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Directors Report of Aditya Birla Nuvo Ltd.

Mar 31, 2015

Dear Shareholders,

The are pleased to present the 58th Annual Report together with the Audited Financial Statements of your Company for the year ended 31st March, 2015.

MACRO-ECONOMIC SCENARIO

India''s economy made a soft recovery in fiscal 2014-15, with an estimated GDP growth at 7.4% compared to 6.9% in the previous year. Many positive developments were witnessed. Among them were lowering of fiscal and current account deficits, declining inflation and benign global commodity prices. The moderation in inflation prompted the Reserve Bank of India ("RBI") to cut interest rates to spur economic growth. Structural reforms to boost investments remained high on the Government''s agenda.

The World Bank and the International Monetary Fund have forecast India''s GDP to grow at 7.5% in 2015, outpacing China to become the world''s fastest growing economy. The Government''s continued focus on policy reforms for encouraging infrastructure investments, improving the ease of doing business, financial inclusion measures, and initiatives like ''Make in India'' are expected to be vital contributors towards achieving economic growth and advancement going forward.

CONSOLIDATED FINANCIAL PERFORMANCE

Your Company has posted sound earnings growth and improved performance across most of the businesses. Consolidated revenue grew by 2% to Rs. 26,516 Crore. On a like-to-like basis, i.e., excluding IT-ITeS business, which was divested w.e.f. 9th May, 2014, year-on-year revenue growth was 14%. EBITDA surged by 18% to Rs. 5,798 Crore. Net Profit rose by 24% to Rs. 1,416 Crore. Financial Services and Telecom businesses were the major contributors to earnings growth, followed by the Fashion & Lifestyle business.

Key Highlights:

- Aditya Birla Financial Services ("ABFS") is a significant non-bank financial services player having a diversified portfolio with 10 lines of businesses. Its funds under management grew year-on-year by 35% to Rs. 164,940 Crore. The Lending book of the NBFC business expanded by 52% to Rs.17,550 Crore. ABFS is entering into strategic partnerships and investing in promising sectors to tap sector growth opportunities. It has commenced Housing Finance business operations in October 2014 and is planning to foray in the health insurance sector through a joint venture with MMI holdings, a leading South African based financial services group.

- The Fashion & Lifestyle business of your Company is India''s #1 branded menswear player through Madura Fashion & Lifestyle, and the # 1 branded womenswear retailer through Pantaloons. To fortify its market leadership, the Fashion & Lifestyle business is scaling up its retail stores as well as its online presence through TRENDIN.com. Trusted by 10.8 million loyalty customers, it has the widest fashion retail presence in India, with 1869 exclusive brand outlets / stores spanning 4.8 million square feet and 6,000 additional points of sale.

- In the Telecom business, Idea Cellular continued its enviable track record of being amongst the fastest growing large Indian mobile operators. Its revenue market share improved year-on-year from 16.1% to 17.5%. In the spectrum auctions held in March 2015, Idea won 79.4 MHz spectrum for about USD 5 billion, laying a solid foundation and visibility for its business growth for the next 20 years. The strong cash profit generation as well as funds raised during the year will support Idea''s balance sheet and growth plans.

- Amongst the divisions, the Linen segment of Jaya Shree textiles attained higher profitability, led by recent expansion. The business is set to further tap the sector growth opportunity with proposed expansion of its Linen yarn Capacity from 3,400 TPA to 6,200 MTPA. In the Rayon business, the profitability of the VFY segment was off-set by softening of ECU realisation and maintenance shut down in the power plant in the chemicals segment. Agri business earnings improved sharply year-on-year, led by enhanced energy efficiency. However, earnings were lower than the normalised level due a shutdown of the urea plant for 35 days. The Insulators business posted healthy earnings growth despite 42 days disruption / suspension of plant operations due to labour unrest.

STANDALONE FINANCIAL PERFORMANCE

Your Company''s standalone revenue grew by 11% to Rs. 8,938 Crore. In the previous year, net profit was higher by Rs. 209 Crore on account of (a) gain of Rs. 65 Crore on divestment of Carbon Black business (including net tax credit of Rs. 41 Crore) and (b) gain of Rs. 144 Crore on buyback of equity shares by Birla Sun Life Insurance to distribute its surplus funds to the shareholders. As a result, Net Profit at Rs. 528 Crore is lower year-on-year vis-à-vis Rs. 674 Crore reported in the previous year.

NEW INTIATIVES/MAJOR ACTIVITIES

Consolidation of Branded Apparels businesses

To capitalise on its large market presence in the branded fashion space in India, your Company – Aditya Birla Nuvo Ltd. ("ABNL") – has announced consolidation of its branded apparels businesses under its listed subsidiary - Pantaloons Fashion & Retail Ltd. ("PFRL"), through a composite scheme of arrangement ("Scheme") under Sections 391 to 394 of the Companies Act, 1956. As part of the Scheme, Madura Fashion, the branded apparel retailing division of ABNL and Madura Lifestyle, the luxury branded apparel retailing division of Madura Garments Lifestyle Retail Company Limited ("MGLRCL") – a subsidiary of ABNL, will be demerged from the respective companies into PFRL. Pursuant to the demerger, new shares will be issued by PFRL to the respective shareholders of the transferor companies directly.

This consolidation will create India''s largest pure play branded apparels company by bringing India''s #1 branded menswear players and

- 1 branded womenswear retailer together. The move will unlock value for the shareholders and give them an opportunity to participate directly in the promising fashion space.

The Boards of above companies have approved the following swap ratio which has been recommended by the independent valuers:- - Shareholders of ABNL will get 26 new equity shares of PFRL for every 5 equity shares held in ABNL pursuant to the demerger of Madura Fashion,

- Shareholders of MGLRCL will get 7 new equity shares of PFRL for every 500 equity shares held in MGLRCL pursuant to the demerger of Madura Lifestyle, and

- Preference shareholder of MGLRCL will get 1 new equity share of PFRL

The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective High Courts, the Stock Exchanges, SEBI, the respective Shareholders and lenders / creditors of each of the companies. The appointed date of the Scheme will be 1st April 2015. The transaction is expected to be completed in the next 6 to 9 months period.

Application for Payments Bank License

Your company has applied for obtaining a license to set up a "Payments Bank", in accordance with the Guidelines for Licensing of Payments Bank issued by RBI. Your Company will be the Promoter of the proposed Payments Bank, holding 51% of its equity capital. Idea Cellular will hold the balance 49% of equity capital in the proposed Payments Bank, which may be increased up to 60%, subject to regulatory approvals, as applicable.

FINANCIAL PERFORMANCE (Rs. in Crore)

Consolidated Standalone

2014-15 2013-14 2014-15 2013-14

Profit Before Depreciation / Amortization, Interest and Tax 5,798.21 4,926.56 1,185.59 1,245.81

Depreciation and Amortisation Expenses 1,702.75 1,608.86 189.36 199.02

Finance Costs 1,757.57 1,550.82 263.30 266.56

Profit Before Exceptional Items and Tax 2,337.89 1,766.88 732.93 780.23

Exceptional Items (13.33) 5.42 - 24.06

Profit Before Tax 2,324.56 1,772.30 732.93 804.29

Tax Expenses 833.48 550.50 205.24 130.34

Net Profit Before Minority Interest 1,491.08 1,221.80 527.69 673.95

Minority Interest 75.58 78.92 - -

Profit for the Year 11,415.50 1,142.88 527.69 673.95

Opening Balance as per last audited financial statement 778.59 312.79 222.56 167.34

Amount Transferred on Stake Change/ Amalgamation of Subsidiaries/ Joint venture (81.57) (0.76) - -

Transfer from General Reserve 13.45 - - -

Transitional Provision of Schedule II Impact (Net of Deferred Tax) (15.19) - - -

Share of Minority Interest Transitional Provision of Schedule II impact 3.09 - - -

Profit available for Appropriation 2,113.87 1,454.91 750.25 841.29

Appropriations :

Debenture Redemption Reserve 24.91 24.63 22.50 20.98

Special Reserve 54.69 33.53 - -

General Reserve 201.76 501.40 200.00 500.00

Transfer to Capital Redemption Reserve 0.10 - 0.10 -

Proposed Dividend on Preference Share - 0.01 - 0.01

Proposed Dividend on Equity Share 91.10 91.06 91.10 91.06

Equity Dividend relating to Previous period 2.60 0.07 0.02 0.01

Interim Dividend on Preference Share B - B -

Corporate Tax on Proposed Dividend 30.13 22.03 18.55 6.67

Corporate Tax on Interim Dividend 25.85 3.59 - -

Corporate Tax on Interim Dividend on B - B - Preference Shares

Corporate Tax on Dividend relating to previous year 0.44 - - -

Closing Balance of Surplus in the Statement of Profit & Loss 1682.29 778.59 417.98 222.56

Note: Figures of Rs. 50,000 or less have been denoted by

Redemption of Preference Shares:

In accordance with the composite Scheme of Arrangement between Aditya Birla Nuvo Limited and Madura Garments Exports Limited and MG Lifestyle Clothing Company Private Limited and Peter England Fashion and Retail Limited, 5000 - 6% Redeemable Cumulative Preference Shares of Rs. 100 each fully paid were issued to Infocyber India Private Limited and Naman Finance & Investment Private Limited respectively on 1st January, 2010.

In terms of the issue of the Preference Shares, these Preference Shares were ordinarily redeemable upon completion of five years from 1st January 2010, at face value. However, the Company had the right to redeem the Preference Shares at any time before the due date of redemption by giving 30 days'' notice to the shareholders, subject to appropriate approvals as may be necessary.

These Preference Shares were redeemed at face value on 29th September, 2014, out of the profits of the Company and dividend was paid thereon for the said period.

DIVIDEND

For the financial year ended on 31st March, 2015, your Directors have recommended for your consideration a dividend of:

i. Rs. 7 per Equity Share of Rs. 10 each (last year Rs. 7 per Equity Share); and

ii. Dividend of Rs. 2.99 per Preference Share of Rs. 100 each paid on 29th September, 2014 pro-rata (last year Rs. 6 per Preference Share).

The dividend on the equity shares, if approved by the shareholders, would involve cash outflow of Rs. 109.65 Crore (including Corporate dividend Tax of Rs.18.55 Crore) compared to Rs. 97.73 Crore (including Corporate Dividend Tax of Rs. 6.67 Crore) paid for the year 2013-14.

The equity shares as may be allotted upon the exercise of options granted under the Employees Stock Option Schemes and out of the Share Capital Suspense before the Book Closure for payment of dividend will rank paripassu with the existing shares and shall also be entitled to receive the aforesaid dividend.

TRANSFER TO RESERVES

We propose to transfer Rs. 200 Crore to general reserve. An amount of Rs. 417.98 Crore is proposed to be retained in the profit and loss account of the Company.

FINANCE

During the year 2014-15, your Company has:

- Raised long-term loans, aggregating to Rs. 37.42 Crore by way of Rupee Term Loan (including Finance Lease Liability) and Rs. 300 Crore by way of issue of Non Convertible Debentures (NCDs);

- Repaid term loans (including Foreign Currency Borrowings and Finance Lease Liability) aggregating to Rs. 227.88 Crore;

- Refinanced foreign currency borrowings aggregating to Rs. 702.97 Crore to get the benefit of lower interest cost.

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposits from the public falling under Section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the balance sheet date.

CORPORATE GOVERNANCE

Your Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements set out by Securities and Exchange Board of India (SEBI). During the year under review, your Company was in compliance with the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges pertaining to the corporate governance compliances.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Statutory Auditors'' Certificate confirming compliance with Clause 49 of the Listing Agreement with Stock Exchanges is given in Annexure I and the same forms part of the Directors'' Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of the provisions of Clause 49 of the Listing Agreement, the Management Discussion and Analysis is set out in this Annual Report.

SUBSIDIARIES, JOINT VENTURES, AND ASSOCIATE COMPANIES

Subsidiary Companies

During the year,the following changes have taken place in the Subsidiary Companies:

- Aditya Birla Financial Services Private Limited, a holding company for all financial services business of the Company except Birla Sun Life Insurance Company Limited, which is held directly by the Company due to regulatory reasons, has been converted into a Public Limited Company viz. Aditya Birla Financial Services Limited on 4th December, 2014 for business expansion and future growth.

- Birla Sun Life Pension Management Limited, a wholly owned subsidiary of Birla Sun Life Insurance Company Limited, has been incorporated on 9th January, 2015 for management of pension fund under National Pension Scheme (NPS). The company is registered with Pension Fund Regulatory and Development Authority.

- Birla Sun Life Asset Management Company Limited has acquired mutual fund schemes and portfolio accounts from ING Investment Management (India) Pvt. Ltd. in September 2014.

- Aditya Birla Customer Services Private Limited, which runs My Universe, an online personal finance management portal, has been converted into a Public Limited Company viz. Aditya Birla Customer Services Limited on 7th January, 2015 for business expansion and future growth.

- International Finance Corporation (IFC) has entered into an agreement and acquired stake in Aditya Birla Customer Services Limited in December 2014 for strategic financial investment in the company.

- Aditya Birla Housing Finance Limited commenced its housing finance business in October 2014 and built a book size of Rs. 142 Crore as on 31st March 2015.

- Aditya Birla Finance Limited, a subsidiary of the Company, sold its entire holding in Aditya Birla Securities Private Limited on 10th September, 2014 to a promoter group Company. Consequently Aditya Birla Securities Private Limited has ceased to be the subsidiary of the Company.

- The Company had applied for winding up of Aditya Vikram Global Trading House Limited (AVGTHL), its overseas subsidiary, registered in Mauritius, and on 30th September, 2014

AVGTHL was liquidated and the entire funds available were distributed to the shareholders.

Accordingly, the Company has received funds available with AVGTHL.

The Policy of determining material subsidiaries may be accessed on the Company''s website at the link below:

http://adityabirlanuvo.com/pdf/policy_material _subsidiaries.pdf

JOINT VENTURE

IDEA Cellular Limited is the Joint Venture of the Company and continues to be the Joint Venture, during the year under review.

ASSOCIATE COMPANIES

During the year, the Company has sold its stake in Birla Securities Limited, an Associate Company.

A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per Section 129(3) of the Companies Act, 2013 ("the Act") and the Rules made there under is provided as Annexure II of the Consolidated Financial Statement and hence not repeated for the sake of brevity.

The audited financial statements of your Company''s subsidiaries and related information have been placed on the website of your Company viz. www.adityabirlanuvo.com. Any Member, who is interested in obtaining a copy of audited financial statements of your Company''s subsidiaries may write to the Company Secretary at the Registered Office of your Company.

CONSOLDATED FINANCIAL RESULTS

The Consolidated Financial Statements have been prepared in accordance with the provisions of the Section 129(3) of the Act, read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the provisions of the Listing Agreement with the Stock Exchanges and forms part of the Annual Report.

HUMAN RESOURCES

Your Company believes that human resources will play a critical role in its future growth. With an unswerving focus on nurturing and retaining talent, your Company provides avenues for learning and development through functional, behavioural and leadership training programs, knowledge exchange conferences, and providing communication channels for information sharing, to name a few of the initiatives.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK- PLACE PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

During the year under review, your Company has not received any complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

In compliance with the provisions of Section 177 (10) of the Act and Clause 49 of the Listing Agreement, your Company has in place a vigil mechanism for the directors and employees to report concerns about unethical behaviour, and actual or suspected fraud or violation of your Company''s Code of Conduct. Adequate safeguards are provided against victimization to those who avail of the mechanism and access to the Chairman of the Audit Committee in exceptional cases is provided to them. The vigil mechanism is posted on the Company''s website at www.adityabirlanuvo.com.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In accordance with the provisions of Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information about the employees, is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of your Company during the working hours. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company and the same will be furnished on request.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure to the Boards'' Report as Annexure III.

EXTRACT OF ANNUAL RETURN

In terms of the provisions of Section 92 (3) of the Act read with the Companies (Management and

Administration) Rules, 2014, an extract of the Annual Return of your Company for the financial year ended 31st March, 2015 in Form MGT-9 is given in Annexure IV to this report.

BUSINESS RESPONSIBILITY REPORT

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.

RELATED PARTY TRANSACTIONS

During the financial year, your Company has entered into related party transactions which were on an arm''s length basis and in the ordinary course of business. The Company has not entered into any transaction with any related party which could be considered material in accordance with the Listing Agreement and the Policy of the Company on materiality of related party transactions. All related party transactions have been approved by the Audit Committee of the Board of Directors of your Company and the same are being reviewed by it on a periodic basis. The Policy on the Related Party Transactions as approved by the Audit Committee and the Board of your Company is posted on the Company''s website viz. www.adityabirlanuvo.com.

The details of contracts and arrangement with related parties of your Company for the financial year ended 31st March, 2015 is given in Note No. 42 to the financial statements.

RISK MANAGEMENT

Your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to review the risk management plan / process of your Company. This Committee identifies the potential risks, assesses their potential impact and takes timely actions to mitigate the same. The Risk Management framework and the Risk Management approach are covered in the Management Discussion and Analysis forming part of this Annual Report.

INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY

Your Company has in place adequate internal control systems commensurate with the size of its operations. The internal control systems, comprising of policies and procedures, are designed to ensure sound management of your Company''s operations, safekeeping of its assets, optimal utilization of resources, reliability of its financial information and compliance. Clearly defined roles and responsibilities have been institutionalized. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Company''s operations.

DIRECTOR''S RESPONSIBILITY STATEMENT

The audited accounts for the year under review are in conformity with the requirements of the Act and the Accounting Standards. The financial statements reflect fairly the form and substance of transactions carried out during the year under review and reasonably present your Company''s financial condition and results of operations.

Based on the information and explanations obtained by your Directors from the management of your Company, your Directors state that:

i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv) the Directors have prepared the Annual Accounts of the Company on a going concern basis;

v) the Directors have laid down internal financial controls and that such internal financial control are adequate and are operating effectively; and

vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Note No. 42 to the financial statements.

EMPLOYEE STOCK OPTION SCHEMES 2006 and 2013 (ESOS 2006 & ESOS 2013)

ESOS – 2006

During the year 5,430 Stock Options have vested in eligible employees. The Nomination and Remuneration Committee ("the Committee") allotted 52,221 equity shares of Rs. 10 each of your Company upon exercise of Stock Options by the employees.

ESOS – 2013

During the year, the Committee granted 35,060 Stock Options and 12,630 Restricted Stock Units to eligible employees of your Company subject to the provisions of the Company''s Employee Stock Option Scheme ("Scheme – 2013"). 12,559 Stock Options have vested in the option grantees in terms of the provisions of the Scheme 2013. However, no Restricted Stock Units have vested in the option grantees in terms of the provisions of Scheme 2013.

The summary information on Options and Restricted Stock Units granted under the above mentioned schemes are provided in Annexure V to this Report.

A certificate received from the Statutory Auditors on the implementation of your Company''s Employees Stock Option Scheme 2006 and Employees Stock Option Scheme 2013 will be placed at the ensuing Annual General Meeting for inspection by the Members.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, required to be disclosed pursuant to provision of Section 134 of the Act read with the Companies (Accounts) Rules, 2014 is given in Annexure VI to this Report.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ("CSR") Committee which is chaired by Mrs. Rajashree Birla. The other Members of the Committee are Ms. Tarjani Vakil, an Independent Director and Mr. Lalit Naik, the Managing Director of your Company. Dr. (Mrs.) Pragnya Ram, Group Executive President, Corporate Communications & CSR, is a Permanent Invitee to the Committee. Your Company also has in place a CSR Policy and the same is available on the website of the Company at www.adityabirlanuvo.com.The Committee places before the Board the details of the activities to be undertaken during the year.

Your Company is a caring corporate citizen and lays significant emphasis on the development of the host communities around which it operates. With this intent, the Company has identified several projects relating to Social Empowerment & Welfare, Infrastructure Developments, Sustainable Livelihood, Health Care and Education during the year and initiated various activities in neighbouring villages around the plant locations.

The work on several CSR initiatives has gained momentum during the year, resulting in a spend of Rs. 9.61 Crore (the same being 2.04% of the average net profits of the last 3 years as defined for the purposes of CSR). A detailed report is attached as Annexure VII forming part of this report.

DIRECTORS

Changes in Board constitution –

Mr. B. L. Shah, the Non-Executive Director of your Company, resigned from the Board of your Company with effect from 25th September, 2014. Dr. Rakesh Jain stepped down as the Company''s Managing Director and as Director from the close of business hours on 30th June, 2014 due to his personal commitments. The Board places on record its deep appreciation for the services rendered by them during their tenure as the Members of the Board. Mr. Lalit Naik, the Deputy Managing Director has been appointed as the Managing Director w.e.f. 1st July, 2014.

Mr. Kumar Mangalam Birla and Mr. T. Chattopadhyay retire from office by rotation and being eligible, have offered themselves for re- appointment. The Directors recommend the said re-appointments. Items seeking your approval on the above re-appointments are included in the Notice convening the Annual General Meeting. Brief resumes of the Directors seeking re- appointments form part of the Notice of the ensuing Annual General Meeting.

Further details on the Board of Directors are provided in the Corporate Governance Report forming part of this Annual Report.

Meetings of the Board –

During the year, the Board of Directors of your Company met 5 times to deliberate on various matters. The details of Board Meetings and the meeting of Independent Directors held are given in the Corporate Governance Report.

Composition of the Audit Committee –

The Board has constituted the Audit Committee which comprises of Ms. Tarjani Vakil, Mr. B. R. Gupta, Mr. G. P. Gupta, and Mr. P. Murari as the members. Other details of the Audit Committee are listed in the Corporate Governance Report. The Audit Committee met 7 times during the year under review.

Independent Director''s Statement –

The Independent Directors on your Company''s Board have given their respective declarations that they meet the criteria of Independence as provided in Section 149(6) of the Act and Clause 49 of the Listing Agreement.

Policy on Appointment and Remuneration of Directors and Key Managerial Personnel –

The appointment and remuneration of Directors and KMPs is as per policy of your Company.

Annual Evaluation –

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board assessed and evaluated the effectiveness of its functioning and that of the Committees and of the individual Directors by seeking their inputs on various aspects of the Board/Committee Governance. The Nomination and Remuneration Committee (NRC) and the Board have reviewed the performance of the individual directors and the Chairman on the basis of criteria such as contributions at the meetings, their preparedness, inputs, etc., on the issues to be discussed.

The details of programme for familiarisation of the Independent Directors of your Company is available on the Company''s website viz. www.adityabirlanuvo.com.

Remuneration Policy -

The NRC has formulated the Remuneration policy of your Company which is attached as Annexure VIII to this report. Details of policy are available on the Company''s website viz.www.adityabirlanuvo.com.

KEY MANAGERIAL PERSONNEL

During the year, Mrs. Hutokshi Wadia, Company Secretary and Compliance Officer, resigned from the services of the Company, w.e.f. 1st March, 2015, consequent to her movement to another group company. Your Board has appointed Mr. Ashok Malu as the Company Secretary and Compliance Officer of the Company effective 1st March, 2015.

AUDITORS

STATUTORY AUDITORS AND THEIR REPORT

M/s. Khimji Kunverji & Co., and S R B C & Co. LLP, Joint Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Auditors have given their consent in writing and have furnished a certificate to the effect that their re-appointment, if made, would be in accordance with the provisions of Section 139 (1) of the Act and that they meet with the criteria prescribed under Section 141 of the Act. Your Directors recommend their re-appointment at the ensuing Annual General Meeting.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

COST AUDITOR AND COST AUDIT REPORT

In terms of the provisions of the Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors of your Company have, on the recommendation of the Audit Committee, appointed the following Cost Auditors for conducting the audit of the cost records of the Company for the financial year 2015-16 at the remuneration as mentioned in the Notice convening the AGM:- i) M/s. Ashwin Solanki & Associates, Cost Accountants Firm Registration Number - 100392 - for Indian Rayon, Veraval – for Viscose Filament Yarn and Chemicals

ii) M/s. K. G. Goyal & Associates, Cost Accountants Firm Registration Number - 000024 - for Indo Gulf Fertilisers, Jagdishpur- for Fertilisers

iii) M/s. R. Chakraborty & Associates, Cost Accountants Firm Registration Number - 100481 - for Jaya Shree Textiles, Rishra – for Textiles, and

iv) M/s. S. S. Puranik & Associates, Cost Accountants Firm Registration Number - 100313 - for Insulators – Halol & Rishra.

As required under the Act, the remuneration payable to the cost auditor is required to be placed before the Members at the general meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to Cost Auditors is included in the notice convening the Annual General Meeting. The members are requested to ratify the remuneration payable to the Cost Auditors for 2015-16.

Your Compay has filed the Cost Audit and Compliance Report for Financial Year 2014 with the Government.

SECRETARIAL AUDITORS

In terms of the provision of the Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Board has appointed M/s. BNP & Associates, Company Secretaries, Mumbai as the Secretarial Auditor for conducting a Secretarial Audit of your Company for the financial year ended 31st March, 2015. The report of the Secretarial Auditors is attached as Annexure IX. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

AWARDS AND RECOGNITION

- Indo Gulf Fertlisers:

i) Global CSR Excellence & Leadership Award for best use of CSR Practice in Manufacturing awarded by World CSR Congress, World CSR Day & World CSR Federation on 17th February, 2015

- Aditya Birla Insulators – Halol Division:

i) Greentech foundation "GOLD" Award for outstanding achievements in Best Strategy in Human Resource received from Greentech Foundation for Best Strategy in Human Resource, on 27th June, 2014

ii) Certificate of recognition for Occupational Health & Safety Management System, received from the British Standards Institution (BSI)for maintaining ISO Certifications.

- Madura Fashion & Lifestyle: Van Heusen

i) Marketing Campaign of the Year - Global Marketing Excellence Awards

ii) Retail Marketing Campaign of the Year - Asia Retail Congress

iii) Impactful Retail Design - Asia Retail Congress

iv) Social Media Campaign of the Year - Asia Retail Congress

v) Best use of LinkedIn - Asia Retail Congress

vi) Best use of Twitter - Asia Retail Congress

vii) Best Loyalty program of the year - AIMIA loyalty awards

viii) Best Design concept of the year - Images Fashion Awards

ix) Most Valuable Brand in the clothing category - WCRC

Allen Solly

i) Social Media Awards – (Best Use of Twitter Award) - Youth Marketing Forum

ii) Best Menswear Brand – (Western wear) – Images Fashion Awards

OTHER DISCLOSURES

- Your Company has not issued:- - any shares with differential voting; - any sweat equity shares

- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

- There were no material changes and commitments affecting the financial position of your Company between end of the financial year and the date of this report.

- There was no revision in the financial statements.

APPRECIATION

Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing cooperation and support provided by Central and State Governments and all Regulatory bodies.

Your Directors place on record their deep appreciation for the exemplary contribution made by the employees of the Company at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company''s growth.

For and on behalf of the Board

Kumar Mangalam Birla

Chairman

(DIN: 00012813)

Mumbai, 14th May, 2015


Mar 31, 2014

Dear Shareholders,

We are pleased to present the 57th Annual Report together with the Audited Accounts of your Company for the financial year ended 31st March, 2014.

MACRO-ECONOMIC SCENARIO

During the calendar year 2013, India''s GDP growth slipped to the decade''s low of 4.4%. Inflation and interest rates remained at high levels, hampering consumption demand and investments. During past few months, India has taken substantive measures to narrow fiscal imbalances, to tighten monetary policy and to move forward on structural reforms. The pick-up in exports in recent months and measures to curb gold imports have contributed to lowering the current account deficit.

In the calendar year 2014, as projected by IMF, India''s GDP growth is expected to improve to 5.4%. A stable government, strong global growth, improved export competitiveness and implementation of recently approved investment projects are expected to be the key contributing factors.

CONSOLIDATED FINANCIAL PERFORMANCE

Your Company has posted strong earnings growth and is competitively well positioned in most of its businesses. Consolidated revenue grew by 2% to Rs. 25,893 Crore. EBITDA surged by 19% to Rs. 4,937 Crore. Net Profit before one-off items rose by 16% to Rs. 1,226 Crore. Fashion & Lifestyle and Telecom businesses were the major contributors.

Key highlights :

a) Funds under the management of Aditya Birla Financial Services grew year on year by 14% to reach Rs. 122,362 Crore. Lending book in the NBFC business expanded to Rs. 11,550 Crore, registering a growth of 44%. While profitability in the Life Insurance business remained subdued, Asset management and NBFC businesses contributed to the bottom-line. ROACE remained strong at 25% per annum.

b) Fashion & Lifestyle business launched new stores at the run rate of one store per day to expand its retail presence to 1,750 exclusive brand outlets / stores spanning across 4.3 million square feet. Jaya Shree Textiles expanded its linen capacities to tap the sector growth while Pantaloons remained in the investment phase. The business has posted a sound ROACE at 28% per annum.

c) For over 5 years now, Idea Cellular has remained the biggest revenue market share gainer in India. Led by earnings growth and healthy cash profits, its balance sheet stands strong and ROACE stands improved to 12% per annum.

d) In the manufacturing businesses, Rayon business posted its highest ever profitability. While Agri business was impacted by the 41 days maintenance shutdown in the urea plant, profitability in the Insulators business improved. The urea plant resumed full operations from 8th April, 2014.

STANDALONE FINANCIAL PERFORMANCE

Your Company''s standalone revenue de-grew by 18% to Rs. 8,020 Crore on account of the divestment of the Carbon Black business and discontinuance of trading in imported P&K fertilisers. EBITDA is up by 12% toRs. 1,246 Crore. Fashion & Lifestyle and the Rayon businesses were the largest contributors. Profitability in the Agri business was impacted due to the shutdown. The dividend income from Birla Sun Life Insurance and Idea Cellular also added to the bottom-line. Net profit surged by 59% from Rs. 423 Crore to Rs. 674 Crore.

NEW INTIATIVES/MAJOR ACTIVITIES

- Divestment of Carbon Black and IT-ITeS businesses

To ensure greater focus in its core businesses, your Company has divested its Carbon Black business with effect from 1st April, 2013 and its holding in IT-ITeS business with effect from 9th May, 2014. The divestment proceeds have been and will be utilised to support the balance sheet and the growth plans of your Company.

- Linen Capacity Expansion

To tap sector growth and strengthen its market leadership in the linen segment, Jaya Shree Textiles has expanded its linen yarn capacity from 2,300 to 3,400 tons per annum and linen fabric processing capacity from 7.3 to 10.1 million metres per annum.

- Capital Infusion

The shareholders, at their meeting held on 25th April, 2012, approved the issue of 16,500,000 warrants to the Promoters/ Promoter Group in accordance with the SEBI Guidelines for an aggregate sum of about Rs. 1,500 Crore. A sum of Rs. 376 Crore was received as 25% application money in May 2012, on allotment of the aforesaid warrants. In March 2013, a sum of Rs. 456 Crore was received, being 75% amount

payable on the conversion of 6,680,000 warrants into equal number of equity shares. In November 2013, Promoters further infused a sum of Rs. 671 Crore on conversion of the remaining 9,820,000 warrants. The capital infusion has not only strengthened the financial position of the Company but has also supported its growth plans.

FINANCIAL PERFORMANCE (Rs. in Crore)

Consolidated Standalone 2013-14 2012-13 2013-14 2012-13

Profit Before Depreciation / Amortisation, Interest and Tax 4,937.07 4,142.32 1,245.81 1,116.07

Depreciation and Amortisation Expenses 1,608.86 1,295.49 199.02 219.18

Finance Costs 1,561.33 1,321.16 266.56 360.00

Profit Before Exceptional Items and Tax 1,766.88 1,525.67 780.23 536.89

Exceptional Items 5.42 - 24.06 -

Profit Before Tax 1,772.30 1,525.67 804.29 536.89

Tax Expenses 550.50 341.78 130.34 113.84

Net Profit Before Minority Interest 1,221.80 1,183.89 673.95 423.05

Minority Interest 78.92 125.00 - -

Profit for the Year 1,142.88 1,058.89 673.95 423.05

Opening Balance as per last audited financial statement 312.79 (298.69) 167.34 51.33

Amount Transferred on Stake Change/ Amalgamation of Subsidiaries/Joint venture (0.76) (0.44) - -

Demerger Expenses - (8.98) - -

Minority Interest Adjustment of Demerger Expenses - 4.48 - -

Profit available for Appropriation 1,454.91 755.26 841.29 474.38

Appropriations :

Debenture Redemption Reserve 24.63 44.70 20.98 28.89

Special Reserve 33.53 20.50 - -

General Reserve 501.40 249.65 500.00 200.00

Corporate Tax on Interim Dividend 3.59 29.97 - -

Proposed Dividend on Preference Share 0.01 0.01 0.01 0.01

Proposed Dividend on Equity Share 91.06 78.14 91.06 78.14

Equity Dividend relating to Previous period 0.07 - 0.01 -

Corporate Tax on Proposed Dividend 22.03 19.50 6.67 -

Closing Balance of Surplus in the Statement of Profit & Loss 778.59 312.79 222.56 167.34

DIVIDEND

For the financial year ended on 31st March, 2014, the Directors of your Company recommend for your consideration a dividend of:

i. Rs. 7.00 per Equity Share of Rs. 10/- each (last year Rs. 6.50 per Equity Share); and

ii. Rs. 6.00 per Preference Share of Rs. 100/- each (last year Rs. 6.00 per Preference Share).

The said dividend, if approved by the shareholders, would involve cash outflow of Rs. 97.74 Crore (including dividend distribution tax of Rs. 6.67 Crore) compared to Rs. 78.15 Crore (including dividend distribution tax of Rs. NIL) paid for the year 2012-13.

FINANCE

During the year 2013-14, your Company,

– Raised long-term loans, aggregating to Rs. 59 Crore by way of Rupee Term Loan and Rs. 200 Crore by way of issue of Non- Convertible Debentures (NCDs);

– Repaid term loans (including foreign currency borrowings) aggregating to Rs. 280.89 Crore and NCDs of Rs. 200 Crore; and

– Refinanced foreign currency borrowings aggregating to Rs. 182.96 Crore to get the benefit of lower interest cost.

HUMAN RESOURCES

Your Company strives to foster a culture for high performance. Ongoing learning, aligning HR systems in line with global bench-marks, aligning rewards and recognitions with performance have enabled your Company to sustain its reputation of being a meritocratic organization.

The Group''s Corporate Human Resources function continues to play an integral role in the Company''s talent management programme.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India (SEBI) and has complied with all mandatory provisions of Clause 49 of the Listing Agreement with the Stock Exchanges.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Statutory Auditors'' Certificate confirming compliance with Clause 49 of the Listing Agreement is annexed (Annexure A) and forms part of the Directors'' Report.

BUSINESS RESPONSIBILITY REPORT

SEBI, vide its circular CIR/CFD/DIL/8/2012 dated 13th August, 2012, has mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for certain listed entities describing the initiatives taken by the company from Environmental, Social and Governance perspective. BRR is attached and forms part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures if any;

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

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the Annual Accounts on a ''going concern basis''.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL RESULTS

During the year, following changes have taken place in the Subsidiary Companies:

¦ In the previous year ended 31st March, 2013, pursuant to the Scheme of Arrangement (''the Scheme'') under sections 391 to 394 of the Companies Act, 1956, the fashion retail business called the ''Pantaloons Format'' of Pantaloon Retail (India) Limited (PRIL) has been transferred by way of demerger to Pantaloons Fashion & Retail Limited (PFRL) on a going concern basis w.e.f. 8th April, 2013. The Scheme was operative from the Appointed Date, i.e. 1st July, 2012. Post demerger, the holding of your Company, through its wholly owned subsidiary Indigold Trade and Services Ltd. (ITSL) in PFRL became 50.09% Post - implementation of the Scheme, ITSL has made an Open Offer to the public shareholders of PFRL at a price of Rs. 175/- per share and acquired additional 17.87% of the issued and paid up capital of PFRL. As a result of this, your Company''s holding through ITSL in PFRL increased to 67.95%.

¦ ABNL IT & ITES Limited, a wholly owned Subsidiary of the Company, on receipt of requisite consents and approvals has divested its IT & ITeS business to a group of financial investors led by CX Partners and Capital Square Partners.

As a result of the above divestment, Aditya Birla Minacs Worldwide Limited and its subsidiaries ceased to be subsidiaries of the Company with effect from 9th May, 2014. Further, Aditya Birla Minacs BPO Pvt. Limited has become a direct subsidiary of ABNL IT & ITES Limited.

Consolidated Financial Statements, pursuant to Clause 41 of the Listing Agreement, entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, are attached for your reference.

In line with the General Exemption granted by Ministry of Corporate Affairs vide, Circular 2/2011 dated 8th February, 2011, from attaching the Balance Sheet of subsidiaries subject to certain conditions, the Balance Sheet, the Statement of Profit and Loss, Report of the Board of Directors and Report of the Auditors of the subsidiary companies have not been attached to the Balance Sheet of the Company as at 31st March, 2014.

The annual accounts of the subsidiary companies and the related detailed information are available to shareholders. The annual accounts of the subsidiary companies are kept open for inspection by any shareholder, at the Registered Office of the Company and of the concerned subsidiary companies. Any shareholder, who desires to obtain a copy of the said documents of any of the subsidiary companies, may send a request in writing to the Company Secretary at the Registered Office of the Company so that the needful can be done.

EMPLOYEE STOCK OPTION SCHEMES 2006 & 2013 (ESOS 2006 & ESOS 2013)

At the Annual General Meeting of the Company held on 6th September, 2013, the shareholders of your Company approved the formulation of ESOS 2013.

Details of the Stock Options issued under ESOS 2006 & ESOS 2013, up to 31st March, 2014, and the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure B to this Report.

A certificate from the Auditors of the Company, confirming that the ESOS 2006 & ESOS 2013 have been implemented in accordance with the SEBI Guidelines and the resolutions passed by the shareholders shall be placed at the Annual General Meeting, for inspection by members.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 217(1)(e) of the Companies Act, 1956, is set out in a separate statement attached to this Report (Annexure C) and forms part of it.

In accordance with the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and accounts as therein set out, are being sent to all shareholders of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of your Company.

DIRECTORS

During the financial year 2014, there were no changes in directorship of your Company.

Pursuant to the provisions of Section 149 of the Companies Act 2013 read with revised Clause 49 of the Listing Agreement (w.e.f. from

1st October, 2014) the Directors, have subject to the approval of shareholders, appointed Ms. Tarjani Vakil, Mr. P. Murari, Mr. B. R. Gupta, Mr. S. C. Bhargava and Mr. G. P. Gupta as Independent Directors. Your Company has received declarations from the Independent Directors confirming that they meet the criteria of independence as prescribed under section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement. In accordance with the provisions of section 149(4), section 160 and proviso to section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the ensuing Annual General Meeting of the Company. Your Directors commend the resolutions for your approval.

The shareholders at the AGM held on 10th July, 2009 had appointed Dr. Rakesh Jain as the Managing Director of the Company, w.e.f 1st July, 2009 for a period of 5 years ending on 30th June, 2014. Due to his personal commitments, Dr. Jain has requested the Board to relieve him from the office of Managing Director as well as Director of the Company, effective from the close of business hours on 30th June, 2014 when his current term as Managing Director of the Company expires. Based on the recommendations of the Nomination and Remuneration Committee, the Board accepted the request of Dr. Jain to relieve him from the office of Managing Director as well as the Director of the Company, effective from close of business hours on 30th June, 2014. The Directors have placed on record its deep appreciation for the valuable services rendered by Dr. Rakesh Jain during his association with the Company.

Subject to the approval of the shareholders, Mr. Lalit Naik, the Deputy Managing Director of the Company has been appointed as the Managing Director, w.e.f. 1st July, 2014. The resolution, seeking Mr. Lalit Naik''s appointment has been included in the Notice of the ensuing Annual General Meeting together with his brief details. Your Directors commend the resolution for your approval.

In order to comply with the provisions of the Companies Act, 2013, read with rules framed thereunder, it was proposed to make the term of each of the Executive Directors of the Company, liable to retire by rotation.

Mr. Sushil Agarwal was appointed as the Whole- time Director of the Company at the Annual

General Meeting of the Company held on 28th September, 2011 and was not liable to retire by rotation. As authorised by the shareholders at the aforesaid Annual General Meeting, the Board of Directors approved partial modification in the terms of appointment of Mr. Sushil Agarwal to include him in the directors liable to retire by rotation. Since, the term of appointment of Mr. Sushil Agarwal has been amended to make it liable to retire by rotation, the resolution seeking Mr. Sushil Agarwal''s appointment together with his brief details have been included in the Notice of the ensuing Annual General Meeting. Your Directors commend the resolution for your approval.

Mrs. Rajashree Birla and Mr. B. L. Shah, Directors of your Company retire from the office by rotation and, being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting. Resolutions seeking their appointment together with their brief profile have been included in the Notice of ensuing Annual General Meeting. Your Directors commend the resolutions for your approval.

AWARDS AND RECOGNITION

Your Company has been the proud recipient of the following awards and recognitions:

- INDIAN RAYON DIVISION

i) 3rd Annual Greentech CSR Award-2013 in Chemical Sector, awarded by Greentech Foundation, New Delhi.

- JAYA SHREE TEXTILES DIVISION

i) Performance Excellence Trophy – IMC Ramkrishna Bajaj National Quality Award 2013.

ii) Trophy for significant improvement in productivity – CII Eastern Region Productivity Awards 2013-2014.

iii) Bronze Award in the Chairman''s WCM Awards 2013 in the Business Category.

- MADURA FASHION AND LIFESTYLE

Peter England:

i) India''s Second Most Trusted Brand – Brand Equity Study (2008-13).

ii) Most Desired Fashion Concept for PE-Oxygeans.

iii) Best Store Front & Best Signage – Retail Design Awards 2014.

Louis Philippe:

i) Best Apparel Brand – Textile Ministry.

ii) Champion CRM Program of the Year – Loyalty Summit 2013.

Van Heusen:

i) Most Popular Youth Brand – Women''s formal wear Award, from Youth Marketing Forum.

Allen Solley:

i) Best Window Display 2013–VMRD Awards.

ii) Best Formal Brand – North East Consumer Forum.

Planet Fashion:

i) Awarded certificate for entering top 100 ranks for franchisee opportunities for the year 2013.

- ADITYA BIRLA INSULATORS – RISHRA DIVISION

i) Valued Customer Award by CPRI in Testing and Certification category.

ii) Special Export Award by CAPEXIL in Export category.

AUDITORS

M/s. Khimji Kunverji & Co., Joint Statutory Auditor of the Company, retire and, being eligible, offer themselves for appointment, to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.

S. R. Batliboi & Co. LLP, Joint Statutory Auditor of the Company have expressed their unwillingness to continue as the Joint Statutory Auditors of the Company and Branch Auditors of Indo Gulf Fertiliser Division at Jagdishpur and Jaya Shree Textiles Division at Rishra, upon the conclusion of the ensuing Annual General Meeting. S R B C & Co. LLP have expressed their willingness to be appointed as Joint Statutory Auditors of the Company and Branch Auditors as aforesaid at the ensuing Annual General Meeting of the Company, to hold office till the conclusion of the next Annual General Meeting. A special notice has been received from a member holding five lakh shares in accordance with provisions of Section 140(4)(i) of the Companies Act, 2013 proposing appointment of S R B C & Co. LLP, as the Joint Statutory Auditors of the Company and Branch Auditors as aforesaid.

Your Directors recommend the appointment of the Auditors as set out in the accompanying Notice of the Annual General Meeting.

A Certificate from them confirming compliance of Section 115 of the Companies Act, 2013, has also been received by the Company.

The observations made in the Auditors'' Report are self-explanatory and, therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

COST AUDITORS

The Company has appointed the following Cost Auditors for conducting the audit of cost records of the Company for the financial year 2013-14: i) For Indian Rayon, Veraval - VFY & Chemicals - M/s. Ashwin Solanki & Associates

iii) For Jaya Shree Textiles, Rishra - Textiles

M/s. R. Chakraborty & Co.

iv. For Indo Gulf Fertilisers, Jagdishpur - Fertilisers & Chemicals - M/s. K. G. Goyal & Associates

v) For Madura Fashion and Life Style,

Bengaluru - Ready Made Garments -

M/s. G. N. V. & Associates vi) For Insulators - Halol & Rishra - Insulators -

M/s. S. S. Puranik & Associates

The Audit Committee has received a Certificate from the Cost Auditors certifying their independence and arm''s length relationship with your Company. In accordance with the Company''s (Cost Audit Report) Rules, 2011, the due date for filing the Cost Audit Report in XBRL for the financial year ended 31st March, 2013 was 30th September, 2013 and the same was filed before the due date.

APPRECIATION

Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. The Directors gratefully acknowledge the ongoing co-operation and support provided by Central and State Governments and all Regulatory bodies.

The Directors place on record their deep appreciation for the exemplary contribution made by employees at all levels, their dedicated efforts and enthusiasm has been pivotal to the Company''s growth.

For and on behalf of the Board

Mumbai Kumar Mangalam Birla

26th June, 2014 Chairman


Mar 31, 2013

Dear Shareholders,

The are pleased to present the 56th Annual Report together with the Audited Accounts of your Company for the financial year ended 31st March, 2013.

MACRO-ECONOMIC SCENARIO

During the financial year 2012-13, India''s GDP growth slipped to the decade''s low of 5%. High current account deficit (CAD), fiscal deficit and persistently high inflation affected savings growth, domestic consumption and investment cycle. Going forward, inflation and CAD are expected to decline on account of falling prices of gold and commodities. Government is also targeting reduction in fiscal deficit through diesel price hikes and disinvestment plans. These developments coupled with expected normal monsoon, signals an improvement in economy as we progress ahead.

CONSOLIDATED FINANCIAL PERFORMANCE

During the year under review, your Company posted strong earnings growth, despite some of the businesses being affected due to testing macro-economic environment. Consolidated revenue grew by 17% to Rs. 25,490 Crore. EBITDA surged by 27% to Rs. 4,142 Crore. Net Profit rose by 19% to Rs. 1,059 Crore. Financial Services businesses led the growth in profitability, followed by Telecom and Fashion & Lifestyle businesses.

Pursuant to the acquisition of controlling stake in ''Pantaloons Fashion'' business, its financials have been consolidated w.e.f. the Appointed Date, i.e., 1st July, 2012.

Key Highlights:

a) Aditya Birla Financial Services gained market share across most of its businesses. Its assets under the management grew to USD 20 billion. Lending book in the NBFC business expanded to more than Rs. 8,000 Crore. Birla Sun Life Insurance distributed interim dividend @ 10% to its shareholders.

b) Since past 4 years, Idea Cellular has remained the biggest revenue market share gainer in India. Having a strong balance sheet and free cash flow generation, the Board of Directors of Idea has recommended maiden dividend.

c) The Fashion & Lifestyle business is generating combined annualised revenue of USD 1 billion. Its operating market size got enlarged with the acquisition of Pantaloons. Its retail presence stands expanded to 1,443 exclusive brand outlets/stores spanning across 3.7 million square feet.

d) IT-ITeS business reached Rs. 2,500 Crore revenue mark. It is generating steady cash profit to fund its capital expenditure and working capital requirements.

e) Having received the approval of the shareholders, your Company is in the process of divesting its Carbon Black Business w.e.f. 1st April, 2013. The cash inflow from the divestment will reduce debt and strengthen your Company''s balance sheet. This will support growth plans of your Company and ensure greater focus on the other businesses.

f) EBITDA from manufacturing operations (Agri, Rayon and Insulators) grew year on year by 10% to Rs. 446 Crore. New Viscose Filament Yarn plant has been commissioned and it is currently under ramp up.

STANDALONE FINANCIAL PERFORMANCE

Revenue grew by 16% to Rs. 9,754 Crore and EBITDA grew by 6% to Rs. 1,116 Crore. While earnings in the Carbon Black and Insulators businesses were constrained due to cheaper imports, volume growth and higher realisation in the linen segment and in the Rayon business supported the earnings growth. Profitability in the Agri-Business was impacted due to planned maintenance shutdown for 20 days. Dividend income of Rs. 146 Crore received from Birla Sun Life Insurance also added to the bottom-line. Net profit surged by 22% to Rs. 423 Crore.

NEW INITIATIVES/MAJOR ACTIVITIES

- Brownfield Expansion

A. Viscose Filament Yarn (VFY)

Indian Rayon has commissioned its additional unit of Viscose Filament Yarn using Spool technology imported from ENKA, Germany in the existing premises at Veraval at a capex of about Rs. 270 Crore. This will help Indian Rayon to manufacture premium quality yarn, especially in the superfine segment.

B. Fertilisers

In January 2013, the Board of Directors of your Company approved brownfield expansion of Urea capacity by 3,850 tons per day at the existing fertiliser complex in Jagdishpur, U.P. Your Company is awaiting requisite approvals from the Government.

- Preferential Allotment

The shareholders in their meeting, held on 25th April, 2012 approved the issue of 16,500,000 warrants to the Promoters/ Promoter Group in accordance with the relevant SEBI guidelines for an aggregate sum of about Rs. 1,500 Crore. In terms of the relevant SEBI guidelines, 25% of the aggregate amount, i.e., Rs. 376 Crore was received in May 2012 and Rs. 456 Crore was received towards the balance 75% amount payable on conversion of 6,680,000 warrants, in March 2013. Consequently, 6,680,000 warrants were converted into equal number of shares and were allotted to the Promoters/ Promoter Group. In terms of the Issue, the balance 9,820,000 warrants are to be converted on or before 9th November, 2013. This equity infusion and remaining capital infusion of about Rs. 671 Crore will not only strengthen the financial position of your Company but also act as a seed capital for capturing the next level of growth.

- Acquisition of Future Group''s Pantaloons Fashion Business

To meet your Company''s strategic intent to be on the top of the league in the Country through an extension into the value segment, your Company has acquired controlling stake in Future Group''s ''Pantaloons Fashion'' business post its demerger from Pantaloon Retail (India) Ltd. (PRIL), through its subsidiary Peter England Fashions and Retail Limited [now name changed to Pantaloons Fashion & Retail Limited (PFRL)]. This acquisition will not only expand your company''s operating market size but will also strengthen its leadership position in the branded apparels sector. Post approval of the shareholders of PRIL, the Bombay High Court sanctioned the Scheme of Arrangement (Scheme) on 1st March, 2013. On the Scheme becoming effective on 8th April, 2013, all the net assets and operations pertaining to the ''Pantaloons Fashion'' business have been transferred, on a going-concern basis, along with debt to PFRL. The Appointed Date of transfer is 1st July, 2012. Post demerger, the holding of your Company, through its wholly owned subsidiary Indigold Trade and Services Ltd. (ITSL), in PFRL became 50.09%. An open offer at a pre-determined price of Rs. 175/- per share has been made by ITSL to the public shareholders of PFRL. On receipt of necessary approvals, the equity shares of PFRL will be listed on the National Stock Exchange of India Limited and BSE Ltd.

- Divestment of Carbon Black Business

Considering the Carbon Black Business scenario, both in the Indian and the global context, your Company has, subject to the requisite approvals, decided to divest your Company''s Carbon Black Business, on a going- concern basis, by way of slump sale to SKI Carbon Black (India) Private Limited, an Aditya Birla Group Company, for a lump sum consideration of Rs. 1,451 Crore as an enterprise value, subject to the adjustment for net working capital. Subsequent to the approval of the shareholders, your Company is in the process of divesting the Carbon Black Business.

FINANCIAL PERFORMANCE (Rs. Crore)

Consolidated Standalone

2012-13 2011-12 2012-13 2011-12

Profit Before Depreciation/ Amortisation, Interest and Tax 4,142.32 3,259.46 1,116.07 1,050.06

Depreciation and Amortisation Expenses 1,295.49 1,092.33 219.18 203.06

Finance Costs 1321.16 837.09 360.00 312.82

Profit Before Exceptional Items and Tax 1,525.67 1,330.04 536.89 534.18

Exceptional Items - (103.88) - (103.88)

Profit Before Tax 1,525.67 1,226.16 536.89 430.30

Tax Expenses 341.78 216.01 113.84 84.91

Profit Before Minority Interest 1,183.89 1,010.15 423.05 345.39

Minority Interest 125.00 120.02 - -

Profit for the Year 1,058.89 890.13 423.05 345.39

Opening Balance as per last audited financial statement (298.69) (839.33) 51.33 28.19

Amount Transferred on Stake Change/ Amalgamation of Subsidiaries/Joint Venture (0.44) (2.70) - -

Demerger Expenses (8.98) - - -

Minority Interest Adjustment of Demerger Expenses 4.48 - - -

Profit available for Appropriation 755.26 48.10 474.38 373.58

Appropriations:

Debenture Redemption Reserve 44.70 54.13 28.89 54.13

Special Reserve 20.50 11.63 - -

General Reserve 249.65 200.70 200.00 200.00

Capital Fund - 0.01 - -

Corporate Tax on Interim Dividend 29.97 11.81 - -

Proposed Dividend on Preference Shares 0.01 0.01 0.01 0.01

Proposed Dividend on Equity Shares 78.14 68.11 78.14 68.11

Corporate Tax on Proposed Dividend 19.50 0.39 - -

Surplus/(Deficit) in the Statement of Profit and Loss 312.79 (298.69) 167.34 51.33

DIVIDEND

For the financial year ended on 31st March, 2013, your Directors recommend for your consideration, a dividend of:

i. Rs. 6.50/- per Equity Share of Rs. 10/- each (last year Rs. 6/- per Equity Share); and

ii. Rs. 6.00/- per Preference Share of Rs. 100/- each (last year Rs. 6/- per Preference Share).

The said dividend, if approved by the Members, would involve cash outflow of Rs. 78.15 Crore (including Corporate Tax on Proposed Dividend of Rs. NIL) compared to Rs. 68.12 Crore (including Corporate Tax on Proposed Dividend of Rs. NIL) paid for the year 2011-12.

FINANCE

During the year 2012-13, your Company,

- Raised long-term loans, aggregating to Rs. 161.64 Crore by way of foreign currency borrowings, Rs. 35 Crore by way of Rupee Term Loan and Rs. 300 Crore by way of issue of Non-Convertible Debentures (NCD).

- Repaid term loans aggregating to Rs. 292.64 Crore and NCDs of Rs. 200 Crore.

HUMAN RESOURCE

Several innovative people focused initiatives have been instituted at the Group level, and these are translated into action at all of the Group Companies. Our basic objective is to ensure that a robust talent pipeline and a high-performance culture, centred around accountability is in place. We feel this is critical to enable us to retain our competitive edge.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India (SEBI), and has complied with all mandatory provisions of Clause 49 of the Listing Agreement.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Statutory Auditors'' Certificate, confirming compliance with Clause 49 of the Listing Agreement with Stock Exchanges, is annexed to (Annexure A) and forms part of the Directors'' Report.

Business Responsibility Report

SEBI, vide its Circular CIR/CFD/DIL/8/2012 dated 13th August, 2012, has mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for certain listed entities describing the initiates taken by the Company from Environmental, Social and Governance perspective. Accordingly, BRR is attached and forms part of the Annual Report.

217(2AA) STATEMENT BY DIRECTORS

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

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

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts on a ''going-concern basis''.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL RESULTS

During the year, the following changes have taken place in the Subsidiary Companies:

- Aditya Birla Financial Services Private Limited (ABFSPL), a subsidiary company, has been classified as a "Core Investment Company" instead of NBFC as hitherto, by the Reserve Bank of India vide its approval, dated 11th April, 2012.

- As part of internal restructuring, Company transferred its majority stake in :

- Peter England Fashions & Retail Limited to Indigold Trade & Services Limited, a subsidiary company, on 1st June, 2012. On 23rd April, 2013, the name of Peter England Fashions & Retail Limited was changed to Pantaloons Fashion & Retail Limited.

- LIL Investment Limited to Aditya Birla Financial Services Private Limited, a subsidiary company, on 31st December, 2012. On 10th January, 2013, the name of LIL Investment Limited was changed to Aditya Birla Housing Finance Limited (ABHFL).

- Aditya Birla Minacs Worldwide Limited, a subsidiary company, to ABNL IT & ITES Limited, a subsidiary company, on 25th March, 2013.

- The Company through its subsidiary, ABFSPL, acquired 1% stake each in Birla Sun Life Asset Management Company Limited (BSLAMC) and Birla Sun Life Trustee Company Private Limited (BSTCL) [earlier Joint Venture Companies with Sun Life (India) AMC Investments Inc. ("Sun Life")] on 10th October, 2012, from Sun Life. Consequent to the said acquisition BSLAMC and BSTCL have become subsidiaries of ABFSPL.

- In order to improve operational efficiency, Aditya Birla Minacs Worldwide Limited, a subsidiary company, undertook re-structuring of its holding in its subsidiaries. As a result, Aditya Birla Minacs BPO Private Limited, earlier a subsidiary of Aditya Birla Minacs BPO Limited, UK, is now a direct subsidiary of Aditya Birla Minacs Worldwide Limited.

Consolidated Financial Statements, pursuant to Clause 41 of the Listing Agreement, entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, are attached for your reference.

In line with the General Exemption granted by the Ministry of Corporate Affairs, vide Circular 2/2011, dated 8th February, 2011, for not attaching the Balance Sheet of subsidiaries subject to certain conditions, the Balance Sheet, the Statement of Profit and Loss, Report of the Board of Directors and Report of the Auditors of the subsidiary companies have not been attached to the Balance Sheet of the Company as at 31st March, 2013.

The annual accounts of the subsidiary companies and the related detailed information are available to Shareholders of the Holding and Subsidiary Companies. The annual accounts of the subsidiary companies are kept open for inspection by any Shareholder, at the Registered Office of the Company and of the concerned Subsidiary Companies. Any Shareholder, who desires to obtain a copy of the said documents of any of the Subsidiary Companies, may send a request in writing to the Company Secretary at the Registered Office of the Company, so that the needful can be done.

EMPLOYEE STOCK OPTIONS SCHEME (ESOS)-2006

Details of the stock options issued under ES0S-2006 up to 31st March, 2013, as also the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the "SEBI Guidelines"), are set out in the Annexure B to this Report.

A certificate from the Auditors of the Company, confirming that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders, shall be placed at the Annual General Meeting for inspection by members.

EMPLOYEE STOCK OPTIONS SCHEME (ESOS) - 2013 - ESOP

Your Directors appreciate the critical role of the employees in your Company''s growth. To share the value created by employees and to promote the culture of employee ownership in your Company, the Directors have subject to the approval of the shareholders, introduced the "Employee Stock Options Scheme-2013" (ES0S-2013). This is in accordance with the provisions of Securities and Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended.

The resolution, seeking approval to the ES0S-2013, has been included in the Notice of the ensuing Annual General Meeting together with brief details of the Scheme. Your Directors commend the resolution for your approval.

FIXED DEPOSITS

Your Company was accepting fixed deposits from the employees. Acceptance of such fixed deposits had been discontinued from January 2009, onwards. As on 31st March, 2013, there are no outstanding fixed deposits.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

The Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 217(1)(e) of the Companies Act, 1956, is set out in a separate statement attached to this Report (Annexure C) and forms part of it.

In accordance with the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and accounts as therein set out are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS

During the year, following were the changes in directorship of the Company:

- Mr. Pranab Barua resigned as Whole-time Director of the Company in May 2012.

- Subject to the approval of the Shareholders, Mr. Lalit Naik has been appointed as Deputy Managing Director of the Company w.e.f. 1st January, 2013. The resolution, seeking Mr. Naik''s appointment, has been included in the Notice of the ensuing Annual General Meeting together with his brief details. Your Directors commend the resolution for your approval.

Following Directors of the Company retire from office by rotation and, being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting:

- Mr. Kumar Mangalam Birla

- Mr. G.P. Gupta

- Mr. T. Chattopadhyay

Resolutions seeking their appointment have been included in the Notice of the ensuing Annual General Meeting together with their brief details.

AWARDS AND RECOGNITION

Your Company has been the proud recipient of the following awards and recognitions:

- INDIAN RAYON DIVISION

- Environment Excellence Award-2012 in Chemical Sector, Awarded by Greentech Foundation, New Delhi.

- 11th Greentech Safety Award-2012, Awarded by Greentech Foundation, New Delhi.

- 2nd Annual Greentech CSR Award-2012 in Chemical Sector, Awarded by Greentech Foundation, New Delhi.

- JAYA SHREE TEXTILE DIVISION

- CII (ER) Quality Award for most significant improvement in TQM category.

- CII (ER) Productivity Award for Sustained Level of High Productivity Category.

- Linen Fabric Division - IR & HRD, received the 3-Star Outstanding Award in the International Convention of Quality Circle Concept held at Kuala Lumpur, Malaysia, in October 2012.

- Wool Combing Division - IR & HRD, received the 3-Star Outstanding Award in the International Convention of Quality Circle Concept held at Kuala Lumpur, Malaysia, in October 2012.

- CARBON BLACK DIVISION, Gummidipoondi

- "Best Supplier - 2012" from Fenner India Ltd. (customer).

- CARBON BLACK DIVISION, Patalganga

- Patalganga Unit has been selected for Certificate of Appreciation for CSR in Chemical Sector by Greentech Foundation, New Delhi.

- Certificate of Appreciation by Jan Shikshan Sanstha Raigad for Tribal Livelihood of Tribes.

- MADURA FASHION AND LIFESTYLE

- Peter England - The winner of IAA Olive Crown Awards 2013 (GOLD) Promoting Water Conservation through PE Oxygens.

- ADITYA BIRLA INSULATORS - RISHRA DIVISION

- Performance Excellence Trophy-2011 from IMC RAMKRISHNA BAJAJ NATIONAL QUALITY AWARD.

AUDITORS

The observations made in the Auditors'' Report are self-explanatory and, therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

M/s. Khimji Kunverji & Co. and M/s. S. R. Batliboi & Co. LLP (earlier known as M/s. S. R. Batliboi & Co.), Jt. Statutory Auditors of the Company, retire and, being eligible, offer themselves for re-appointment, to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. Your Directors recommend their appointment, as set out in the accompanying Notice of the Annual General Meeting. A Certificate from them confirming compliance of Section 224(1B) of the Companies Act, 1956, has also been received by the Company.

APPRECIATION

Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the on-going co-operation and support provided by Central and State Governments and all Regulatory bodies.

Your Directors place on record their deep appreciation for the exemplary contribution made by employees at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company''s growth.

For and on behalf of the Board

Mumbai Kumar Mangalam Birla

29th May, 2013 Chairman


Mar 31, 2012

The are pleased to present the 55th Annual Report together with the audited accounts of your Company for the financial year ended 31st March, 2012.

MACRO ECONOMIC SCENARIO

Financial year 2011-12 was a challenging year for the economy with GDP growth further slowing down to 6.1%, in the third quarter. Rupee weakened against US dollar to historically low level of 54. High inflation and resultant monetary measures continued to constrain growth. However, with the much anticipated easing of inflation and interest rates, domestic demand growth is expected to improve going forward.

Amidst this testing macro-economic scenario, your Company posted strong earnings.

CONSOLIDATED FINANCIAL PERFORMANCE

Consolidated revenue crossed Rs 21,000 Crore mark. It grew year on year by 20%. While revenue growth of the Financial Services business moderated, the Telecom business posted 26% growth in revenue driven by MoU growth. The Fashion & Lifestyle and IT-ITeS businesses registered 24% and 23% revenue growth respectively. Manufacturing businesses garnered 33% rise in revenue largely driven by the commencement of trading in imported fertilisers. Increase in the realisation in Agri, Carbon Black, Rayon and Textiles businesses, to partly pass on the rise in production costs, also contributed.

Consolidated EBITDA rose by 21% to Rs 3,259 Crore - led by the Life Insurance, Telecom and Fashion & Lifestyle businesses. With the strong emergence of profit, Birla Sun Life Insurance Company Limited has declared 5% maiden dividend. Strong growth in the minutes of usage ("MoU") in the Telecom business and sales growth in the Fashion & Lifestyle business contributed to the profitable growth.

Net profit grew by 8% to Rs 890 Crore. Rise in depreciation and interest costs primarily relating to 3G investments in the Telecom business contained net profit growth.

STANDALONE FINANCIAL PERFORMANCE

Standalone revenue at Rs 8,433 Crore registered 31% growth. Agri business touched Rs 2,100 Crore revenue mark supported by commencement of trading in imported fertilisers. Textiles business crossed Rs 1,000 Crore revenue mark.

EBITDA rose by 9% to Rs 1,051 Crore - largely driven by the Fashion & Lifestyle, Agri and Textiles businesses. Higher trading of imported fertilisers in the Agri-business has augmented profitability, including pricing gain due to favourable forex movement. Improved realisation in the Rayon and the Textiles businesses also contributed. However, dumping from China and rise in production costs strained profitability in the Carbon Black and Insulators businesses.

Earnings before Tax and Exceptional Items grew by 8%. A provision of Rs 104 Crore has been made towards entry tax liability, largely related to the earlier years; the matter is sub-judice.

As a result, net profit de-grew by 9% to Rs 345 Crore.

NEW INTIATIVES /MAJOR ACTIVITIES

* Brown Field Expansion

Indian Rayon is planning to expand its presence in fine and superfine VFY segment using Spool Technology from ENKA, Germany at a capex of about Rs 270 Crore. The new technology will help Indian Rayon to manufacture premium segment quality yarn and cater to high margin premium segment. A sum of Rs 76 Crore has already been spent.

* Restructuring of IT-ITeS Business

As a part of restructuring of IT-ITeS business, your Company has, during the year under review, purchased 19,27,334 Equity Shares and 8,25,999 Equity Shares of Aditya Birla Minacs Worldwide Limited (ABMWL) from RHCP TXW Investments Inc. and RHCP Fund Holdings (Cyprus) Ltd. respectively. Further, as part of the above restructuring, Aditya Birla Minacs IT Services Limited and Aditya Birla Minacs Technologies Limited, subsidiaries of your Company, have been merged with ABMWL through a scheme of amalgamation sanctioned by the Karnataka High Court on 5th September, 2011. Consequently the shareholding of your Company and its subsidiary in ABMWL has increased to 99.85% as on 31st March, 2012.

* Preferential Allotment

With a view to strengthen the balance sheet of your Company, your Directors had been considering various proposals including capital infusion. Accordingly, in their meeting held on 26th March, 2012, the Board of Directors have decided to issue 1,65,00,000 warrants to the Promoters/ Promoter grossup in accordance with relevant SEBI guidelines for an aggregate sum of Rs 1,500 Crore. This was approved by the shareholders in their meeting held on 25th April, 2012. Accordingly, 25% of the above issue i.e., Rs 325 Crore has been received by the Company on 10th May, 2012 in terms of the relevant SEBI guidelines.

This equity infusion will not only strengthen the financial position of your Company but also act as a seed capital for capturing the next level of growth.

* Acquisition of Future Group's Pantaloon Retail Format Business

To meet your Company's strategic intent to be on the top of the league and to be the largest integrated branded fashion player in the country through an extension into the value segment, your Directors have decided, in principle, on 30th April, 2012 to acquire, directly or through its subsidiaries, a controlling stake in Pantaloon Format business, a division of Pantaloon Retail (India) Limited by making an investment of about Rs 800 Crore by way of optionally fully convertible debentures, subject to necessary approvals.

This acquisition will catapult your Company to the pole position in the branded fashion space in all the segments with a pan India presence.

The business-wise performance review, outlook and strategy have been spelt out in depth in the Management Discussion and Analysis section, which forms part of the Annual Report.

FINANCIAL PERFORMANCE

< Rs Crore)

Consolidated Standalone 2011-12 2010-11 2011-12 2010-11

Profit before Depreciation / Amortisation,

Interest and Tax 3,259.10 2,685.41 1,050.50 959.94

Depreciation and Amortisation Expenses 1,092.33 940.90 203.06 194.05

Finance cost 836.73 549.62 313.26 270.81

Profit before Exceptional Items and Tax 1,330.04 1,194.89 534.18 495.08

Exceptional (Gain)/Loss 103.88 103.84 103.88 -

Profit before Tax 1,226.16 1,091.05 430.30 495.08

Tax Expenses 216.01 183.08 84.91 115.39

Net Profit before Minority Interest 1,010.15 907.97 345.39 379.69

Share of Profit/(loss) of Associates - (0.01)

Minority Interest 120.02 85.86

Profit for the year 890.13 822.10 345.39 379.69

Opening balance as per last audited

financial statement (839.33) (1,284.96) 28.19 17.18 Amount transferred on Stake Change/

Amalgamation of Subsidiaries / Joint venture (2.70) (0.09)

Profit available for Appropriation 48.10 (462.95) 373.58 396.87

Appropriations :

Debenture redemption reserve 54.13 46.11 54.13 46.11

General Reserve 200.70 250.00 200.00 250.00

Special Reserve 11.63 7.70 Capital Fund 0.01 -

Proposed Dividend on Preference Share 0.01 0.01 0.01 0.01

Proposed Dividend on Equity Share 68.11 62.43 68.11 62.43 Corporate Tax on Dividend 12.20 10.13 10.13 Closing Balance of Surplus /

(Deficit) in the Statement of Profit & Loss (298.69) (839.33) 51.33 28.19

DIVIDEND

For the financial year ended on 31st March, 2012, your Directors recommend for your consideration a dividend of :-

i. Rs 6/- per Equity Share of Rs 10/- (last year Rs 5.50 per Equity share) and

ii. Rs 6/- per Preference share of Rs 100/- each (last year Rs 6/- per Preference share)

The said dividend, if approved by the Members, would involve cash outflow of Rs 68.12 Crore (including Corporate dividend Tax of Rs NIL) compared to Rs 72.57 Crore (including Corporate dividend Tax of Rs 10.13 Crore) paid for the year 2010-11.

FINANCE

During the year 2011-12, your Company,

- Raised long-term loan, aggregating to Rs 485 Crore by way of foreign currency borrowings.

- Repaid term loans aggregating to Rs 389 Crore and NCDs of Rs 390 Crore.

HUMAN RESOURCES

The human resource philosophy and strategy of your Company is structured to attract and retain the best talent that encourages innovation and creates engaging and motivating workplace environment. This strategy has, through strong alignment with your Company's vision, successfully built and sustained your Company's standing as one of the India's most admired and valuable corporations despite unrelenting competitive pressures.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI and has complied with all mandatory provisions of Clause 49 of the Listing Agreement.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Statutory Auditors' Certificate confirming compliance with Clause 49 of the Listing Agreement with Stock Exchanges is annexed to (Annexure A) and forms part of the Directors' Report.

217(2AA) STATEMENT BY DIRECOTRS

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts on a 'going concern basis'.

SUBSIDIARY COMPANIES & CONSOLDATED FINANCIAL RESULTS

During the year, following changes have taken place in subsidiary companies:

As mentioned above, Aditya Birla Minacs IT Services Ltd. and Aditya Birla Minacs Technologies Ltd., subsidiaries of the Company have merged with Aditya Birla Minacs Worldwide Limited with effect from 1st April, 2010 and have therefore ceased to be subsidiaries of the Company.

As part of exercise to rationalize the operations and the costs, Compass BPO Inc., USA and Transworks Inc., USA, both part of the IT, ITeS business were closed.

Aditya Birla Financial Services Private Limited, a subsidiary of the Company has been classified as a "Core Investment Company (CIC)" by RBI in April 2012.

Consolidated Financial Statements pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, are attached for your reference.

In line with the General Exemption granted by Ministry of Corporate Affairs vide Circular 2/2011 dated 8th February, 2011 for not attaching the Balance Sheet of subsidiaries and in compliance with the conditions enlisted therein, the report and annual accounts of the subsidiary companies for the financial year ended March 31, 2012 have not been attached to the Company's Accounts.

The Annual accounts of the subsidiary companies and the related detailed information are available to Shareholders of the Holding and Subsidiary companies. The Annual accounts of the Subsidiary companies are kept open for inspection by any shareholder(s) at the Registered Office of the Company and of the concerned Subsidiary Company. Any shareholder, who wishes to obtain a copy of the said documents of any of the subsidiary companies, may send a request in writing to the Company Secretary at the Registered Office of the Company so that the needful can be done.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the year, under ESOS - 2006, ESOS Compensation Committee granted 3370 stock options under the Fifth Tranche to eligible employees of the Company.

Details of the stock options issued under ESOS - 2006 upto March 31, 2012, as also the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999 are set out in the Annexure B to this report.

A certificate from the Auditors of the Company, confirming that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders shall be placed at the Annual General Meeting for inspection by members.

FIXED DEPOSITS

Your Company was accepting fixed deposits from the employees. Acceptance of such fixed deposits has been discontinued from January, 2009 onwards. As on 31st March, 2012, there are no outstanding deposits.

The erstwhile Birla Global Finance Limited (since amalgamated with the Company) had accepted deposits from the public till May, 2005. Of the total matured fixed deposits, as on 31st March, 2012, there was an unclaimed fixed deposit of ' 15,000. This unclaimed deposit is kept in a separate earmarked bank account.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

The Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 217(1)(e) of the Companies Act, 1956, is set out in a separate statement attached to this Report (Annexure C) and forms part of it.

In accordance with the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and accounts as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS

During the year, following were the changes in directorship of the Company:-

* Mr. Tapasendra Chattopadhyay has been nominated by Life Insurance Corporation of India (LIC) as their nominee/representative in place of Mr. S.C Bhargava with effect from 30th May, 2011.

* Mr. S. C. Bhargava, who was earlier nominee/ representative of LIC has been appointed as an Independent Director of the Company.

* Mr. Sushil Agarwal, Chief Financial Officer of the Company has been appointed as Whole Time Director of the Company w.e.f. 1st June, 2011.

* Mr. Pranab Barua has resigned as Whole Time Director of the Company on 7th May, 2012, which was accepted by the Board of Directors of the Company in its meeting held on 15th May, 2012.

Following Directors of the Company retire from office by rotation, and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting:

* Mr. B. R. Gupta,

* Mr. B. L. Shah

* Ms. Tarjani Vakil

Resolutions seeking their appointment have been included in the notice of ensuing Annual General Meeting together with their brief details.

AWARDS AND RECOGNITION

Your Company has been the proud recipient of the following awards and recognitions -

* INDIAN RAYON DIVISION

- Environment Excellence Award - 2011 in Chemical Sector, Awarded by Green Tech Foundation, New Delhi

* INDO GULF FERTILISERS DIVISIOIN

- Certification for ISO / IEC 27001:2005 Awarded by Bureau Veritas Certification.

* JAYA SHREE TEXTILE DIVISIOIN

- Second position under 'Sustained' category in CII Eastern Region Productivity Awards 2011-12.

* CARBON BLACK DIVISION, PATALGANGA

- 12th Annual Greentech Environment Silver Award 2011 in Chemical Sector by Greentech Foundation, New Delhi.

* MADURA FASHION AND LIFESTYLE

- Peter England Fashion And Retail Limited was awarded Brand Equity Award in The Economics Times.

- Van Heusen won A Power Band Award 2011 in Planman Marcom.

- Peter England Fashion And Retail Limited was awarded Bronze Award in the Best Website in Retail category at BBC.com Campaign India Digital Media Awards.

- Van Heusen won "Most Popular Western Wear Brand Award - Female" at Images Fashion Awards 2011.

- Allen Solly received Best website/ microsite - Product for spring/summer 2010 collection in Indian Digital Media Awards (IDMA) 2011.

- 3rd Global Youth Marketing Awards to Allen Solly, Van Heusen Woman and Louis Philippe.

* ADITYA BIRLA INSULATORS- RISHRA DIVISION

- IMC RAMKRISHNA BAJAJ NATIONAL QUALITY AWARD - Performance Excellence Trophy 2011 in Manufacturing Category.

* ADITYA BIRLA INSULATORS- HALOL

DIVISION

- CAPEXIL Special Award - Export Achievement in Porcelain Insulators.

AUDITORS

The observations made in the Auditors' Report are self-explanatory and therefore, do not call for any further comments under section 217(3) of the Companies Act, 1956.

M/s Khimji Kunverji & Co and M/s S. R. Batliboi & Co., Jt. Statutory Auditors of the Company, retire, and being eligible, offer themselves for appointment, to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. Your Directors recommend their appointment, as set out in the accompanying notice of the Annual General Meeting. A certificate from them confirming compliance of section 224(1B) of the Companies Act, 1956 has also been received, by the Company.

APPRECIATION

Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by Central and State Governments and all Regulatory bodies.

Your Directors place on record their deep appreciation for the exemplary contribution made by employees at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company's growth.

For and on behalf of the Board

Kumar Mangalam Birla

Chairman

Mumbai 15th May, 2012


Mar 31, 2011

Dear Shareholder,

We are pleased to present the 54th Annual Report together with the Audited accounts of your Company for the financial year ended 31st March, 2011.

MACRO ECONOMIC SCENARIO

With the GDP growth at 8.5% during fiscal 2010- 11, Indian economy sustained growth after recovery in the previous year, supported by strong rebound in agriculture sector and continued momentum in the manufacturing and services sectors. During the year, high inflation remained a key area of concern and the Reserve Bank of India pursued monetary tightening measures throughout the year.

CONSOLIDATED FINANCIAL PERFORMANCE

Led by continuous pursuit of profitable growth across the businesses, your Company has posted strong financial results during the year. Consolidated revenue of your Company at Rs. 18,168 Crore crossed USD 4 billion mark registering year on year growth of 17%. Revenue growth was contributed by all the businesses. Your Company posted its highest ever Consolidated EBITDA at Rs. 2,702 Crore (~USD 600 million) achieving a robust growth of 60% over previous year. Consolidated net profit grew five times from Rs. 155 Crore to Rs. 822 Crore (~USD 183 million) - the highest ever. The earnings growth was driven by improved profitability in the Financial Services, Fashion & Lifestyle and IT-ITeS businesses.

During the year, Aditya Birla Financial Services

("ABFS") has strengthened itself as a large non- bank player and posted a strong financial performance. Today, ABFS is managing assets worth USD 20.5 billion with a customer base of about 5.5 million customers.

- Combined revenue grew from Rs. 5,871 Crore to Rs. 6,296 Crore (~ USD 1.4 billion).

- ABFS achieved a strong turnaround in profitability with EBITDA of Rs. 537 Crore vis- a-vis loss of Rs. 231 Crore in the previous year.

- AUM of Birla Sun Life Insurance ("BSLI") scaled up by 23% to Rs. 19,760 Crore (USD 4.5 billion). Fuelled by the growing size of in- force book, lower new business strain and better expense management, BSLI achieved

EBITDA of Rs. 352 Crore compared to loss of Rs. 378 Crore in the previous year. No capital infusion was required during the year.

- The total average AUM (AAUM) of Birla Sun Life Asset Management stood at Rs. 67,560 Crore (USD 15 billion). Its market share in terms of domestic AAUM increased from 8.3% to 9.1%. Its maiden Real Estate Onshore Fund collected Rs. 1,088 Crore.

- The NBFC business more than doubled its book size.

In the Telecom business, Idea Cellular Limited ("Idea") ranks among the top 10 cellular operators in the world with more than 1 billion minutes of usage per day. Idea is the 3rd largest cellular operator in India in terms of revenue market share which stands enhanced from 12.6% to 13.6% in past one year. Idea has launched 3G services in 19 service areas. Post launch of Mobile Number Portability, Idea is leading net subscribers gainers and it also has highest active subscribers ratio in the industry, reflecting its strong brand equity. Revenue of Idea rose by 25% to Rs. 15,438 Crore (~USD 3.5 billion) while EBITDA grew by 6% to Rs. 3,853 Crore. The decline in average revenue per minute was compensated by volume led cost efficiencies.

Madura Fashion & Lifestyle has posted a robust 45% growth in revenue at Rs. 1,809 Crore (USD 400 million). It continues to leverage its brand leadership and expanded retail presence to ride on the buoyant demand in the domestic market. EBITDA shot up to Rs. 137 Crore vis-a-vis loss of Rs. 4 Crore in the preceding year.

Revenue of Aditya Birla Minacs, the IT-ITeS business grew by 11% to Rs. 1,692 Crore (~USD 375 million). EBITDA rose by 75% from Rs. 105 Crore to Rs. 183 Crore. Revenue growth and rationalised cost structure spurred profitability.

Combined revenue of Manufacturing businesses grew by 26% to Rs. 4,689 Crore (USD 1 billion). EBITDA grew from Rs. 748 Crore to Rs. 781 Crore. They posted an operating margin of 16% and return on average capital employed of 26%. The Greenfield Carbon Black project at Patalganga with a capacity of 84,000 MTPA was completed in end May 2010, thereby taking the total capacity to 314,000 MTPA.

STANDALONE FINANCIAL PERFORMANCE

Standalone revenue soared by 33% to Rs. 6,445 Crore. Revenue growth was driven by expansion in the Carbon Black business and strong volume growth in Textiles business. Your Company posted its highest ever Standalone EBITDA which grew by 16% from Rs. 835 Crore to Rs. 970 Crore and highest ever Standalone Net profit which grew by 34% from Rs. 283 Crore to Rs. 380 Crore. Growth in profitability was contributed by strong volume growth in the Fashion & Lifestyle, Textiles and Insulators businesses, higher agri-input sales in the agri-business and higher power sales in the Carbon Black business. Profitability in the Rayon business was strained by a steep rise in the input and fuel cost.

Equity infusion by promoters strengthened balance sheet

The Promoter Group companies further infused Rs. 426 Crore on conversion of remaining warrants into equity shares on 20th December, 2010. As a result, the paid up equity capital of your Company increased from Rs. 103.01 Crore to Rs. 113.51 Crore on allotment of 10.5 million equity shares.

Led by improved earnings coupled with equity infusion by promoters, the standalone balance sheet has also been strengthened with Net Debt to Equity improving from 0.74 to 0.58 and Net Debt to EBITDA from 4.1 to 3.2.

The business-wise performance review, outlook and strategy have been spelt out in depth in the Management Discussion and Analysis section, which forms part of the Annual Report.

FINANCIAL PERFORMANCE

(Rs. Crore)

Consolidated Standalone

2010-11 2009-10 2010-11 2009-10

Profit before Depreciation / Amortisation, Exceptional Items and Tax 2,135.54 1024.05 689.03 500.40

Depreciation and Amortisation 940.65 866.48 193.95 180.10

Profit before Exceptional Items and Tax 1,194.89 157.57 495.08 320.30

Exceptional Items (103.84) - - -

Prof it before Tax 1,006.64 157.57 495.08 320.30

Provision for Taxation (Net) 183.08 114.00 115.39 36.90

Net Profit before Minority Interest 907.97 43.57 379.69 283.40

Minority Interest (85.86) 111.03 - -

Share of Profit/(loss) of Associate (0.01) (0.04) - -

Net Profit 822.10 154.56 379.69 283.40

Balance brought forward (1,284.96)(1,112.61) 17.18 86.03

Amount transferred on change in stake in Subsidiaries/ Joint venture and Mergers - (105.20) - (139.60)

Profit available for Appropriation (462.95) (1063.25) 396.87 229.83

Appropriations :

Proposed Dividend 62.44 53.26 62.44 51.51

Corporate Tax on Dividend 10.13 8.86 10.13 7.95

General Reserve 250.00 100.00 250.00 100.00

Debenture redemption reserve 46.11 53.19 46.11 53.19

Special Reserve 7.70 6.40 - -

Surplus / (Deficit) carried to Balance Sheet (839.33) (1284.96) 28.19 17.18

(532.54) (1063.25) 396.87 229.83

DIVIDEND

For the financial year ended on 31st March, 2011, Your Directors recommend for your consideration a dividend of :-

i. Rs. 5.50/- per Equity Share of Rs. 10/- (last year Rs. 5 per Equity share) and

ii. Rs. 6/- per Preference share of Rs. 100/- each (last year Rs. 6 per Preference share)

The said dividend, if approved by the Members, would involve cash outflow of Rs. 72.57 crore (including Corporate dividend Tax of Rs.10.13 crore) compared to Rs. 59.46 crore (including Corporate dividend Tax of Rs. 7.95 crore) paid for the year 2009-10.

FINANCE

Durng the year, your Company raised long-term loans aggregating to Rs. 94 crore by way of foreign currency borrowings and Rs. 200 Crore by way of Non-Convertible Debentures (''NCDs'').

During the year, term loans aggregating to Rs. 698 Crore and NCDs of Rs. 110 Crore were repaid during the year.

HUMAN RESOURCES

Your Company believes that Human Resources play a very critical role in its growth. Your Directors' are pleased to inform you that the Aditya Birla Group of which your Company is a part, has been declared as one of the Best Employers in India by the Aon-Hewitt survey conducted recently. The Group ranked second amongst two hundred other Indian organizations which took part. The process entailed a rigorous six months exercise involving HR Systems and processes audit, online survey with several employees, face to face meetings with Leadership teams, HR and a cross section of employees.

Going forward, attracting and retaining talent will be a key challenge. Various initiatives have been launched to provide growth opportunities to employees and stem attrition. Notable initiatives for the current year include the rollout of the Employee Value Proposition and the Career Portal Platform to provide visibility of career opportunity to the employees.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI.

Your Company has complied with all mandatory provisions of Clause 49 of the Listing Agreement.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

Your Company's Statutory Auditors' Certificate conferring compliance with Clause 49 of the Listing Agreement with Stock Exchanges is annexed to (Annexure A) and forms part of the Directors' Report.

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the Directors have prepared the annual accounts on a 'going concern basis'.

SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL RESULTS

During the year, the following changes have taken place in subsidiary companies :

Companies which became subsidiaries :

- Bureau of Collection Recovery, LLC,

- Bureau of Collection Recovery (BCR) Inc.,

- Indigold Trade & Services Limited

- Aditya Birla Securities Private Limited and

- Shaktiman Mega Food Park Private Limited

Company which ceased to be subsidiary :

- Compass BPO FZE, UAE.

Name changes:

To reflect group's strong parentage and commitment to its businesses, as also to signify the nature of business, the names of following subsidiary companies were changed:-

- Birla Insurance Advisory & Broking Services Limited to Aditya Birla Insurance Brokers Limited

- Compass Business Process Outsourcing Private Limited to Aditya Birla Minacs BPO Private Limited

- Compass Business Process Outsourcing Limited to Aditya Birla Minacs BPO Limited., UK

Consolidated Financial Statements pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, are attached for your reference.

In line with the General Exemption granted by Ministry of Corporate Affairs vide Circular 2/2011 dated 8th February, 2011 for not attaching the Balance Sheet of subsidiaries subject to certain conditions, the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of the subsidiary companies have not been attached to the Balance Sheet of the Company as at 31st March, 2011.

The Annual accounts of the subsidiary companies and the related detailed information are available to Shareholders of the Holding and Subsidiary companies at any point of time. The Annual accounts of the Subsidiary companies are kept open for inspection by any shareholder(s) at the Registered Office of the Company and of the concerned Subsidiary Company. Any shareholder of subsidiary Company, who wishes to obtain a copy of the said documents of any of the subsidiary companies, may send a request in writing to the Company Secretary at the Registered Office of the Company so that the needful can be done.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the year, ESOS compensation Committee granted 17,174 and 11,952 Stock Options under the Third and Fourth tranche respectively under ESOS - 2006 to eligible employees of the Company.

During the year, after receiving approval from shareholders at the 53rd Annual General Meeting held on August 6, 2010, ESOS Compensation Committee re-priced the Stock options granted to employees under Tranche I and Tranche II at Rs. 687/- per Stock Option.

Further on 7th June, 2011, the ESOS Compensation Committee approved grant of 3,370 Stock Options under Fifth Tranche to an eligible employee of the Company at an exercise price of Rs. 748/- per option.

Details of the options issued under ESOS - 2006 upto March 31, 2011, as also the disclosures in compliance with Clause 12 of Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines 1999 are set out in the Annexure B to this report.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The Certificate shall be placed at the Annual General Meeting for inspection by members.

FIXED DEPOSITS

Your Company was accepting fixed deposits from the employees. Acceptance of such fixed deposits has been discontinued from January, 2009 onwards. As on 31st March, 2011, there are no outstanding deposits.

The erstwhile Birla Global Finance Limited (since amalgamated with the Company) had accepted deposits from the public till May, 2005. Of the total matured fixed deposits, as on 31st March, 2011, there were unclaimed fixed deposits of Rs. 68,000. These unclaimed deposits are kept in a separate earmarked bank account.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

The Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 217(1) (e) of the Companies Act, 1956, is set out in a separate statement attached to this Report (Annexure C) and forms part of it.

In accordance with the provisions of Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and accounts as therein set out, are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS

Mr. Tapasendra Chattopadhyay has been nominated by Life Insurance Corporation of India (LIC) as a Director in place of Mr. S.C Bhargava with effect from 30th May, 2011.

Considering his valuable contribution to the growth of the Company, Mr. S. C. Bhargava has been appointed as an Independent Director of the Company.

Mr. Sushil Agarwal, Chief Financial Officer of the Company has been appointed as Whole Time Director of the Company w.e.f. 1st June, 2011.

Mr. Kumar Mangalam Birla, Mrs. Rajashree Birla and Mr. P Murari, Directors of the Company retire from office by rotation, and being eligible, offer themselves for reappointment at the ensuing Annual General Meeting.

Resolutions seeking appointment of Mr. Kumar Mangalam Birla, Mrs. Rajashree Birla, Mr. P Murari, Mr. S.C. Bhargava and Mr. Sushil Agarwal have been included in the notice of ensuing Annual General Meeting together with their brief details.

AWARDS AND RECOGNITION

Your Company has been the proud recipient of the following awards and recognitions -

- INDIAN RAYON DIVISION

- Rajiv Gandhi Environment Award for Prevention of pollution from Ministry of Environment & Forests, Government of India

- Environment Excellence Award -2010 in Chemical Sector Awarded by Green Tech Foundation, New Delhi

- National Award for excellence in Energy Conservation and Management - 2009 awarded by Indian Chemical Council (ICC)

- Mumbai

- Server virtualization & thin client deployment awarded by IDG Group (USA)

- Publishers of CIO Magazine

- Automation of batch scheduling jobs in Spinning Department awarded by UBM GROUP- publishers of Dataquest PC World Magazine

- JAYA SHREE TEXTILES DIVISION

- IMC Ramakrishna Bajaj National Quality Award 2010 in the manufacturing category.

- INDO GULF FERTILISERS DIVISIOIN

- Agriculture Leadership Today from National Agricultural Magazine for Innovative Extension Model and the outstanding contribution in agriculture extension and development through pioneering use & application of Six Sigma Methodology

- MADURA FASHION & LIFESTYLE

- Van Heusen received "Best Loyalty Programme in the Retail Sector" at 4th Loyalty Summit.

- The Collective - won "Fashion Apparel- Speciality store" at In Store Asia 2011- VMRD Retails Design Awards.

- The Collective - was recognized in the merit list for "Window Display" at In Store Asia 2011- VMRD Retails Design Awards.

- The Collective- was recognized in the merit list for "Best Visual Merchandising" at In Store Asia 2011- VMRD Retails Design Awards.

- Peter England was recognized as "2nd Most Trusted Brand in Apparel & Textile Category" at Economic Times- Brand Equity Awards.

- Peter England was awarded as "Best Performing Brand in Retail Sector" by Reliance Retail.

- Van Heusen won "Most popular Formalwear Brand Award- Female" at 3rd Global Youth Marketing Awards.

- Madura Clothing was awarded with IMC RBNQA Award for Performance Excellence by IMC RBNQUA.

- ADITYA BIRLA INSULATORS, RISHRA

- Quality Circle Team "AGNI" got "GOLD" level recognition (par excellence) in chapter convention on Quality circle Competition (CCQC) 2010.

- Quality Circle Team "AGNI" got "DISTINGUISHED" level recognition in National Convention on Quality circle Competition (NCQC) 2010.

- IMC RAMKRISHNA BAJAJ NATIONAL QUALITY AWARD 2010 in Quality Category

- ISO 9001:2008 certification awarded for The Design, Development, Manufacture & Supply of Extra High, High & Low Voltage Electro-porcelain Insulators by British Standards Institution (BSI)

- ISO14001:2004 certification awarded for The Design, Development, Manufacture & Supply of Extra High, High & Low Voltage Electro-porcelain Insulators by British Standards Institution (BSI)

- OHSAS 18001:2007 certification awarded for The Design, Development, Manufacture & Supply of Extra High, High & Low Voltage Electro-porcelain Insulators by British Standards Institution (BSI)

- Social Accountability 8000 : 2008 certificate for Manufacture of H.V & L.V. Electro Porcelain Insulators by "Det Norske Veritas AS"

- ISO/IEC 17025:2005 certificate received for General Requirements for the Competence of Testing & Calibration Laboratories in Chemical, Mechanical & Electrical Testing Laboratories by "NABL"

AUDITORS

The observations made in the Auditors' Report are self-explanatory and therefore, do not call for any further comments under section 217(3) of the Companies Act, 1956.

Your Directors request you to appoint Auditors for the current year as set out in the accompanying notice of the Annual General Meeting.

APPRECIATION

Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by Central and State Governments and all Regulatory bodies.

Your Directors place on record their deep appreciation for the exemplary contribution made by employees at all levels. Their dedicated efforts and enthusiasm have been pivotal to your Company's growth.

For and on behalf of the Board

Kumar Mangalam Birla

Chairman

Mumbai

August 13, 2011







 
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