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Directors Report of Heidelberg Cement India Ltd.

Dec 31, 2012

TO THE MEMBERS,

The Directors of your Company are pleased to present the 54th Annual Report together with the audited accounts of the Company for the year ended 31st December 2012.

THE YEAR IN RETROSPECT

The year under review was a challenging year; the Indian economy continued to face serious domestic as well as external challenges. The decline in the growth rate of the Gross Domestic Product (GDP), as also in industrial activity and investments, continued. Apart from overall growth slippage, inflation remained a major concern leading to higher input costs, putting pressure on margins.

Economic slowdown and a declining GDP trend, especially deceleration in infrastructure investments and projects adversely impacted the cement industry. In this backdrop, the Indian Cement sector grew by 6.9%.

By the time the year 2012 drew to a close, the country''s overall installed cement manufacturing capacity had risen to about 330 million tonnes in terms of industry estimates. Effective capacity utilization is estimated to have remained in the range of about 75% to 80%.

The Indian Cement Industry, during the year, witnessed once again a continuation of last two years'' trends, where the first half of the year was buoyant and the latter half sluggish, both in terms of demand and prices. Demand was weak in the second half primarily on account of lower infrastructure spending and slowdown in the realty sector due to high interest rates.

A GLANCE AT THE FINANCIAL PERFORMANCE

Despite the challenges, your Company registered an upswing in its turnover during the year. Gross revenues from operations for the year ended 31st December, 2012 were up by 12.8%, at MINR 12766.3, compared to gross revenues for the previous year, at MINR 11319.4.

Despite an unabated rise in costs, EBITDA (Earnings before interest, tax, depreciation and amortisation) grew by 13% (MINR 876.8 against MINR 776.1 for the previous year) on account of better realizations and operational efficiencies. Net profit stood at MINR 308.4 against net profit of the previous year (MINR 291.7) registering a growth of 5.7%.

A snapshot of your Company''s financial performance for the year ended 31st December 2012 vis-à-vis performance for the previous year ended 31st December, 2011 is as under:-

(Rs. in Millions)

Particulars Year ended Year ended 31st December 2012 31st December 2011

Revenue from Operations (Gross) 12766.3 11319.4

Revenue from Operations (Net of Excise Duty) 11039.5 9879.6

Other Income 104.7 118.4

Total Revenue 11144.2 9998.0

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) 876.8 776.1

Finance Costs (105.3) (38.5)

Net Depreciation and Amortization (314.9) (314.0)

Profit before tax 456.6 423.6

Total Tax Expense 148.2 131.9

Net Profit for the year 308.4 291.7

EBITDA margins were close to 8% of total revenue. A graphic presentation of EBITDA and Costs as a percentage to the total revenues during the year under review is given below:

REVIEW OF OPERATIONS

On the operations front, cost challenges continued to be a cause of concern, particularly power, freight and raw material. Due to depreciation of the Rupee, imported gypsum became dearer. Through stringent quality checks, your Company has been able to meet its requirement of gypsum through indigenous sources with higher purity levels. However, availability of Gypsum continued to be a challenge in certain parts of the country.

The year also saw an increase in diesel prices which impacted the Company both directly and indirectly. PP granule prices saw a spurt by about 14% leading to an increase in the price of PP bags. Coal India introduced a new system of coal pricing based on gross calorific value with effect from the start of the year, which was subsequently rolled-back partially. This resulted in an increase in coal prices for cement industry in the range of 10-15%. Overall there was increase of 14.51% in the total cost of production.

Pet coke prices remained relatively stable due to availability from certain new sources. Pet coke being a more economical fuel than coal, your Company has successfully altered its fuel mix by increasing pet coke consumption levels year on year. In operations also, the consumption parameters have shown definite improvement and we have bettered our incorporation ratios. Our strategy to increase road dispatches, in view of the steep hike in railway freight towards the end of the first quarter of 2012, has yielded results and during the year your Company crossed the initial target of one million tonne road dispatches in Central India.

Consistent good quality of the product has enabled the Company to meet the expectations of its discerning customers and create and sustain the image of its brand "mycem". Brand visibility helped your Company expand its channel network. During 2012 over 600 dealers and about 2,000 retailers were added to the network. To strengthen its bond with channel partners, the Company conducted number of training programs for its dealers.

BROWNFIELD EXPANSION IN CENTRAL INDIA

Your Company is now poised for growth, strengthening its presence in Central India through implementation of the brownfield expansion project in U.P. and M.P. The expansion project at Jhansi Unit in U.P. has been successfully completed and commercial production from the new plant at Jhansi commenced on 16th January 2013. Trial runs at the new plants at Narsingarh and Imlai in Damoh (M.P.) have started and commercial production is expected to commence shortly.

The expanded capacities of the plants will be as under:-

a. Cement grinding capacity of the plant at Jhansi (U.P.) has increased from 0.8 to 2.7 million tonnes per annum.

b. Clinker manufacturing capacity of the plant at Narsingarh, District Damoh (M.P) will increase from 1.2 to 3.1 million tonnes per annum.

c. Cement grinding capacity of the plant at Imlai, District Damoh (M.P) will increase from 1.0 to 2.0 million tonnes per annum.

One of the key highlights of the project is the construction of around 20 kilometers long Overland Belt Conveyor (OLBC), one of the longest in the Country, for transportation of limestone from the mines at Patharia to the Clinkerisation unit at Narsingarh.

Capital expenditure on the entire expansion project is about MINR 15700 (including interest during the construction period that has been capitalized), which has been funded through a mix of internal accruals, External Commercial Borrowings (ECB) from the promoter group and term loans from Indian Banks. Post expansion, the cement manufacturing capacity of the Company in Central India will increase by 2.9 million tonnes per annum and the total cement manufacturing capacity of the Company will increase to 6 million tonnes per annum.

DIVIDEND

With the objective of long term value creation for the shareholders, your Directors have recommended conservation of internal resources in place of dividend distribution.

FUTURE OUTLOOK

The current year is a year of transformation as well as challenges for the Company; anticipation of growth and earnings on the one hand and challenges posed by intensifying competition and a trying environment on the other.

As you are aware, a declining trend in the GDP and a slowdown in economic activity, especially in the infrastructure investments and projects, have a direct impact on industries like cement. While we may hope that the recent economic reforms initiated so far by the government will bring about a resurgence in the economy, from which the Company will also benefit, we can not overlook the impact of the slowdown and related factors on the performance of the cement industry as a whole and on that of your company specifically.

Going forward, during 2013, based upon an anticipation of significant government spending on infrastructure in the next five years and an improved focus by the Government on the housing and infrastructure sectors, cement demand is expected to achieve a growth rate of about 8% during the current year.

The new manufacturing capacities, will enable the Company to increase its market share in Central India and also increase deliveries in other markets including Bihar, Punjab, Haryana and Uttarakhand. In the current year, our endeavour is to maximize volumes at optimal logistics cost and improve realizations. This would require nurturing existing markets as well as developing new ones. Your Directors are confident that with the help of a committed sales team and strong product quality, the Company will successfully carve a niche for its brand "mycem" in new markets and will continue to improve its brand positioning in the existing ones.

Apart from economies of scale due to enhanced volumes, post expansion, the profitability drivers will include savings in transportation costs and power and fuel consumption and also tax benefits pursuant to MP Industrial Promotion policy.

BUILDING ON SUSTAINABILITY

Sustainability is a part of our Group''s vision statement. "Heidelberg Cement has activities in 50 countries and its goal of sustainable development is shared by all group areas and business lines.

Environmental Sustainability

We seek to contribute to environmental sustainability by incorporating environmental considerations at every stage in business decision making. Towards this goal, during the year under review, the following initiatives were taken:

- Continuous Stack Monitoring System and Continuous Ambient Air Quality Monitoring Stations were installed at all the plants so that the emission data is monitored and directly updated at the websites of the Pollution Control Boards.

- The Company procured Auto Road Sweeper to prevent generation of fugitive emission at Narsingarh and Imlai plants. An Auto Road sweeper is being procured for Jhansi Unit also.

- A number of varieties of saplings were planted by developing Green Belt to improve the environment.

- Trainings on environmental legislations were conducted at all the plants.

- Rehabilitation of the existing Kiln ESP hybrid filters of Line 1 & 2 were done for air pollution control at Narsingarh plant, Damoh (M.P.).

- Clinker wagon loading facility at Imlai grinding unit was upgraded to control fugitive emissions.

- Plastic waste incineration in the kiln at Narsingarh is done on a regular basis.

- Garland drain, retaining wall, settling tank, check dams and De-composition pit constructed at Yerakatte Limestone Mines, Ammasandra (Karnataka).

- Bag filter installed at mill feeding clinker belt conveyor transfer point at Raigad plant (Maharashtra) to control fugitive emissions.

A Step Towards Green Energy

Confirming HeidelbergCement Group''s commitment to sustainability, the Board of Directors has approved the setting up of an eco-efficient Waste Heat Recovery based Power Generation Plant at its Clikerisation unit at Narsingarh, District Damoh (M.P.). The proposed plant envisages production of approximately 12.15 MW of power from available waste heat of pyro-processing system of all three clinkerisation lines at Narsingarh. It will substitute equivalent grid power and thus reduce power cost per ton of clinker, meeting the twin goals of ecological conservation and economic added value.

The project cost is estimated to be in the range of MINR 1450 to MINR 1500 and it is likely to be operational in January 2015.

Making a Difference Through CSR

Social responsibility is the third pillar of our sustainability vision. The Company continued to engage with the local communities by encouraging their participation in various welfare and development activities, which has served to strengthen our relationships. The Company contributed to the economic and social development of the local communities, in the regions where it has presence, by focusing on healthcare, education and improvement of the surroundings.

Every Plant has a medical centre along with an Ambulance to provide timely medical help and treatment. The Company organized free health check-up camps for the residents of the surrounding villages, which included orthopedic and eye examination for old people. The awareness was also spread about hygiene and health care issues. Family welfare programs were also organized.

In order to tackle the problem of water shortage a check dam was constructed on the river Tillu Jhiriya, which fulfils the daily requirements of the people of Narsingarh village. In the vicinity of some of the Company''s plants, villagers were provided treated water from the plants, wherever applicable. The Company also got old wells and ponds in the surrounding areas cleaned, deepened and renovated. Bore wells were also installed at certain places.

Development activities such as construction of rest sheds, community halls, cremation sheds, concreting the floor of a school, passenger facilities at local bus stands in nearby villages were also completed during the year under review. A driving school has been established to impart training to local youth and they are being engaged by transporters and travel agencies. With the help of social clubs, the Company organized training programs for women to enable them to learn stitching and tailoring etc., so that they can fruitfully engage themselves and improve their standard of living.

The schools assisted by your Company continue to provide education of high standard not only to the children of the Company''s employees but also to the children from the surrounding villages. Various sports and cultural events were organized at the schools to ensure a holistic development of the students, where children from other schools also participated. Education Centres have been opened with the objective of providing basic education to the wives of labourers.

On the occasion of World Environment Day, to spread environmental consciousness amongst people, saplings were planted and cloth bags were distributed to curb the use of plastic bags.

Awareness was spread amongst the villagers regarding the need to protect the environment and ecology.

OCCUPATIONAL HEALTH & SAFETY

"There''s one figure we want to keep at zero : the accident rate" is the motto of the HeidelbergCement Group. In line with this objective, the Company is committed to achieving zero accident and injury frequency rate1 across all its plants, mines and at projects / construction sites. Appropriate systems have been put in place for the purpose, including guidelines on energy isolation, machine guarding, working at height and project safety in construction. Relentless efforts are made for continual improvement on the basis of past experience and best safety practices, including continuous surveillance by plant safety team to monitor industrial activities in plants and vigil of the HoDs to ensure safe working environment.

Safety trainings on different aspects are conducted which help in developing safe working culture by focusing on behavior and attitude of individuals. Various contests and competitions were organized to motivate employees for creating safe working environment. A system of rewards and penalties has also been put in place and the same is being applied judiciously in the interest of safety. During implementation of the expansion project, substantial time, money and effort was invested to ensure that health & safety remained a focal point and no compromises were allowed. However, despite our best efforts, there were two fatalities during the year 2012. The chart given below shows the number of lost time injuries during the last few years :-

- "Lost Time Injury" means work related injury which causes the absence of an employee for one or more workdays.

- Lost Time Injury incident figures are combined for Operations (1 LTI) and Projects (4 LTI).

The Company stands committed to achieve "Zero Harm" Safety performance. We forego operational benefits and adherence to time schedules if there is any cause of concern relating to safety. Towards this goal, during the year under review the following steps were ensured :-

- Standard Operating Procedures containing step by step procedures and permit system for safe working are in place for all the critical activities and the same were revisited, wherever necessary.

- Risk Assessment for all activities and communication about the risks involved, control measures and safe plan of action is communicated to all involved for safe working.

- Safety is our foremost priority. In order to give utmost importance to Safety, organizational structure has been changed with no reporting lines to Plants.

- Training on different safety aspects is regularly imparted at all locations based on theme of the month.

- Group Safety week was observed at all the plants and project sites during 14th to 20th October 2012. During the week practical safety demonstrations and safety trainings were conducted. Safety Quiz, Poster, Extempore Speech, Slogan competitions were organized to instill a strong safety culture.

- All Heads of Departments take safety rounds to ensure proper implementation of all safety control measures.

- Frequency of the "Safety Committee meeting" has been increased from monthly to weekly.

- Corporate Safety Head conducts reviews of all the plants, mines and other offices at regular intervals and observations / findings are discussed with all concerned for ensuring effective compliance.

- Material handling procedure was revisited. Forklift at Ammasandra plant and new generation hydra crane with in-built safety features was introduced at Imlai plant to ensure safety of human beings.

- As a part of "Access Control", changed the design of workstation of ropeway attendant, motorized gate has been provided at Narsingarh plant.

- Implementation of Lock out Tag Out (Electrical Isolation system) at Ammasandra unit.

- Policy on restriction on "Night Time Highway Driving" introduced to ensure off-the-job safety of employees.

- On Going activities include implementation of Group Safety guidelines, Safety Inspections and ensuring corrective actions, Daily Safety Gate Meetings, Knowledge/ experience sharing by Line Managers, HODs, Plant Head, Unit Head, Safety Head, Safety Person of the month and Screening of a film on Safety.

AWARDS AND ACCOLADES

During the year, we earned a number of awards and honours from various Ministries and Industry bodies.

The "National Safety Award" was received from the Hon''ble President of India, Mr. Pranab Mukherjee at Vigyan Bhawan, New Delhi on 21st November, 2012. Narsingarh Limestone Mine was declared a winner for "Lowest Injury Frequency Rate" in Metal Mines - Mechanized opencast with manshift < 0.5 lacs at country level for the year 2009.

- During the Mines Environment & Mineral Conservation Week held in Jabalpur Region, the Indian Bureau of Mines awarded our Patharia Limestone Mines in the category of "Fully Mechanized Mines", First Prize in Reclamation & Rehabilitation and Management of Sub-Grade Minerals, Second Prize in Top Soil Management and Publicity and Third Prize in overall Performance for the year 2011-12 .

- Clinkerisation Unit at Narsingarh was awarded ''National Energy Conservation Award - 2012'' by the Ministry of Power, Govt. of India.

- Narsingarh Limestone Mine was awarded First prize for "Overall Safety Performance" during Metalliferrous Mines Safety Week celebrations in Jabalpur Region, in Mechanized ''A'' Category Mines.

- The Expansion Project at Damoh received the prestigious RoSPA (The Royal Society for the Prevention of Accidents, UK) Award 2012 with the Highest Award GOLD category for the Organization''s commitment to improve workplace health and safety.

CORPORATE GOVERNANCE

''Securing Success through Ethics, Transparency and Accountability'' is our Company''s Corporate Governance Philosophy. Your Company fully stands by the standards set out by the Securities and Exchange Board of India for Corporate Governance practices.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from a Practicing Company Secretary confirming compliance with conditions of Corporate Governance, forms part of this Annual Report.

Pursuant to clause 49 of the Listing Agreement, Management Discussion and Analysis Report is given as an addition to this Report.

A certificate furnished by Mr. Ashish Guha, CEO & Managing Director and Mr. Anil Sharma, Chief Financial Officer in respect of the financial statements and the cash flow statement for the year ended 31st December 2012 is annexed as Annexure ''C''.

DIRECTORS

Dr. Bernd Scheifele, Dr. Lorenz Naeger and Mr. S. Krishna Kumar, Directors of the Company retire by rotation at the ensuing Annual General Meeting (AGM). The retiring Directors being eligible have offered themselves for re- election by the members at the said AGM.

The Board recommends the re-appointment of the aforesaid Directors.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm & declare that they have taken all reasonable steps, as are required, to ensure that:

(a) The applicable accounting standards have been followed in the preparation of the annual accounts for the year ended 31st December 2012 and no departures have been made there from;

(b) They have selected such accounting policies and applied them consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st December, 2012 and of the profit of your Company for the year ended on that date;

(c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting frauds and other irregularities; and

(d) The annual accounts for the year ended 31st December, 2012 are prepared on a going concern basis.

AUDITORS

The Auditors'' observations in their Report and the relevant notes to the accounts are self-explanatory. The Statutory Auditors, M/s. S.R. Batliboi & Co., Chartered Accountants, who were appointed at the last Annual General Meeting held on 25th April 2012, have expressed their unwillingness for re- appointment as Statutory Auditors at the ensuing AGM.

Your Directors'' recommend the appointment of M/s. S.R. Batliboi & Associates, Chartered Accountants as Statutory Auditors for the ensuing term. The said Auditors have confirmed that their re-appointment, if made, shall be within the limit laid down under Section 224(1B) of the Companies Act, 1956.

COST AUDIT

Pursuant to the directives of the Ministry of Corporate Affairs, your Company appointed Mr. A. Nagaraja, Cost Accountant as Cost Auditor of the Company under Section 233B of the Companies Act, 1956 for the year 2012. The Cost Audit Report for the year ended 31st December 2012 will be submitted to the Ministry within the stipulated time.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended are given in the enclosed statement forming part of this Report as Annexure ''A''.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, forming part of this Report are annexed as Annexure ''B''.

ACKNOWLEDGEMENTS

We are thankful to various agencies of the Central and State Government(s) for their continued support and co-operation. Your Directors are thankful to all stakeholders including Customers, Bankers, Suppliers, Distributors, Dealers, and Contractors for their continued assistance, co-operation and support. The Directors wish to place on record their sincere appreciation to all employees for their commitment and continued contribution to the Company. The Directors are grateful for the confidence, faith and trust reposed by the shareholders in the Company.

For and on behalf of the Board

Sd/-

Place: Gurgaon P.G. Mankad

Date : 11th February 2013 Chairman


Dec 31, 2011

The Directors of your Company are pleased to present the 53rd Annual Report together with the audited accounts of the Company for the fi nancial year ended 31st December 2011.

ECONOMIC SCENARIO

India's GDP growth has been slowing down over the period due to various external and internal factors, including the adverse impact of crude oil prices, continuing inflationary pressures, high interest rates and a perception of slow down in economic decision making among investors leading to a decline in investment flows. An uncertain external environment, the sharp depreciation of the Rupee against the US Dollar in the last quarter and the decline in various indices of economic performance have also been cause of concern for policy makers and industry. The estimates for GDP growth have consequently been lowered to around 7% for the fiscal 2011-12.

REVIEW OF OPERATIONS

Production and Sales figures of the Company in quantitative terms are as under:

Financial year ended Financial year ended 31st December 2011 31st December 2010

Production (in tonnes)

-Clinker 1,450,303 13,36,805

-Cement 2,853,682 26,45,725

-GGBS 21,550 15,993

Sales (in tonnes)

-Clinker 68,964 81,449

-Cement 2,812,017 26,09,254

-GGBS 20,679 17,151

Your Company sold 2.81 million tonnes of cement in 2011 which is the highest ever cement sales in the history of the Company.

The brand of your Company "Mycem" continued its journey northward garnering higher premiums and better market positioning. Sustained good quality of cement assisted the brand in improving customer acceptance. Technical services to consumers facilitated in improving the overall product satisfaction. A recent study by Nielsen to gauge customer satisfaction for "Mycem" confi rms the above. Brand visibility helped us to attract new channel partners and retain the existing ones. With the focus on the upcoming expansion, our team successfully added over 250 dealers and about 1500 retailers. The Company also conducted number of training programs for dealers and a mega event for C&F Agents and Platinum Dealers.

During the year sharp rise in input costs without any significant increase in realizations impacted margins. During February 2011, linkage coal prices increased in the range of 30% to 150% for various grades. Besides the price of coal, its shortage also troubled the industry. Strike at Singareni Collieries Company Limited, excessive monsoon in Eastern and Central India and the labour strike at Coal India and its subsidiaries severely impacted the coal production. During the year power tariff was also increased as a result of increase in coal prices.

Shortage of coal affected power generation adversely, thereby reducing the fl y ash availability. Some power plants were forced to use low ash imported coal which further decreased the availability of fl y ash. Shortage of fl y ash necessitated incorporation of more clinker for manufacturing Portland Pozzolana Cement (PPC) at Imlai unit thereby eroding margins. Bottlenecks at port near Raigad lead to shortage of clinker at Raigad unit.

Poor quality and unavailability of gypsum locally, forced your Company to import gypsum. The weakening of Rupee increased the cost of imported Gypsum by about 10%. Significant cost increases were also witnessed in petcoke, slag and bags. Freight cost for transportation by road increased due to increase in diesel price. Railway freight for Cement and Coal was also increased during the year. Imposition of excise duty on fl y ash & coal, enhancement of excise duty on cement and HSD price hike further aggravated the position. In the wake of all round cost pressures the Company continued its relentless drive to improve the consumption parameters, wherever possible.

FINANCIAL HIGHLIGHTS

The Company achieved gross sales of Rs.112662.56 lacs during the fi nancial year ended 31st December 2011, against Rs. 98537.07 lacs during the financial year ended 31st December 2010. The net profit of the Company during the financial year ended 31st December 2011 was Rs.2917.25 lacs as compared to the net profit of Rs. 6,329.95 lacs during the financial year ended 31st December 2010.

The snapshot of your Company's performance for the financial year ended 31st December 2011 vis-à-vis its performance in the previous year ended 31st December, 2010 is as under:-

(Rs. in lacs) Financial year ended Financial year ended 31st December 2011 31st December 2010 Earnings before Interest, Depreciation and Taxes (EBIDTA) 7,759.97 12,900.82

Less :

- Finance Charges (383.75) (421.31)

- Depreciation / Amortization (3,139.88) (2,884.88)

(3523.63) (3,306.19)

Earnings before taxes (EBT) 4,236.34 9,594.63

Less:

- Deferred Tax Credit (296.81) (1,365.12)

- Provision for Income Tax (1,022.28) (1,899.56)

1,319.09 (3264.68)

Net Profit 2,917.25 6,329.95

Less: Dividend on 9% Cumulative Redeemable Preference Shares - (50.83)

(including Corporate Dividend Tax of Rs. 7.24 lacs).

Add: Balance b/f from the previous year 9707.53 4,777.75

Less: Amount Transferred to Capital Redemption Reserve - (1,349.34)

Profit / (Loss) carried to Balance Sheet 12,624.78 9,707.53

CAPACITY EXPANSION

The work on the expansion projects at Damoh & Jhansi units to enhance the aggregate installed capacity of the Company from 3.07 MTPA to 6 MTPA is at an advanced stage and it expected that the commercial production will commence in the first half of the year 2012. In view of the same the Company has already started seeding the markets of Bihar and has plans to commence deliveries in Uttrakhand, Delhi and Haryana also. Your Company will further increase its dealers and retailers network and open new sales offices in 2012.

DIVIDEND

In view of the requirement of funds for the expansion projects at Damoh and Jhansi units, your Directors have decided not to recommend any Dividend on the equity shares for the financial year ended 31st December 2011.

RE-APPOINTMENT OF DIRECTORS

Mr. P.G. Mankad, Mr. Amitabha Ghosh and Dr. Albert Scheuer, Directors of the Company retire by rotation at the ensuing Annual General Meeting (AGM) of the Company. While Mr. Mankad and Dr. Scheuer are eligible and have offered themselves for re-election at the forthcoming AGM, Mr. Ghosh due to personal reasons has not offered himself for re-election.

The Company has been privileged in having on its Board of Directors a person of Mr. Ghosh's eminence, and he has also contributed signifi cantly as the Chairman of the Audit Committee. The Board places on record its appreciation of his contributions during his tenure.

The Board proposes that the vacancy caused by the retirement of Mr. Amitabha Ghosh shall not be fi lled up at the ensuing Annual General Meeting in terms of Section 256 of the Companies Act, 1956.

The Board recommends the re-appointment of Mr. P.G. Mankad and Dr. Albert Scheuer at the ensuing AGM.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confi rm & declare that they have taken all reasonable steps, as are required, to ensure that :

(a) The applicable accounting standards have been followed in the preparation of the annual accounts for the financial year ended 31st December 2011 and no departures have been made there from;

(b) They have selected such accounting policies and applied them consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st December, 2011 and of the profit of your Company for the year ended on that date;

(c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting frauds and other irregularities; and

(d) The annual accounts for the financial year ended 31st December, 2011 are prepared on a going concern basis.

AUDITORS

The Statutory Auditors, M/s. S.R. Batliboi & Co., Chartered Accountants, who were appointed at the last Annual General Meeting held on 10th June 2011, hold office up to the conclusion of the ensuing AGM and are eligible for re-appointment. The said Auditors have confirmed that their re-appointment, if made, shall be within the limit laid down under Section 224(1B) of the Companies Act, 1956. The Auditors' observations in their Report and the relevant notes to the accounts are self-explanatory.

COST AUDIT

Pursuant to the directives of the Ministry of Corporate Affairs, your Company has appointed Mr. A. Nagaraja, Cost Accountant as Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the year 2011. Cost Audit Report for the year 2010 was filed with Ministry of Corporate Affairs on 28th June 2011.

The Cost Audit Report for the year 2011 will be submitted to the Ministry within six months of the close of the financial year i.e., on or before 30th June 2012.

CORPORATE GOVERNANCE REPORT

In terms of Clause 49 of the Listing Agreement with the Stock Exchanges a report on Corporate Governance is included in the Annual Report. A Certificate from a Practising Company Secretary on compliance of conditions of Corporate Governance is also annexed to the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to clause 49 of the Listing Agreement, Management Discussion and Analysis Report is given as addition to this Report.

HUMAN RESOURCES

During the year, Industrial Relations remained harmonious and employees at all levels demonstrated a high degree of commitment towards achieving the Company's goals. Long term wage settlement has been signed for all plants for a period of four years.

The Company has focused on various measures to attract and retain talent, including the creation of a satisfying working environment, encouraging worker participation in productivity and quality initiatives, providing opportunities for skill up gradation and career advancement, and recognizing and rewarding good performance.

Training, communication, structured induction process, discussion and feedback sessions and soft skill development remained some of the key areas of human resource development.

OCCUPATIONAL HEALTH & SAFETY

Health and safety remains an area of very high priority for the Company.

The Company's objective, in line with that of the Heidelberg Cement Group, is to achieve the lowest possible injury frequency rate across all its units, at construction as well as at operational stages. It has put in place appropriate systems for this, including guidelines on project safety in construction, regular monitoring, and eff orts at improvement on the basis of experience and detailed analysis of the root causes of unsafe conditions or practices. Continuing training and constant attention to safety are integral parts of the strategy.

No fatalities happened during the year 2011.

Narsingarh Limestone Mine of the company received award for 3rd best for "Overall Safety Performance" during Metalliferrous Mines Safety Week celebrations in Jabalpur Region.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is an integral part of the Company's ethos and policy, and it has been pursuing this on a sustained basis. The focus of the Company's CSR activities has been on three areas viz., healthcare, education and improvement of the surrounding areas where it has presence. During the year under review the Company organized various medical camps for the residents of the surrounding villages. Medical assistance was also provided through mobile dispensaries. Medicines are provided free of cost to the beneficiaries. Family welfare programs were also undertaken. Every Plant has a medical centre along with Ambulance to provide timely medical help and treatment.

The schools assisted by your Company provide education of high standard not only to the children of the Company's employees but also to the children from the surrounding villages. Various sports and cultural events were organized at the schools to ensure holistic development of the students.

In order to tackle the problem of shortage of water in the vicinity of some of the Company's plants the villagers were provided treated water from the plants, wherever applicable. The Company also made necessary arrangements for cleaning, deepening and renovating old wells and ponds in the surrounding areas. Some other development activities like construction of a road at Imlai village, a cremation centre at Narsingarh village and passenger facilities at local bus stand were also completed.

Emphasis was laid on creation of awareness amongst the villagers about the need to protect the environment. With this objective in mind cloth bags were distributed to the villagers so as to reduce the usage of plastic bags. Emphasis is also laid on plantation of trees. With the help of social clubs, the Company organized training programs for women and unemployed youth so that they can fruitfully engage themselves in some activity and improve their standard of living.

Camps were organized at the Company's plants to facilitate local people to obtain "Aadhar Cards" under the UID Project of Government. On the occasion of Akshya Trutiya a Samuhik Vivah Ceremony was organized at Damoh. Donations were given by Ammasandra unit for renovation of Kariyamma Temple and for organising Tumkur Zilla Uthsava and Kannada Sahiyatha Sammelana. CSR activities carried out by the Company have further strengthened the Company's relationship with the local people.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended are given in the enclosed statement forming part of this Report as Annexure 'A'.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, forming part of this Report are annexed as Annexure 'B'.

MD / CHIEF FINANCIAL OFFICER'S CERTIFICATION

Pursuant to Clause 49 of the Listing Agreement, a certificate furnished by Mr. Ashish Guha, CEO & Managing Director and Mr. Anil Sharma, Chief Financial Officer in respect of the financial statements and the cash flow statement for the financial year ended 31st December 2011 is annexed as Annexure 'C'.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their sincere gratitude for the cooperation and support received by the Company from various agencies of the Central and State Government(s). The Board also acknowledges the continued assistance and support of all stakeholders including Customers, Bankers, Distributors, Dealers, Suppliers and Contractors. The Directors are grateful for the confidence, faith and trust reposed by the shareholders.

For and on behalf of the Board Sd/-

Place : Gurgaon P.G. Mankad

Date : 13th February 2012 Chairman


Dec 31, 2010

The Directors of your Company are pleased to present the 52nd Annual Report together with the audited accounts of the Company for the financial year ended 31st December 2010.

REVIEW OF OPERATIONS

Production and Sales figures of the Company in quantitative terms are as under:

Financial year ended Financial year ended 31st December 2010 31st December 2009

Production (in tonnes)

-Clinker 13,36,805 13,53,951

-Cement 26,45,725 26,60,674

-GGBS 15,993 5,026

Sales (in tonnes)

-Clinker 81,449 55,479

-Cement 26,09,254 26,54,767

-GGBS 17,151 5,376

India is the worlds second largest producer of cement. The main characteristics of this industry is that it is highly fragmented, regional, cyclical and capital intensive.

In the first half of the year 2010 the demand for cement was buoyant which resulted in higher volume and price realisation. However during the second half of the year additional capacities became operational which resulted in oversupply situation. Further, during the second half of the year the demand for cement also declined due to heavy rains in most parts of the Country resulting in subdued construction activity. The oversupply coupled with the poor off take of cement created demand supply mismatch putting pressure on prices. This lead to decline in the capacity utilization throughout the industry. Significant rise in costs, especially the price of coal, petroleum products, power and freight cost further eroded the profitability.

Financial year 2011-12 is the terminal year of the 11th Five year plan of the Government of India. Therefore we expect that the Government spending will be relatively higher during the aforesaid period. This will also help in increasing the demand of cement during the current year.

Mycem is now a well established brand with high degree of customer acceptance, which is the result of the Companys constant endeavour to give its customers the best possible product. The Company has also started marketing its cement in Bihar to expand its market reach. In order to foster better channel - Company Partnership, a dealer training program was initiated, a first for the Company.

FINANCIAL HIGHLIGHTS

The Company achieved gross sales of Rs. 98,537.07 lacs during the financial year ended 31st December, 2010, against Rs. 1,04,023.92 lacs during the financial year ended 31st December 2009. The net profit of the Company during the financial year ended 31st December 2010 was Rs. 6,329.95 lacs as compared to the net profit of Rs. 13,403.91 lacs during the financial year ended 31st December 2009.

The snapshot of your Companys performance for the financial year ended 31st December, 2010 vis-a-vis its performance in the previous year ended 31st December, 2009 is as under:-

(Rs. in lacs)

Financial year ended Financial year ended 31st December 2010 31st December 2009

Earnings before Interest, Depreciation and Taxes (EBIDTA) 12,900.82 20,495.46

Less :

- Finance Charges (421.31) (439.90)

- Depreciation / Amortization (2884.88) (2,580.69)

(3,306.19) (3,020.59)

Earnings before taxes (EBT) 9,594.63 17474.87

Less:

- Deferred Tax Credit (1365.12) (1,646.90)

- Provision for Income Tax (1899.56) (2,408.60)

- Fringe Benefit Tax - (3264.68) (15.46) (4,070.96)

Net Profit 6,329.95 13,403.91

Less: Dividend on 9% Cumulative Redeemable Preference Shares (50.83) (434.03) (including Corporate Dividend Tax of Rs. 7.24 lacs).

Add: Balance b/f from the previous year 4,777.75 (8,192.13)

Less: Amount Transferred to Capital Redemption Reserve (1,349.34) -

Profit / (Loss) carried to Balance Sheet 9,707.53 4,777.75

CAPACITY EXPANSION

The Companys present installed capacity is 3.07 MTPA. The Company has embarked upon expansion projects at Damoh & Jhansi units, which will double its cement production capacity.

On 4th August 2010, the Honble Chief Minister of Madhya Pradesh, Mr. Shivraj Singh Chauhan, performed a Bhoomi Poojan and unveiled a plaque at the Narsingarh Unit for the said expansion project.

The work on the aforesaid expansion projects is in full swing and it is expected that the commercial production will commence in the first quarter of the year 2012. The total cost of the expansion project will be funded through a mix of internal accruals, External Commercial Borrowings (ECB) from the promoter group and borrowings from Indian Banks and Financial Institutions.

DIVIDEND

The Directors of the Company had passed a Resolution by Circulation on 11th May 2010 to exercise the Call Option for redemption of 13,49,336 9% Cumulative Redeemable Preference Shares of Rs. 100 each aggregating to Rs. 13,49,33,600. Since these Preference Shares were Cumulative in nature, it was obligatory for the Company to pay the accumulated dividend i.e, dividend @ 9% per annum on 13,49,336 Preference Shares for the period from 1st January 2010 till 11th May 2010 (being the date of redemption of preference shares).

The Company has already paid the dividend amounting to Rs. 43.59 lacs as interim dividend along with the redemption proceeds for which the Board seeks the confirmation of the shareholders at Item No. 2 of the Notice of Annual General Meeting.

Further, in view of the requirement of funds for the aforesaid expansion projects, your Directors have decided not to recommend any Dividend on the equity shares for the financial year ended 31st December, 2010.

APPOINTMENT / RE-APPOINTMENT OF DIRECTORS

Dr. Bernd Scheifele and Dr. Lorenz Naeger, Directors of the Company retire by rotation at the ensuing Annual General Meeting (AGM) of the Company. The retiring Directors being eligible have offered themselves for re-election at the said AGM.

Mr. Pradeep V. Bhide, Mr. Daniel R. Fritz and Mr. Sushil Kumar Tiwari were appointed as Additional Directors on the Board w.e.f. 29th April 2011. Pursuant to section 260 of the Companies Act, 1956 the aforesaid Additional Directors shall hold office up to the date of the ensuing AGM. The Company has received notices under section 257 of the Companies Act, 1956 from some members proposing the names of the aforesaid persons for appointment as Directors.

The Board has appointed Mr. Sushil Kumar Tiwari as Wholetime Director for tenure of 3 years w.e.f. 29th April 2011, subject to the approval of the shareholders at the ensuing AGM.

The Board at its meeting held on 29th April 2011 has re-appointed Mr. Ashish Guha as Managing Director of the Company, without any remuneration, for a further term of five years w.e.f. 23rd August 2011, subject to the approval of the shareholders at the ensuing AGM.

The Board recommends the appointment / re-appointment of the aforesaid Directors.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm & declare that they have taken all reasonable steps, as are required, to ensure that:

(a) The applicable accounting standards have been followed in the preparation of the annual accounts for the financial year ended 31st December 2010 and no departures have been made there from;

(b) They have selected such accounting policies and applied them consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st December, 2010 and of the profit of your Company for the year ended on that date;

(c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting frauds and other irregularities; and

(d) The annual accounts for the financial year ended 31st December, 2010 are prepared on a going concern basis.

AUDITORS

The Statutory Auditors, M/s. S.R. Batliboi & Co., Chartered Accountants, who were appointed at the last Annual General Meeting held on 11th May 2010, hold office up to the conclusion of the ensuing AGM and are eligible for re-appointment. The said Auditors have confirmed that their re-appointment, if made, shall be within the limit laid down under Section 224(1B) of the Companies Act, 1956. The Auditors observations in their Report and the relevant notes to the accounts are self-explanatory.

COST AUDIT

Pursuant to the directives of the Central Government, your Company has appointed M/s. A. Nagaraja, Cost Accountants as Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the year 2011.

CORPORATE GOVERNANCE REPORT

In terms of Clause 49 of the Listing Agreement with the Stock Exchanges a report on Corporate Governance is included in the Annual Report. A Certificate from a Practising Company Secretary on compliance of conditions of Corporate Governance is also annexed to the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to clause 49 of the Listing Agreement, Management Discussion and Analysis Report is given as addition to this Report.

REGISTERED OFFICE

The Registered Office of the Company has been shifted from the plant at Ammasandra (Karnataka) to Gurgaon (Haryana) w.e.f. 8th March 2011.

HUMAN RESOURCES

During the year under review the Industrial Relations remained cordial and there was all round cooperation. Employees at all levels demonstrated high degree of commitment for achieving the Companys goals.

The Company focused on Employee Development, Retention, Recognition, Performance Management & Communication. Initiatives like Hi-Potential scheme and Star Employee of the month/quarter have been implemented with the objective of retention & recognition and also to encourage innovative ideas.

Various training programs focusing on the soft skills like Communication & Leadership skills were conducted. The key programs focusing on soft skills and managerial skills conducted were Business Communication, Breakthrough in Effectiveness, Performance Management Process, Team Bonding & Jagriti (Workmen Training).

Quarterly communication meetings. Directors Feedback Sessions and open house sessions were also introduced to share the business performance vis-a-vis market scenario, new market place challenges and also to address the concerns of employees.

Employees at all levels continue to put in their best in the service of the Company and your Directors place on record sincere appreciation of their dedication and loyalty.

OCCUPATIONAL HEALTH & SAFETY

The Company has continued to focus on embedding strong safety culture top-down and bottom-up. "Nothing is more important to us at Heidelberg than the safety of our workers, our subcontractors, and the communities in and near which we operate," says Dr. Scheifele, Chairman of HeidelbergCement Group.

Safety Topic of the Month program is designed to educate the employees about why safety is so important, and to remind our employees and subcontractors about ways to maximize their own safety, on the job, in and around the plant, and in their own homes and communities. During the month, each site is organizing events, open house sessions to increase awareness and communication campaigns on the theme of occupational health and safety for employees and subcontractors.

Every Operational Unit and Project Site conducts Daily Safety Meeting to communicate the previous day safety observations & incident information of all the sites for taking immediate corrective & preventive actions at their respective sites. This has improved the Safety performance drastically at Shop floor. This meeting is headed by Plant Head and the presence of all Officers & Contractor Employees has been made mandatory.

The Lost Time Injury frequency Rate drastically decreased from the year 2007 to 2010 as a result of the companys comprehensive safety program. Damoh Limestone Mine has been selected for the National Safety Award under the category of "Lowest Injury Frequency Rate" by the Ministry of Labour & Employment.

The Company has set up Corporate Health & Safety function to lead these efforts to facilitate design and implementation of H&S Management System. The Company has also implemented the Contractor Safety Management System, which helps to ensure that proper processes are in place for the safety of Contract Employees. We have embarked on the journey of changing behaviors across all functions. We continue to lead our efforts for enforcement of H&S norms at all our brown field projects.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is actively contributing to the economic and social development of the surrounding communities as part of its corporate social responsibility by focusing on Healthcare, Education and improvement of the surroundings. During the year under review, your Company continued to co-ordinate with local communities, in the regions where it has presence, to facilitate development and welfare activities. These included medical assistance and organising medical camps for the residents of the surrounding villages. Every Plant has a medical centre along with Ambulance to provide timely medical help and treatment.

In the area of Education, your Companys schools provide high standard of education not only to the children of its employees but also to the children from the surrounding rural areas. Sports meets with various events were conducted at schools

which also attracted participation of other schools from the surrounding areas. With the help of social clubs, the Company has initiated various training programs for women and unemployed youth.

There is scarcity of water in the vicinity of some of the Companys plants. Therefore the Company has made necessary arrangements to provide treated water from its plants to the villagers. In addition, the Company also engaged manpower for cleaning and renovation of old wells and ponds in surrounding areas to ensure that water is easily available to the villagers.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended upto date are given in the enclosed statement forming part of this Report as Annexure A.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, forming part of this Report are annexed as Annexure B.

MD / CHIEF FINANCIAL OFFICERS CERTIFICATION

Pursuant to Clause 49 of the Listing Agreement, a certificate furnished by Mr. Ashish Guha, Managing Director and Mr. Anil Sharma, Chief Financial Officer in respect of the financial statements and the cash flow statement for the financial year ended 31st December 2010 is annexed as Annexure C.

ACKNOWLEDGEMENTS

We deeply acknowledge the continued support and co-operation received from the State and Central Government Authorities and other regulatory agencies. We also take this opportunity to thank all the valued customers who have appreciated and patronised the companys brand "mycem".

Your directors are thankful to all stakeholders including Shareholders, Bankers, Suppliers, Distributors, Dealers and Contractors for their continued assistance, co-operation and support.

For and on behalf of the Board Sd/-

P.G. Mankad Chairman

Place : Gurgaon Date : 29th April 2011


Dec 31, 2009

The Directors of your Company are pleased to present the 51st Annual Report together with the audited accounts of the Company for the fi nancial year ended 31st December 2009.

REVIEW OF OPERATIONS

The cement sales of the Company were 2.66 million tonnes during the fi nancial year ended 31st December 2009 against 2.42 million tonnes of the previous fi nancial year ended 31st December 2008.

Production and Sales figures of the Company are as under:

Financial year ended Financial year ended 31st December 2009 31st December 2008

Production (in tonnes)

-Clinker 13,53,951 13,80,470

-Cement 26,59,472 24,17,622

-GGBS 7,198 20,353

Sales (in tonnes)

-Clinker 55,414 1,14,057

-Cement 26,54,767 24,19,441

-GGBS 5,376 21,694

Cement Industry is largely dependent on domestic demand and has a cluster market structure. The industry is cyclical in nature and to a great extent depends on the infrastructure spending by the Government. During the fi rst half of the fi nancial year 2009, the demand for cement was buoyant which resulted in strong growth in volume as well as improved price realisation. The demand was fuelled by increased government spending on roads and infrastructure projects and also partial recovery in the housing sector which was under severe pressure during the year 2008 due to the general economic slowdown. Further, there was spurt in the demand in the clusters in which we operate, resulting in higher turnover and better profi t margin. However, the scenario changed during the second half of the year since not only did the demand recede to some extent but the supply also increased as the additional capacities came on stream. This led to a temporary demand supply mismatch leading to fall in cement prices almost throughout India. Moreover the cement was also brought in from the distant markets into the markets in which we operate. Consequently, it was diffi cult to protect the margins during the second half. There were many pockets where the prices fell steeply, especially in southern India where the drop in prices was the maximum.

However, during the start of the fi rst quarter of the year 2010, the demand for cement has again improved due to increase in spending on infrastructure and housing projects, especially in northern, western and central India on account of signs of recovery shown in overall economic activity. In this backdrop your Directors hope that the demand for cement would continue to be stable throughout the year.

Mycem brand is now well established in the market and has gained high degree of customer acceptance. Mycem now commands a premium which is result of elevated customer’s perception about the brand. Focus on quality and service, have been key drivers for enhancing customer satisfaction for Mycem.

The Company has improved its quality at every plant and it will be the constant endeavour of the Company to give its customers the best possible product.

FINANCIAL HIGHLIGHTS

The Company achieved gross sales of Rs. 1,04,023.92 lacs during the fi nancial year ended 31st December, 2009, against Rs. 88,697.67 lacs during the fi nancial year ended 31st December 2008 , thereby, registering annualized growth of 17 %. The net profi t of the Company during the fi nancial year ended 31st December 2009 was Rs. 13403.91 lacs as compared to the net profi t of Rs. 12,552.64 lacs during the fi nancial year ended 31st December 2008.

Your Directors are pleased to inform that during the 2nd quarter ended 30th June 2009, the Company fully absorbed all its unabsorbed depreciation and brought forward business losses of the past fi nancial years, which stood at Rs. 37,098.37 lacs as on 31st December 2006.

The snapshot of your Company’s performance for the fi nancial year ended 31st December, 2009 vis-à-vis its performance in the previous year ended 31st December, 2008 is as under:-

(Rs. in lacs)

Financial year ended Financial year ended Particulars 31st December 2009 31st December 2008

Working for the year resulted in an operational surplus of 20,495.46 13,310.34

From which are subtracted :

- Finance Charges (439.90) (410.24)

- Depreciation / Amortization (2,580.69) (2,137.23)

(3,020.59) (2,547.47)

Resulting in a profi t/(loss) for the year of 17474.87 10,762.87

To/From which are added / subtracted :

- Deferred Tax Credit (1,646.90) 1,848.24

- Provision for Income Tax (2,408.60) -

- Fringe Benefi t Tax (15.46) (4,070.96) (58.47) 1,789.77

Net Profi t / (Loss) 13,403.91 12,552.64

Add: Amount transferred from Securities Premium Account -- 6,238.32

Less: Proposed Dividend on 9% Cumulative Redeemable Preference Shares (including Corporate Dividend Tax of Rs. 63.05 lacs). (434.03)

To which is added loss b/f from the previous year (8,192.13) (26,983.09)

Profi t / (Loss) carried to Balance Sheet 4,777.75 (8,192.13)

Note : The figures for the year ended 31st December 2009 are not strictly comparable with the fi gures for the year ended 31st December 2008 since the fi gures of the year ended 31st December 2008 include the fi nancial performance of erstwhile Indorama Cement Ltd. and erstwhile HeidelbergCement India Pvt. Ltd. for the nine months period i.e, from 1st April 2008 to 31st December 2008 as the appointed date for the Scheme of Amalgamation through which these companies got amalgamated with your Company was w.e.f. 1st April 2008.

CAPACITY EXPANSION

The Company’s present installed capacity is 3.07 MTPA. In order to increase the cement production capacity, the Company has embarked upon the following expansion projects at the Damoh & Jhansi units:-

(i) Expansion of clinker manufacturing capacity from 1.2 MTPA to 3.1 MTPA at Narsingarh, District Damoh, Madhya Pradesh.

(ii) Expansion of cement grinding capacity from 1 MTPA to 2 MTPA at Imlai, District Damoh, Madhya Pradesh.

(iii) Expansion of cement grinding capacity from 0.8 MTPA to 2.7 MTPA at Jhansi, Uttar Pradesh.

The Company has already received requisite approvals, subject to fulfi llment of certain conditions, from the Government Authorities for the aforesaid expansion projects. The work on the aforesaid expansion projects has already begun and it is expected that the commercial production would commence in the fi rst quarter of the year 2012. After completion of the aforesaid expansion, the total cement production capacity of the Company would double to 6 MTPA.

DIVIDEND

The Board of Directors hereby recommend dividend at the agreed rate of 9% per annum on the 13,49,336 9% Cumulative Redeemable Preference Shares of Rs. 100 each from the date of allotment of the said preference shares i.e, 12th December 2006 till the fi nancial year ended 31st December 2009. It may be noted that the Company could not pay any dividend on the said preference shares till the fi nancial year ended 31st December 2008 due to the unabsorbed depreciation and brought forward business losses of the earlier fi nancial years. The aforesaid preference shares are cumulative in nature and carry dividend at the fi xed rate of 9% p.a. Therefore as per the terms of issue of the aforesaid preference shares it is obligatory for the Company to pay dividend @ 9% p.a. from 12th December 2006 till 31st December 2009, aggregating to Rs. 370.98 lacs.

Further, in view of the requirement of funds for the aforesaid capacity expansion projects, your Directors have decided not to recommend any Dividend on the equity shares for the fi nancial year ended 31st December, 2009.

RE-APPOINTMENT OF DIRECTORS

Dr. Albert Scheuer and Mr. S. Krishna Kumar, Directors of the Company retire by rotation at the ensuing Annual General Meeting (AGM) of the Company. The retiring Directors being eligible have off ered themselves for re-election at the said AGM. The Board recommends the re-appointment of the aforesaid Directors.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confi rm & declare that they have taken all reasonable steps, as are required, to ensure that :

(a) The applicable accounting standards have been followed in the preparation of the annual accounts for the fi nancial year ended 31st December 2009 and no departures have been made there from;

(b) They have selected such accounting policies and applied them consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of aff airs of your Company as at 31st December, 2009 and of the profi t of your Company for the year ended on that date;

(c) They have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company and for preventing and detecting frauds and other irregularities; and

(d) The annual accounts for the fi nancial year ended 31st December, 2009 are prepared on a going concern basis.

AUDITORS

The Statutory Auditors M/s. S.R. Batliboi & Co., Chartered Accountants who were appointed at the last Annual General Meeting held on 29th May, 2009 hold offi ce up to the conclusion of the ensuing AGM and are eligible for re-appointment. The said Auditors have confi rmed that their re-appointment, if made, shall be within the limit laid down under Section 224(1B) of the Companies Act, 1956. The Auditors’ observations in their Report and the relevant notes to the accounts are self-explanatory.

COST AUDIT

Pursuant to the directives of the Central Government, your Company has subject to the approval of the Central Government, appointed M/s. A. Nagaraja, Cost Accountants as Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the year 2010.

CORPORATE GOVERNANCE REPORT

In terms of Clause 49 of the Listing Agreement with the Stock Exchanges a report on Corporate Governance is included in the Annual Report. A Certifi cate from a Practising Company Secretary on compliance of conditions of Corporate Governance is also annexed to the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to clause 49 of the Listing Agreement, Management Discussion and Analysis Report is given as addition to this report.

HUMAN RESOURCES

During the year, 146 employees opted for Voluntary Retirement under the approved Voluntary Retirement Scheme (VRS) of the Company.

As always, the commitment of the team was instrumental in achievement of the results. Employees at all levels demonstrated a huge degree of commitment towards the general cost consciousness as a result of which despite infl ation, we were able to reduce our costs wherever possible.

It will be our constant endeavor to work as a team and deliver better quality products consistently and at the same time keep a vigilant eye on costs.

The Board would like to thank the contribution and commitment of all employees towards the success and growth of the Company.

HEALTH & SAFETY

Your Company places the highest value on ensuring the health and safety of its employees, contractors, third parties and visitors. In line with the Health & Safety Policy of the Company a detailed Safety Manual was prepared and circulated during the year under review. The manual provides detailed processes and practices to be followed in the day-to-day operations at the Company’s plants. In line with the Health & Safety Policy detailed procedures and work instructions have been drawn-up to assist in the smooth working of our Plants. The Company has also conducted various safety related training programmes and seminars to develop a safe working culture, by focusing on behaviours and attitudes, using a systematic approach.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company actively pursued the corporate social responsibility by focusing on key areas being Education, Healthcare and improvement of the surroundings.

We have specifically earmarked funds towards improvement in our surroundings and for provid- ing subsidised education in our schools. Water is scarce in some of the areas that we operate in and we have ensured that villagers are given treated water from our plants. In addition, the Company has also cleaned, deepened and renovated the old wells as well as ponds at Imlai and Narsingarh to ensure that adequate quantity of water is available to the villagers. Medical assistance is provided at our clinics and also through medical vans. With the help of our social clubs, we have initiated vari- ous training centres for women and unemployed youth.

We are also in constant touch with the respective district administration to provide adequate services as and when required to the people at large.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended are given in the enclosed statement forming part of this Report as Annexure ‘A’.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, forming part of this Report are annexed as Annexure ‘B’.

MD / CHIEF FINANCIAL OFFICER’S CERTIFICATION

Pursuant to Clause 49 of the Listing Agreement, a certifi cate furnished by Mr. Ashish Guha, Managing Director and Mr. Anil Kumar Sharma, Chief Financial Offi cer in respect of the fi nancial statements and the cash fl ow statement for the fi nancial year ended 31st December 2009 is annexed as Annexure ‘C’.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to acknowledge the continued support and cooperation received from the State & Central Government Authorities and other regulatory agencies. Your Directors also express their sincere gratitude to the Shareholders, Bankers, Suppliers, Distributors, Dealers and valued customers for their continuous committed support and cooperation.

For and on behalf of the Board

Sd/- Place : Gurgaon P.G. Mankad

Date : 24th February 2010 Chairman