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Directors Report of Ambuja Cements Ltd.

Dec 31, 2015

Dear Members,

We are pleased to present the Annual Report of the Company for the year 2015.

1. FINANCIAL RESULTS 2015 AT A GLANCE (STAND-ALONE RESULTS):

- Cement production increased by 0.5% to reach 21.5 million tonnes, from 21.4 million tones while clinker production decreased by 3% to 14.4 million tonnes, from 14.9 million tonnes in 2014.

- Domestic cement sales volume in 2015 increased marginally to 21.5 million tones. Clinker sales (including exports) decreased from 0.61 million tonnes in 2014 to 0.27 million tonnes in 2015.

- Net sales at - 9,368 crores were down by 5.5% than that of the previous year's - 9,911 crores. Average sales realization decreased by around 3.9% at - 4,297 per tonne against approx - 4,474 per tonne in 2014.

- Total (operating) expenses for the year 2015 were marginally lower than the previous year.

- The Company achieved an absolute EBITDA of - 1,531 crores which was lower by 20.6% over the corresponding EBITDA of - 1,928 crores of the year 2014. This was mainly on account of lower cement sales realization.

- Profit before Tax at - 1,172 crores was down by 34.3% over corresponding Profit before Tax of

- 1,783 crores for the year 2014. Fall in Profit before Tax was due to lower EBITDA and additional depreciation charge on account of implementation of the provisions of new Companies Act, 2013. - Net Profit at - 808 crores was down by 46% over corresponding Net Profit of - 1,496 crores for the year 2014. This was mainly due to lower Profit before Tax coupled with write back of tax provision in previous year of - 176 crores as against additional tax pertaining to previous years of - 56 crores during current year.

Amount in Rs, crores

Stand alone Consolidated

Current previous current previous Year year Year year 31.12. 31.12.2014 31.12 31.12 2015 2014 2015 2014

Sales (Net of excise duty) 9,368.30 9,910.70 9,388.00 9,930.54

Profit before interest, depre- ciation and excep- tional item 1,889.66 2,357.42 1,895.48 2,352.60

Less: Finance costs 91.79 64.48 92.47 65.55

Gross profit 1,797.87 2,292.94 1,803.01 2,287.05

Less: Depre- ciation and Amor- tization Expense 625.66 509.53 629.76 513.03

Profit before Tax 1,172.21 1,783.41 1,173.25 1,774.02

Less: Tax Expense 364.65 287.05 365.37 287.51

Profit after Tax but before Minority Interest 807.56 1,496.36 807.88 1,486.51

Less : Minority Interest - - - (0.01)

Profit for the Year 807.56 1,496.36 807.88 1,486.50

Add : Balance as per the last Financial Statements 1,655.93 1,230.69 1,941.15 1,525.77

Profit available for appro- priation 2,463.49 2,727.05 2,749.03 3,012.27

Appro- priations:

General Reserve - 150.00 - 150.00

Adjustment for Depre- ciation and Amorti- zation as per Schedule II of the Companies Act, 2013 106.63 - 108.91 -

Dividend on Equity Shares (including interim) 434.53 774.61 434.53 774.61

Corporate Dividend Tax 88.46 146.51 88.46 146.51

Total 629.62 1,071.12 631.90 1,071.12

Balance carried forward to Balance Sheet 1,833.87 1,655.93 2,117.13 1,941.15

2. DIVIDEND

The Company paid an interim dividend of 80% (Rs, 1.60 per share) during the year. In view of the substantial decline in the Profit after Tax for the full year and with a view to conserve resources for the future requirements, the Directors have recommend a final dividend of 60% ( Rs,1.20 per share). Thus, the aggregate dividend for the year 2015 is 140% (Rs, 2.80 per share) and the total payout will be Rs, 522.99 crores, including dividend distribution tax of Rs, 88.46 crores. This represents a payout ratio of 65%.

3. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has made conscious efforts to involve communities in its development journey through Ambuja Cement Foundation (ACF), the CSR arm of the company. ACF realized its responsibility to co-exist peacefully with the host communities, and over the past two decades has kick-started multiple programmers at 21 locations across 11 states.

ACF's programs are focused on: Water Management, Skill and Entrepreneurship Development, Healthcare, Education, Women Empowerment and Agro-based Livelihoods. Detailed report on CSR activities including amount spent is given in Annexure I.

WATER MANAGEMENT

With the motive of 'giving more than we take', ACF has been working in Gujarat, dry arid territories of Rajasthan, hilly regions of Darlaghat and the water scarce state of Andhra Pradesh. To date, ACF has reached out to more than 400,000 people across locations. Initiatives like renovation of traditional water reservoirs, pond deepening, roof rain water harvesting structures (RRWHS) and reverse osmosis plants, among others have improved accessibility to healthy drinking water. In addition, these initiatives have improved the quality of land and environment.

THE ONLY WATER POSITIVE CEMENT COMPANY IN INDIA.

As a result of these efforts, the Company was certified as 4.03 times water positive. ACL's Rabriyawas plant, located in middle of a desert in Rajasthan, has been certified 13 times water positive. For Rabriyawas, water has changed the landscape in the region, with improvement in not just biodiversity and land quality, but also the livelihoods and lifestyle of people.

Ambuja Cement is the only water positive cement Company in India with total water credits of 31 million cubic metres.

AGRO-BASED LIVELIHOODS

Strengthening community through sustainable livelihoods programmers has changed the lives of youth, women and farmers in nearby communities.

The agro-based livelihood generation programmed to make agriculture and allied activities a sustainable source of livelihood has introduced the farmers to new technologies and created market linkages reaching out to over 85,000 farmers. Crop specific programmers - Better Cotton Initiative (BCI) reached out to more than 26,000 farmers covering 40,000 hectares of land and System for Rice Intensification (SRI) project has covered 800 farmers, and is in an expansion mode. The initiative to promote animal care has changed lives of many women in Darla hat. The local women are trained as para-veterinarians or Pashu Swasthya Sevikas (PSS), thus providing the much needed access to cattle care, improving the status of agriculture allied activities. To promote allied farming livelihoods, the farmers were introduced to Alternative Fuel Resource (AFR), where they get paid by Ambuja to provide bio-wastes like sugarcane trash, leaves, cotton stalk, wheat straw and other crop residues as biomass.

To enhance alternative means of livelihood and develop the skills of community youth, ACF has established 16 Skill and Entrepreneurship Development Institutes (SEDI) across 10 states that provides vocational training in 12 sectors. Till date, SEDI has trained almost 26,400 youth, of which 70% have been successfully placed in various industries.

SEDI, Nagaur (Rajasthan) has trained 60 physically challenged youth, of which 90% have started their independent enterprises.

HEALTH AND SANITATION

ACF has been actively working on clinical, preventive and promotive healthcare through mobile medicare units, community health clinics, diagnostic centres and specialised health camps. The health projects are implemented in close coordination with Public Health Departments, panchayats, Village Development Committees and led by a cadre of voluntary health workers or "sakhis", who work as the interface between the public health system and the community. Today, sakhis are active participants in the village health and sanitation committees, vocal at gram sabhas about healthcare issues and are resource persons promoting awareness on rural health and hygiene.

KEEPING IT CLEAN

ACF along with Women's Federations in Chandrapur (Maharashtra) and Kodinar (Gujarat) encouraged people to construct toilets in their households to improve health and sanitation. The two Federations, with 435 self help groups (SHG) and over 4800 members are driving communities to adopt hygienic practices. In Darlaghat (Himachal Pradesh), children from the community ensured an open defecation free (ODF) village. Known as "Swachata Doot" (Messengers of Cleanliness), these children spread the message by demonstrating hygiene and cleanliness in their allocated area.

As part of the sanitation project, more than 22,000 toilets have been constructed in 130 villages in different locations of the Company. ACF aims to make all the villages that they are working in 100% ODF by 2020. Under the school sanitation programme, ACF has resolved issues in 172 schools. Each of these schools have a vigilance committee with school children as committee members, ensuring cleanliness and sanitation in their school premises.

AMBUJA MANOVIKAS KENDRA (AMK)

pAt this special facility for intellectually challenged children in Ropar, Punjab, two students brought glory to their school at the Summer Special Olympics 2015 organized in Los Angeles, USA. Meera Kumari and Pawandeep Singh won the gold and bronze medals in the cycling and basketball categories respectively. This has added yet another credit to AMK with seven of its students to date, having won 11 medals at the Summer Special Olympics under different categories.

STAKEHOLDER ENGAGEMENT

ACL's communities and stakeholders participate in identifying issues and evolving solutions in a systematic and continuous manner.

- Community Advisory Panels (CAP) consisting of community members and members from Ambuja Cement, meet regularly to discuss the community concerns.

- Community Engagement Plans (CEP) are prepared annually by ACF in close consultation with the community and ACL units, based on concerns raised at CAPs and other stakeholder meetings.

- Social Engagement Scorecard (SES) is conducted annually at all locations, to provide a review of programs in the form of group discussions and opinion leader interviews.

- Site Specific Impact Assessments (SSIA) are conducted cyclically to apprehend the insights and needs of all stakeholders of the Company.

4. HEALTH & SAFETY (H&S)

Health & Safety is an overarching value for all of us at Ambuja. The Company is committed to ensure safety of all its employees, contractors and everyone associated with it. It firmly believes in the policy of "Zero Harm. Our onsite performance has gradually improved since 2013. From ten fatalities in 2013, it was three in 2014 and one in 2015. The 'We Care' - our Health & Safety Excellence Journey initiative launched across the Company the previous year has remarkably helped in changing the mindset of our people and strengthening the safety culture in the Company.

It was observed that everyone across the plants was speaking the language of safety. Under 'We Care', Health & Safety was made a line responsibility and not the functional obligation. This led to standardization of processes, increased participation, involvement and engagement of people on the ground.

For capability building, a mass training program was rolled out for 6500 employees and contractors involved in high risk activities; also conducted certification programs with the help of external experts. With the objective of emotional engagement and changing mind-set towards safety, 12000 people were connected through sensitization workshops and behaviour-based training (BBS) for over 900 front-line staff and workers. A Reward & Recognition program was introduced where 374 individuals and 31 teams were rewarded for proactive interventions.

Even as our efforts in 2015 have been good, we need to continue the momentum in the coming year especially in improving H&S engagement and accountability. In 2016, our focus will be on implementation which would include enforcing on-ground learning's and demonstrating it too. Besides rewards, there is a need to introduce consequence management for any non-compliance on safety. A matter of concern has been Vehicular & Traffic Safety, which will be incorporated this year as part of our larger strategy.

So far, we have been on the right track on our H&S journey and our teams are committed to achieve the goal of Zero Harm.

5. MERGER OF HOLCIM LTD. SWITZERLAND AND LAFARGE SA FRANCE

On 10th July, 2015 Holcim Ltd. Switzerland and Lafarge SA, France announced the completion of their global merger to create LafargeHolcim Ltd. (LH), a world leader in cement and building material industry. LH is present in 90 countries with around 1,15,000 employees. LH is the ultimate holding Company and Ambuja continues to receive all-round support from them in various facets of the Company's business and support functions.

6. ORDER OF COMPETITION APPELLATE TRIBUNAL (COMPAT)

In June 2012, the Competition Commission of India (CCI) passed an Order levying a penalty of -1163 crores on the Company in connection with a complaint filed by the Builders Association of India against leading cement companies (including Ambuja) for alleged violation of certain provisions of the Competition Act, 2002. The Company filed an appeal before the COMPAT for setting aside the said Order of CCI. The COMPAT granted stay on levying the penalty imposed on the Company by CCI against deposit of 10% of the penalty amount.

In December 2015, the COMPAT finally set aside the said Order of CCI and remanded back to CCI for fresh adjudication of the issues and passing of fresh Order. It also allowed the Company to withdraw the amount of 10% deposit kept with the CCI.

7. TREASURY OPERATIONS

During the year, the Company's treasury operations continued to focus on cash forecasting and deployment of excess funds on the back of effective portfolio management of funds within a well-defined risk management framework.

All investment decisions in deployment of temporary surplus liquidity continued to be guided primarily by the tenets of safety of Principal and liquidity. Proactive management of portfolio helped improve treasury yield performance. During the year, the investment portfolio mix was continuously rebalanced in line with the evolving interest rate environment.

8. DEPOSITS

The Company has not accepted any deposits from the public/members under Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year.

9. PURCHASE OF SHARES IN HOLCIM INDIA PVT. LTD. (HIPL) AND AMALGAMATION OF HIPL WITH THE COMPANY

The members may be aware that the Company had proposed to acquire 24% equity shares of HIPL from Holderind Investment Limited, Mauritius and subsequently amalgamating HIPL with the Company under the Scheme of Amalgamation. The Scheme has been approved by the requisite majority of the Members and has also received assent from the Hon'ble High Courts at Gujarat and Delhi. However, the Scheme will be effective upon receipt of approval from the Foreign Investment Promotion Board (FIPB), Government of India which is yet to be received.

On the scheme being effective, the Company will hold 50.01% equity shares in ACC Limited and consequently ACC Limited and all its subsidiaries will become the subsidiary of the Company.

10. EMPLOYEE STOCK OPTION SCHEME (ESOP)

During the year, the last ongoing ESOP scheme got closed and the Company did not grant any fresh stock option to its employees. Henceforth, information on stock options will be given only when fresh options are granted by the Company.

11. DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND LISTING REGULATIONS

(I) EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the annual return is given in Annexure II.

(II) NUMBER OF BOARD MEETINGS:

The Board of Directors met 7 (seven) times in the year 2015. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

(III) CHANGES IN SHARE CAPITAL:

During the year under review, the Company allotted 21,51,635 equity shares of the face value of - 2 each upon exercise of stock options under various Employee Stock Option Schemes. Consequently the equity share capital has increased from - 309,94,91572 divided into 154,97,45,786 equity shares of - 2 each to - 310,37,94,842 divided into 155,18,97,421 equity shares of - 2 each. All the equity shares forming part of the share capital rank pari-passu in all respect.

(IV) CONTINUANCE OF THE EXISTING FINANCIAL YEAR: Pursuant to the requirement of consolidation of the Company's accounts with the ultimate Holding Company, Lafarge Holmic Ltd., the Company will continue to follow the Calendar Year (1st January – 31st December) as its Financial Year. Necessary approval from the Company Law Board has been obtained in this regard.

(V) COMPOSITION OF AUDIT COMMITTEE:

The Board has constituted the Audit Committee which comprises of Mr Rajendra Chitale as the Chairman and Dr Omkar Goswami, Mr Nasser Munjee and Mr Bernard Terver (since resigned) as members. More details on the committee are given in the Corporate Governance Report.

(VI) RELATED PARTY TRANSACTIONS:

All the related party transactions are entered on arm's length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Company's financial statements in accordance with the Accounting Standards.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the certificate from the MD & CEO and the CFO.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at http://www.ambujacement.com/ wpcontent/uploads/2015/12/policy_on_determ ining _materiality _of_rpt_28_oct_2015_revised.pdf

(VII) POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaints Committee has also been set up to redress complaints received on sexual harassment.

During the financial year under review, the Company has not received any complaints of sexual harassment from any of the women employees of the Company.

12. CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the listing regulations. A separate section on corporate governance under the listing regulations, along with a certificate from the auditors confirming the compliance, is annexed and forms part of this Annual Report.

13. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year ended 31st December 2015, as stipulated under regulation 34 of the Listing Regulations is annexed and forms part of the Annual Report.

14. INTERNAL CONTROL SYSTEM

INTERNAL AUDITS AND CONTROLS

The Company's internal controls system has been established on values of integrity and operational excellence and it supports the vision of the Company "To be the most sustainable and competitive Company in our industry". Over the years, formal and independent evaluation of internal controls and initiatives for remediation of deficiencies by in house Internal Audit department have resulted in a robust framework for Internal Controls, commensurate with the size and complexity of the business.

The internal control framework essentially has two elements: (1) structures, policies and guidelines designed to achieve efficiency and effectiveness in operations and compliance with laws and regulations; (2) an assurance function provided by Internal Audit.

The Company also has well-documented Standard Operating Procedures (SOPs) for various processes which are periodically reviewed for changes warranted due to business needs. The Internal Audit department continuously monitors the efficiency of the internal controls/compliance with SOPs with the objective of providing to Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organization's risk management, control and governance processes. This formalized system of internal control facilitates effective compliance of Section 138 of Companies Act, 2013, the Listing Regulations and also the relevant statutes applicable to the parent organization.

KEEPING AN EYE ON OURSELVES

The scope and authority of Internal Audit activity are well-defined in the Internal Audit Charter, approved by the Audit Committee. The Internal Audit department develops the risk based annual audit plan with inputs from business risk management, prominent stakeholders and previous audit reports. The annual internal audit plan is approved by the Audit committee.

The Audit Committee meets regularly to review reports, including significant audit observations and follow-up actions thereon. The Audit Committee also meets the Company's Statutory Auditors to ascertain their views on financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of internal control system.

The Internal Audit department also assesses opportunities for improvement in the business processes, designed to add value to the organization and follows up on the implementation of corrective actions and improvements in the business processes after review by the Audit Committee.

15. MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES

I. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Fraud and corruption-free work culture has been the core of the Company. In view of the potential risk of fraud, corruption and unethical behaviour consequent to rapid growth and geographical spread of operations, which could adversely impact the Company's business operations, performance and reputation, the Company has put an even greater emphasis to address these risks. To meet this objective, a comprehensive Ethical View Reporting Policy akin to vigil mechanism or the whistleblower policy has been laid down. More details about this Policy are given in the Corporate Governance Report, which forms part of this Annual Report. The Ethical View Reporting Policy is available on the Company website: www.ambujacement.com

II. ANTI BRIBERY AND CORRUPTION DIRECTIVES (ABCD)

In furtherance to the Company's philosophy of conducting business in an honest, transparent and ethical manner, the Board has laid down ABCD as part of the Company's Code of Business Conduct and Ethics. As a Company, we take a zero- tolerance approach to bribery and corruption and are committed to act professionally and fairly in all our business dealings.

To spread awareness about the Company's commitment to conduct business professionally, fairly and free from bribery and corruption, employee training and awareness workshops were conducted across the organization during 2015. As part of continuous education on ABCD to the employees, a mandatory on-line training through a web-based application tool was also undertaken by approximately 4,000 employees.

The above policies and its implementation are closely monitored by the Audit and Compliance Committees of Directors and periodically reviewed by the Board.

16. DIRECTORS AND KEY MANAGERIAL PERSONNEL

I. DEMISE OF CHAIRMAN EMERITUS

Mr. Suresh Neotia, one of the founder promoters of the Company left for heavenly abode on 7th May, 2015. As Chairman of the Company (1988 - 2009) and thereafter as Chairman Emeritus, Mr. Neotia played a pivotal role in the setting-up of Ambuja and raising it to be among the most successful cement companies of India. His contribution in the growth and development of the Company will always be remembered. The Board placed on record their rich tributes for the unparalleled and precious contribution made by Mr. Neotia to the Company in particular and society at large.

II. CESSATION

Mr. Bernard Fontana (DIN 00009181), Director (representing erstwhile Holcim Ltd.) resigned from the Board w.e.f. 17.07.2015 upon his stepping down as the CEO of Holcim Ltd.

Mr. Bernard Terver (DIN 06771125), Vice Chairman (representing LafargeHolcim Ltd.) resigned from the Board w.e.f. 11.02.2016 in view of his proposed retirement from Lafarge Holmic Ltd., the ultimate Holding company.

The Board placed on record its appreciation for the valuable services rendered by Mr. Fontana and Mr. Terver.

III. RETIREMENT BY ROTATION

In accordance with the provisions of Section 152 and Article 147 of the Articles of Association of the Company, Ms. Usha Sangwan (DIN 02609263) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, has offered herself for re-appointment. The Board recommends her re-appointment.

IV. APPOINTMENT

Mr. Eric Olsen (DIN 07238383)

Mr. Eric Olsen has been appointed as an Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 w.e.f. 27th July, 2015. Consequent to the stepping down of Mr. Bernard Tever, Mr. Olsen has been appointed as the Vice Chairman of the Board w.e.f. 11th February, 2016.

Mr. Olsen, aged 51 is the CEO of Lafarge Holmic Ltd. He is a business graduate from the University of Colorado, Certified Public Accountant (Chicago, USA) and holds a Master of Business Administration from HEC International Business School in Paris. He possesses more than 25 years of experience in the fields of Finance, M&A, Business Development and Human Resource.

Mr. Christof Hassig (DIN 01680305)

Mr Christof Hassig has been appointed as an Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 w.e.f. 9th December, 2015.

Mr. Hassig, aged 56 is currently the Head of Corporate Strategy and Mergers & Acquisitions at LafargeHolcim Ltd. He is a professional banker and did his Masters in Banking and Advanced Management Program at Harvard Business School. He possesses more than 30 years of experience in the fields of Banking, Finance and M&A.

Mr. Martin Kriegner (DIN 00077715)

Mr. Martin Kriegner has been appointed as an Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 w.e.f. 11th February, 2016.

Mr. Kriegner, aged 54 who is currently the Area Manager of Central Europe region of LafargeHolcim has been now appointed as the Head of India. He is a Doctorate of Law and MBA from Austrian Universities. He joined the erstwhile Lafarge group in 1990. Prior to his current role, he was the CEO of Lafarge India Pvt. Ltd. from 2012 to 2015.

As Additional Directors, Mr. Olsen, Mr. Hassig and Mr. Kriegner shall hold office up to the date of the ensuing Annual General Meeting. The Company has received a Notice as per the provisions of Section 160 (1) of the Companies Act, 2013 from the Members along with the requisite deposit for proposing their appointment as Directors. The Board of Directors recommends their appointment.

Further details about the directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

V. ATTRIBUTES, QUALIFICATIONS & INDEPENDENCE OF DIRECTORS AND THEIR APPOINTMENT

The Nomination & Remuneration Committee of Directors have approved a Policy for Selection, Appointment and Remuneration of Directors which inter-alia requires that the Directors shall be of high integrity with relevant expertise and experience so as to have diverse Board.

The Policy also lays down the positive attributes/ criteria while recommending the candidature for the appointment as Director.

Our Leadership Blueprint

The Board Diversity Policy of the Company requires the Board to comprise of set of accomplished individuals, ideally representing a wide cross-section of industries, professions, backgrounds, occupations and functions and possessing a blend of skills, domain and functional knowledge, experience, educational qualifications, both individually and collectively.

Directors are appointed/re-appointed with the approval of the Members for a term in accordance with the provisions of the law and the Articles of Association. The initial appointment of Managing Director & CEO is generally for a period of five years. All Directors other than Independent Directors are liable to retire by rotation unless otherwise specifically provided under the Articles of Association or under any statute. One-third of the Directors who are liable to retire by rotation, retire at every Annual General Meeting and are eligible for re-appointment.

The relevant abstract of the Policy for Selection, Appointment & Remuneration of Directors is given in Annexure III.

VI. INDEPENDENT DIRECTORS DECLARATION

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 of the Companies Act, 2013 and provisions of the Listing Regulations, stating that they meet the criteria of independence as provided therein. The profile of the Independent Directors forms part of the Corporate Governance Report.

VII. EVALUATION OF THE BOARD'S PERFORMANCE

In compliance with the Companies Act, 2013, and Regulation 17 of the Listing Regulations, the performance evaluation of the Board and its Committees were carried out during the year under review. More details on the same are given in the Corporate Governance Report.

VIII. REMUNERATION POLICY

The Company follows a Policy on Remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. The main objective of the said policy is to ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the Directors, KMP and senior management employees. The remuneration involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The Remuneration Policy for the Directors and senior management employees is given in the Corporate Governance Report.

IX. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The familiarization programmed aims to provide Independent Directors with the cement industry scenario, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, significant developments so as to enable them to take well informed decisions in a timely manner. The familiarization programmed also seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes.

The policy on Company's familiarization programmed for Independent Directors is posted on the Company's website at:

www.ambujacement.com

X. KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Sanjeev Churiwala resigned from the post of the CFO of the Company w.e.f. 15.11.2015. The Board placed on record its appreciation for the valuable services rendered by Mr. Churiwala.

The Board of Directors, based on the recommendation of the Nomination & Remuneration Committee and the Audit Committee, appointed Mr. Suresh Joshi as the new CFO of the Company w.e.f. 1st February, 2016. Mr. Joshi, aged 54, is a Commerce Graduate and a qualified Chartered Accountant and has more than 30 years of experience (including 19 years with Ambuja) in the areas of finance & controlling, taxation, commercial & business strategy and M&A. He also possesses global exposure to LafargeHolcim group's finance and controlling function for around four years.

17. DIRECTORS' RESPONSIBILITY

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability 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, except for the change in accounting policies stated in notes to the accounts and 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 on 31st December, 2015, and of the statement of profit and loss and cash flow of the Company for the period ended 31st December, 2015;

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

iv) the annual accounts have been prepared on an ongoing concern basis;

v) proper internal financial controls to be followed by the Company has been laid down and that such internal financial controls are adequate and were operating effectively and;

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

18. AUDITORS

I. AUDITORS AND THEIR REPORT

M/s. SRBC & Co. LLP (ICAI Firm Registration No.324982E), the Statutory Auditors of the Company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per Section 139 of the Companies Act, 2013.

M/s. SRBC & Co. LLP have expressed their willingness to get re-appointed as the Statutory Auditors of the Company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013, and the rules framed there under. In terms of the Listing Agreement/Regulations, the Auditors have confirmed vide their letter dated 11th January, 2016 that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. SRBC & Co. LLP as the Statutory Auditors of the Company.

The members are requested to appoint M/s. SRBC & Co. LLP, Chartered Accountants as Auditors from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting in 2017 and to authorise the Board to fix their remuneration for the year 2016.

The Auditors' Report to the Shareholders for the year under review does not contain any qualification.

II. COST AUDITOR AND COST AUDIT REPORT

Pursuant to section 148 of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee appointed M/s. P.M. Nanabhoy & Co. Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2016 and has recommended their remuneration to the Shareholders for their ratification at the ensuing Annual General Meeting.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm's length relationship with the Company. Pursuant to the Companies (Cost Audit Report) Rules, 2011, the Cost Audit Report for the financial year 2014, was filed with the Ministry of Corporate Affairs on 12.05.2015 vide SRN No. S37794351.

III. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

The Board had appointed M/s. Rathi & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2015. The report of the Secretarial Auditor is annexed to this report as Annexure IV. The report does not contain any qualification.

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

Except as stated elsewhere about passing of Order by the Competition Appellate Tribunal, there have been no significant and material orders passed by the courts or regulators or tribunals impacting the going concern status and Company's operations. However, members' attention is drawn to the statement on contingent liabilities and commitments in the notes forming part of the Financial Statements.

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of loans, guarantees given and investments made during the year as required under Section 186 of the Companies Act, 2013 and Schedule V of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulations, 2015 are provided in Notes 11, 28 (I)(vi) and 47 of the Standalone Financial Statements.

19. TRANSFER OF UNCLAIMED DIVIDEND AND UNCLAIMED SHARES

UNCLAIMED DIVIDEND

The Company has transferred a sum of - 132 lakh during the financial year 2015 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividends which were lying with the Company for a period of seven years from their respective due dates of payment. Prior to transferring the aforesaid sum, the Company has sent reminders to the shareholders for submitting their claims for unclaimed dividend.

UNCLAIMED SHARES

During the year the Company transferred 24,96,378 undelivered unclaimed equity shares of - 2 each belonging to 17,365 shareholders to the Unclaimed Suspense Account out of the two issues made by the Company viz - shares issued to the shareholders of Ambuja Cement Rajasthan Ltd. on merger and simultaneous issue of Bonus shares and subdivision of the face value of shares from - 10 to - 2. These shares were transferred to the Unclaimed Suspense Account on 14th December, 2015 after sending three reminders in compliance with Clause 5A of the Listing Agreement & Regulation 39(4) of the Listing Regulations, 2015.

Company is holding these shares in a Demat – 'Unclaimed Suspense Account' with HDFC Bank on behalf of the allottees of these shares. The voting rights in respect of these shares would remain frozen till the rightful owner claims it as per the procedure laid down under the Listing Regulations.

20. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, is required to be given pursuant to provision of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 is annexed hereto marked Annexure V and forms part of this report.

21. PARTICULARS OF EMPLOYEES

The disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report at Annexure VI.

Further, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules, forms part of this report. However, in terms of first proviso to Section 136(1) of the Act, the Annual Report and Accounts are being sent to the members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent. Further, the details are also available on the Company's website: www.ambujacement.com

22. SUBSIDIARIES AND JOINT VENTURES

At present, the Company does not have any material subsidiary. During the year, one subsidiary company, viz. Kakinada Cements Ltd., which was not engaged into any business activities, has applied to the Registrar of Companies, Gujarat, under the Easy Exit Scheme of erstwhile Companies Act 1956, for striking off its name. During the year, One India BSC Pvt. Ltd. became the joint venture Company. The Policy for determining Material Subsidiaries, adopted by the Board, pursuant to Regulation 16 of the Listing Regulations can be accessed on the Company's website at www.ambujacement.com

23. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Regulation 33 of the Listing Regulations, the consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited consolidated financial statements together with Auditors' Report form part of the Annual Report.

Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is annexed to this report at Annexure VII.

Pursuant to Section 136 of the Companies Act, 2013, the financial statements of the subsidiary and joint venture companies are kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary and joint venture companies to the shareholders upon their request. The statements are also available on the website of the Company www.ambujacement.com under the Investor Relations section.

The consolidated net profit of the Company and its subsidiaries amounted to - 807.88 crores for the corporate financial year ended on 31st December, 2015 as compared to - 1,486.50 crores for the previous year.

24. EQUAL OPPORTUNITY EMPLOYER

The Company has always provided a congenial atmosphere for work to all employees that is free from discrimination and harassment including sexual harassment. It has provided equal opportunities of employment to all without regard to their caste, religion, color, marital status and sex.

25. AWARDS AND ACCOLADES

CORPORATE AWARDS

- Ambuja Cement was awarded the 'Best Sustainability Risk Management Company' of the year be CNBC TV18. The India Risk Management Awards recognizes those organizations and teams that have significantly added to the understanding and practice of risk management in the country.

- Ambuja Cements bagged 'Eco Corporate of the Year 2014' by Yes Bank's Natural Capital Awards: Yes Bank honored corporate and photographers who have exemplified 'action for the environment' in their own capacities.

- CM Sustainability Award 2015 for 'Corporate Excellence-Commendation' for Significant Achievement in category 'A'. Ambuja has bagged this award for the 5th consecutive year.

REGIONAL AWARDS

- Maratha Cement Works (MCW) and Rabriyawas jointly bagged the 2nd prize for Excellence in Water Management & Conservation at the 3rd edition of FICCI Water Awards held in the national capital. This award is yet another recognition of ACL's commitment towards water conservation efforts in keeping with its vision to achieve sustainability.

- Ambujanagar won the Best Environment Excellence Award for 2013-14 and 2014-15 at the 14th International Council for Cement & Building Material International Seminar at New Delhi.

- Maratha Cement Works (MCW) bagged the Electrical Safety Best Performer Certification

organized by Industry, Energy and Labor department of Government of Maharashtra. The MCW unit was identified for incorporating best practices in Electrical Safety that has led to Zero Harm

- Rabriyawas recognized and rewarded by Rajasthan Renewable Energy Corporation Limited (an undertaking of Rajasthan Govt.) for Remarkable Performance in Energy Conservation in the Cement Sector.

- Ropar been declared winner of the 'Genentech Environment Award - 2015' in the Silver Category in Cement Sector for outstanding achievement in Environment Management.

- Ambuja Cement Foundation (Ropar) was awarded the Best HIV Project for Intravenous Drug Users by the State Institute of Health and Family Welfare, Punjab.

- Ambuja Cement Foundation – Darlaghat bags NABARD's 'Best Partnership Award' for its Watershed Development Projects in Himachal Pradesh.

- Bhatapara was conferred 'Domain Excellence in Corporate Social Responsibility' and 'Commendation for Significant Achievement in Environment Management' at the CII Sustainability Award 2015.

26. CAUTIONARY STATEMENT

Statements in the Directors' Report and the Management Discussion and Analysis describing the Company's objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company.

27. ACKNOWLEDGEMENTS

The Directors take this opportunity to express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Ambuja family.

To them goes the credit for all of the Company's achievements. And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the board of

Ambuja Cements Limited

N. S. Sekhsaria

Chairman

Mumbai, 25th February, 2016


Dec 31, 2014

Dear Members,

It is our pleasure to present the Annual Report of the company for the year 2014.

1. INDIAN ECONOMY:

NEED FOR CHANGE MANAGEMENT GROWTH

Promoting reforms and policies key to economic revival.

Due to several factors, the Indian economy witnessed sluggish growth in first half of 2014. On the domestic front, policy paralysis of the last couple of years continued right up to the national elections in May 2014; added to that was a virtual stoppage of all infrastructure projects, both in the private and public sectors as well as through public-private partnership. Also, there were continuing inflationary pressures; interest rates remained far too high for financing long term projects. Nevertheless, the current account deficit, while better than a year earlier, was still in danger zone; and entrepreneurial ''animal spirits'' — so essential for economic growth — were at their nadir. On the external front, there were uncertainties regarding growth of the Euro Zone, the conflict in Ukraine, increasing militant activities in the Middle East and concerns about the falling growth in China.

Thankfully, the second half of 2014 showed signs of improvement. For one, the Lok Sabha election results which brought the BJP-led National Democratic Alliance into power at the centre with a comfortable majority in the Lok Sabha created its own optimism. After a long time, there was positive talk of growth; of infrastructure development; unblocking of coal mines; allocation of telecom spectrum; deregulation of diesel prices; and of the promises of an ambitious ''Make in India'' campaign. For another, the external economic front became more benign. Crude oil prices, which averaged USS 108 per barrel even in June 2014, started moving south — steadily reducing to under USS 50 per barrel. This, in turn, reduced the oil import bill as well as the cost of imported naphtha, resulting in both fiscal comfort and lesser pressure on the current account. Moreover, inflation started dropping, creating hope for the easing of interest rates. Thus, by early 2015, there were many more positive drivers for growth, both economic and political, than those that existed in 2014. If anything, there seems to be a sense that a better future awaits the Indian economy in 2015 and, hopefully, with it, your company

CEMENT INDUSTRY:

GOVERNMENT SUPPORT ESSENTIAL FOR REVIVAL Cement and cementitious materials are critical for meeting society''s needs of housing and basic infrastructure such as bridges, roads, water treatment facilities, schools, hospitals, airports, ports, factories and many other facilities.

The operating environment for the cement industry was no different from that of the macro economy In the first half of 2014, the industry suffered due to muted demand and rising cost pressures on account of rising freight (-5%) and raw material costs (-8%). It was also affected by the shortage and ban of essential construction materials like sand, bricks, water and the like, along with very heavy rains in most parts of the country Infrastructure bottlenecks further added to the woes. Major infrastructure projects got log jammed in policy paralysis, depressing demand.

However, with the beginning of an economic turnaround and riding on the back of moderating inflation amidst gradually improving consumer sentiment, industry showed some recovery in consumption, which was also reflected in improved despatch numbers.

Groundwork to expedite the growth prospects of all end-use segments of cement - housing, infrastructure, commercial - are being worked upon by the Central Government. Concerns on energy and land are being taken care via e-auction of coal blocks and the Land Ordinance signed by the President of India. All these along with the policy push for good governance augur well for the future of the cement industry

2. FINANCIAL RESULTS 2014

AT A GLANCE (STAND-ALONE RESULTS):

Cement production increased by 2% to reach 21.43 million tonnes, from 20.96 million tonnes while clinker production increased to 14.84 million tonnes, 4% up from 14.27 million tonnes in year 2013.

Domestic cement sales volume recorded increase of 3% at 21.46 million tonnes from 20.94 million tonnes in year 2013. Cement exports decreased to 0.08 million tonnes from 0.10 million tonnes in year 2013. Clinker sales (including exports) were up at 0.61 million tonnes from 0.56 million tonnes in 2013.

Net sales at Rs.9,911 crores were 9% up than that of previous year''s Rs. 9,079 crores. Average sales realisation increased by around 7% at Rs. 4,475 per tonne against approx Rs.4,208 per tonne in 2013.

Total (operating) expenses for the year 2014 increased by 7% over thatofyear 2013.

The company achieved an absolute EBITDA ofRs. 1928 crores. This is higher by 16% over the corresponding Rs. 1,667 crores of the year 2013.

Amount in Rs. crores

Stand-alone Consolidated

Current Year Previous Year Current Year Previous Year 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Sales (Net of excise duty) 9,910.70 9,078.74 9,930.54 9,109.88

Profit before interest and deprecia- tion and excep- tional item 2,357.42 2,044.45 2,352.60 2,033.91

Less: Finance Cost 64.48 65.08 65.55 66.75

Gross profit 2,292.94 1,979-37 2,287.05 1,967.16

Less: Deprecia- tion and amortisa- tion expense 509.53 490.07 513-03 493-67

Profit before Excep- tional Items and Tax 1,783.41 1,489.30 1,774.02 1,473.49

Less/ (Add): Excep- tional items - (24.82) - (24.82)

Profit before tax 1,783.41 1,514.12 1,774.02 1,498.31

Less: Tax expense 287.05 219.55 287-51 219.87

Profit after tax but before minority Interest 1,496.36 1,294.57 1,486.51 1,278.44

Less: Minority interest - - (0.01) 0.13

Profit for the Year 1,496.36 1,294.57 1,486.50 1,278.57

Add: Balance as per the last financial statements 1,230.69 737.01 1,525.77 1,048.09

Profit available for appropria- tion 2,727.05 2,031.58 3,012.27 2,326.66

Appropria- tions: General Reserve 150.00 150.00 150.00 150.00

Dividend on Equity Shares (including interim) 774.61 556.34 774.61 556.34

Corporate Dividend Tax 146.51 94.55 146.51 94-55

Total 1,071.12 800.89 1,071.12 800.89

Balance carried forward to Balance Sheet 1,655.93 1,230.69 1,941.15 1,525.77

Profit before tax at Rs. 1,783 crores was up by 18% over corresponding figure of Rs. 1,514 crores for the year 2013.

Net Profit at Rs. 1,496 crores was up by 16% over corresponding figure ofRs. 1,295 crores for the year 2013.

3. DIVIDEND

The company paid an interim dividend of 90% (Rs. 1.80 per share) during the year. The Directors are pleased to recommend a final dividend of 160% (Rs.3.20 per share). Thus, the aggregate dividend for the year 2014 is 250% (Rs.5/- per share) and the total payout will be Rs. 921.12 crores, including dividend distribution tax of Rs. 146.51 crores. This represents a payout ratio of 62%.

4. MARKET DEVELOPMENTS

The company''s domestic cement sales in 2014 grew by 2.5% to 21.46 million tonnes versus 20.94 million tonnes in 2013. Total cement sales (including exports) grew by 2.4% to 21.54 million tonnes compared to 21.04 million tonnes in 2013.

REGION WISE SALES VOLUME / GROWTH:

In the North region, domestic cement sales of the company grew by 1.2% to 8.74 million tonnes in 2014 compared to 8.64 million tonnes in 2013.

In the East region, the company achieved sales of 4.45 million tonnes of cement in the domestic market, registering a growth of 6% over the previous year sales of 4.21 million tonnes.

In the West & South region, the company''s domestic cement sales in 2014 grew by 2.2% to 8.27 million tonnes as compared to 8.09 million tonnes achieved in 2013.

Cement exports were reduced to 0.08 million tonnes in 2014 as compared to 0.10 million tonnes in 2013.

DISTRIBUTION FOOTPRINT

Our product range is marketed through a countrywide network of sales units, area offices and warehouses. This is backed by a distribution network of over 8,700 dealers and 29,000 retailers. Their reach and penetration helps the company to cater to rural and semi-urban markets. This, coupled with the strong brand equity and efficient channel management, helped the company withstand severe price and volume competition. The company''s network of ports, bulk cement terminals and captive ships on the west coast has supported a sustainable and strong market position in Mumbai, Surat and Cochin. Similarly, the Mangalore Bulk Cement Terminal, with its commercial operations has helped in expanding the company''s footprints in the southern region.

CREATING VALUE THROUGH OUR SYSTEMS Preserving our most valued resource - knowledge.

To live by its ''I CAN'' spirit, Ambuja started with ''Foundations'' - a knowledge initiative, called Ambuja Knowledge Centre (AKC) for all from the construction fraternities. AKC aspires to create a holistic resource base on the subject of cement and concrete. It stems from Ambuja''s belief in the continuous evolution of architecture, engineering and construction industries, thereby offering its professionals various platforms for information, inspiration and interaction.

Raising our own high standards.

The company has also embarked upon a Customer Excellence programme (CE) (its erstwhile Marketing and Commercial Excellence) to sharpen its marketing, sales and distribution functions. CE has now become a way of life at Ambuja. Excellence is what we seek and what we strive for in every aspect under Marketing and Sales. Since all along we have had customer centricity in our DNA, it is imperative that we reiterate our commitment and continue to walk the talk! This is also in line with the global strategy of Holcim - the vision of Holcim CE to be the most customer focused company with the highest customer loyalty in our industry thus creating more value for our customers.

5. COST DEVELOPMENTS

Upward movement in costs led to increased cost of production. The company''s cost optimisation initiatives partly mitigated inflationary pressures and restricted overall cost increases.

MAJOR COST MOVEMENTS:-

i) Cost of major raw materials, fly ash and gypsum, increased by 2% on per tonne basis. During the year, royalty on limestone was hiked by 27% from Rs. 63 to Rs. 80 per tonne. Overall, the raw material cost per tonne increased by approximately 13% over the previous year.

ii) Power and fuel costs account for approximately 26% of the total operating cost of the company Coal cost for kiln and captive power plants increased by 4% and 10% respectively, mainly due to higher cost of imported coal. However, substitution of high cost coal by pet coke usage helped restricting the overall cost increase. Besides, there was increased usage of alternate fuels by 5% over the usage for the year 2013. Usage of alternate fuels accounted for 4% of total thermal energy consumption in 2014.

The cost of grid power remained stable on a per unit basis. However, cost of captive power increased by 10% in 2014 mainly due to higher coalprices. Captive power generation contributed 67% of the total power requirements.

Overall, power and fuel cost increasedby 7% on per tonne basis as compared to the year 2013.

iii) Freight and forwarding cost works out to 28% of total operating costs. On per tonne basis, cost increase was restricted to 4% due to positive impact of various logistic optimisation efforts and declining diesel prices during latter part of the year.

iv) The cost of packing bags went up by around 7%, driven by increase in PP granule prices. Declining prices of PP granule in latter part of the year helped restricting overall price increase.

COST MITIGATION MEASURES / EFFICIENCY

IMPROVEMENT INITIATIVES:

i) Keeping in line with the company''s philosophy of Sustainable Operation, focus on production of fly ash based PPC was maintained and several initiatives were taken up to enhance fly ash consumption in PPC with quality

ii) The company worked on fuel flexibility to mitigate risk associated with dynamic fuel market and developing the abilities to switch to most economical fuel mix.

iii) The ''GEO 20'' project is a part of the efforts by the company for creating a cost efficient fuel mix. It is in operation now and will be stabilised by Qi 2015. Here, as a result of handling, storing and processing of waste materials, the company will be able to ensure more usage of greener fuels thereby reducing energy cost.

iv) The revision of load lines for captive ships will lead to handling of higher cargo in environment friendly mode of sea transportation with savings in coastal freight cost.

v) Replacement of MP turbine with HP turbine at Maratha Cement should help to improve efficiency of captive thermal power plant and lower power generation cost. The company has also replaced most of major drives with VVFDs which will help to get lower power consumption thereby reducing energy cost.

vi) With the introduction of the SCOPE (Supply Chain Optimisation Project for Excellence), a supply chain excellence initiative, the company is expected to derive operational efficiencies in logistics. This is targeted by improvisation in direct despatches to customers by undertaking fleet optimisation and route optimisation mode (rail/ road/ sea) among others.

6. EXPANSION PROJECTS AND NEW INVESTMENTS

MOVING FORWARD RESPONSIBLY The company took up several projects to serve its customers in a more efficient, cost-effective, reliable and environment-friendly manner, while bolstering its market position in the industry

CAPACITY EXPANSION DURING THE YEAR The new Roller Press commissioning at Rabriyawas will help to increase grinding capacity by 0.8 Mio T and also result in reduction in energy consumption. One additional silo will also be constructed by 2015, which will help in diversifying product portfolio.

Getting better at being the best.

The company focused on consolidation and optimisation of its existing capacities in all the three regions. Capital investments kept flowing in during the year, to ensure the highest standards of safety in order to meet the company policies of ''Zero Harm'', clean and energy efficient infrastructure, cost efficient and environment friendly material handling systems, process optimisation and sustainability initiatives.

Increasing productivity, one major step at a time.

i) A Waste Heat Recovery (WHR) plant at Rabriyawas in Rajasthan with an investment of Rs. 92 crores is in progress to bring efficiency in fuel utilisation, optimise power costs and meet our renewable power targets.

ii) We have completed the Geocycle platform projects at four integrated plants which will help increase the co-processing of waste. With

a total investment of over Rs. 240 crores on these platforms, this showcases our commitment for sustainable and environment friendly operations.

iii) We have successfully completed the ambitious fast return projects that the company had taken up in 2013 to optimise and enhance efficiency The company has already started benefitting from these initiatives.

UPCOMING CAPACITIES AND INVESTMENTS

i) Significant cement capacity addition of approximately 4.50 million tonnes with associated clinkerisation capacity of 2.70 million tonnes is expected at the proposed integrated plant at Marwar Mundwa, Nagaur district in Rajasthan with cement capacity of 1.5 MTPA; and with similar capacity grinding units at Osara (M.P.) and Dadri (U.P.).The total project cost is estimated at Rs.4,000 crores.

Environmental clearances for the project were acquired but kept in abeyance for Marwar Mundwa by the MoEF. Part of the mining land is already in possession and the rest is under an advanced stage of acquisition. The company is also in the process of tying-up water sources required for construction and operations. Full- fledged construction work is expected to commence in the later part of 2015.

ii) The new brown-field expansion project of Roller Press with master packer and auto wagon loading is in full swing at Sankrail and will be completed during 2015. This will help increase grinding capacity by 0.8 million tonnes and also result in reduction in energy consumption. New packer and auto loaders will improve despatch capacity.

iii) To mitigate the increase in logistic cost, the Rabariyawas unit in the State of Rajasthan is constructing a railway line to connect the plant location with the nearest railway junction. It is likely to get operational in the year 2016.

The year 2015 will see capital expenditure worth Rs.523 crores. The entire proposed expenditure would be financed by internal accruals.

7. OUTLOOK

TANGIBLE POLICY ACTIONS TO FACILITATE ECONOMIC GROWTH

The bigger picture is looking favourable.

To facilitate rapid economic growth, it will be necessary to see big ticket structural reforms, faster approvals on the supply side, with major support of fiscal and monetary policy on the demand side. After nine months plus of the new government in the Centre, tangible policy actions are required to facilitate investment and sustained growth.

Medium to long-term economic growth depends on ensuring macroeconomic stability and on creating an enabling environment for the private sector to invest. Fundamentally, India''s medium-term growth prospects looks to be promising, and a medium-term trend rate of growth of about 7% to 8% should be within reach in view of favourable tailwinds, both domestic and external, supported by active policy push in all three areas of good governance, fiscal and monetary management. Despite headwinds of a global slowdown in some parts of the world, India has the ability to grow faster and be a leading growth engine in the near to medium-term.

GROWTH PROSPECTS FOR THE CEMENT INDUSTRY

A positive trickle-down effect.

Investment in infrastructure and housing segments are most likely to propel demand for the cement industry, in which road sector would act as major end user segment. Housing will continue to remain key end-user segment for cement demand and grow at 5-7% over the next few years.

The Government of India is starting to make efforts to provide conducive environment for the industry by bringing out key policy measures on ease of doing business, energy related reforms, fiscal consolidation and the like which, along with reasonably accommodative monetary policy, ought to open up growth opportunities for the cement industry

Cement demand growth bears a strong correlation with GDP growth, particularly government revenue expenditure. As GDP growth revives, we believe, growth in government spending (which has been curtailed for some time to arrest fiscal deficit) will also improve, leading to a higher cement demand. We factor -7% growth in demand for year 2015.

8. RISKS AND AREAS OF CONCERN

Staying one step ahead of risk.

The company has laid down a well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risks. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

In line with the new regulatory requirements, the company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. A Risk Management Committee under the Chairmanship of Mr. Rajendra Chitale, Independent Director, has also been constituted to oversee the risk management process in the company. Based on the detailed review, the following key risks have been identified.

LAND ACQUISITION

New laws bring new hope.

Restrictions on buying land, under a law championed by the previous Government, were among barriers holding up projects worth almost U.S.D. $300 billion or nearly Rs. 20 lakh crores in infrastructure, industrial and housing sectors. The present Government, realising the flaws has been working on the subject and has come up with a new land acquisition Bill to kick-start pending projects. With this Bill not being taken up in the previous session of the Rajya Sabha, the President of India signed an ordinance on land acquisition on 7th January 2015, which aims at easing land acquisition rules to kick-start hundreds of billions of dollars in stalled projects. This land ordinance protects the interests of farmers and lifts curbs on five categories of projects including defence, national security, rural infrastructure and low-cost housing. We hope that the Bill will soon become law, and land can again be acquired for economic growth.

Ambuja Cement has appointed a dedicated function at the corporate level to look into risks relating to the land, which will help in improved land acquisition and management.

ENERGY

Moving beyond coal.

Depleting coal linkages and volatility in the Indian rupee is escalating concerns regarding coal. The company is constantly working on efficiency improvement measures by plugging heat loss at every possible stage of coal consumption, looking at cost- effective fuel mixes and also increasing the usage of alternative fuels and pet coke.

As a long term solution to energy security, the company has invested in project Geocycle, under the banner of ''Geo2o''. Waste Heat Recovery (WHR) systems that improve fuel utilisation, by tapping renewable energy sources are top priorities. New AFR pre-processing platforms are running at our plant location to increase the usage of the AFR.

Taxation / Administrative Burden

Resolving the taxing problems of the cement industry.

Cement, along with steel, forms an important raw material for the infrastructure and real estate sectors. However, steel, being included under the category of ''Goods of Special Importance'', attracts a lower tax rate at 4%. Even other raw materials such as clay bricks, fly ash bricks, attract sales taxes ranging from

4% to 6%. Unfortunately, cement attracts a high rate of tax ranging from 12.5% to 15% in the various states, which makes it subject to higher tax in comparison with other building materials.

A solution to this lies in rolling out a uniform tax regime through the implementation of Goods and Services Tax (GST). So far, the Government has taken some positive steps by getting the Cabinet approval. The central implementation of GST will play a critical role in next level of growth and truly realise the country''s potential.

De-allocation of Coal Blocks

On 25th August 2014, the Supreme Court had ruled that the allotment of captive coal blocks since 1993, was done with an "ad-hoc and casual" approach "without the application of mind". The ruling further added that, "common good and public interest suffered heavily in the unfair distribution of the national wealth — coal". The Supreme Court termed the allocation of these coal blocks as arbitrary and illegal and cancelled 214 of the 218 blocks. Some 40 companies were asked to pay a fine of Rs. 295 per tonne and surrender their coal blocks.

The Government is now addressing the issue and to this effect, has cleared a Bill on coal block auctions to replace an ordinance that was promulgated to begin auction of coal mines that were cancelled by the Supreme Court. This move will boost investor confidence due to transparency in the process and reduce fuel availability risks. The e-auction of coal mines will be open to private companies while state- run companies would be allocated mines directly In Phase I, the cancelled blocks will be opened for e-auction to three end users: steel, power and cement.

ORDER OF THE COMPETITION COMMISSION OF INDIA

On 20th June 2012, the Competition Commission of India (CCI) passed an order imposing unprecedented penalties of more than Rs.6,300 crores against some cement manufactures of the country, including the company, in the matter of a complaint filed by

the Builders Association of India for the alleged contravention of the Competition Law. Following the penalty imposed on the company ofRs. 1,164 crores, the company filed an Appeal before the Competition Appellate Tribunal (COMPAT) against the order and for granting a stay against deposit of penalty The matter is pending before COMP AT and the next hearing is scheduled in February 2015. The management, backed by legal opinion from the external legal counsel, strongly believes that the company has a good case to succeed before COMPAT and accordingly, no provision has been made in the books of accounts. However, the amount of penalty has been considered as contingent liability.

9. HUMAN RESOURCES

SUSTAINABLE TALENT MANAGEMENT Human resources (HR) at Ambuja plays a vital role in realising business objectives by leading organisational change, fostering innovation and effectively mobilising talent to sustain the organisation''s competitive edge.

The HR strategy is aimed at integrating HR processes to result in overall organisational effectiveness, which consequently affects the business growth. HR in line with business clarifies the business direction, performance expectations and actively contributes to decide what tactics are required for managing talent to achieve business goals.

How do we maintain our competitive edge-

By honing our talent.

HR at Ambuja has been driving various Talent Management initiatives. Talent Management plays a vital role in combination with other business processes in not only driving shareholder value but also in managing, developing and retaining superior talent that defines the prime source of competitive advantage.

Structured talent reviews across levels supported by individualised development plans and cross- functional and cross-location assignments have helped develop wholesome leadership skills. All the development efforts are showing good results with more and more senior positions being filled internally, while maintaining a healthy external talent intake. Thus succession planning has helped create a talent pipeline for key positions and a strong growth avenue for our developing leaders.

Carving out leaders from the best talent.

The core values of the organisation also emphasised the need to develop and build leaders that will take the organisation to the path of high performance. Keeping this in mind along with the other Talent Management initiatives, the STEP (Sustainable Talent for Enhanced Performance) programme was institutionalised in 2012. The prime objective of STEP (Sustainable Talent for Enhanced Performance) is to develop a sustainable pool of leaders equipping them with essential leadership skills and competencies and enhancing their coaching skill capacity to be internal coaches. The first batch of 96 managers who were part of the STEP journey have successfully completed the programme.

Our people strategy, systems and processes are aimed towards making us an employer of choice with sustainable talent and concrete action plans to enhance employee engagement. The employee engagement survey administered this year saw 98% employee participation with an improvement in the engagement score.

We also continued in our efforts to provide a congenial work environment, innovative recruitment and retention practices, and continuous learning opportunities to employees (management and non- management staff) for their future growth and development. As part of the Workforce Development initiative - a key initiative to build the capability and competence of workmen and to ensure safety, productivity and quality training opportunities have been provided to 70% of our workmen.

These efforts have led to a significant increase in manpower productivity Efforts have also been made to design progressive and empower HR policies and other welfare measures.

10. SUSTAINABILITY AND ENVIRONMENT

Making the Earth a better place.

We are committed to the path of corporate sustainability, with a legacy of a responsible and ethical organisation. It is driven by our senior management in a sustainability framework comprising of our sustainability committees, with the mandate to assess sustainability risks and opportunities at corporate and unit levels to monitor and drive sustainability initiatives. Sustainability is a regular item in our board meetings. The company sustainability initiatives are aimed inter-alia at low carbon emissions, water positivity, and use of biomass / industrial wastes as alternative fuels as well as fly ash as blending material.

Gaining recognition for staying light on our feet.

We improved our sustainability performance over the previous years. This has been recognised by independent audits, and the company won the prestigious CII Sustainability Award 2013 for ''Significant Achievement on the Journey towards Sustainable Development''. This is the fourth time in a row Ambuja Cements has received this award. In addition, for Domain Excellence, our Bhatapara unit was conferred the CII Sustainability Award for ''Commendation for Significant Achievement in CSR''. Furthermore, this year we won the YES BANK - Saevus Natural Capital Awards 2014 as the ''Eco-Corporate of the "Year - Manufacturing'' for the commendable work towards environmental sustainability

We have been ranked amongst the top 10 participants of the Carbon Disclosure Leadership Index (CDLI), the highest in the Cement Sector, under the Carbon Disclosure Project (CDP) in their recently released CDP India 200 Report.

The year 2014 saw us achieving sustainability product certification ''Pro-Sustain'' for cement production (PPC) from our Darlaghat plant from an independent third party DNV-GL. The product Stewardship Standard of Pro-Sustain certification is aligned with the objective and principle of internationally recognised standard encompassing environmental, social and economic aspects of our operations and product traceability.

A new way to equate our self-worth. And our worth to the world.

To further strengthen our commitment to build competitiveness through sustainability, we launched the True Value Project, a unique initiative that takes into account the value of environmental and social impacts in monetary terms along with financial parameters. This makes Ambuja Cement the first Indian company to carry out such an elaborate exercise of assessment.

We are glad to report that in our journey to Water Positivity, we achieved the water positive factor of ''4'' in 2014 by way of meticulous accounting of our water consumption (debit) and water harvesting or recharges (credit) taking place from rain water harvesting structures at our plants, colony, mines and community We give back to nature four times what we draw.

We are frequently reported. By ourselves.

Carbon Conscious Growth - The company monitors and reports its Carbon emissions as per the World Business Council for Sustainable Development''s (WBCSD)''s Cement Sustainability Initiative (CSI) protocol. We reduced our Green House Gas (GHG) emissions by around 28% in 2013 from the 1990 level. To further reduce the use of natural resources and consequently our carbon emissions, our focus remained on the fly ash based cement (PPC) as our major product. A 6.5 MW Waste Heat Recovery (WHR) based power generation system is under installation at our Rabriyawas plant at Rajasthan which will further lessen our carbon footprint.

Environment Management - The company ensured availability of Continuous Emission Monitoring Systems (CEMS) at all the kiln stacks with above 95% availability round the year for online monitoring of all vital pollution parameters.

As a part of our consistent effort to ensure sustainable ecology by way of biodiversity conservation, a Biodiversity Action Plan (BAP) has been prepared for our Ambujanagar site in Gujarat. A Wildlife Conservation Plan has also been prepared for our Darlaghat plant at Himachal Pradesh. We have completed the installation of water meters in all the plants as per the Holcim Water Protocol.

During the year, one more integrated plant and one grinding unit attained the Energy Management System as per ISO 50001 certification — adding up to total two integrated plants and four grinding units to be certified. The company has taken steps to meet its commitments under the PAT scheme and RPO- REC obligations. Further, we are taking all necessary actions to monitor and control our emissions to ensure that we comply with the requirement of New Emission Standards as notified in 2014.

Partnering the environment.

Collaboration with Global Community - ACL is

one of the active co-chairs of World Business Council for Sustainable Development (WBCSD) CSI India for implementation of the India specific ''Low Carbon Technology Road Map for Cement Industry''.

We have been partnering with WBCSD for the development of India Water Tool (IWT) since 2012. The tool will help companies to understand and respond to their growing challenges of managing water effectively and identify water risk areas.

We actively collaborate with Leader for Nature (LFN) Initiative of International Union for Conservation of Nature (IUCN) and the CII''s India Business and Biodiversity Initiative (IBBI) on Policy dialogue and capacity building on Biodiversity Conservation.

Sustainability Awareness & Reporting - Train the Trainer (ToT) training was imparted during the year covering all the plants. Various training and awareness programmes were conducted on environment and sustainability topics, emission / environment monitoring, biodiversity management and water management to build capacities for environmentally responsible operations.

Read all about it: our sustainability efforts.

We released our 71h Annual Corporate Sustainability Report, presenting our efforts towards sustainable development for the year 2013, the report also provided the glimpses of ''True Value Project''. The report is aligned with Global Reporting Initiative (GRI) G3 guidelines for A Level of reporting, having been ''assured'' by an independent certifying agency We have responded to the Metal and Mining Sector Supplement of the GRI while reporting on our sustainability performance to our stakeholders. As in the previous year, the report has been accorded the ''GRI Check'' to enhance credibility by Global Reporting Initiative (GRI), Netherlands. The company has been issuing Business Responsibility Report (BRR) as a part of its Annual Reports since 2012.

11. CORPORATE SOCIAL RESPONSIBILITY (CSR)

At Ambuja, the CSR has been an integral part of the way in which we have been doing business since inception. The founders of the company always believed it imperative for surrounding communities and stakeholders to progress with the company This vision was translated into the establishment of the Ambuja Cement Foundation (ACF) which is the CSR arm of the company

The ACF operates in 12 states and 22 locations, reaching out to more than 14 lakh people over 860 villages. ACF programmes are in line with its mission statement - ''Energise, involve and enable communities to realise their potential''.

IMPROVING LIVES THROUGH INVOLVEMENT.

At Ambuja, stakeholder engagement is the key to implement CSR programmes and several tools and processes have been established to aid this objective. To integrate business and community needs, Community Engagement Plans (CEP) are prepared in close engagement with the community and then the unit. The Community Advisory Panels consists of community members and members from the company to deliberate upon programmes and decide for the future. The Social Engagement Scorecard assesses the work done in communities. The Site Specific Impact Assessment (SSIA) captures perceptions and feelings of all stakeholders at sites and enables the Foundation to address potential risks. These processes ensure that programmes introduced are relevant and dynamic in nature. Based on assessment of needs, the ACF works in thrust areas namely - water resource management, agro - based and skill- based livelihoods, and socio-economic development.

WATER RESOURCE MANAGEMENT The ACF''s work on water resource management has ensured access to quality water in its neighbouring communities. The work was initiated in salinity ingress areas of Kodinar which has now spread to the dry arid territories of Rajasthan and hilly regions of Darlaghat. Programme adaptability according to the topography of the region has increased ground water table, and better water availability in farms. Micro irrigation has ensured optimum utilisation of water and is being widely adopted by farmers. Continued water management programmes undertaken by the ACF have contributed significantly for the company to be four times water positive.

AGRO BASED LIVELIHOOD

Supporting the backbone of the nation''s economy.

Assured availability of quality water has enabled farmers to grow more than one crop on their fragmented lands impacting the economic status of their families. The farmers have also benefitted from the numerous training programmes conducted by the ACF. For instance, the Foundation manages the Krishi Vigyan Kendra at Ambujanagar, a one-stop-shop for latest and best agriculture technologies in the region, and has reached out to 265 villages through training programmes and fairs. The ACF also works with farmers to promote animal care by organising regular camps. In Darlaghat, the Pashu Swasthya Sevika (PSS) have been trained by the Foundation to ensure animal care.

Based on geographical suitability, programmes like organic farming in the north and Systemic Rice Intensification (SRI) in the east have enhanced agricultural practices. The Better Cotton Initiative (BCI), a global initiative for sustainable cotton production, reaches out to over 17,200 farmers. Implementing BCI practices has guaranteed work ethics on farms, ensured soil health and better profit margins coupled with safe environment practices. In 2014, 70,565 tonnes of cotton was produced by our farmers, all licensed as ''Better Cotton''.

The ACF has also partnered with farmers through establishment of Producer Companies to provide biomass to the company to be used as Alternate Fuel Resource (AFR). It is hoped that this supply chain will appear as an inclusive business model in the near future.

SKILL TRAINING

Ensuring talent doesn''t go wasted.

Skill training through the ACF''s 16 Skill and Entrepreneurship Development Institute (SEDI) has changed the social and economic dynamics through assured jobs and by addressing the industry demand of skilled personnel. In Kodinar, young girls contribute to their family income after training in bedside attendant course. In Chandrapur, unemployed youth have gained jobs in industries or have gained construction assignments in nearby villages after being trained as masons. In 2014, SEDI also provided supplementary skills training and valid certification to the company''s workers. SEDI not only imparts training in 45 different trades but complements these by providing training in computer, English and soft skills. A number of courses at SEDI are government affiliated. Till date, SEDIs have reached out to more than 20,000 youth with a placement rate of 76%.

SOCIO ECONOMIC DEVELOPMENT

Building stronger communities.

The ACF ensures holistic development of its communities by focusing on health, education and women development. Clinical health care is met through Mobile Medicare Units, Community Health Clinics, Diagnostic Centres and specialised health camps. The training of village health functionaries (Sakhis) has ensured maternal and child care for women and 24 x 7 health access at their doorstep. The Sakhi has also developed relevant linkages with government to ensure services for her village. ACF trained Sakhis are much sought after as much as the ASHAs of the government cadre. Till date, 337 Sakhis have been trained of which 110 have been absorbed as ASHA workers.

The Sakhi has also become the forerunner to initiate other programmes like tobacco control, nutrition programme and child development for villages.

The ACF has been working rigorously to ensure complete sanitation in its host communities. The programme is being run in a campaign mode and till date 11 villages have received the Nirmal Gram Puraskar. The ACF has facilitated construction of over 12,000 individual and community toilets apart from soak pits and drains.

HIV and AIDS prevention programme at Ambuja reaches out to truckers in the plant and communities through counselling sessions, street plays, camps etc. The ACF implements io targeted intervention projects in collaboration with state-level AIDS Control Societies and four health care centres at truck halt points neighbouring our sites.

Looking out for the next generation.

The company promotes education in the five integrated plants through Ambuja Vidya Niketan Trust (AVNT). The ACF also conducts programmes in nearby government schools through teacher training programmes. The methodologies introduced in schools have made subjects interesting and easier to understand. ACF-trained Balmitra supports children in understanding mathematics and science. ACF also provides infrastructural support to schools like the establishment of science centres and libraries.

The Ambuja Manovikas Kendra (AMK) is a special school for mentally challenged children in Ropar. A range of activities and programmes like therapies, sports and cultural activities, etc. at the AMK help them grow as independent and productive individuals. The children have won awards at the state-level Olympics Championship since the past nine years and at the World Special Olympics. The school also extends its services to children who cannot travel to school through its Home-based Rehabilitation Programme.

Women''s Empowerment is a part of the ACF''s DNA and is interwoven in all its programmes. Assured access to water, developing a cadre of women to ensure health and education and relevant skills training provide an opportunity to women to showcase their leadership. Access to finance and knowledge of running small businesses has also boosted the confidence of many women. In Kodinar and Chandrapur, women have federated from small self-help groups of 15-20 members, to form a federation consisting of 2,000-3,000 women. The Sorat Mahila Mandal in Kodinar, Gujarat, has opened its retail outlet, and runs a stitching course for its members. The government reached out to the group for its insurance scheme giving it the much needed recognition. The federation extends its support to members in times of emergencies as well. These initiatives have played a critical role in ensuring an elevated status of women. Since the process has been participatory, the changes brought forth are irreversible and have become a permanent feature.

PURSUING CSR AS A PASSION INSTEAD OF A MANDATE.

CSR has been an integral part at Ambuja Cements much before the passing of Companies Act, 2013. The company has made conscious efforts to involve communities in its development journey with a spending of more than 2% since manyyears. Continuous and meaningful community engagement since 22 years has made the company the ''neighbour of choice''. ''Ambuja Cements'' has received appreciations from the government, as well as other stakeholders, which makes us feel a sense of pride and an encouragement to continue our resolve further and better.

Pursuant to Section 135 of the Companies Act, 2013, and the relevant rules, the Board has constituted the Corporate Social Responsibility (CSR) Committee under the Chairmanship of the Board Chairman, Mr. N. S. Sekhsaria. The other members of the Committee are Mr. Nasser Munjee, Mr. Rajendra Chitale, Mr. Bernard Terver, Mr. B.L. Taparia and Mr. Ajay Kapur. A detailed CSR Policy has also been framed which is placed on the company''s website. Other details of the CSR activities as required under Section 135 of the Companies Act, 2013, are given in the CSR Report at Annexurel.

i2. OCCUPATIONAL HEALTH & SAFETY (OH&S)

After a disappointing OH&S performance in 2013, we had a very deep introspection and detailed management review. Based on this, we kick-started the ''We Care'' initiative to transform our OH&S culture.

Although we did significant work in establishing good OH&S standards and organisation over the last 5-6 years, we found significant gaps in real implementation on ground. We have significant complexity of having 17 operating sites, some 15,000 people of which most are not adequately literate and have a culturally poor OH&S mind set. We thought that the best way to deal with this was to engage our people emotionally and make them very much the building blocks of Ambuja''s OH&S transformation journey, while, at the same time, working with subject experts to prioritise and address all issues related to both unsafe conditions and unsafe acts.

''We Care'' is a big change management programme. The primary objective of this initiative is to achieve our OH&S ambitions by making it a People''s Movement. We believed that this could be possible only when we connected and engaged with 100% people entering our sites; reinforced that OH&S is primarily a line accountability; achieved a right balance between people aspects, engineering solutions and OH&S systems; and created the right organisation and processes to achieve our OH&S ambitions.

In our ''We Care'' programme, each plant was divided into total manageable zones; each Zone owner was supported by 7 - 9 Safety Ambassadors. We trained some 250 Zone Owners and 1,600 Safety Ambassadors to implement the programme and directly connected to 100% of our workforce (approximately 15,000 people) through 4-6 hours of sensitisation and idea generation workshops. We introduced a company- wide reward and recognition programme to encourage safe behaviour and exceptional contribution to safety

Safety results show when nothing happens.

The result was very evident with a significant improvement in OH&S performance with no onsite fatality for 10 months and very visible change in the safety behaviour of our people at all levels.

For 2015, we have prepared a clear strategy and implementation plan to keep the momentum and drive the next level of Initiatives to further strengthen ''We Care''. This year, we will have a very intensive focus on Workmen Capability building, effective implementation of Fatality Prevention Elements & Contractor Safety Management directives, simplifying procedures to achieve scale and speed and are in the process of preparing a structure to address Occupational Health related issues proactively

We will again directly connect to all our people entering our sites to update them about the progress, plan for 2015 and listen to them so that we can collectively transform our OH&S culture.

13. PURCHASE OF SHARES IN HOLCIM INDIA PVT. LTD. (HIPL) AND AMALGAMATION OF HIPL WITH THE COMPANY

The Members may be aware that the company had proposed to acquire 24% equity shares of HIPL from Holderind Investment Limited, Mauritius and subsequently amalgamating HIPL with the company under the Scheme of Amalgamation.

The Scheme of Amalgamation has been approved by the requisite majority of the Members and has also received ascent from the Hon''ble High Courts at Gujarat and Delhi. However, the scheme will be effective upon receipt of approval from the Foreign Investment Promotion Board, Government of India which is yet to be received.

On the Scheme being effective, the company will hold 50.01% equity shares in ACC Limited and consequently ACC Limited and all its subsidiaries will become the subsidiary of the company

14. EMPLOYEE STOCK OPTION SCHEME

During the year, the company has not granted any fresh stock option to its employees.

i5. DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) Extract of Annual Return:

The details forming part of the extract of the annual return is enclosed in Annexure II.

ii) Number of Board Meetings:

The Board of Directors met 5 (five) times in the year 2014. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

iii) Changes in Share Capital:

During the year under review, your company allotted 38,85,500 equity shares of the face value of Rs.2/- each upon exercise of stock options under various Employee Stock Option Schemes. Consequently the equity share capital has increased from Rs.309,17,20,572/- divided into 154,58,60,286 equity shares of Rs.2/- each to Rs.309,94,91,572/- divided into i54,97,45,786 equity shares of Rs.2/- each.

iv) Composition of Audit Committee:

The Board has constituted the Audit Committee which comprises of Mr. Rajendra Chitale as the Chairman and Dr. Omkar Goswami, Mr. Nasser Munjee and Mr. Bernard Terver as the members. More details on the committee are given in the Corporate Governance Report.

v) Related Party Transactions:

All the related party transactions are entered on arm''s length basis and are in compliance with the applicable provisions of the Act and the Listing Agreement. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. During the year, the Board reviewed the Technology and Know-how (TKH) Agreement and decided that the rate of TKH Fees be maintained at 1% of the Net Sales of the company for the remaining three years period commencing from 1st January, 2015. This disclosure is being made as a matter of prudence.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the certificate from the MD & CEO and the CFO.

The Related Party Transactions Policy as approved by the Board is uploaded on the company''s website at the web link:

http ://www.ambujacement.com/wp-content/uploads/2014/Related_Party_ Policy_30.10.2014.pdf.

The details of the transactions with Related Party are provided in the accompanying financial statements.

16. CORPORATE GOVERNANCE

The company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance under the Listing Agreement, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

17. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year ended 31st December 2014, as stipulated under clause 55 of the Listing Agreement is annexed and forms part of the Annual Report.

18. INTERNAL CONTROL SYSTEM

A strong internal control culture is pervasive in the company: The company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources. The formalised systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement, and article 728 (a) of the Swiss Code of Obligations applicable to the Holcim Group. The company also has well documented Standard Operating Procedures (SOPs) for various processes which is periodically reviewed for changes warranted due to business needs. The Internal Audit department continuously monitors the efficacy of internal controls / compliance with SOPs with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation''s risk management, control and governance processes.

The scope and authority of the Internal Audit activity are well defined in the Internal Audit Charter, approved by the Audit Committee. Internal Audit department develops a risk based annual audit plan with inputs from business risk management, prominent stack holders and previous audit reports. The Internal audit plan is approved by the Audit Committee. During the year, the Audit Committee met regularly to review reports submitted by the Internal Audit department. All significant audit observations and follow-up actions thereon were reported to the Audit Committee. The Audit Committee also met the company''s Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal controls and systems followed by the company

The Internal Audit department also assesses opportunities for improvement in business processes, systems and controls, provides recommendations, designed to add value to the organisation and follows up on the implementation of corrective actions and improvements in business processes after review by the Audit Committee.

19. MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES

i) Vigil Mechanism / Whistle Blower Policy

Fraud-free and corruption-free work culture has been core to the company In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the company has put an even greater emphasis to address this risk.

To meet this objective, a comprehensive Fraud Risk Management (FRM) Policy akin to vigil mechanism or the whistleblower policy has been laid down. More details about the FRM Policy are given in the Corporate Governance Report, which forms part of this Annual Report.

ii) Anti Bribery and Corruption Directives (ABCD)

In furtherance to the company''s philosophy of conducting business in an honest, transparent and ethical manner, the Board has laid down ABCD as part of the company''s Code of Business Conduct and Ethics. As a company, we take a zero-tolerance approach to bribery and corruption and are committed to act professionally and fairly in all our business dealings.

To spread awareness about the company''s commitment to conduct business professionally, fairly and free from bribery and corruption, training and awareness workshops were extended to select vendors of the company based on their risk profile and business relationship with the company.

As part of continuous education on ABCD to the employees, a mandatory on-line training through a web-based application tool was undertaken during 2014 by approximately 4,000 employees.

The above policies and its implementation are closely monitored by the Audit and Compliance Committees of Directors and periodically reviewed by the Board.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL

I. CESSATION

Mr. Onne van derWeijde, (DIN 00009181) Managing Director decided to return to the parent company Holcim and accordingly resigned from the Board w.e.f. 25th April, 2014. Mr. Onne joined the Board in January 2009 and in May 2010 was appointed as the Managing Director of the company

The Board placed on record its appreciation for the valuable services rendered by Mr. Onne van der Weijde.

II. RETIREMENT BY ROTATION

In accordance with the provisions of Section 152(6) and Article 147 of the Articles of Association of the company, (i) Mr. Ajay Kapur (DIN 03096416) and (ii) Mr. B. L. Taparia (DIN 00016551) will retire by rotation at the ensuing Annual General Meeting of the company and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

III. APPOINTMENT

Mr. Ajay Kapur (DIN 03096416)

Mr. Ajay Kapur who was holding the position of the Dy Managing Director & CEO of the company since August, 2013, was appointed as the Managing Director & CEO we.f. 25th April, 2014, for a period of five years.

Ms. Usha Sangwan (DIN 02609263)

Ms. Usha Sangwan has been appointed as an Additional Director (Non Independent) under Section 161 of the Companies Act, 2013 w.e.f. 24th April, 2014.

Ms. Usha Sangwan is the Managing Director of Life Insurance Corporation of India and holds a Master''s Degree in Economics and a Post Graduate Diploma in Human Resource Management. She joined LIC as Direct Recruit Officer in 1981. She has worked in almost all core areas of life insurance including Marketing, Personnel, Operations, Housing

Finance, Group Business, Direct Marketing, International Operations and Corporate Communications. She has been awarded the ''Women Leadership Award'' in BFSI sector by Institute of Public Enterprise and ''Brand Slam Leadership Award'' by CMO Asia.

As an Additional Director, Ms Sangwan shall hold office up to the date of the ensuing Annual General Meeting. The company has received a notice as per the provisions of Section 160(1) the Companies Act, 2013, from a member proposing her appointment as Director. The Board of Directors recommends her appointment.

Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

IV. APPOINTMENT OF INDEPENDENT DIRECTORS With coming into the force of the Companies Act, 2013, the Board appointed all the existing Independent Directors viz. Mr. Nasser Munjee, Mr. Rajendra Chitale, Mr. Shailesh Haribhakti, Dr. Omkar Goswami and Mr. Haigrieve Khaitan as Independent Directors under section 149 of the Companies Act, 2013 for a term up to 31st March, 2019. The shareholders at their Extra Ordinary General Meeting held on nth September 2014, approved their appointment.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6). The profile of the Independent Directors forms part of the Corporate Governance Report.

V. EVALUATION OF THE BOARD''S PERFORMANCE In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the performance evaluation of the Board was carried out during the year under review. More details on the same is given in the Corporate Governance Report.

VI. REMUNERATION POLICY

The company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same is given in the Corporate Governance Report.

21. DIRECTORS'' RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies Act, 1956 as amended, the Directors confirm that:

i) In the preparation of the financial statements, the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) Appropriate accounting policies have been selected and applied consistently, except for the change in accounting policies stated in notes to the accounts and judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the company as on 31st December, 2014, and of the statement of profit and loss and cash flow of the company for the period ended 31st December, 2014.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The financial statements have been prepared on a going concern basis.

22. AUDITORS

I. AUDITORS AND THEIR REPORT: - M/s SRBC & Co. LLP (ICAI Lirm Registration N0.324982E), the Statutory Auditors of the company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per Section 139 of the Companies Act, 2013.

M/s SRBC & Co. LLP have expressed their willingness to get re-appointed as the Statutory Auditors of the company and has furnished a certificate of their eligibility and consent under Section 141 of the Companies Act, 2013, and the rules framed thereunder.In terms of the Listing Agreement, the Auditors have confirmed vide their letter dated 22nd January, 2015, that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s SRBC & Co. LLP as the Statutory Auditors of the company.

The members are requested to appoint M/s SRBC & Co. LLP, Chartered Accountants as Auditors from the conclusion of the ensuing annual general meeting till the conclusion of the next Annual General Meeting in 2016 and to authorise the Board to fix their remuneration for the year 2015.

The Auditors'' Report to the Shareholders for the year under review does not contain any qualification.

II. COST AUDITOR AND COST AUDIT REPORT Pursuant to section 148 of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee appointedM/s P.M. Nanabhoy & Co. Cost Accountants, as the Cost Auditors ofthe company for the Linancial Year 2015 and has recommended their renumeration to the Shareholders for their ratification at the ensuing Annual General Meeting. M/s P.M. Nanabhoy & Co. have confirmed that their appointment is within the limits of the Section 224 (iB) of the Companies Act, 1956, and have also certified that they are free from any disqualifications specified under Section 233B (5) read with Section 224 sub-section (3) or sub-section (4) of Section 226 ofthe Companies Act 1956.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the company. Pursuant to Cost Audit (Report) Rules 2001, the Cost Audit Report for the financial year 2013, was filed on 28th April, 2014 vide SRN N0.Q31060932 on the Ministry of Corporate Affairs website.

III. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

The Board had appointed M/s Rathi & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2014. The report of the Secretarial Auditor is annexed to this report as Annexure III. The report does not contain any qualification.

23. TRANSFERTO INVESTOR EDUCATION AND PROTECTION FUND

The company has transferred a sum of Rs.207.88 lakh during the financial year 2014 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividends which were lying with the company for a period of seven years from their respective due dates of payment. Prior to transferring the aforesaid sum, the company has sent reminders to the shareholders for submitting their claims for unclaimed dividend.

24. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, is required to be given pursuant to provision of Section 134 of the Companies Act, 20i3,read with the Companies (Accounts) Rules, 2014 is annexed here to marked Annexure IV and forms part of this report.

25. PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956 ("the old Act") and corresponding Section 197 of the Companies Act, 2013 ("the new Act") and the rules thereunder forms part of this Report. However, in terms of Section 2i9(i)(b)(iv) of the old Act and Section 136(1) of the new Act, the Report and Accounts are being sent to the members and others entitled there to, excluding the Statement of Particulars of Employees. The Annexure is available for inspection by the members at the Registered Office of the company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy there of, such member may write to the Company Secretary, whereupon a copy would be sent.

26. SUBSIDIARY COMPANIES

Pursuant to the circular dated 8th February, 2011, issued by the Ministry of Corporate Affairs, Government of India and Section 136 of the Companies Act, 2013, which has exempted companies from attaching the Annual Reports and other particulars of its subsidiary companies along with the Annual Report of the company, the Annual Reports of the subsidiary companies viz. (1) Chemical Limes Mundwa Pvt. Ltd. (2) M.G.T. Cements Pvt. Ltd. (3) Kakinada Cements Ltd. (4) Dang Cement Industries Pvt. Ltd. and (5) Dirk India Pvt. Ltd. are not attached with this Annual Report. However, a statement giving certain information as required vide aforesaid circular is placed along with the Consolidated Accounts.

The financial statements of the subsidiary Companies are kept for inspection by the shareholders at the Registered Office of the company The company shall provide free of cost, the copy of the financial statements of its subsidiary companies to the shareholders upon their request. The statements are also available on the website of the company www.ambujacement.com

27. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Clause 32 of the listing agreement with the stock exchanges, the consolidated financial statements have been prepared by the company in accordance with the applicable Accounting Standards. The audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.

The consolidated net profit of the company and its subsidiaries amounted to Rs. 1486.50 crores for the corporate financial year ended on 31st December, 2014 as compared to Rs. 1496.36 crores on a standalone basis.

28. EQUAL OPPORTUNITY EMPLOYER

The company has always provided a congenial atmosphere for work to all employees that is free from discrimination and harassment including sexual harassment. It has provided equal opportunities of employment to all without regard to their caste, religion, colour, marital status and sex. The company has also framed a policy on ''Prevention of Sexual Harassment'' at the workplace. There were no cases reported during the year under review under the said Policy

29. AWARDS AND ACCOLADES

- ACF Darlaghat bags NABARD''s Best Partnership Award.

- Ambuja bags CII-ITC Sustainability Award - 2014.

- Roorkee Grinding Unit has been awarded with the ''CERTIFICATE of MERIT'' for ''Energy Conservation in Cement Sector for the year 2013''.

- Ambuja Cement Foundation - Chirawa has won the UNESCO supported Water Digest Water Award 2013-14.

- Ambuja Cement bags Bronze at the Flame Awards 2013 for Rural Marketing Initiative.

- Ambuja Cement bagged the 1st runner up award at the ASSOCHAM CSR Excellence award during the 6th Global Corporate Social Responsibility Summit held in Delhi.

- ACEs Rabriyawas Unit won the 14th Annual Greentech Environment award in the Gold Category

- Greentech Environmental Excellence Gold Award 2013.

- Ambuja Cements - Rabriyawas Plant won Productivity Excellence Award 2011-12, presented by Rajasthan State Productivity Council.

- Ambuja Cement Foundation - Bathinda won the NABARD ''Partnership Excellence Award'' in the category of''Improving productivity of crops''.

30. CAUTIONARY STATEMENT

Statements in the Directors'' Report and the Management Discussion and Analysis describing the company''s objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the company''s operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the company

31. DISCLAIMER

The Ministry of Corporate Affairs vide Circular No. 08/2014 dated 4th April, 2014 clarified that the financial statements and the documents required to be attached thereto, the Auditor''s and Directors'' report in respect of the financial year under reference shall continue to be governed by the relevant provisions of the Companies Act, 1956, schedules and rules made there under. However, the company has made efforts to provide the information in the Directors'' Report and the Corporate Governance Report as per the Companies Act, 2013, to the extent possible as a matter of prudence and good governance.

32. ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Ambuja family. To them goes the credit for the company''s achievements. And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Ambuja Cements Limited

N. S. Sekhsaria Chairman

Mumbai, 18 February, 2015


Dec 31, 2013

1. INDIAN ECONOMY

A Year of Challenges

Slowing growth, rising inflation and the depreciating rupee marked the onset of 2013 setting in motion a challenging year for the Indian economy. Growth rate continued to slide despite attempts by the government to stem the tide with a host of traditional and innovative measures. Efforts were further constrained due to global headwinds.

To boost investor confidence, the Cabinet Committee on Investments approved infrastructure projects entailing huge investments.

However, given the weak start, we expect that real GDP growth would average at 4.5-5% in 2013-14.

FLAT GROWTH FOR CEMENT INDUSTRY

The cement industry witnessed flat growth in 2013 due to several reasons - a prolonged monsoon that extended until the festive season, natural calamities (floods and cyclone) that hit many parts of India and low demand due to financial crunch and slowdown in realty and infrastructure sectors.

In the first half of 2013, industry demand was slow due to fall in construction activity and a virtual halt in government spending. During the second half, the early arrival of the monsoon compared with the previous year did not augur well.

The cement industry also faced rising costs, high interest rates, land acquisition and clearance issues. An overall weak macro environment and ban on sand mining continued to worry the industry.

Increase in freight rates for several commodities has had a cascading impact on the cement industry. An increase in freight rates for coal and cement drove up transportation cost as well as the landed cost of imported goods. Moreover, the rupee''s weakness against the U.S. dollar and other global currencies prevented India from taking advantage of the decline in commodity prices in the world market.

Over the past few years, the cement industry witnessed huge capacity addition (almost 90 million tones on the available supply basis), which substantially increased the gap between demand and supply and consequently lowered capacity utilization.

We expect demand to gradually revive over 2014 and 2015 with a new government and recovery in construction activity.

2. FINANCIAL RESULTS 2013

AT A GLANCE (STAND ALONE RESULTS):

- Cement production decreased by 3% to reach 20.96 million tonnes, from 21.62 million tonnes while clinker production decreased to 14.27 million tonnes, 10% down from 15.81 million tonnes in year 2012.

- Domestic cement sales volume continued with sluggish demand by recording a decrease of 2% at 20.94 million tonnes from 21.31 million tonnes in year 2012. Cement exports decreased to 0.10 million tonnes from 0.12 million tonnes in year 2012. Clinker sales (including exports) were up at 0.56 million tonnes from 0.55 million tonnes in 2012.

- Net sales at '' 9,087 crores were 6% lower than that of previous year''s '' 9,675 crores. Average sales realisation decreased by around 4% at ''4,208 per tonne against approx ''4,400 per tonne in 2012.

- Total (operating) expenses for the year 2013 increased by 2% over that of year 2012.

- The Company achieved an absolute EBITDA of '' 1651 crores in year 2013. This is lower by 33% over the corresponding '' 2473 crores of the year 2012.

- Profit before tax at '' 1,514 crores was down by 20% over corresponding figure of'' 1902 crores for year 2012.

- Net Profit at '' 1,295 crores was down by 0.2% over corresponding figure of'' 1297 crores for the year 2012.

Amount in '' crores

Stand alone Consolidated

Current Year Previous Year Current Year Previous Year

31.12.2013 31.12.2012 31.12.2013 31.12.2012

Sales (Net of excise duty) 9086.84 9674.94 9118.00 9739.54

Profit before interest and depreciation 2044.45 2821.84 2033.91 2821.95

Less: Finance Cost 65.08 75.66 66.75 78.46

Gross profit 1979.37 2746.18 1967.16 2743.49

Less: Depreciation and amortisation

expense 490.07 565.22 493.67 568.68

Profit before Exceptional Items and Tax 1489.30 2180.96 1473.49 2174.81

Exceptional items (24.82) 279.13 (24.82) 279.13

Profit before tax 1514.12 1901.83 1498.31 1895.68

Less: Tax expense 219.55 604.77 219.87 603.86

Profit after tax but before minority Interest 1294.57 1297.06 1278.44 1291.82

Less: Minority interest - - (0.13) (1.39)

Profit for the Year 1294.57 1297.06 1278.57 1293.21

Add: Balance as per the last financial

statements 737.01 284.75 1048.09 598.72 Profit available for appropriation 2031.58 1581.81 2326.66 1891.93 Appropriations:

Consequent to change in group''s interest - - - (0.96)

General Reserve 150.00 200.00 150.00 200.00 Dividend on Equity Shares

(including interim) 556.34 554.80 556.34 554.80

Corporate Dividend Tax 94.55 90.00 94.55 90.00

Total Appropriations 800.89 844.80 800.89 843.84

Balance carried forward to Balance Sheet 1230.69 737.01 1525.77 1048.09 3. DIVIDEND

The Company has paid an interim dividend of 70% ('' 1.40 per share) during the year. The Directors are pleased to recommend a final dividend of 110% (''2.20 per share). Thus the aggregate dividend for the year 2013 works out to 180% (''3.60 per share) and the total payout will be ''648.37 crores, including dividend distribution tax of ''92.71 crores. This represents a payout ratio of 50%.

4. MARKET DEVELOPMENTS

The Company''s domestic cement sales in 2013 declined by 1.7% to 20.94 million tonnes as compared to 21.31 million tonnes achieved in 2012. Total cement sales (including exports) declined by 1.8% to 21.04 million tonnes as compared to 21.43 million tonnes achieved in 2012.

REGION-WISE SALES VOLUME / GROWTH

In the North region, domestic cement sales of the Company declined by 1.7% to 8.64 million tonnes in 2013 compared to 8.79 million tonnes in 2012.

In the East region, the Company achieved sales of 4.21 million tonnes of cement in the domestic market, registering a decline of 0.2% over the previous year sales of 4.22 million tonnes.

In the West & South region, the Company''s domestic cement sales in 2013 declined by 2.5% to 8.09 million tonnes as compared to 8.30 million tonnes achieved in 2012.

Cement exports in 2013 reduced further to 0.10 million tonnes as compared to 0.12 million tonnes in 2012.

GROWING THE DISTRIBUTION FOOTPRINT

The Company continues to develop and leverage its large and able network of around 8,500 dealers and 27,000 retailers across India. Their reach and penetration helps the Company in core rural and semi-urban markets across the country. This, coupled with the strong brand equity and efficient channel management, has significantly helped the Company to withstand severe competition in an over-supplied market.

The Company''s network of ports, bulk cement terminals and captive ships on the west coast has supported a sustainable and strong market position in Mumbai, Surat and Cochin. The Mangalore Bulk Cement Terminal that commenced its commercial operations in 2013 will further strengthen the Company''s position and enhance its footprint in the South region.

ENHANCING OUR SYSTEMS

The Company embarked on the Marketing and Commercial Excellence (MaCX) programme to further sharpen its marketing, sales and distribution functions. This ambitious programme is part of the comprehensive Holcim Leadership Journey (HLJ), announced by Holcim management across the globe to deliver gains and create value in a competitive environment over the next few years. MaCX aims to supplement in-house skills with global expertise of Holcim and that of advisory firms, to revamp customer interfacing functions by focusing on core value levers. This is an investment to future proof the Company and to promote an environment of innovation and excellence.

5. COST DEVELOPMENTS

During the year 2013, the economy witnessed upward movement in overall cost structure and volatile foreign exchange rates. However, the Company implemented cost optimisation initiatives which helped in containing inflationary impact to some extent.

MAJOR COST MOVEMENTS:

i) Cost of major raw material, fly ash, increased by 7% on per tonne basis. However, strategy to change in mix of gypsum resulted in cost decrease by 2% on per tonne basis. Overall, the absolute raw material cost decreased by approx. 6% over the previous year including the impact of lower volumes.

ii) Power and fuel costs account for approximately 26% of the total operating cost of the Company. Coal cost for kiln and captive power plants reduced by 8% and 10% respectively, due to reduced usage of imported coal and also substitution of high cost coal by pet coke usage. Besides, there was increased usage of Alternate fuels by 3% over the usage for the year 2012.

Cost of grid power continued its upward movement with per kwh rate increasing by approximately 22% over the previous year. In 2013, captive power generation which supports 66% of the total power requirements of the Company, reduced by 10%.

Overall, the reduction in dependence on grid, increase usage of captive power and reduction in fuel prices have helped the Company in registering a decrease of 11% in absolute cost of power and fuel as compared to the year 2012.

iii) Freight and forwarding cost works out to 30% of total operating costs. During the year, the same hardened by 6% on per tonne basis over the year 2012 due to an increase in diesel prices.

iv) The cost of packing bags went up by around 14%, driven by increase in PP granule prices.

COST MITIGATION MEASURES /

EFFICIENCY IMPROVEMENT INITIATIVES:

i) Keeping in line with the corporate philosophy, focus on production of fly ash based PPC was maintained.

ii) The Company launched its first fully automatic one million tonne capacity terminal in Mangalore. This will help the Company in reducing the negative seasonality effect of the Company''s Gujarat plant. Besides, the logistic costs will be reduced as there will be an opportunity to optimise by using the same vessel for both Mangalore and Cochin terminals in one trip. It will also help the Company enhance its footprint in the southern part of India.

With the launch of this terminal, all states along the country''s west coast are covered by Ambuja Bulk Cement Terminals.

iii) The new Ulwe channel at Panvel, Navi Mumbai was successfully made operational during the year. This will lead to handling of higher cargo and thus result in savings in coastal freight cost.

iv) A mechanised wagon loading system at Farakka was put to use during the year. This helps in reducing loading charges while loading cement from truck to rake as well as reduction in the transportation cost from packing plant to railway siding.

v) With the introduction of the SCOPE (Supply Chain Optimisation Project for Excellence) project, a supply chain excellence initiative, the Company is trying to derive operational efficiencies in logistics. This is targeted by improvisation in direct despatches to customers by undertaking fleet optimisation measures such as installation of Radio Frequency Identification (RFID), Global Positioning System (GPS) on trucks to monitor movement and improving turnaround time etc.

vi) The efforts by the Company for the usage of cost efficient fuel mix are part of the ''GEO 20'' project which will be operational in the first half of year 2014. Here, as a result of handling, storing and processing of waste materials, the Company will be able to ensure more usage of Greener Fuels thereby reducing energy cost.

6. EXPANSION PROJECTS AND NEW INVESTMENTS

The Company took up several projects to serve its customers in a more efficient, cost-effective, reliable and environment-friendly manner, while bolstering its market Dosition in the industrv.

CAPACITY EXPANSION DURING THE YEAR

The new Bulk Cement Terminal (BCT) at Mangalore commissioned this year will help the Company expand its footprint in the southern markets of India.

EFFICIENCY IMPROVEMENT MEASURES:

Getting better at being the best The Company focused on consolidation and optimisation of its existing capacities in all the three regions. Capital investments kept flowing in during the year, to ensure the highest standards of safety in order to meet the Company policies of ''Zero Harm'', clean and energy efficient infrastructure, cost efficient and environment- friendly material handling systems and process optimisation.

Achievements at a glance

i) A Waste Heat Recovery (WHR) plant at Rabriyawas with an approved investment of '' 75 crores is being installed to bring efficiency in fuel utilisation, optimise power costs and meet our Renewable Power Obligation.

ii) In order to strengthen logistics capability and extend its reach to customers, a new railway siding project has been initiated at the Rabriyawas unit in Rajasthan. The total project cost is ''250 crores. So far 40% work of the Railway Project is completed and our timelines for completion are within the second quarter of 2016.

iii) An automatic wagon loading system constructed at the Farraka unit in West Bengal built at a cost of approximately ''32 crores was completed and made operational during the year. This system will reduce cost and improve efficiency of material handling.

Upcoming Capacities and Investments

i) A new brown-field expansion project was announced in 2011 at Sankrail grinding unit in the eastern region comprising a roller press and related logistics. The project is underway, with extended scope to include advanced technical specifications. It is slated to cost '' 325 crore and aimed for completion by 2016. So far, equipment orders have been placed and civil work is in progress. This project would add 0.80 million tonne grinding capacity to the unit, along with other facilities.

ii) Significant cement capacity addition of approximately 4.50 million tonnes with associated clinkerisation capacity of 2.17 million tonnes is coming up at the proposed integrated plant at Marwar Mundwa, Nagaur district in Rajasthan with cement capacity of

1.5 MTPA; and with similar capacity grinding units at Osara (M.P.) and Dadri (U.P.), the total project cost is estimated at ''3500 crores. Environmental clearances for the project were acquired but kept in abeyance for Marwar Mundwa by the MoEF. Part of the mining land is already in possession and the rest is under an advanced stage of acquisition. The Company is also in the process of tying-up water sources required for construction and operations. Full-fledged construction work is expected to commence in the latter part of 2014.

iii) Last year, the Company had taken up 13 new ambitious projects at different locations worth '' 272 crores to optimise and enhance efficiency. These projects have a quick payback of two and half years to four years. Work is progressing well and most are likely to be completed in the first half of 2014.

iv) A new brown-field expansion project to set up a roller press at a cost of '' 70 crore at the Rabriyawas unit in Rajasthan, will add 0.80 million tonne grinding capacity in the first half of 2014.

The year 2014 will see capital expenditure worth ''802 crores, over and above the ''725 crores investment made in 2013. The entire proposed expenditure would be financed by internal accruals.

ACHIEVING SUSTAINABILITY OBJECTIVES WITH ''GREENER'' ENERGY

Keeping the planet green through cement

Ambuja envisions being the most sustainable Company in the cement industry and draws heavily on Holcim''s sustainability policy on CO2 and energy, eco-efficient products, atmospheric emissions, sustainable construction, etc. The strategic stress on environmentally-friendly and cost-effective resources resulted in the establishment of the Geocycle department to focus on Alternative Fuels and Raw Material (AFR).

An ambitious project, named ''Geo20'' has been taken up by the Company last year, which involves a capital investment of '' 200 crores. The project that is meant to substitute costlier traditional fossil fuels with Alternative Fuels (AF), is nearing completion and slated to be operational at all of our integrated plants by end of 2014. Holcim is actively supporting our efforts by making available its global experience and technical expertise in the area of clean and green technology and burning all sorts of waste materials without the corresponding release of harmful gases and CO2 in the air. Holcim''s rich experience in this area has helped to devise innovative ways of sourcing.

During 2013, the Company increased its use of Greener Fuels in its kilns from 1.4% in 2012 to 3.65% in 2013. The Company is determined to achieve higher thermal energy substitution rates in the coming years.

7. OUTLOOK

REFORMS FOR AN ECONOMIC REVIVAL The Economic Outlook

Economic growth accelerated to 4.8% in the second fiscal quarter from 4.4% in the first due to higher output in both industry and agriculture and a rebound in exports. However, it is less likely that we will see a complete turnaround in the economy as the domestic demand remains weak and both consumption and investment continue to grow sluggishly. We expect growth to remain soft in the first quarter of year 2014 owing to delayed investment announcements in the run-up to general elections. Further, it is expected to be supported by export recovery and likely sustained growth in capital expenditure after the second quarter of FY2014, once political stability has been re-established.

We expect the Indian economy to grow at 5% during year 2014 and driven by India''s strong economic fundamentals - high saving and investment rates, rapid workforce growth, a quickly expanding middle class, and the start of a shift from low-productivity agriculture to high- productivity manufacturing. However, given the country''s large external financing needs, domestic expansion will be affected by the global availability of capital.

Economic growth could exceed our forecasts if the Administration''s reform efforts are sustained, infrastructural development accelerates and the government enjoys success in its bid to develop a labour-intensive manufacturing sector in India.

The Cement Industry Outlook

In the period 2011 to 2013 cement consumption grew at an average of 4% compared to the golden period of 2008-2010, when consumption grew at a CAGR of 8%. The multiplier of cement demand growth to GDP growth not only declined below one in 2011 to 2013 but also lost its relevance.

Balancing growth with economic reforms Mid-term outlook appears challenging in the current scenario. However, there are reasons to assume it will be more positive with a potential towards 6-7% growth per annum after 2015 provided the new central government pushes economic reforms.

We expect the capacity utilization rate of the industry to improve gradually from current 73% to ~80% by 2018 given the slowdown in pace of capacity addition and gradual recovery in cement demand.

Cement demand emanates from four key segments - housing which accounts for 67% of cement demand, infrastructure (13%), commercial construction (11%) and industrial construction (9%). Economic reforms announced by the Government and RBI, including the expected lowering of interest rates in 2013, will surely boost sentiment and rejuvenate the economy.

Long-term growth prospects

The cement industry is looking for an up-cycle backed by an increase in rural consumption and recovery in infrastructure activity after a muted growth for the last three years. Recent government measures to fast-track infrastructure projects ahead of general elections that are just around the corner; construction activity is expected to pick up steam leading to strong demand for cement.

Long-term growth prospects for cement demand are favourable, riding on the back of a growing economy and the impetus provided to the housing and infrastructure construction activities in the 12th Five-Year Plan period (2012-17). The total investment in infrastructure sectors in the 12th Five Year Plan is estimated to be Rs 56 lakh crores (one trillion USD).

8. RISKS AND AREAS OF CONCERN

OH&S - OPERATIONAL HEALTH & SAFETY

OH&S is given top priority within the organisation. The Company aims to achieve ''Zero Harm'' through the implementation of formal directives, improvement in logistics flow and visible leadership by line management. Plant workers/ contractors and our own management staff have put in every effort to imbibe and ensure safety in their day-to- day activities.

VULNERABLE DEMAND

Demand for cement is closely related to overall economic development and tends to vary across States within the country, depending on the level of industrialisation and infrastructure development. Fall in demand has been a concern for both the industry and the organisation but with strong economic fundamentals, we are hopeful to see a revival of demand in the near to medium term.

RISING COMPETITION

Domestic and global cement majors are strengthening their production bases across India to mitigate the location risk associated with cement operation but at the same time this has also led to a rise in additional capacity. With decrease in exports, there is consistent pressure on the Company to beat competition. The Company counts on its resources and various other marketing and service elements that will help the organization stay afloat and deliver improved performance.

LOGISTICS COST

Logistics is another area of concern for the industry and distribution cost is one of the major costs for the industry. The industry has witnessed a rise in movement of cement through the sea route to optimise distribution cost. Ambuja is continuously working towards strengthening their distribution network along the coast of India, while at the same time concurrently trying to bring down distribution and logistics costs.

ENERGY COST

Energy is one of the major expenses faced by the cement industry and it is constantly working towards reducing its traditional energy consumption through measures such as use of greener fuels, setting up captive power plants and increasing the production of blended cements. Energy Activation across Regional Network (EARN), is an in-house initiative that Ambuja has embarked upon, to build a lean energy culture across the Company.

9. HUMAN RESOURCES

PROGRESSIVE PRACTICES

FOR A TRANSFORMING ORGANISATION

The Human Resource function at Ambuja strives to provide the ''People Edge'' to business through continuous process improvement and innovation. Our people strategy, systems and processes are aimed at making the Company an employer of choice with sustainable talent by attracting, retaining and developing talent in the organisation and working on concrete actions plans to enhance employee engagement. This is in perfect alignment with the Company''s vision of being the most sustainable and competitive company in the industry.

assess Sustainability risks and opportunities both at the unit and corporate levels and monitor the various sustainability initiatives. Enhancing the focus on embedding sustainability at the highest level, it has been made a regular item in our Board Meeting Agendas. In requirement of the newly introduced Clause 55 of SEBI, we have released our first Business Responsibility Report (BRR) as a part of the Annual Report for 2012. The Company continues to take on initiatives aimed at low carbon emissions, water positive, use of alternative fuel, renewable energy, bio-mass, plastic reuse, etc.

We released our 6th Corporate Sustainable Development Report covering our Sustainability endeavours for the year 2012. The report is aligned with Global Reporting Initiative (GRI) G3 guidelines for A Level of reporting, having been "Assured" by an independent certifying agency. We have responded to the Metal & Mining Sector Supplement of the GRI while reporting on our Sustainability performance to our stakeholders. Like last year, this year''s report too has been accorded the GRI check for A level by Global Reporting Initiative, Netherlands.

We continue to focus on developing our renewable energy portfolio in line with Renewable & Clean Energy Roadmap till 2020. In 2012, 330 KV of solar energy has been installed at Bhatapara, in addition to the existing 7.5 MW of wind energy commissioned at Kutch, Gujarat, the year before last. A 6.5 MW Waste Heat Recovery-based power generation system is being installed and is slated to be operational by 2014.

STEPPING LIGHTLY ON OUR CARBON FOOTPRINT The Company is currently monitoring and reporting CO2 emissions as per the World Business Council for Sustainable Development''s (WBCSD) Cement Sustainability Initiative (CSI) protocol. We have been able to reduce our Green House Gas emissions by over 26% taking 1990 as the reference year. To reduce the carbon footprint and avoid the use of natural resources, we continue to produce fly ash- based cement as our major product. The Company is one of the co-chairs of CSI India and has been part of the Working Group that released the Low Carbon Technology Road Map for Indian Cement Industry.

A LEGACY OF SUSTAINABILITY HONOURS

For the third year in a row, we bagged the CII Sustainability Award in recognition of our endeavours in streamlining Corporate Sustainability within our operations. In 2013, we were recognised in the category of commendation for ''significant achievement'' similar to the previous year. Further, we achieved Gold Level in the Sustainability Plus rating conducted by the CII in 2012 where 100 largest companies (by market cap and market share) were rated along ESG indicators by CII for the Sustainability Plus rating.

PROACTIVE ENVIRONMENT MANAGEMENT

The Company ensured availability of Continuous Emission Monitoring Systems (CEMS) at all the nine kiln stacks above 95% round the year for online monitoring of all vital pollution parameters. Apart from this, trainings were also conducted on emission monitoring, biodiversity and water management to build capacities for environmentally responsible operations,

Three of our grinding units have attained certifications to the Energy Management System as per ISO 50001:2011. The Rabriyawas plant has become the first integrated unit in Ambuja to implement the international standard. This was also our first pilot conducted at a plant to estimate Scope 3 emissions (limited) emanating from our operations.

The Company has taken steps to ensure it meets its commitments under the PAT scheme and RPO-REC obligations. Further, we are anticipating emission standards to be notified for SO2 & NOx emissions. We are taking all steps to monitor and control our emissions so that we can meet the requirements of the new standards as and when they are notified.

BEING A GOOD NEIGHBOUR

Ambuja Cement Foundation celebrated two decades of work with the host communities where it has been involved in development with a spending of well over 2% of Profit before Tax (PBT). The programmes at the Foundation successfully address community needs in a sustainable manner.

CONSERVING THE EARTH''S MOST PRECIOUS RESOURCE

Water resource management has changed the landscape of Kodinar (Gujarat) which is marked by saline water and the water scarce region of Rajasthan. Innovative projects involving the revival of traditional water conservation - roof rain water harvesting, building check dams and customised irrigation methods - has ensured water availability for domestic and agricultural use, winning the FICCI "Water Award" under ''Community Initiative, Industry'' category. External auditors also declared Ambuja as water positive and it is now hoped that each one of our Ambuja sites would raise their bar on water sustainability.

SOWING THE SEEDS OF DEVELOPMENT Krishi Vigyan Kendra (KVK) at Ambujanagar (managed by the Foundation) is much sought after by farming communities for the latest and best technologies in agriculture. KVK also conducts regular meetings, training programmes and other extension programmes to disseminate information. Ambujanagar has also introduced weather insurance protecting the farmers from unforeseen weather conditions.

Better Cotton Initiative (BCI) is being implemented in five states to grow cotton in a sustainable manner and through eco- friendly methodologies. Through this initiative, farmers are able to sell their produce at a better rate without any middlemen. In 2013, the Foundation was conferred with the "Best NGO Award" by the Northern India Cotton Association Ltd. Livelihoods like animal husbandry are encouraged. In Darlaghat, women are trained as pashu swasthya sevikas (PSS) and learn the latest techniques in animal care. The work of the PSS is complemented by cattle camps and immunisations programmes conducted regularly.

MEETING THE CHALLENGES OF EMPLOYMENT The Skill and Entrepreneurship Development Institutes (SEDI) at the Foundation tries to bridge the gap between drop-out or undertrained youth and high demand by industry of skilled personnel. SEDI provides relevant skill training to youth through the courses held at 16 centres established across India; and have to date transformed the lives of over 11,000 youth through wage employment encouraging them to become entrepreneurs. These 45 courses are designed specific to the requirement of that region and also incorporates sessions on soft skill development. Today, SEDI courses are affiliated to the National Council of Vocational Training and Modular Employment Scheme of Central Government.

CHAMPIONING HEALTH

To ensure round-the-clock health services in the far flung rural areas, sakhis (village health functionaries) are provided home-based neo natal care for the numerous mothers and children across locations. Their services are complemented by regular health checks by doctors and health camps. Ambuja Cements also works extensively towards the prevention of HIV & AIDS in and around its plants and locations and works towards reducing stigma on those affected by it. Programmes are held with truckers and workers raising awareness; counselling sessions are also organised in some locations; 10 Targeted Intervention projects are implemented in collaboration with the state AIDS Control Societies and four health care centres established in partnership with Apollo Tyres Foundation.

EDUCATION

Nurturing The Nation''s Talent

The Company has been promoting education

through the non-profit Ambuja Vidya Niketan Trust (AVNT), to provide educational facilities through its schools in each of its five integrated plants. The schools provide education to the wards and dependants of Ambuj a employees as well as children of nearby villages.

In addition, educational intervention is done by the Foundation through Balmitras (members from the community and trained by the Foundation) who are appointed to help children enjoy studies and understand subjects like math, science and English using varied teaching and learning methods. Training is also provided to school teachers for better teaching methodologies. Innovations like using sport for life skills and e-learning methodologies have been used in schools to make curriculum interesting for children. In locations where children are either drop-outs or not going to school at all, the Foundation has introduced non-formal education centres to aid students to enter the mainstream education system.

The Foundation also runs the Ambuja Manovikas Kendra (AMK), a special school for mentally challenged children in Ropar, Punjab. With 100 children on its rolls, the school works to improve the quality of life of children with mental disabilities. A range of activities and programmes at AMK help them grow as independent and productive individuals. The children at AMK once again did us proud by winning the "Overall Championship Trophy" in Punjab State Special Olympics 2013, for the eighth time in a row. The institution was also adjudged the "Best Institution in Sports". In the past one year, the school has extended its services to children who cannot travel to school through its Home Base Rehabilitation Programme.

Stakeholders In Creating A Difference The Foundation ensures Stakeholder Engagement where all programmes are decided after a detailed deliberation. Well-defined processes ensure that all stakeholders are involved to identify key concerns by the community and Community Engagement Plans are implemented the subsequent year. Meanwhile, the Community Advisory Panel established in locations comprise of Company and community leaders. It is a platform to discuss issues faced by the community and achieve a consensus to implement programmes for them.

All programmes are rigorously monitored through the Social Engagement Scorecard which through detailed group discussions and interviews with community representatives maintains a score on activities and programmes of the Foundation. In 2013, all locations scored between 75% to 100%, reflecting positive reviews.

Active Volunteer Engagement programmes has ensured employees become a part of the development journey of the communities along with the Foundation by actively engaging in volunteering - participating in activities like cleaning beaches, painting anganwadis, planting saplings, participating in community projects on health, safety, HIV & AIDS, skill training, school activities etc. So far, 2,000 Ambuja''s volunteers have clocked in over 26,000 hours through their participation in activities.

12. OCCUPATIONAL HEALTH AND SAFETY (OH&S)

WORKING TOWARDS ''ZERO HARM'' FOR OUR PEOPLE

Our OH&S journey of 2013 was mixed - achievements and incidents that highlighted both our strengths and areas of improvement. Going forward, there is a need to capitalise on our strong points and work on development areas to ensure utmost efficiency to prevent future incidents.

Safety is one of our core values and part of the Company''s vision statement. We are committed to strive for ''Zero Harm'' and firmly believe safety as one of the most important primary criteria for us to achieve the goal of being the ''Most Sustainable and Competitive'' Company.

LEARNING FROM THE PAST

As part of a structured approach and setting up the OH&S objectives, the Company has reviewed its past performance. Situations have been assessed and learning incorporated - we believe all incidents are preventable especially if we can alter our mindset and behaviour.

Some key focus action areas include an increase in the visible leadership in OH&S by the Front Line Management. To achieve this objective, we have kick-started a new initiative ''We Care'' - a holistic approach to safety that encompasses all connected with Ambuja - across different levels of management, within and outside locations including third party contractors. As part of this initiative, two concepts - Model Safety Zone and Safety Ambassador - have been launched that will help engage and connect with all people onsite and establish common objectives between OH&S and line teams.

Meanwhile, all operational sites have taken one OH&S wave based on the targeted Fatality Prevention Element (FPE). These include working at height, isolation and lockout, vehicle and traffic safety, machine guarding, lifting and supporting loads and hot work.

A formal OH&S management system, aligned with the Holcim OH&S Pyramid System and other directives, has been established over the past few years across the organisation. FPEs are implemented across all sites and quality of implementation assessed through an external certifying agency. Peer Reviews are scheduled and conducted within Ambuja and also with ACC.

Each plant has taken steps to ensure no recurrence of fatal incidents and appropriates steps taken at sites. To reduce Risk Exposure, several actions were initiated through increasing interface between departments, developing a road map to implement Contractor Safety Management (CSM) activity, initiating process for integration of OH&S requirements during the planning and execution of a shutdown, conducting Risk Assessments during shutdown; Safety audits and analysis to ensure safety while handling coal; and a structural integrity survey by the Company''s technical arm, Techport. Meanwhile, Risk-specific and Competency-based trainings are conducted as per requirements of targeted FPEs and other OH&S directives.

In addition, the Company is making continuous efforts to reduce OH&S risks through the integration of OH&S requirements with other business processes.

13. PURCHASE OF SHARES IN HOLCIM INDIA PVT. LTD. (HIPL) AND AMALGAMATION OF HIPL WITH THE COMPANY

A SYNERGY THAT WILL PROMOTE GREATER DEVELOPMENT

The Company''s promoter, Holcim has proposed a restructuring exercise with a view to simplify its investment structure as well as unlock synergies in the operations of two of its subsidiaries in India - Ambuja and ACC. Under this exercise, the Company will acquire 24% equity shares of Holcim India Pvt. Ltd. (HIPL) from Holderind Investments Limited (Holderind) for a consideration of approximately '' 3,500 crores and HIPL will then amalgamate with the Company. Upon completion of the amalgamation, the Company will hold 50.01% equity shares in ACC and consequently, ACC and all its subsidiaries will become the subsidiary of Ambuja. Holderind will hold 61.39% equity shares in Ambuja.

Over the last few years, both Companies have been working on a common platform for technical support, major procurement and IT functions. However, there are many areas where synergies are yet to be unlocked. This amalgamation will help realise these synergies. This process along with the alignment of critical back-end functions will help both Companies improve their competitive position in the current challenging market.

15. NEW COMPANIES ACT, 2013

The historic Companies Act, 2013 which replaces more than five decades old Companies Act, 1956 was passed by the Parliament. Subsequent to receiving the President''s Assent, the Ministry of Corporate Affairs notified 98 sections and also put up various Rules under the new Act for the public comment. The objective behind the 2013 Act is lesser Government approvals and enhanced self- regulations coupled with emphasis on corporate democracy. The 2013 Act delinks the procedural aspects from the substantive law and provides greater flexibility in Rules making to enable adaptation to the changing economic environment. This will lead to improved compliance and accountability from the corporate sector and will provide further transparency in the disclosure.

16. CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES:

The majority of the Corporate Governance Voluntary Guidelines, 2009, stand complied while complying with the requirements under the Companies Act, 1956, the Listing Agreement, and the Company''s own governance policies.

17. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year ended 31st December, 2013 as stipulated under clause 55 of the Listing Agreement is annexed and forms part of the Annual Report.

18. INTERNAL CONTROL SYSTEM

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

The formalised systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement, and article 728 (a) of the Swiss Code of Obligations applicable to the Holcim Group.

The Company''s Internal Audit department tests, objectively and independently, the design and operating effectiveness of the internal control systems to provide a credible assurance about their adequacy and effectiveness to the Board and the Audit Committee. The Internal Audit function assesses the effectiveness of controls to provide an objective and independent opinion on the overall governance processes within the Company, including the application of a systematic risk management framework.

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

19. MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES

Protecting our strongest product:

Ambuja Integrity

Fraud and corruption-free work culture has been the part of the Company''s DNA all along. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the Company has put even greater emphasis to address this risk. To meet this objective a comprehensive Fraud Risk Management Policy (FRMP) almost akin to whistle-blower policy has been laid down. More details on FRMP have been given in the Corporate Governance Report.

Corruption: The one area we aim for zero In furtherance to the Company''s philosophy of conducting business in an honest, transparent and ethical manner, the Board has laid down the Anti- Bribery and Corruption Directives (ABCD) as part of the Company''s Code of Business Conduct and Ethics. As a Company, we take a zero-tolerance approach to bribery and corruption and we are committed to acting professionally and fairly in all our business dealings.

To spread awareness about the Company''s commitment to conduct business professionally, fairly and free from bribery and corruption, training and awareness workshops were conducted through an independent consulting firm wherein more than 1,700 employees participated and got trained. Apart from this face-to-face training, over 3,500 employees were also given online ABCD training through a web-based application tool during 2013.

In order to further spread awareness about ABCD, face-to-face training workshops will also be conducted during the current year for select vendors, based on their risk profile and business relationship with the Company.

These above policies and its implementation are closely monitored by the Audit and Compliance Committees of Directors and reviewed by the Board at regular intervals.

20. DIRECTORS

CESSATION

Some people are irreplaceable Mr Paul Hugentobler, representative of Holcim (the Company''s Promoter), has conveyed his decision to step down from the Board and will cease to be a Director w.e.f. 7th February, 2014.

Mr Hugentobler joined the Board in May 2006 as Holcim''s Nominee when Holcim took over the management control of the Company. Over the last eight years, he played a key role in providing valuable guidance and expert advice on all facets of the cement business.

The Board placed on record its appreciation for the valuable services rendered by Mr Hugentobler.

RETIREMENT BY ROTATION

In accordance with the provisions of Article 147 of the Articles of Association of the company, (i) Mr Nasser Munjee (ii) Mr Rajendra Chitale and (iii) Dr Omkar Goswami will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

APPOINTMENT

A company that offers growth even at the top

Mr Ajay Kapur and Mr Bernard Terver have been appointed as Additional Directors under Section 260 of the Companies Act, 1956 to hold office up to the date of the ensuing Annual General Meeting and being eligible, have offered themselves for appointment. Additionally, Mr Ajay Kapur has also been appointed as the Dy. Managing Director & CEO of the Company for a period of three years w.e.f. 1st August, 2013.

(i) Mr. Ajay Kapur

Mr Kapur, aged 48 years, is an Economics Graduate from St. Xavier''s College, and completed his MBA from Somaiya Institute of Management Studies and Research (SIMSR) - both from the University of Mumbai. He has also completed the Wharton Advanced Management Program from the University of Pennsylvania, USA. He joined the Company in 1993 from Citibank, and for the first eight years was the Executive Assistant to the then Managing Director, Mr N.S. Sekhsaria. Among several areas, his main focus that time was on Marketing Strategies, Brand and Promotion, Logistics Management and Commercial issues. In 2007, he was made all India Head - Marketing and Commercial Services at Corporate Office and was also inducted as Executive Committee member. In the year 2009, he was made Business Head of West & South region. Mr Kapur was elevated to the post of CEO in May, 2012. The Board of Directors have appointed Mr Kapur as an Additional Director w.e.f. 25th July, 2013 and also as Dy. Managing Director & CEO w.e.f. 1st August, 2013.

(ii) Mr Bernard Terver

Mr Terver, aged 62 years, is a French national. He concluded his studies at the Ecole Polytechnique in Paris in 1976. After beginning his career in the steel industry, in 1977 he moved to cement producer CEDEST, which was taken over by Holcim France in 1994. In 1999, Bernard Terver became CEO of Holcim Colombia and in 2003 he was appointed Area Manager for the Andes nations, Central America and the Caribbean. Since October 2008, he has been CEO of Holcim US and effective November 2010 CEO of Aggregate Industries US. Mr Terver was appointed Area Manager and member of senior management of Holcim Ltd, with effect April 1, 2010. From September 2012, he was appointed as member of the Executive Committee and effective January, 2013 has been bestowed the responsibility for the Africa, Middle East and the Indian Subcontinent (comprising India, Sri Lanka and Bangladesh) region of Holcim.

The Board of Directors recommends their appointment. Further details about these Directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

21. DIRECTORS'' RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies Act, 1956 as amended, the Directors confirm that:

i) In preparation of the financial statements, the

applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) Appropriate accounting policies have been selected and applied consistently. Judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st December, 2013, and of the statement of profit and loss and cash flow of the company for the period ended 31st December, 2013.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The financial statements have been prepared on a going concern basis.

22. AUDITORS

STATUTORY AUDITORS

M/s. S. R. Batliboi & Co. LLP, the Statutory Auditors of the Company, will retire at the ensuring Annual General Meeting and are eligible for re-appointment. M/s. S. R. Batliboi & Co., LLP have expressed their unwillingness to get re-appointed as the Statutory Auditors of the company.

The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. SRBC & Co. LLP as the Statutory Auditors of the company, for whom the company has received a notice u/s. 225 read with Section 190 of the Companies Act, 1956, from a shareholder seeking their appointment in place of M/s. S. R. Batliboi & Co. LLP. M/s. SRBC & Co. LLP have confirmed that their appointment, if made, shall be within the limits of Section 224(1B) of the Companies Act, 1956.

The Auditors have informed that M/s S.R. Batliboi & Co. LLP and M/s. SRBC & Co. LLP are part of the same group.

COST AUDITORS AND COST AUDIT REPORT

Pursuant to section 233B(2) of the Companies Act 1956, the Board of Directors on the recommendation of the Audit Committee appointed M/s. P.M. Nanabhoy & Co. Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2014. M/s. P.M. Nanabhoy & Co. have confirmed that their appointment is within the limits of the Section 224 (1B) of the Companies Act, 1956 and have also certified that they are free from any disqualifications specified under Section 233B(5) read with Section 224 sub-section (3) or sub-section (4) of Section 226 of the Companies Act 1956.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company. Pursuant to Cost Audit (Report) Rules 2001, the Cost Audit Report for the financial year 2012 was filed on 6th May, 2013 vide SRN No.S21001375 on the Ministry of Corporate Affairs website.

23. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred a sum of '' 123.36 lacs during the financial year 2013 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividends which were lying with the Company for a period of seven years from their respective due dates of payment. Prior to transferring the aforesaid sum, the Company has sent reminders to the shareholders for submitting their claims for unclaimed dividend.

24. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, is required to be given pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto marked Annexure - I, and forms part of this report.

25. PARTICULARS OF EMPLOYEES

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

26. SUBSIDIARY COMPANIES

Ministry of Corporate Affairs, Government of India, vide its circular dated 8th February, 2011 has exempted companies from attaching the Annual Reports and other particulars of its subsidiary companies along with the Annual Report of the Company required u/s 212 of the Companies Act 1956. Therefore, the Annual Reports of the subsidiary companies viz. (1) Chemical Limes Mundwa Pvt. Ltd. (2) M.G.T. Cements Pvt. Ltd. (3) Kakinada Cements Ltd. (4) Dang Cement Industries Pvt. Ltd. (5) Dirk India Pvt. Ltd. and (6) Dirk Pozzocrete (MP) Pvt. Ltd. are not attached with this Annual Report. However, a statement giving certain information as required vide aforesaid circular dated 8th February 2011 is included in Consolidated Financial Statements.

The financial statements of the subsidiary Companies are kept for inspection by the shareholders at the Corporate (Head) Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary companies to the shareholders upon their request.

27. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Clause 32 of the listing agreement with the stock exchanges, the consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards issued by The Institute of Chartered Accountants of India. The audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.

The consolidated net profit of the Company and its subsidiaries amounted to '' 1278.57 crores for the corporate financial year ended on 31st December, 2013 as compared to '' 1294.57 crores on a standalone basis.

28. EQUAL OPPORTUNITY EMPLOYER

The Company has always provided a congenial atmosphere for work to all sections of the society. It has provided equal opportunities of employment to all without regard to their caste, religion, colour, marital status and sex.

29. AWARDS AND ACCOLADES

Recognition for constant innovation

(a) Ambuja won the prestigious CII ITC Sustainability Award for the third year in a row. It won the award for ''Significant Achievement on journey towards Sustainable Development'' under Large Industry category.

At the same award ceremony, Ambuja''s two integrated units - MCW and Bhatapara - also won the CII ITC Sustainability Awards in Individual Plant category for ''Strong Commitment for proving commitments; adopting appropriate policy and processes''.

(b) Ambuja Cement won ''The Asia''s Most

Promising Brand'' at the Asian Brand & Leadership Summit - Dubai 2013, held in August, 2013. The award was received by Ambuja''s Dy. MD & CEO Mr Ajay Kapur, who was voted as ''Asia''s Most Promising Leader''.

(c) Ambuja Cement Foundation bagged the first prize in the ''Community Initiatives by Industry'' category at the FICCI Water Awards 2013 by Deputy Chairman, Planning Commission Montek Singh Ahluwalia at the Federation House, New Delhi in August 2013.

(d) The Foundation also bagged two more National Awards for Excellence in Water Management - ''Excellent Water Management Initiatives'' for work done at Marwar Mundwa, Rajasthan and Excellence in Water Management 2012 for Rabriyawas Unit under "Within the Fence" category.

(e) Maratha Cement Works was awarded the IPE- Asia Pacific HRM Congress Awards 2013 under category ''Organization with Innovative HR Practices'', for its innovative and good HR practices.

(f) The 4th National HR Excellence Award Confluence 2013'' by the Confederation of Indian Industries (CII) held in New Delhi on 24th September where Ambuja Cements Limited bagged the recognition award for exhibiting ''Strong Commitment to HR Excellence''.

(g) MCW unit bagged the Safety Award in the Gold category in Cement Sector at the 12th Annual Greentech Safety Award 2013.

(h) Ambuja Cements Ltd won the ET NOW Talent and HR Leadership Award 2013 for Best Talent Management and the Global HR Excellence Awards 2013 for Organization with Innovative HR Practices by World HRD Congress.

(i) Ambujanagar unit won the 12th Greentech Silver Award in Cement sector category.

(j) RKBA Limestone Mine at Ambujanagar was awarded the prestigious RIO TINTO Health & Safety Award for 2012-2013. The award was presented by the Union Minister of Mines, Dinsha J. Patel.

30. CAUTIONARY STATEMENT

Statements in the Directors'' Report and the Management Discussion and Analysis describing the Company''s objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company.

31. ACKNOWLEDGEMENTS

The true wealth of Ambuja: Our people and partners

Your Directors take this opportunity to express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Ambuja family. To them goes the credit for the Company''s achievements. And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the board of Ambuja Cements Limited

N. S. Sekhsaria

Chairman

Mumbai

6th February, 2014


Dec 31, 2012

Dear Members,

The is a pleasure to present the Annual Report of the Company for the year 2012,

1. THE JOURNEY OF EXCELLENCE CONTINUES

The Company continues to occupy an important and benchmarked position in the cement industry through continual capacity enhancement, operational efficiencies, financial excellence and focused sustainable Hoity efforts which promote the well-being of society. With sound tactical and strategic initiatives and the indomitable spirit of "I can"'' the Company is well poised to continue its journey of excellence in the short and long time frame,

2. BRAVING THE SLOWDOWN

INDIAN ECONOMY LOOKING FOR SILVER LINING IN SPATE OF REFORMS

The Indian economy has shown remarkable resilience compared to other global economies. However, the stress was visible in below 6% projected GDP growth in £012 vis-a-vis aspirations of over 7% growth, in stark contrast to an average of 8% growth achieved during 2007-2011.

Economic growth declined across all the sectors due to domestic and external factors, high inflation, wide fiscal deficit and unfavorable domestic savings and investment rate. Despite strong fundamentals and structural support, uncertainty and consequent lack of confidence held back investments in capital formation. Output was disrupted due to power outages and stalled projects. Services also slowed down due to both cyclical and structural factors.

High inflation was a cause of worry, with wholesale price Index hovering over 7%. The weak rupee. Settling around 7 55 against USD, increased the import bill of crucial fuel supplies, thus driving up the current account deficit.

In an attempt to rekindle India''s economic slowdown, the Government unveiled a series of economic reforms. These have certainly led to a revival in investors'' sentiment. Though the first half of the financial year 2012-13 grew by just 5.4%, the reforms- driven positive sentiment is expected to help achieve growth rate of approx 5.5% by the end of the financial year. Manufacturing PM1 data for December 2012 published by HSBC, reflects this sentiment as it surged to 6-month high, backed by Strong factory Output and a spike in new orders.

Steps taken by the Government to reform the economy has given a positive tone to (he challenging scenario,

A MIXED YEAR FOR THE CEMENT INDUSTRY The first half of £012 augured well with robust demand backed by states holding elections and due to extended construction period owing to a delayed monsoon. This demand was largely driven by rural housing and road construction while other infrastructure activities remained sluggish.

In the second half, demand faltered as construction activities remained sub clued with the onset of the monsoon, which extended till late October and uneven distribution of rain across the country, leading to floods in some parts Of the country while some areas faced drought/drought-like situation.

Cement industry also suffered due to shod age of essential construction materials like sand, bricks, water {due to drought), etc. High interest rates and an overall slowdown in the economy kept demand suppressed

In spite of slowing down of capacity additions, supply side pressures continued to remain. Adverse demand supply situation, mainly post monsoon, resulted m lower capacity utilization.

On the cost front, India''s cement industry continues to reel under the pressure of rising input costs and high inflation rates. In March 2012, the railways rationalized freight rates, by effecting major changes in freight slabs which resulted in approximately 20''25% increase in freight charges. The Government also hiked diesel pence''s by 15/- per later (excluding VAT) in the middle of September, putting further pressure on freight & distribution costs. Some respite came in the form of reduced imported coal prices in the later part of the year, however, the cost benefit was restricted by a volatile rupee. Overall, The cost of coal increased in double digits.

3. FINANCIAL RESULTS 2012

AT A GLANCE (STAND ALONE RESULTS):

- Cement production increased modestly by 3,1% to reach 21.62 million Non tonnes, from 20-97 million tonnes while clinker production went up to 15-91 million tonnes registering growth of 7,5% over 14,7Q million tonnes in the year 2011.

- Domestic cement sales volume reflected sluggish demand scenario by growing at 3.8% to reach 21.31 million tonnes from 20.54 million tonnes a year ago. Cement exports fell to 0.12 million tonnes From 0.37 million tonnes a year ago. Clinker sales (including exports) grew by 2.4%, settling at 0.55 million tonnes from 0.54 million tonnes In 2011.

* Met sales at Rs. 9,675 crores were 13.8% higher than that of previous year * 8,504 crores. Average sales realization improved by around 11% at Rs. 4.400 per tonne against approx Rs. 3,960 per ton in 2011.

* Total {operating) expenses for the year 2012 increased by 11.4% over that of year 201J.

* The company achieved an absolute EBITDA of Rs. 2,473 crores in 2012. This is higher by 25.0&% over the corresponding regrouped figure (Rs. 1.977 crores) of 2011.

* Net Profit at Rs. 1,297 crores improved by 5.6% over corresponding figure of Rs. 1229 crores for previous year:

Amounl in 7 crores

Stand alone Consolidated

Current year Previous Current Year year Previous Year 31,12-2012 31.l2.2011 31.12.2012 31.12.2011

Sales (net of excise duty) 9674.94 8504.32 9739.54 3521.03

Profit before Interest and depreciation 2821.04 2224.9 2021.95 2225.13

Less: Interest 75,66 52.63 78.46 53.44

Gross profit 2746.18 2172.17 2743.49 2171,69

Less: Depreciation 56122 445.15 563.53 446.24

Profit before tax and exceptional item? 2180.96 1727-12 2174,61 1726.49

Less: Exceptional items 279-13 24.25 279.13 24.25

Profit before tax 1991.03 1702.87 1895.68 1701,24

Less: Provision tor tax 694.77 474.01 603.36 473.75

Profit alter lax bill balance minority interest 1297,06 1226.36 1291.02 1227.49

Less: Minority interest - - (1.39} (0.25)

Net profit after tax 1237.06 1228.86 1293.21 1227,74

Add Balance bough lowland form previous year 264.76 325-85 598.72 649.44

Profit available for appropriation 1581.81 1554.21 1891.93 1868.18



Amount in Tenino''s

Stand alone Consolidated

Current Year Previous Year Currant Year Previous Year 31.12.2012 31.12.2011 31.12.2012 31.12,2011

Appropriations:

Consequent to change In group''s interest - - (0.36) -

General reserve 200.00 700.00 200.00 700.00 Provision for dividend distribution

Tax written back - 0.83 - 0.83 Dividend on equity shares (including interim) 554.00 490.69 551.00 490.69

Dividend distribution tax 90,00 79.00 90.00 75.60

Total Appro prialions 844.80 1269.46 843.84 1269.46

Balanoe carried forward to Balance Sneef 737.01 204.75 1043.09 593.72

4. DIVJDEND

The Company has paid an interim dividend of 70%

1.40 per share) during the year. The Directors are pleased to recommend a final dividend of 110% (Rs. 2.20 per share). Thus the aggregate dividend for the year 2012 works out to 100% Rs. 3.60 per share) and the total payout with be Rs. 644.80 crores. including dividend distribution tax of 90 crores. Tiles represents a payout ratio of 50%.

5, MARKET DEVELOPMENTS

That Company''s domestic cement sales in 2012 grew by 3.3% lo 21.31 million lonnes 3$ compared to 20.&4 million tonnes achieved in 2011. Total cement sales (including exports) grew by £.5% lo 21 -43 million tonnes as compared to £0-91 million tonnes achieved in 3011 The company''s clinker sales in 2012 grew by £.4% to 0.55 million loners as compared to 0,54 million tonnes achieved in 2011.

REGION WISE SALES VOLUME / GROWTH In the North region, domestic cement sales of I he Company grew by 8.9% to 8.79 million tonnes in 2012 as compared to B.07 million tonnes in 2011. Clinker safes during 2012 were at 0.10 million loners as compared to 0.12 million tonnes achieved in 2011.

In the Eastern region, the Company achieved sates of 4,22 million tonnes of cement in the domestic market, registering a growth of 7% over the previous year sales of 3.95 million tonnes. Clinker sales also grew by 7% to 0,45 million tonnes in 2012 as compared to 0,42 million tonnes in. 2011.

In I he Weal A South region, the Company''s domestic cement sales in 2012 declined by 2.6% to a.30 million tonnes as compared to 6,52 million lonnes achieved in 2011. This was mainly on account of poor demand ?winy to tile drought-like situation In many parts of Maharashtra, extended shortage of essential construction materials, poor liquidity, fewer new projects, etc.

Cement exports were reduced further lo 0.12 million lonnes as compared to 0-37 million tonnes in 2011 due to adverse international market and diversion of material to domestic market. The Company continues to develop and leverage its large and cable network of around 3000 dealers and 25.00Q retailers across India. Their reach and penetration helps the Company across the country in core rural and semi-urban markets. This, coupled with the strong brand equity and efficient channel management, helped the Company to withstand severe competition in an over-supply market.

While the company''s network of ports, bulk cement terminals and captive ships on (the west coast has supported a sustainable and strong market position in Mumbai, Seurat and Cochin, the Mangalore Bulk Cement Terminal, which is expected to commence commercial operations in the first half of 2013, will further strengthen Company''s position and enhance footprints in the southern region.

With the support of Holcomb''s rich experience of operating in 70 countries, the Company has now added sophisticated IT and channel management tools to its traditional Indian model. This has enhanced Company''s capability to face stiff competition more convincingly and maintain a strong market position.

The Company has embarked upon Marketing and Commercial excellence program {MaCX) lo further Sharpen its marketing, sales and distribution functions, This ambitious program is part of comprehensive Holmic Leadership Journey (HLJ), announced by Holmic management across the globe, to deliver substantial tangible and intangible gains and create value in competitive environment over next few years. MaCX aims to supplement in-house skills with global expertise of Holmic and that of advisory firms, to revamp customer interfacing functions by focusing on core value levers. This is an investment to future proof the company and to promote environment of innovation and excellence-

COST DEVELOPMENTS

The major cost elements of the Company continued their upward movement in line with unyielding inflation in the economy and volatile foreign exchange rates.

MAJOR COST MOVEMENTS:

i} Cost of major raw materials, namely, fly ash and gypsum, increased by 14% and 25% respectively on per ton basis, mainly on account of increase in transportation costs. Excise burden on fly ash introduced In the Union Budget 2011 continues. Overall, the absolute raw material costs increased by approx 15% over the previous year. During the year, the Company did not purchase clinker from open market. Costs on account of raw materials consumed, excluding purchased clinker, increased hy a little over 18% as compared to over 2011 costs.

li) Power and fuel costs registered an Increase of around 16% in terms of absolute costs over last year. These costs account for approximately 30% of total operating costs of the Company and are mainly driven by movement in cost of fuel, especially coal.

Cost of coal used in kilns and power plants increased by 12.5% and 8.6% respectively on an average basis, over the year 2tJt 1. Concerns associated with linkage coal, like non availability commensurate with increased production, inordinate delay in conversion of allotted linkages into Fuel Supply Agreements (FSA) and deteriorating quality continues to be an issue. The Company is proactively taking measures to mitigate expenses by trying cost effective fuel mix, exploring energy efficient technologies, and increasing the use of pet coke in lieu of coal. Significant volatility and devaluation in Indian currency in 2012, especially in the second half, has made imported coal costlier, even when USD denominated coal prices relaxed- Cost of grid power continued its upward movement with per kwh rate Increasing at approximately 6% over the previous year. Expensive thermal power was substituted by relatively cheaper grid power. Captive power generation Supported 60% of total power requirements of the Company in 2012 as against 70% in 2011.

Savings on account of efficiency in operations helped reduction of costs by 2% of total energy costs.

Freight forwarding costs, makes around 29% of total operational cost, also hardened by approx 18% in absolute terms over previous year.

iv) Cost of packing went up by around 15% driven by increase in PP granule prices in line with oil price Increase.

COST MITIGATION MEASURES / EFFICIENCY

IMPROVEMENT INITIATIVES:

I) Tine Company continued to focus on production of fly ash based PPC and maintained an average blending ratio of approximately 1-48.

i) The Company has embarked upon an ambitious journey, named ''Holmic Leadership Journey'' (HLJ), as a pair of global efforts launched by its parent, Holmic, to add higher value for its shareholders.

The Company is channelizing its efforts into exploring and utilizing excellence in the areas of customer development and cost leadership. Focus on customers, products and services Innovation, constructive pricing policies and empowered sales force Is expected to deliver Customer excellence. Incisive studies have been initiated to find the most efficient use of energy resources, maximizing usage Of Alternative Fuels and Raw materials (AFR}, optimization of clinker and cement movement to save on logistics costs.

iii) Railway siding at Bhatinda grinding unit was made operational in mid January 2013. This will help us to optimize transportation costs for the unit and reduce dependence on road transport.

Iv) A dedicated corridor (road), measuring B.5 km, connecting highway to our captive jetty at Muldwarka port has been completed to enable the company to shift the entire transport to Muldwarka port through own road. This would ensure seamless flow of dispatches to coastal markets using jetty at Muldwarka port, which makes 60% of total dispatches from Amhujanagar plant. Besides, this would also address some serious concerns of road safety.

v) Dumas Channel. I he shorter sea route to BCT Surat explored in year 2011, is being used extensively and facilitating transportation cost savings in coastal freight.

7. EXPANSION PROJECTS AND NEW INVESTMENTS

The Company took up several projects to serve Its customers In a more efficient, cost-effective, reliable and environmentally-friendly manner, while bolstering its market position In the industry.

CAPACITY EXPANSION DURING THE YEAR:

In the Eastern region, the Company commissioned a pre-grinder at its Bhatpara unit in the Slate of Chhattisgarh at an approximate cost of Rs. 40 crores resulting in an increase in total cement capacity by 0,60 million tonnes per annum. With the above addition, the Company has achieved cement grinding capacity of 27.95 million tonnes as at 31st December 2012.

EFFICIENCY IMPROVEMENT MEASURES:

The Company focused on consolidation and optimization of its existing capacities in all the three regions. Capital investments kept Mowing in during the year, to ensure the highest standards of safely in order to meet the company policies of ''Zero Harm1, clean arid energy efficient infrastructure, cost efficient and environment-friendly material handling systems and process optimization.

i} Waste Heat Recovery (WHR) project at Rabriyawas umt in Rajasthan was initiated in year 2011 to bring efficiency in fuel utilization and optimize power costs. This is expected to complete by September 2013 at a total cost of Rs. 75 cnores. The Marat ha Cement Works unit in Maharashtra has also taken up this project (or implementation in 2013-14 at approximate cost of Rs. 90 crores,

ii) In order to Strengthen logistics capability and extend, reach to customers, a new railway siding project has been initiated at Rabriyawas unit in Rajasthan.

sis) An automatic wagon loading system at Farrakhan unit in West Bengal being built at a cost of approximately T 32 crores, Is nearing completion. This will reduce the cost and improve the efficiency of material handling,

Upcoming CAPACITIES AND INVESTMENTS:

i) A new Sulk Cement Terminal (SCT) ss nearing completion at Manga)ore. With operations to commence early 2013, it will help I he company to expand its footprints in southern markets of India.

ii) A new brown-field expansion project was announced in 2011 at Sank rail Grinding Unit in the eastern region comprising of a roller press and related logistics. The project has started progressing, with extended scope to include advanced technical specifications. This would add 0.00 million tonne grinding capacity to the unit, along with other facilities.

iii) Significant cement capacity addition of approximately 4.50 MT at proposed integrated plant (with extended grinding capacities) is coming up at Marwar Mundwa, Nagaur district in Rajasthan, with associated dinkerisation capacity of 2.20 million tonnes. Environmental clearances for the project are already in place while mining land acquisition is in an advanced stage. The Company is also in the process of tying-up water sources required for construction and operations. Full-fledged construction work is expected in the later part of year 2013.

Iv) The Company has taken up 13 new ambitious projects at different locations worth f 272 crores to Optimize and enhance efficiency. These projects have a quick payback of 2.5 to 4 years and likely to be completed in first half of 2014.

v) A new brown-field expansion project at the Rabriyawas until in Rajasthan, for commissioning a roller press air a cost of Rs. 70 crores, will add 0.30 million tonne grinding capacity hy the end of the year 2013.

vij Plans are afoot to Set up a state-of-the-art blending facility at Sanand in Gujarat with grinding and mechanized packing facilities at an investment of 7 267 chores. This facility, once operational by the 3rd quarter of 2015, will lend a competitive edge in the nearby central markets of Gujarat.

The year 2013 would see capital expenditure worth T 1100 crores, over and above Rs. 600 crores investment made in the year 2012. The entire proposed expenditure would be financed by internal accruals.

ALTERNATIVE FUELS - THE GREEN ENERGY An ambitious project, named ''GeD20'', taken up by the Company to substitute costlier traditional fossil fuels by Alternative Fuels {AF), is progressing welt and supporting cost-cutting. Holcim is actively supporting our efforts by making available its world-wide experience and technical expertise in the area of clean and green technology and burning all sorts of wastes without corresponding release of harmful gases and CO2 in the air, Besides, Holcim''s rich experience in the area has helped devise in nova live ways of sourcing.

The Company envisions being the most sustainable Company in the cement industry and draws heavily on Holcim''s sustainability policy on CO: and energy, eco-efficient products, atmospheric emissions, sustainable construction, etc. The strategic stress on environment tally-friendly and cost effective resources resulted in the establishment of the Recycle department to focus on Alternative Fuels and Raw Material (AFR).

In order to optimize the furnaces at 5 of the integrated plants, lo support higher utilization Of lower cost, environment tally-friendly. alternative fuels, Ihe Company has planned investments involving capital expenditure of 7 200 crores. Some work on these am bilious projects has already started.

During SOI2, the Company increased use of

alternative fuels in its kilns From 0.59% in 2011 to M0% in 2012. The company is determined to achieve higher thermal energy substitution rates in the coming years.

a, OUTLOOK

REFORMS WILL RESULT IN ECONOMIC REVIVAL India''s growth story remains attractive in comparison with many developed and developing economies, although the nation''s adverse fiscal deficit and negative current account balance calls for some bold rectification measures from the Government. The Government appears to be focusing on consolidation of the economic recovery through expeditious clearances for the projects, selective disinvestment and accelerating foreign direct investments through policy reforms.

While the impact of some recently announced progressive reforms would reflect only in a year and a half, the Company agrees with experts and expects GDP to grow in £013 at around 6% plus and the cement industry at 7,5 - 8%. This optimism relies On the positive outlook for infrastructure and construction, upcoming state and national elections, improvement in monetary conditions and also possible upturn in investments post the structural reforms. Higher agricultural income, lower interest rates, pre-election welfare and Five Year Plan induced spending by the Government is expected to raise private consumption growth and improve capacity utilization in the economy.

GROWTH PROSPECTS FOR THE CEMENT INDUSTRY Cement demand emanates from four key segments. Namely housing, which accounts for approx 67% of cement demand, infrastructure (13%}. commercial construction (11%) and industrial construction (9%), Economic reforms announced by the Government and RBI. including the expected lowering of i rile re si rates in 2013, will surely boost sentiments and rejuvenate the economy.

The cement industry is looking for an up-cycle after muted growth for the last three years, backed by an increase in rural consumption and the recovery in the infrastructure activity. The recent government measures to fast-track infrastructure projects & with general elections a year away, construction activity is expected to pick up steam, leading lo strong demand for cement.

Long-term growth prospects for cement demand are favorable, riding on the back of a growing economy and the impetus provided lo the busing and infrastructure construction activities in the 12th Five-Year Plan period (2012-17}, The total investment in infrastructure sectors m the Twelfth Five Year Plan is estimated to be Rs. 56 lakh crores (one trillion USD).

Rising input costs, particularly energy, raw material, freight & distribution, will remain a key challenge few the cement industry. Any adverse changes to existing laws/taxes may impact the industry. Land acquisition, environment clearances, inadequate supply of raw materials like limestone, linkage coal & fly ash are likely to hamper expansion plans of many cement companies.

The Company plans to militate such cost escalations through varied measures, including the increased use of alternative fuels and higher production of blended cement. The leadership journey adopted by the company will drive cost efficiency and customer excellence to increase margins. The Company will continuously strive to further strengthen its operational platform to manage cost, remain competitive and create value-addition for stake holders with a long-term perspective.

3. RISKS AND AREAS OF CONCERN

ENERGY COSTS

Coal price escalations, stressed supplies and faltering quality continue to remain a major area of concern. Depleting coal linkages and volatility in the Indian rupee is escalating the cost concern. Tine company constantly works on efficiency improvement by plugging heal loss at every possible stage of Coal consumption, looking af cost effective fuel mixes and increasing the usage of alternative fuels These measures would partly address cost concerns. As a long term solution to energy security, capability development in area of utilization of alternative fuels involving large investments has been taken up under the banner of ''Geo20 Waste

Heat Recovery (WHR) systems that improve fuel utilization, and the tapping of renewable energy sources are lop priorities. Going forward the company realizes the importance of technological innovations and the extensive usage of alternative fuels for the sustainable reduction in energy costs.

A long term solution to the problem resides in the development of alternative fuel (AF) sources, in particular industrial and agricultural waste materials, for which the Company is making huge investments under the banner of Geo20 Waste Heat Recovery (WHR) systems to improve fuel utilization efficiency would help mitigate fuel-associated risks. Renewable energy sources, such as wind and hydro, are being tapped as far as possible to mitigate the high costs associated with traditional energy sources. This is in line with the company''s vision and mission and to fulfill the Renewal Power Obligation (RPO) recently imposed by many stales across India.

ORDER OF THE COMPETITION COMMISSION OF INDIA

On 20th June £012, the Competition Commission of India (CCI) passed an order imposing unprecedented penalties Of more than Rs. 6300 erg res against some cement manufacturers of the country, including the Company, in the matter of a complaint filed by the Builders Association ot India for the alleged contravention of the Competition Law, The penalty imposed on the Company is Rs. 1164 crores. The Company has filed an Appeal before the Competition Appellate Tribunal (COMPAT) against the order and for granting stay against deposit of penalty. The matter is pending before the COM PAT. The management, backed up by a legal opinion from the external legal counsel, strongly believes that the Company has a good case lo succeed before the COMPAT and accordingly, no provision has been made in the books of accounts tor the year 2012. However, the amount of penalty has been considered as contingent liability.

0E-ALLOCATION OF COAL BLOCK The Ministry of Coal allotted a coal block in the State of Maharashtra along with 1ST Steel & Power Ltd and Lafarge India Pvt. Ltd. The block was allotted for the captive consumption of the allotters. A joint venture company was formed for coal mining with the company holding 27-27% of shares. The JV company was in the process of achieving various milestones as per the terms of allocation letter. However, alleging delay in achieving the milestones, the Ministry of Coal passed an Order on 15th November, 2012 de allocating the said coal block and invocation of partial bunk guarantee. The Company immediately filed a writ petition in the Delhi High Court against the said order and the Hon''bie High Court was pleased to pass the stay order on 30th November 2012 against the encashment of hank guarantee The Appeal is pending before Hon''bie High Coud- The Company believes that the progress made by the JV company in achieving the milestones was quite satisfactory. The alleged delay is either misconstrued or is for the reasons beyond the control of the JV company. In view of these facts, the management strongly believes that the Company has a good case to succeed in the writ pending before the Hon''bie High Court.

ECONOMIC SLOWDOWN COUPLED WITH SURPLUS CAPACITY IN INDUSTRY

Implementation of various reforms and macro- economic Initiatives being initiated by Government is important. In the absence of the rejuvenation of the national economy, aspired GDP growth may not be achieved, leading to restricted growth in cement demand- ft is perceived that, in this scenario, demand from infrastructure and commercial reality segments would be constricted- Coupled with capacity additions, the adverse demand supply scenario would continue, leading to pressure on volumes and prices.

The Company, having clear sight of this risk, is weJI equipped to continue the growth plan leveraging and building up on its strong brand equity and channel network in the core retail segment. Marketing and Commercial Excellence [MaCX) would give the desired impetus to achieve excellence and provide a clear mitigation plan.

TAXATION / ADMINISTRATIVE BURDEN

External and internal pressures in the economy, the rising fiscal deficit and falling savings and investment rates are some of the challenges before the Government calling for strict fiscal discipline, rollback of incentive and experimentation with tax laws to mobilize additional sources and improve Tax to GOP ratio. Retrospective tax proposals still haunt investors. Introduction of domestic transfer pricing provisions would necessitate change in the way business is conducted in many areas besides entailing administrative costs.

The much awaited reforms in the field of taxation, i.e. the implementation of Goods and Services Tax [GST) and Direct Tax Code (DTC) are yet to come in. Though the Government has taken steps towards GST by introducing negative list in service tax, aligning provisions for excise and service tax. these have incremental cost impact without corresponding simplification and reduction in the overall administrative burden on the Industry. Thus, the lack of uncertainty on tax policies remains a concern,

10. HUMAN RESOURCES

BUSlNE5S EXCELLENCE THROUGH HR LEADERSHIP Our HR systems and processes are aimed towards making us an employer of choice with sustainable talent. This is in perfect alignment with the company vision of being the most sustainable and competitive company in the industry. Towards this end, there have been constant efforts to ensure a capable talent pipeline

The core of achieving business excellence lies in a dedicated and talented employee base. The first step towards (his is attracting the right talent through our streamlined and structured recruitment process. We have structured systems for performance management and for planning individual development with a vision of creating a wealth of high performance employees. The organization also believes in home-grown talent through various management development programs conducted in association with renowned business schools like IIM, ISB, NMIMS as well as international B-Schools. We are focusing on creating leaders across levels and in the early stages of an employee''s career. The company has recently launched an initiative called "Sustainable Talent for Enhanced Performance" [STEP) to develop a sustainable pool of leaders equipping them with essential leadership skills and competencies and enhancing their coaching skill capacity. Our people are also exposed to the Holcim way of working through leadership development programs through talent movements to various

Holcim operating companies across the globe specially in lha areas of finance, safely, projects, manufacturing and commercial.

We believe that the success and milestones achieved during this year has been possible because Of Our people and robust systems and processes across the organization,

PEOPLE POWER

Over the last couple of years, we have initiated a very important and major Change Management program called "People Power", This comprehensive program has evolved to manage plant performance at each of our locations, as well as to develop a very strong leadership pipeline. We have completed the roll out of this program at 16 locations of the Company and have invested significant time and resources for its I''m pie mutation and to make this a "way of life".

During 2012. we made significant progress to strengthen all four basic pillars Of this program vie:

- Organization Structure and Manning

- Performance Management

* Technical Model and Capability Building

* Cultural Change and Sustainability

This program will make the Company a Continuously Improving Organization in a true sense. As a part of this program, we have set up a People Power Academy at different plant locations and have introduced the Academy White Paper and the Academy Certification Program to ensure we get best quality people and offer them a visible career progression towards future leadership. This has now been embedded into our formal HR systems. Like any change management program, there are still tots of challenges that remain to be addressed lo main lain the level of energy and commitment of our people and to this end, we have developed a comprehensive and objective oriented ''People Power Excellence Index". The index comprises of more than 50 Indicators that give a fair idea of where each location stands in terms of sustaining The People Power momentum and what specific actions are required to excel further.

We have also set up a dedicated PMO (Program Management Organization) at the corporate office for driving this change management program. Specific focus is given to capability-building through various customized programs. We have pull In place 7 community practices to replicate proven ideas with the help of plant champions. Conscious efforts are being made on unit-specific cultural aspects to build on their strengths and improve development areas,

We are confident that this program which continue to contribute very significantly to realize our vision "lo he the most sustainable and competitive Company in our industry",

11, SUSTAINABILITY AND ENVIRONMENT

NURTURING SUSTA1NABIUTY AT THE CORE OF THE COMPANY We renewed our commitment to sustainable development by revising our vision to be the most sustainable and com pet I live company in our industry. We continued to pursue our sustainability goals under the overarching ''Sustainability Policy'', In addition we initiated the implementation of Sustainable Procurement Guidelines aimed at our supply chain. This is aligned to the Holmic Supplier Code of Conduct.

To embed sustainability as a strategic factor in our framework, Sustainability Steering Committees were constituted last year. These have continued to assess sultana bilgy risks and opportunities both at the until and corporate level, and monitor the various sustainability initiatives. The Company''s focus among others is on low carbon growth, being water positive, use of alternative I tie], renewable energy, bio-mass etc. Continuing our participation in the Global Programme of Clean Development Mechanism (CDM) we are currently pursuing two CDM projects on Smokeless Chelas in the Community around our plants and Waste Heat Recovery.

We released our 5th Corporate Sustainable Development Report. Tine report is aligned with Global Reporting Initiative (GRI) G3 guidelines for A Level of reporting, having been ''Assured'' by an independent certifying agency. Additionally this year''s repot has also been GR1 checked.

We continue to focus on developing our renewable

energy portfolio in the with Renewable and Clean Energy Roadmap till £020. We installed 330 KV of Solar energy at Bhatapara, Chhattisgarh I his year, in addition to the existing 7.5 MW of wind emery at Kutch, Gujarat comm. is jinxed last year. A 6-5 MW Waste Heat Recovery based power generation system is being installed which is expected 10 be operational by 2013,

The Company is currently monitoring and reporting COS emissions as per the WBCSD Cement Sustainability Initiative (CSI) protocol. The Company is one ot the Co-chairs of CSI India and has been part of the Working Group on a Low Carbon Technology Road Map to the Indian Cement Industry. The Low Carbon Technology Roadmap report has been released in December Z012.

We attained independent third-party assurance tor our water footprint, it was established [hat we are water positive by a factor of two. Further, we meticulously estimated our carbon footprint that included our all operations, bulk cement terminals, shipping activity, and offices, as well as offsets due to our plantation initiatives for the year £010. This was verified independently by a third party in accordance with the international standard ISO 14064:2006.

In recognition of our endeavors in streamlining Corporate Sustainability within our operations, we have been awarded the CM Sustainability Award in the category of commendation for ''significant achievement'' bettering our previous year''s performance where we were adjudged winners in the category of commendation for ''strong commitment''. Further, we have been rated at Gold Level in the Sustainability Plus rating done by Cll. The 100 largest companies by market cap and market share were rated against ESG Indicators by the Cl! for the Sustainability Pius rating. The rating was done across

3 categories, namely Platinum, Gold and Bronze.

PROACTIVE ENVIRONMENT MANAGEMENT

The Company ensured availability of Continuous Emission Monitoring Systems (CEMS) round the year at all the 9 kiln stacks above 95% for online monitoring of all vital pollution parameters.

Three of our grinding units have attained certifications

to the Energy Management System as per ISO 50001:2011. Our Rabriyawas unit is in the process of implementing the standard. In addition to mapping the energy saved, corresponding greenhouse gas mitigation achieved through this initiative shall also be monitored.

The company has taken steps to ensure it meets its commitments under the PAT scheme and RPO-REC obligations. Further, we are anticipating emission standards to be notified for S02 and NOx emissions. We are taking steps to monitor and control our emissions so that we can meet the requirements of the new standard as and when they are notified.

Most of our panels have done well in the Holcim Plant Environment Profile (REP] annual assessment. While the Company average equaled the Holcim average score in the integrated units, 4 of them scored above the Holcim average. Both individually and Company lever I, all the grinding units have scored above the Holcim average PEP 2011 score.

As in previous years, this year we participated in Carbon Disclosure Project to make our carbon emissions public as per CSI protocols.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

STRENGTHENING COMMUNITIES ACROSS THE COUNTRY Ambuja Cements Ltd. is among very few companies that invest more than 2% of their net profit in CSR, much before the new Companies Bill makes it mandatory for the corporate sector. The Company has clearly identified the community as one of the significant stakeholders, and is keenly interested in responding to their needs in a systematic manner. This guides our efforts in community development.

Ambuja Cement Foundation (ACF), (he CSR arm of the Company, has identified a broad spectrum of development initiatives, addressed macro level issues by stratagems a! the micro lever, and subsequently replicated and scaled-up work, leading to larger impact.

When Ambuja Cements initially began identifying the needs of the communities, water emerged as a prime requirement in Gujarat and Rajasthan -

amongst the most ecologically fragile regions of the country. Gujarat faces the problem of sea water intrusion and ingress; while Rajasthan faces perennial droughts and scarcity of water. Our multi-pronged approach resulted in several projects aimed at I water con Enervation and its effective usage, hath for domestic as well as agricultural purposes. This extensive effort in water resource development over a period of time, has resulted in contributing to the water-positive status of the Company. The scale of work has been possible only due to extensive networking with other development organizations and project-based partnerships with various government departments.

In Gujarat this year, aside from continuing to build and interlink water harvesting structures, promoting micro irrigation and creative awareness on elective utilization of water, ACF, in cob I a boo ration with the Government of Gujarat completed construction of a major check dam at Bhekheshwar to help recharge ground water The Bhekeshwar dam has a water storage capacity of 1.01 MCM.

In Rajasthan, ACFs approach consists of reviving

traditional water harvesting systems tike village ponds, khadins - a system of runoff farming, Innovations like sub-surface dykes on sandy river beds and promoting Roof Rainwater Harvesting Systems (RRWHS) in the region. These methods have had an impact on the drinking water availability as well as the irrigation potential 1o increase the area under cultivation, RRWHS has proved itself as a sustainable solution to address the issue of access to drinking water at the household level. Amajuba Cements, with its sustamability agenda, now has a clear goal for each functional unit to be water positive. ACF is now focusing its efforts on various water resource developments in each location,

Lack of employment opportunities and access to skill up gradation is another complex issue taken up at ACF through its livelihood promotion programs. Water agriculture being a primary occupation tor the majority people around our plants, our C5R activities focus on agro-based livelihood programs which include promotion of System of Rice Intensification (SRI), organic farming, mushroom cultivation, honey collection, horticulture promotion, training programme on scientific and recommended agricultural practices through Krishi Vigyan Kendra at Kodinar. Additionally, in Rajasthan, with the support of Rajasthan State Seed Corporation, a large project on seed production is enabling higher returns for farmers.

By way of promoting weather-based insurance. ACF is also enabling farmers to better manage risk in agriculture crops. Since March £010, ACF has participated in the Better Cotton Initiative, a global project lo makes cotton production sustainable for producers and the environment- the projects now reaches out to over 7000 farmers and about 93% of the participating farmers have qualified as per BCI parameters

To create alternate sources of employment and bridge the gap between required and available skills, ACF''s. 17 Shill and Entrepreneurship Development Institutes (SEDI) have trained over 9000 candidates in over 40 different trades. Systematic study, analyzing local demands for skills and maintaining market and Industry linkages has helped these institutes promote gainful employment with a placement rate of over 75%,

Health and Sanitation are important indicators Tor Human Development Index (HDIJ, and have prime significance in ACF''s efforts in the area of social development. The comprehensive program, evolved over a period of time, places emphasis on clinical, preventive, as well as pro motive healthcare. Across locations, a large team of 312 Sakhis (Village Health Functionaries] play a vital role in ensuring improved access to health facilities for all in the communities. These Sakhis are periodically trained by ACF lo enhance their knowledge, capacities and skills in handling primary healthcare needs all the village level, and working closely with the gram pane hay at and village health and sanitation committees (VHSCs) to improve health and sanitation facilities in the villages. Many of our units have taken measures to link Sakhis with government/government Supported programs. Currently over 115 Sikhism have been absorbed as ASHA workers under NRHM, angina workers or as angina helpers.

We have continued to work on education and prevention of HIV/AIDS with truckers and migrant workers around our plants by providing services such as Still treatment, counseling and awareness sessions,

Ambuja (Vlanovikas Kendra (AMK) al Ropar, is a Centre of special education working for the welfare of persons with autism, cerebral palsy, mental retardation and multiple disabilities Since 1999- The school provides various therapies and programmers'' for children along with a strong emphasis on outdoor games To reach the maximum number of special children in need, this year AMK introduced a ''home- based rehabilitation programme'' under which special educators from the school visit children at home on a weekly basis. This way the school creates access for those children in need of specialized services, but cannot go to school.

After the stellar performance of d of our AMK students in World Special Olympics 2011 held in Greece this year, our athletes won 13 Gold, 07 silver and 02 Bronze medals In athletic events in the Special Olympics Bharat. Punjab Chapter Five students from AMK were adjudged best athletes Of the tournament. AMK also won the "''Overall Championship Trophy" of the tournament and was adjudged the Best Institution tn sports in Punjab for a record 7th year in a row.

STAKEHOLDER ENGAGEMENT

Clearly identifying groups of stakeholders helps the Company to respond lo I heir needs in a focused manner. We Endeavour to evolve active participation of various stakeholders in the process of planning, implementation and monitoring of various programs. We set up a Community Advisory Panel (CAP] al each of our locations. This panel has representatives from the Company as well as from the host com main lies, including the local administration, and is constituted to present the views and opinions of the people and discuss and build consensus on initiatives for the Company to implement jointly with the people in the area.

fn the year 2012. all operational sites reviewed our CSR Through our Social Engagement Scorecard (SES), The exercise provided an opportunity for the community lo review and evaluate ACF''s work. The scorecard result this year has been a rating of 75-100% across locations.

The Abuja Volunteerism Program launched Iasi year provides an opportunity for our employees lo engage and participate In the Company''s social development projects. In 2012 Abuja Cements saw 1695 employees dedicating

I heir services. Their value long efforts amounted to approximately 16.885 hours,

12. OCCUPATIONAL HEALTH AND SAFETY (OH&S)

WORKING TOWARDS "ZERO HARM" FOR OUR PEOPLE We believe QH&S is one of our core values and we strive for "Zero Harm" lo our employees, contractors and visitors.

A review of the Company''s OH&S performance has led to addition of some key action areas and a further re iteration of the earlier objectives. The key to us areas are:

t) Increase visible leadership in OH&S by the Front Line Management. Apart from the annual OH45 targets, each operational plant undertook one additional initiative based on the Fatality Prevention Element (FPE) of Ambuja Cement.

2) Fatality Prevention Elements include working at heights, isolation and lockout, vehicle and traffic safety. These were Implemented across our sites with a target of 40-60%. The quality of implementation was assessed through an external certifying agency.

3) A formal OH&S management system, aligned with the Holcim OH&S Pyramid System and other directives, has been established over the past few years across the organization. All sites were assessed for implementation of the Holmic GH&S Pyramid System through an external certifying agency. The scores from the OH&S pyramid assessment were excellent and a clear demonstration of the implementation of an integrated OH£S management system in our operations.

4) Each of our plants has taken steps to ensure there is no reoccurrence of fatal incidents within the organization, on the basis of investigation reports. A similar initiative was also undertaken for fatalities reported within ACL since 1st January 2008, potential fatalities reported within ACL and fatalities reported within Holmic World Since 1st January 2012.

5) To reduce Risk Exposure through the application of the QH&S Management system, the following actions were Initiated:

'' An interface between ACL QH&S Management system. Maintenance Cement (MAC) and the integration of Alternative Fuel A Raw Materials (AFR) OH&S (ACerl requirements) in the ACL OH&S management system was established.

* A road map was developed for the implementation of OH&S directive for the Contractor Safety Management System (CSM). Implementation of CSM was initiated among the high-risk category of contractors.

A process was Initiated tor the integration of QH&S requirements during the planning and elution of a shutdown by applying the ACL OH&S management system. Risk assessments were conducted for all activities during the shutdown,

6) We established risk-specific and competency- based training as per the requirements of the targeted Fatality Prevention Elements and other OH&S directives.

The Company is committed to reduce OH&S risks through continuous efforts and the integration of Obis requirements with other business processes. It makes us proud that two of our integrated plants - Rabriya was and MCW have received National safety awards and FICCI Gold respectively, in recognition of their safety performance.

13. EMPLOYEE STOCK OPTION SCHEME

During the year, the Company has not granted any fresh stock option to its employees.

CUMULATIVE DISCLOSURE

The particulars as on 31st December, 2012 as required to be disclosed pursuant to Clause 12 of SEBF (Employees Stock Option Scheme) Guidelines 1999, in respect of past ESOS are as follows:

CUMULATIVE POSITION AS ON 31ST DECEMBER, 2012:

Nature of disclosure Particulars

a. Options granted 37776300

b. The pricing formula 2007 to 20l0

The exercise price was determined by averaging the daily closing price of the Company''s equity shares during 1 [seven) days on I he National Stock Exchange immediately preceding (the grant

2004-05 & 2006-06

The exercise price was determined by averaging the daily closing price of the Company''s equity shares during is (fifteen) days on the National Stock Exchange immediately preceding the grant

2003-2004

The exercise price was deemed by averaging two weeks'' Hogtie and Low price of the Company''s equity shares on the National Stock Exchange immediately preceding the grant

1999 2000 to 2002-2003

The exercise price was tile Average of the daily closing price of equity shares of I he Company on the Slosh Exchange. Mutual during the period of 30 (Intertie) days immediately preceding the dale on which the options were granted

c. Options vested 32045925

d. Options exercised 22630900

e. The total number of Shares prizing as result Total number of Shares arising as a result of exercise of Options shall of exercise of options be 44041507 shares of Rs.2 each

f. Options lapsed/ surrendered 4030075

g. Variation of terms of option -

h. Money realized by exercised option Rs,303.91 crores

i Total number of option in force 10165025

j (i) Details of options granted/ exercised No. of options granted No. of options exercised

by the former Managing Director and the former Whole- time Directors

32.85.000 26,00,000

ii) Any other employee who received a grant NIL NIL In any one year of 5% or more of option granted during that year

k. Employees who were granted options NIL during any one year, equal to or exceeding 1% of the issued capital of the Company all the time of grant

I Diluted earning prestart (EPS) pursuant to issue shards on exercise of options ealeulted In accordance with Accounting Standard AS-20

2003- 04 2004- 05 2005- 00 2007 2003 2009 2010

m. Weighted average exerts price of options in 310* 443* 69.60 13 62 96 119 Weighted average ** ** ** ** ** fair value of options in 67.44 96.73 19,23 29.28 16.95 26.36 39,37 * * ** ** ** ** **

14. CORPORATE GOVERNANCE

The company has complied with the corporate Governance requirements as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of Ihe Annual Report,

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES:

The majority of the Corporate Governance Voluntary Guidelines, 20Q9. stand complied while complying with the requirements under the Companies Act. 1956, the Listing Agreement, and the Company''s own governance policies.

15. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year ended 31st December, 2012 as stipulated under clause 55 of the Listing Agreement is annexed and forms part of the Annual Report

16. INTERNAL CONTROL SYSTEM

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

The formalized systems of control facilitate effective compliance as per Clause 49 of the Listing Agreement, and article 728 {a) of the Swiss Code of Obligations applicable to the Holcim Group from 2008,

[The Company''s internal Audit department tests, objectively and independently, the design and operating effectiveness of the internal control systems to provide a credible assurance about their adequacy and effectiveness to the Board and the Audit Committee. The internal Audit function assesses the effectiveness of controls to provide an objective and independent opinion on the overall governance processes within the company, including the application of a systematic risk management framework.

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

17. MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES

Fraud and corruption-free work culture has been the part of the Company''s ONA all along. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of the operations, the Company has put even greater emphasis to address this risk. To meet this objective a comprehensive Fraud Risk Management Policy (FRMP) has been laid down. More details on FRMP have been given in the Corporate Governance Report.

In furtherance to the Company''s philosophy of conducting business in a honest, transparent and ethical manner, the Board has laid down the Anti- Bribery and Corruption Directives (ABCD) as part Of the Company''s Code of Business Conduct and Ethics, As a Company, we lake a ;erectile range approach to bribery and corruption and we are committed to acting professionally and fairly in all our business dealings.

To spread awareness about the Company''s commitment to do its business professionally, fairly and free from bribery and corruption, training and awareness workshops are conducted through an Independent consulting firm for all the relevant employees of the Company.

These policies and their implementation are closely monitored by the Audit and the Compliance Committees of Directors and reviewed by the Board from time to lime.

18. DIRECTORS retirement at rotation

In accordance with the provisions of Artifice 147 of the Articles of Association of the company, (i) Mr. M.L Bhakla (ii) Mr. Naresh Chandra and (iii) Mr. One van deer Weirder will retire by rotation at the ensuing Annual General Meeting of the Company.

(i) Mr, M L Bhakta,

Mr. Bhakla will retire at the ensuing Annual General Meeting of the Company. Mr Bhakta has conveyed that he does not intend to seek re-election and will reline upon completion of his term at the ensuing Annual General Meeting.

Mr. IYI.L. Bhakta joined the Board in September, 1935. He was amongst the first Non-exec utile Independent Directors on the Company''s Board, much before the Term Independent Director became common in the Indian corporate sector. Over I lie tats two-and-a-huff decades, Mr. Bhakta played an active role by providing expert advice and guidance to the Board and its committees on issues ranging from legal, taxation, governance etc.

(it) Mr, Naresh Chandra

Mr. Chandra will retire at the ensuing Annual General M eel mg of the Company. Mr, Chandra has conveyed that he does not intend to seek reflection and will retire upon completion of his term at the ensuing Annual General Meeting, Mr, Naresh Chandra joined the Company''s Board in July, 3003 and during this period he guided the Board and its committees on the issues of governance, compliance, health and safety, etc.

The Board placed on record its appreciation for the valuable services rendered by Mr, M.L Bhakta and Mr. Naresh Chandra.

In terms of Section 256(4) of the Companies Act, 1956. the vacancies created by the retirement Of Mr. M.L Bhakta and Mr. Naresh Chandra shall no! be filled and a resolution to that effect is proposed for the approval Pf the Members at the ensuing Annual General Meeting.

(lit) Mr. One vender Weirder will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his appointment.

APPOINTMENT

Mr, Haig re ve Khaitan and Mr. 8.L Tapana have been appointed as Additional Directors under; Section 260 of the Companies Act, 1956 to hold office up to the date of ensuing Annual General Meeting and being eligible, has offered themselves for appointment.

(i Mr. Haigreve Khaitan

Mr. Khaitan. aged 42 years is a Law graduate and is a partner of Khaitan 4 Cos Mumbai office. He heads Khaitan & Co''s Mergers £ Acquisition (M&A) practice and over the years he has successfully handled many M&A, private equity and project finance transactions. He has published books and articles on foreign investments and arbitrations and has been a distinguished speaker at various conferences. He is also affiliated with various Bar Councils and Law Institutes of India and abroad. He has been appointed as Non-executive Independent Director on the Board of the Company w.e,f. 27th July, 2012.

(ii) Mr. B.L. Taparia

Mr. Taparia. aged 62 years is Commerce and Law graduate and a fellow member of the Institute of Company Secretaries of India, He has over 40 years of experience in the fields of Legal. Secretarial, Finance and Accounts, Commercial, Corporate Strategies, HR, Health and Safely. CSR, Sustainability, etc. He joined the Company in the year 1905 as a Deputy Company Secretary and after working at different positions, he was appointed as Whole-time Director in the year 1999, where he served till the year 2009 After stepping down from the Board, Mr. Taparia continued on the Executive Committee as a Legal Head, Company Secretary and Head of some key corporate functions. He superannuated from the Company in July, 2012. Considering his vast knowledge and experience and expertise in handling critical functions, he was appointed as Non-executive Director on the Board of the Company w.e,f, 1st September, 2012.

The board of directors recommends their appointment. Further details about these Directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report,

19, DIRECTORS''RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies Act, 1056 as amended, 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.

ii) Appropriate accounting policies have been selected and applied consistently, except (or the change in accounting policies stated in notes to the accounts and judgments and estimates made are reasonable and prudent, so as to give a true and fair view of the slate of affairs of the Company as on 31st December 2012, and of the statement of profit £ loss and cash flow of the company for the period ended 31st December, 2012.

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

iv) The annual accounts have been prepared on a going concern basis,

20. AUDITORS

STATUTORY AUDITORS

M/s S. R. Balboa & Co. Statutory Auditors, will retire at the ensuing Annual General Meeting and are eligible for re-appointment. M/s S. R. Ballyhoo 4 Co. have confirmed that their re-apartment, if made, shall be within the limits specified under Section 24(10) of the Companies Aprilr 1956.

The Board recommends their re-appointment as Statutory Auditors and to fix their remuneration.

COST AUDITORS AND COST AUDIT REPORT

Pursuant to section 233S(2} of the Companies Act 1956. the Board of Directors on the recommendation of the Audit Committee appointed M/s. PM. Na nab hoy & Co. Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2013. M/s. PM, Na nab hoi & Co. have confirmed that their appointment is within the limits of the Section 224 (18) of the Com pan res Act. 1956 and have also certified that they are free from any disqualifications specified under Section 233B(5) read with Section 224 sub-sect ion (3) or sub-sect ion {4} of Section 225 of the Companies Act 1956

The Audit Committee has also received a certificate from the Cost Auditor certifying Their independence and arm''s length relationship with the Company. Pursuant to Cost Audit (Report) Rules 200T, the Cost Audit Report for the financial year 2012 was filed on 27th December, 2012 vide SRN No. S19608567 on the Ministry of Corporate Affairs website,

21. TRANSFER TO JNVESTOR Education AND PROTECTION FUND

The Company has transferred a sum al 59 50 laces during the financial year 2012 lo the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956, The said amount represents unclaimed dividends which were lying with the Company for a period Of 7 years from Their respective due dates of payment. Prior lo transferring the aforesaid sum. the Company has sent reminders to the shareholders for submitting their claims for unclaimed dividend.

22. ENERGY, TECHNOLOGY AND

 
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