribution in training artisans and diploma holders.

14. FINANCE

Your Company''s cash and cash equivalent as at December 31, 2012 was Rs. 3037 crore. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters are kept under strict check through continuous monitoring. The Company''s debt programme continues to enjoy "AAA" rating from CRISIL.

During the year, the Company had given an option of premature redemption of Non-Convertible Debentures to the holders of its Privately Placed Debentures having coupon rates of 8.45% and 11.30%. Out of Rs. 500 crore of Non-Convertible Debentures, debentures totalling Rs. 343 crore, stand prematurely redeemed as on December 31, 2012.

15. FIXED DEPOSITS

Despite efforts to identify and repay unclaimed deposits, the total amount of fixed deposits matured and remaining unclaimed as on December 31, 2012 was Rs. 0.02 crore.

16. STATUS OF AMALGAMATION OF SUBSIDIARY COMPANIES

During the year, ACC Concrete Limited and Encore Cement and Additives Private Limited, both wholly owned subsidiaries of your Company, have amalgamated with your Company. The amalgamations would enable your Company to utilize the resources of the said subsidiaries to further augment its cement business and would bring down the cost of overheads and other common expenses.

The Scheme of Amalgamation of Lucky Minmat Limited and National Limestone Company Private Limited, both wholly owned subsidiary companies of your Company, was filed with the High Court of Judicature at Bombay and is pending due to certain regulatory approvals.

17. SUBSIDIARY COMPANIES

17.1 ACC Mineral Resources Limited (AMRL)

The wholly owned Company, AMRL, is a Special Purpose Vehicle which looks into the development of the four coal blocks allotted by the Madhya Pradesh State Mining Corporation Limited (MPSMC) through four companies incorporated jointly by MPSMC and AMRL pursuant to a joint venture agreement.

In January 2013, the Company received notice of de-allocation of one of the Coal Blocks from the Ministry of Coal, Government of India, on the grounds of non-receipt of forest and environmental clearances from the Ministry of Environment and Forests, in view of the block''s proximity to the National Tiger Reserve at Bandhavgarh. MPSMC along with the concerned Joint Venture Company, have together filed a writ petition in the Jabalpur High Court for relief in the matter.

During the year under review, the preliminary and pre-development activities in the other three coal blocks are in progress. The Bicharpur Coal Block in Shahdol District is in an advanced stage of development. AMRL does not have any commercial activity or earnings from investments and therefore no income.

17.2 Bulk Cement Corporation (India) Limited (BCCI)

During the year under review, BCCI handled cement volumes of 9.20 lakh tonnes in 2012, as against 9.34 lakh tonnes in 2011. The Profit after tax for the year 2012 is Rs. 179.81 lakhs, as against Rs. 68.35 lakhs in the year 2011.

17.3 Singhania Minerals Private Limited

This Company was acquired in August 2012. Being wholly owned Company, the said acquisition will help the Company in augmenting its limestone reserves.

17.4 Audited statements of accounts of the Company''s Subsidiaries

As required under Section 212 of the Companies Act, 1956, the audited statements of account, along with the report of the Board of Directors relating to the Company''s subsidiaries; ACC Mineral Resources Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited together with the respective Auditors'' Reports thereon for the year ended December 31, 2012 are annexed.

18. DIRECTORS

As per the Succession Policy for Directors, Mr Naresh Chandra and Mr R A Shah will be stepping down from the Board of Directors of the Company at the forthcoming Annual General Meeting of the Company. The Board has placed on record its appreaciation for the outstanding contributions made by Mr Naresh Chandra and Mr R A Shah during their respective tenures as Directors of the Company since May 5, 2004 and January 24, 2006 respectively.

It is proposed not to fill up these vacancies and accordingly the requisite resolutions in this behalf have been included at Items 5 & 6 of the Notice convening the Annual General Meeting.

In accordance with the provisions of the Companies Act, 1956, and in terms of the Memorandum and Articles of Association of the Company, Mr N S Sekhsaria and Mr Shailesh Haribhakti retire by rotation and are eligible for re-appointment.

19. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has documented a robust and comprehensive internal control framework for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.

The Internal Control System of the Company is commensurate with the size, scale and complexity of its operations. It is being constantly assessed and strengthened with new / revised standard operating procedures and robust internal and Information Technology (IT) controls.

The formalized systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement with the Stock Exchanges, and Article 728(a) of the Swiss Code of Obligations applicable to the Holcim Group since 2008.

The Company''s Internal Audit Department objectively and independently tests the design and operating effectiveness of the internal control system to provide a credible assurance to the Board and the Audit Committee regarding the adequacy and effectiveness of the internal control system. The Internal Audit function monitors the effectiveness of controls, and also provides an independent and objective assessment of the overall governance processes in the Company, including the application of a systematic risk management framework.

The scope and authority of the Internal Audit activity are well defined in the Internal Audit Charter, approved by the Audit Committee. Internal Audit plays a key role by providing an assurance to the Board of Directors, and value adding consultancy service to the business operations.

20. BUSINESS RISK MANAGEMENT

Your Company has robust Business Risk Management (BRM) practices to identify, evaluate business risks and opportunities. This is monitored both at the Corporate and at the regional levels. The business risks and opportunities so identified are integrated into the business plan and a detailed action plan to mitigate the identified business risks is thereafter drawn up and its implementation monitored.

The key business risks identified by the Company and its mitigation plans are as under:

Fuels Risks:

Availability of fuel at reasonable rates is one of the main concerns of the Company, as it uses large quantities of coal annually to meet its kiln and captive power generation requirements. The year 2012 also witnessed an increase in the price of coal which adversely impacted the profitability of the Company. This, coupled with limited production of the fuel in the country, is expected to result in higher input costs for a fuel intensive industry like cement. Further, the availability of linkage coal is gradually reducing. The Company is trying to mitigate its fuel risk by increased usage of alternative fuels and optimization of coal mix. It has also initiated steps and is in the process of developing its own coal blocks which would partly go to meet its coal requirements.

Project Risks:

The Cement Industry is capital intensive in nature. In the execution of large projects, there could be exposure to time and cost overruns. To mitigate these risks, the Company has strengthened its project management team as well as its project accounting and governance framework. Whilst the Company continues to draw on Holcim''s expertise, a separate Organization structure at project sites, with defined roles and accountability, is in place for large projects. A Capex Committee of the Board oversees the feasibility and progress of projects and makes suitable recommendations.

Competition Risks:

The Cement Industry is becoming intensely competitive with the foray of new entrants and some of the existing players adopting inorganic growth strategies. To mitigate this risk, the Company is working to enhance brand equity and visibility and enlarge its product portfolio and service offerings. Simultaneously, there are several initiatives being taken as part of Institutionalizing Excellence programme in the areas of cost competitiveness and cost leadership.

OH&S Risks:

The Cement Industry is labour intensive and hence safety of its employees and shop floor associates is of utmost importance to the Company. To reinforce the safety culture in the Company, it has identified OH&S as a major focus area. Your Company already has various activities and programmes under way in all its plants and sales units.

21. ENHANCING SHAREHOLDERS VALUE

The processes of the Secretarial & Compliance Division, Share Department and ISD Support, are ISO 9001:2008 certified by Det Norske Veritas AS for the robustness of quality management processes.

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company''s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. The Company is also committed in creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions for the society for sustainable growth and development.

22. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

- that in the preparation of the annual accounts for the year ended December 31, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements, have been selected and have been applied consistently and judgement and estimates have been made that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on December 31, 2012, and of the profit of the Company for the year ended on that date;

- that proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the annual accounts have been prepared on a going concern basis.

23. AUDIT

The Company''s Auditors Messrs S R Batliboi & Co., Chartered Accountants, Mumbai, who retire at the ensuing Annual General Meeting of the Company, are eligible for re-appointment. They have confirmed their eligibility under Section 224 of the Companies Act, 1956, for re-appointment as Auditors of the Company.

Members'' attention is invited to the observation made by the Auditors at point (xxi) of their ''CARO Report'', issued pursuant to the Companies (Auditor''s Report) Order, 2003 (CARO Report), which is self explanatory.

As per the requirement of the Central Government, and in pursuance of Section 233B of the Companies Act, 1956, your Company carries out an audit of cost records relating to cement each year. Subject to the approval of the Central Government, your Directors have appointed Messrs N I Mehta & Co., to audit the cost accounts of the Company for the financial year 2012.

24. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company''s Auditors confirming compliance, is set out in the Annexure forming part of this Report.

25. BUSINESS RESPONSIBILITY REPORTING

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting forms part of this Annual Report.

26. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company, prepared in accordance with relevant Accounting Standards viz. AS21, AS23 and AS27 issued by the Institute of Chartered Accountants of India forms part of this Annual Report.

27. ENERGY TECHNOLOGY AND FOREIGN EXCHANGE

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Sec 217(1)(e) of the Companies Act, 1956, are given in Annexure ''A'' to the Directors'' Report.

28. PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended is given in Annexure ''B'' to the Directors'' Report.

29. ACKNOWLEDGEMENTS

Your Directors are thankful to the various Central and State Government Departments and Agencies for their continued help and co-operation. The Directors are grateful to the various stakeholders - customers, shareholders, banks, dealers, vendors and other business partners for the excellent support received from them during the year under review. Your Directors wish to place on record their sincere appreciation to all employees for their commitment and continued contribution to the Company.

30. CAUTIONARY STATEMENT

Statements in the Directors'' Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts, may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board of Directors

N S Sekhsaria

Chairman

Mumbai

February 7, 2013

 
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