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Directors Report of HIL Ltd.

Mar 31, 2016

TO THE SHAREHOLDERS

The Directors have pleasure in presenting their Report and the Audited Financial Statements of your Company for the year ended 31st March 2016.

FINANCIAL RESULTS

(Rs, In lacs)

2015-16

2014-15

Net Revenue from operations

109628

110779

Earnings Before Interest, Depreciation &Tax

11172

13507

Less: Interest

917

577

Depreciation

3974

3402

Profit Before Tax and Exceptional items

6281

9528

Less: Exceptional items

276

333

Profit before Tax

6005

9195

Less: Taxes

2039

2509

Profit for the year

3966

6686

Surplus in P&L account as per last year

5624

4885

AVAILABLE FOR APPROPRIATION

9590

11571

Carrying value of Fixed Assets having NIL useful life

As per Schedule II of Companies Act, 2013 net of deferred tax

0

176

Transfer to General Reserve

1000

4000

Interim Dividend on Equity Shares

560

746

Proposed Final Dividend on Equity Shares

746

746

Corporate Dividend Tax

266

279

Balance Carried to Balance Sheet

7018

5624

DIVIDEND

During the year under review the Board of Directors declared an interim dividend of Rs, 7.50 per equity share (75% of the paid-up value). Your directors are pleased to recommend a final dividend of Rs, 10.00 per equity share (100% of the paid-up value) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2015-16 would be Rs, 17.50 per equity share (175% of the paid-up value) as against the total dividend of Rs, 20/- per equity share (200% of the paid-up value) declared in the previous year.

The total dividend outgo would amount to Rs, 15.72 crores (including dividend distribution tax) and the Company has transferred Rs, 10 crores to General Reserves out of the profits for the year.

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March 2016 wasRs, 7.49 crores. During the year under review, the Company has neither issued any shares with differential voting rights nor sweat equity. As on 31st March 2016, Mr CK Birla, Chairman holds 51,376 equity shares of the Company. None of the Directors of the Company, except as specified above, hold shares or convertible instruments of the Company.

During the year under review, the Company has allotted 84,200 stock options under HIL Employee Stock Option Scheme 2015 to the eligible employees and there was no stock options vested or exercised during the period. Out of the above, 9100 stock options were lapsed and reverted back to the pool on account of resignation of an employee.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of Loans, Guarantees and Investments as required under the provisions of Section 186 of the Companies Act, 2013 are provided in note no. 11 to the notes to the Financial Statements.

DEPOSITS

The Company has not accepted any deposits covered under chapter V of the Companies Act, 2013 and as such, no amount of principal or interest was outstanding as on 31st March 2016.

STATE OF COMPANY’S AFFAIR

In the year 2015-16, the Company has reported net revenue of Rs, 1097 crores as compared to Rs, 1108 crores in the previous year. However, Profit Before Tax for the year under review stood at Rs, 60.05 crores as compared to Rs, 91.95 crores reported last year. Lower profitability in this year was predominantly on account of stiff market conditions which prevailed during the year and the consequent lower realisation. A focused approach and unique strategy adopted for each business division with the objective of sustaining growth helped the Company to minimise the adverse impact contributed by external factors.

Roofing

The Roofing Business has sustained its position in the market despite muted demand coupled with highly competitive sphere. Some parts of the country witnessed poor demand due to migration to alternate products which affected the demand for Fibre Cement Sheets. During the year under review, Company had started manufacturing Coloured Steel Sheets for catering to the customers who prefer this product due to the aesthetic look and feel. The Roofing business ended the year with a decline of 11% in quantity terms in line with the industry de-growth of 11%.

Focus on high potential geographies, marketing initiatives, and cost optimization have played a vital role in sustaining the market share and intense competition.

Aerocon AAC - Blocks

AAC (Autoclaved Aerated Concrete) block is an eco-friendly building material used in construction activities. AAC block offers a unique combination of strength, low weight, cost-effectiveness and durability compared with a clay brick. It is a steam-cured mixture of fly ash, cement, lime and an aeration agent.

With an increase in awareness of eco-friendly & green building products, demand for AAC blocks have increased and has created an opportunity for entry of many unorganized players, thereby increasing competition. This resulted in surplus capacity creation in certain parts of the country which intensified the pricing pressure especially in urban areas. However, HIL with its superior quality and latest technology driven manufacturing processes, has achieved a growth of 49% in quantity terms and 46% in revenue terms as compared to the previous year.

Aerocon Panels

Well planned marketing activities along with focus on quality have helped the Company to increase its sales volume by more than 27% during the year under review as compared to last year. The growth in volumes was also supported by ongoing Government initiatives like Swatch Bharat, which created visibility of this product among users. Your Company remained the market leader in this segment.

Your Company will continue to focus on Tier 2 & Tier 3 cities which are promising due to increase in infrastructure projects and real estate activity. Unique concept selling approach differentiates AEROCON from other players in the industry, supported by the brand promotion activities.

Advanced Polymer Products (APP)

During the year under review, Advanced Polymer Products division reported a growth of 52%. This division established its strong presence in its existing territories in the North and South regions. Key strength of this division continues to be its strong distribution foot print and intense marketing & branding activities. The division will focus on building deep and wide distribution channels, increase SKU''s and develop in-house compounding capability.

Thermal Insulation - HYSIL

The key driver for volume growth in this vertical is capacity building in the form of brown field or new green field projects. Absence of such projects has become a bottleneck for growth for this vertical resulting in a decline of 21% in volume and 23% in revenue when compared to the previous year.

NEW PROJECTS

AAC Blocks: As a part of expanding its foot print in the growing AAC Blocks industry, the Company has added new manufacturing facility for manufacture of AAC Blocks at its Thimmapur Plant, Telangana. The said plant has started its commercial operations on 2nd November 2015.

This plant shall cater to the growing AAC Blocks market in the Telangana & Andhra Pradesh regions and will help the Company to retain its position in Southern region of the Country.

Coloured Steel Sheets: In order to cater to the demands of urban customers, your Company has set up its pilot plant for manufacture of Coloured Steel Sheets at Maharashtra with an initial capacity of 800 MT per month. The plant started its commercial operations on 7th Duly 2015. This plant shall cater to the requirements of Maharashtra and Gujarat. These sheets are being sold under the brand name “Charminar”. This will help the Company to retain its customers in the roofing segment.

AWARDS

During the year, your Company won the prestigious “TPM Excellence Award” (Category B) from DIPM for “Excellence in Operational Manufacturing” for one of its roofing plant at Kondapalli, Vijayawada. The Kondapalli plant is the only plant from the roofing industry to have won this award both in India and worldwide. This showcases our commitment towards delivering quality products by adhering to the best manufacturing/safety practices.

During the year, another roofing plant at Sathariya bagged the NAMC Silver Medal. The National Awards for Manufacturing Competitiveness (NAMC) was instituted by International Research Institute for Manufacturing (IRIM) with the aim of acknowledging and applauding manufacturing competitiveness of Indian Organisations. Sathariya plant is the second roofing plant after Balasore to win the NAMC Silver Medal.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (I) to this report as per the requirements of SEBI (Listing Obligations & Disclosures Requirements) Regulations 2015.

DIRECTORS & KEY MANAGERIAL PERSONS

During the year under review, the members at the Annual General Meeting held on 30th Duly 2015 have appointed Mr Prashant Vishnu Vatkar as Managing Director (DIN 07139685) of the Company with effect from 20th April 2015.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Mr CK Birla (DIN 00118473), Director of the Company, is liable to retire by rotation and being eligible, offers himself for re-appointment.

The Company has received declarations from all the Independent Directors of the Company confirming that they continue to meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

During the year, Mr P Rajesh Kumar Dain, Company Secretary resigned w.e.f 18th August 2015 and the Company has appointed Mr G Manikandan, who has been an employee of your Company since 7th May 2008, as Company Secretary & Financial Controller w.e.f 19th August 2015.

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, is provided in the Notice of Annual General Meeting.

MEETINGS

During the year under review, seven board meetings were held on 20th April 2015, 27th April 2015, 12th May 2015, 30th Duly 2015, 17th August 2015, 26th October 2015 and 4th February, 2016. The maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, the Board has carried out an annual performance evaluation of its own performance and the performance of the individual Directors as well as the evaluation of the working of its Committees. The manner in which the evaluation was carried out has been detailed in the Corporate Governance Report.

VIGIL MECHANISM

Pursuant to the requirement laid down in the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosures Requirements Regulations 2015, the Company has established Vigil Mechanism by framing Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Vigil Mechanism framework ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination shall be meted out to any person for a genuinely raised concern. The Designated Officer/Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud/misconduct at cs@hil.in. A High Level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board.

The details of the same are provided in the Report on Corporate Governance forming part of this Report.

The Whistle Blower Policy is also posted in the Investors section of the Company''s website www.hil.in on the following link http://hil.in/ investors/codes-policies/.

REMUNERATION POLICY

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

SEXUAL HARASSMENT POLICY

The Company as required under the provisions of “The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013” has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto.

In the year under review, the Company has not received any complaint under this Policy.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arms'' length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The requisite details of the related party transactions entered into during the financial year are provided as Annexure (II) to this report. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

All Related Party Transactions were placed before the Audit Committee and to the Board for their approval, whenever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which were of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted were placed before the Audit Committee and the Board of Directors on a quarterly basis.

None of the Directors, other than to the extent of their shareholding, receipt of remuneration/ commission, has any pecuniary relationships or transactions vis-a-vis the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134 (3)

(c) of the Companies Act, 2013 and on the basis of compliance certificate received from the executives of the Company and subject to disclosures in the Annual Accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, and to the best of their knowledge and information furnished, the Board of Directors states that:

i) In preparation of the Annual Accounts for the year ended 31st March 2016, all the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanation relating to material departures, if any.

ii) The Directors have adopted such accounting policies, as selected in consultation with Statutory Auditors, and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year ended 31st March 2016.

iii) The Directors have taken proper and sufficient care 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 for the year ended 31st March 2016 has been prepared on a going concern basis.

v) Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) The systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

CORPORATE GOVERNANCE

Your Company is committed to good Corporate Governance coupled with good corporate practices. As per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a Compliance Report on Corporate Governance for the year 2015-16 and a Certificate from the Auditors of the Company M/s. S R Batliboi & Associates LLP., Chartered Accountants, [ICAI Firm Registration Number: 101049W/E300004] is furnished as part of the Annual Report.

AUDIT COMMITTEE

Audit Committee of the Company meets the requirements of section 177 of the Companies Act, 2013 and Regulation 18 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The details of the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act, 2013 is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Audit Committee.

NOMINATION AND REMUNERATION CUM COMPENSATION COMMITTEE

Nomination and Remuneration cum Compensation Committee meets the requirements of section 178 of the Companies Act, 2013 and Regulation 19 SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The details of the composition of the Nomination and Remuneration cum Compensation Committee as required under the provisions of Section 178 of the Companies Act, 2013 is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Nomination and Remuneration cum Compensation Committee.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has adequate internal financial control procedures commensurate with its size and nature of business. These controls include:

1. All transactions are recorded in the ERP system SAP.

2. Well defined policies, guidelines, and Standard Operating Procedures (‘SOP''), authorization and approval procedures.

3. The internal financial controls of the Company are adequate to ensure the accuracy and completeness of the accounting records, timely preparation of reliable financial information, prevention and detection of frauds and errors, safeguarding of the assets and that the business is conducted in an orderly and efficient manner.

4. The Company has appointed Internal Auditors to check the Internal Controls and to ensure whether the workflow of the organization is in accordance with the approved policies of the Company.

5. The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Corporate Social Responsibility Policy, Risk Management Policy, Dissemination of Material Events Policy, Documents Preservation Policy, Monitoring and Reporting of Trading by Insiders, Code of Internal Procedures and Conduct for Regulating, Code of Practices and Procedures for Fair Disclosures and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

HUMAN CAPITAL

People are our most valuable asset and they play a vital role in the growth of your Company. The Company places the engagement, development and retention of talent as its highest priority, to enable achievement of organizational vision. Structure, Process and Culture are the cornerstones of our Human Resource strategy and we have made strides in these areas during the last year.

With an unswerving focus on nurturing, training and retaining talent, your Company provides avenues for learning and development through functional, behavioral and leadership training programs, communication channels for information sharing, to name a few.

The Group''s Corporate Human Resources play a critical role in your Company''s talent management process through a customized Competency based Leadership Program devised for High - Potential employees with focus on Individual Development Plan which helps them to become future leaders. Nurturing young, hi-potential talent has been our focus through the CEO Circle program wherein the selected participants are provided rigorous leadership training for 2 years to prepare them to take-up higher roles in the organization. We continue to strive to build a performance driven culture and create an environment conducive for the employee''s growth.

Your Company also believes that the human capital is of utmost importance to sustain the market leadership in all product segments and also to capture new markets.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Rules made there under and pursuant to the recommendation of the Committee, the Board has approved a Corporate Social Responsibility (‘CSR'') policy and the same has been uploaded in the website of the Company “http://hil.in/investors/codes-policies/CSR Policy” which contains the CSR activities being carried out by the Company, governance structure, implementation process, etc.

As the Average Net Profits of the Company for the immediately preceding three (3) financial years calculated as per Section 198 of the Companies Act, 2013 works out to Rs, 1.27 crores and the Company has spent Rs, 1.68 crores on CSR activities and CSR projects in the areas of healthcare and education. The details on CSR activities are provided as Annexure (III) and forms part of this report.

RISK MANAGEMENT

The Company has laid down the procedure for risk assessment and its mitigation through an internal Risk Committee. Key risks and their mitigation arising out of reviews by the Committee are assessed and reported to the Audit Committee on a periodic basis. The Risk Management Policy details the Company''s objectives and principles of Risk Management along with an overview of the Risk Management processes, procedures and related roles and responsibilities.

STATUTORY AUDITORS

The Statutory Auditors of the Company, M/s. S R Batliboi & Associates LLP., [ICAI Firm Registration Number: 101049W/E300004], were re-appointed by the members at the 67th Annual General Meeting held on 18th Duly 2014 for a term of 3(Three) years till the conclusion of 70th Annual General Meeting to be held in 2017. Members are requested to ratify the same at the ensuing Annual General Meeting of the company, in accordance with section 139 of the Companies Act, 2013.

The Audit Report issued by the Statutory Auditors for the financial year ended 31st March 2016 forms part of this Report. There are no qualifications, reservations or adverse remarks made by the Statutory Auditors which requires explanation or comments from the Board.

INTERNAL AUDITORS

The Company has an in-house internal audit team which monitors the effectiveness of the internal control systems. It reports to the Audit Committee about the adequacy and effectiveness of the internal control system of your Company. Your Company also retains the services of M/s. KPMG, Chartered Accountants and other reputed Chartered Accountants to audit specific locations and processes.

The recommendations of the internal audit team on improvements in the operating procedures and control systems are also presented to the Audit Committee and the business to use these as tools for strengthening the operating procedures.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 read with the rules framed there under, the cost audit records maintained by the Company in respect of its cement products manufacturing activity are required to be audited by a Cost Auditor. The Board of Directors, on recommendation of the Audit Committee, appointed M/s. S S Zanwar & Associates, as Cost Auditors of the Company, to conduct the audit of the cost records of the Company for the financial year ending 31st March 2017 at a remuneration of Rs, 6.0 lacs. Members are requested to ratify the remuneration payable to the Cost Auditors at the ensuing Annual General Meeting of the Company, in accordance with section 148 of the Companies Act 2013.

The Cost Audit report for the financial year ended 31st March 2015 was duly filed with the Central Government within the due date.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules framed thereunder, the Board of Directors, on recommendation of the Audit Committee, appointed M/s. P S Rao and Associates, Practicing Company Secretaries to undertake the secretarial audit of the Company. The secretarial audit report issued by M/s. P S Rao and Associates, Practicing Company Secretaries for the financial year ended 31st March 2016 provided as Annexure (IV) attached hereto and forms part of this Report. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed there under, the extract of the Annual Return in form MGT-9 is provided as Annexure (V) and forms part of this Report.

EMPLOYEE STOCK OPTIONS

During the year under review, 84,200 stock options were granted under HIL Employee Stock Option Scheme 2015. The details of Employee Stock Options pursuant to Section 62 of the Companies Act, 2013 read with Rules made thereunder; and SEBI (Share Based Employee Benefits) Regulations, 2014 and erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are provided as Annexure (VI) to this Report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are provided as Annexure (VII) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in annexure to this report.

Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is provided as Annexure (VIII) of this Report.

JOINT VENTURES

As on the 31st March 2016, the Company holds 33% of the share capital in M/s Supercor Industries Limited (“Supercor”), a company incorporated under the laws of Nigeria. The State Government of Bauchi, Nigeria (“Nigerian Government”) and other shareholders hold remaining 67% of the share capital in Supercor. Information required pursuant to Section 129(3) of the Companies Act, 2013 a statement containing salient features of the Joint Ventures of the Company is provided as Form AOC-1 attached as Annexure (IX) to this Report. Due to change in product mix and shift in demand for the non-asbestos product, the demand for said company''s products considerably reduced during 2015 which forced the said company to report losses and also suspended its operations from end of November 2015.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Regulation 33 of SEBI (Listing Obligations & Disclosures Requirements) Regulations 2015, and the Companies Act, 2013, the Consolidated Financial Statements prepared as per Companies Act, 2013 and Accounting Standards, duly audited forms part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURT

During the year under review, no significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and operations of the Company.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments, affecting the financial position of the Company which occurred between the end of the financial year 31st March, 2016 to which the financial statements relates and the date of signing of this report.

ACKNOWLEDGEMENTS

The Board of Directors take this opportunity to place on record their appreciation to all the Stakeholders of the Company, viz., customers, investors, banks, regulators, suppliers and other business associates for the support received from them during the year under review. The Directors also wish to place on record their deep sense of gratitude and appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

CK BIRLA

Chairman

New Delhi, 5th May 2016 (DIN 00118473)


Mar 31, 2015

TO THE SHAREHOLDERS

The Directors have pleasure in presenting their Report and the Audited Financial Statements of your Company for the year ended 31st March 2015.

FINANCIAL RESULTS Rs in lacs

2014-15 2013-14

Net Revenue from operations 110779 86947

Earnings Before Interest,

Depreciation & Tax 13507 5239

Less: Interest 577 1023

Depreciation 3402 2872

Profit Before Tax and

Exceptional items 9528 1344

Less: Exceptional items 333 355

Profit before Tax 9195 989

Less :Taxes 2509 276

Profit for the year 6686 713

Surplus in P&L account

as per last year 4885 4708

AVAILABLE FOR APPROPRIATION 11571 5421

Carrying value of Fixed Assets

having NIL useful life

As per Schedule II of

Companies Act, 2013 - net of

deferred tax 176 -

Transfer to General Reserve 4000 100

Interim Dividend on Equity Shares 746 -

Proposed Final Dividend on

Equity Shares 746 373

Corporate Dividend Tax 279 63

Balance Carried to Balance Sheet 5624 4885

DIVIDEND

During the year under review the Board of Directors declared an interim dividend of Rs. 10.00/- per equity share (100% of the paid-up value). Your directors are pleased to recommend a final dividend of Rs. 10.00/- per equity share (100% of the paid- up value) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2014-15 would be Rs. 20.00/- per equity share (200% of the paid-up value) as against the total dividend of Rs. 5.00/- per equity share ( 50% of the paid-up value) declared in the previous year.

The total dividend outgo would amount to Rs. 1771 lacs (including dividend distribution tax).

SHARE CAPITAL

The paid up Equity Share Capital as on March 31st, 2015 was Rs. 7.49 Crores. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on March 31, 2015, Mr. CK Birla, Chairman holds 51,376 equity shares of the Company. None of the Directors of the Company, except as specified above, hold shares or convertible instruments of the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of Loans, Guarantees and Investments as required under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the Financial Statements.

DEPOSITS

The Company has not accepted any deposits covered under chapter V of the Companies Act 2013 and as such, no amount of principal or interest was outstanding as on 31st March 2015.

OVERALL ECONOMIC OUTLOOK:

The low economic growth phase in the Indian Economy appears to have bottomed out and 2014-15 witnessed a gradual improvement in economic activity. As per the advance estimates of Central Statistics Office (CSO), India's economic growth is pegged at 7.4% in 2014-15 as compared to 6.9% in 2013-14.

With the control over price rise continuing a remarkable fall in inflation was noted, as the wholesale price index (WPI) fell to a 5-yr low of 0.11 in December'2014. The Manufacturing PMI reported by Market Economics and conducted by HSBC every month, rose from 51.40 at the beginning of Q1 of 2014-15 to 52.10 by the end of Q4 of 2014-15. The Business confidence index has been continuously rising from 49.9 in Q4 of 2013-14 to 56.4 in Q4 of 2014-15 as reported by Confederation of Indian Industry (CII). The forecast expects the index to rise to 58.18 by 2016.The medium term to long term growth prospects look positive in view of the Government's determination to bring in reforms. The Economic Survey has projected the Gross Domestic Product (GDP) growth at 8%-8.5% in financial year 2015-16 and double-digit growth in the coming years.

STATE OF COMPANY'S AFFAIR

In the year 2014-15, the Company's net revenue stood at Rs. 1108 Crores as compared to Rs. 869 Crores in the previous year, a growth of 27.5%. Consequently, Profit before Tax for the year under review was Rs. 91.95 Crores as compared to Rs. 9.89 Crores reported last year signifying an y-o-y growth of 830%. In order to compete in the changing market conditions, HIL started adapting different strategic initiatives in its existing businesses. A focussed approach and unique strategy was adopted for each business division with the objective of achieving higher growth and profitability. Various strategic initiatives such as optimization of cost, focused sales strategy, regular performance improvement initiatives contributed to an impressive performance by your Company both in terms of revenue and profitability. Your company's priority is to develop eco-friendly products and to achieve this it has a well thought strategy in place for the development of new products and for the growth of Green Building Products produced by the Company.

Sheeting:

The Sheeting business had a historical year with the highest ever sales volume and revenue. It witnessed a growth of 23% in volume during the year under review. This was achieved through focus on high potential geographies, sales & marketing initiatives in priority markets, changes in manufacturing footprint and cost optimization at it's plants.

Aerocon AAC - Blocks

The year under review was a challenging year for the AAC Blocks Industry. While the Industry witnessed a growth in demand due to increasing awareness about green building products, however the pricing was a challenge because of surplus capacity and oversupply across regions. There was intense price pressure especially in the North and Western markets resulting in a drop in realization by 10%-20% as compared to the previous year. Aerocon AAC Blocks sales revenue grew by 59% as compared to the market growth of 32% approximately.

Aerocon Panels

During the year under review the Aerocon Panel Sales grew by 29% and your company continued to be the market leader in this segment. Demand for the Company's pre-fabricated panels is increasing especially from major Government, Industrial, Healthcare projects as well as from export requirement. Your company will continue its focus on Tier 2 and Tier 3 towns which are witnessing good growth in real estate and infrastructure projects.

Advanced Polymer Products (APP):

The year under review was the first full year of operations for the Advanced Polymer Products division of the Company. In

its first full year of operation, the Company has successfully setup its distribution foot print in 10 states covering Northern and Southern markets and has cornered about 7% market share in North. The division's primary focus is to build deep and wide distribution channels, increase SKU's and develop in-house compounding capability which are some of the key essentials in this business.

Thermal Insulation - HYSIL

Hysil business continued to maintain its market leadership position in the Granular Insulation segment, with a virtual numero - uno position in the Cement industry which is its biggest consumer. To de-risk itself against any slowdown in the Indian Cement industry, it has forayed into Exports. In the fiscal year 2014-15, 16% of the Hysil business came through Exports to Africa, Middle East, Nepal & Bangladesh.

NEW PROJECTS

Wind Power: During the year, HIL commissioned a 2.0 MW Wind Turbine Generator in Rajasthan on 30th September 2014, taking the HIL's renewable energy portfolio to 9.35 MW. HIL continues to evaluate various options for expanding its renewable energy portfolio.

AAC Blocks: Expanding its foot print in the growing AAC Blocks Industry, HIL on 1st January 2015 commissioned a AAC Blocks manufacturing facility in Jhajjar, Haryana with an installed capacity of 1.5 lac Cu.m/annum. This plant shall cater to the growing AAC Blocks market in the National Capital Region (NCR) and the northern region of the Country.

APP Division: HIL ventured into manufacturing of Advanced Polymer Products, with CPVC and UPVC plumbing products in October, 2013 with the commissioning of its Faridabad unit. Expanding further, HIL on 2nd March 2015, commissioned its second state of the art manufacturing facility for CPVC and UPVC Pipes and Fittings at Timmapur, Telangana with an initial capacity of 1555 MT. This unit will help strengthen your Company's presence in the Southern market.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (I) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

During the year under review, the members at the AGM held on 18th July, 2014 appointed Mr. P Vaman Rao and Mr. Yash Paul as Independent Directors of the Company for a term of 5 years w.e.f 18th July, 2014 and Mrs. Gauri Rasgotra as Independent Director of the Company for a term of 5 years w.e.f 8th May, 2014.

During the year, Mr. Abhaya Shankar, resigned as Managing Director of the Company with effect from 22nd September, 2014. The Board of Directors place on record their

appreciation for the hard work and dedication of Mr. Abhaya Shankar during his tenure since February 2008, as Managing Director of the Company.

The Board of Directors of the Company, on the recommendation of the Nomination and Remuneration Committee, co-opted Mr. Prashant Vishnu Vatkar as an Additional Director of the Company with effect from 20th April, 2015, and appointed him as Managing Director of the Company, subject to the approval of the members, at the forthcoming Annual General Meeting.

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr. Desh Deepak Khetrapal Director of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

The Resolutions proposing appointment of Mr. Prashant Vishnu Vatkar as Managing Director and reappointment of Mr. Desh Deepak Khetrapal as Director of the Company will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the company.

The Company has received declarations from all the Independent Directors of the Company confirming that they continue to meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

MEETINGS

During the year under review, six board meetings were held on 08th May, 2014, 18th July, 2014, 16th September, 2014, 17th October, 2014, 23rd December, 2014 and 19th January, 2015. The maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013.

BOARD EVALUATION

The Board of Directors evaluated the annual performance of the Board as a whole, its committee's and the directors individually in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement in the following manner:

i. Structured evaluation forms, as recommended by the Nomination and Remuneration Committee, after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its

Committees, Board culture, execution and performance of specific duties, obligations and governance, for evaluation of the performance of the Board, its Committee's and each director were circulated to all the members of the Board along with the Agenda Papers.

ii. The members of the Board were requested to evaluate by filling the evaluation forms and the duly filled in evaluation forms were required to be sent to the Company Secretary in a sealed envelope or personally submitted to the Chairman at the concerned meeting.

iii. Based on the individual evaluation of the Directors, the Board initiated a detailed discussion at the concerned meeting on the performance of the Board / Committee/ Individual Director, and formulated a final collective evaluation of the Board. The Board also provided an individual feedback to the concerned director on areas of improvement, if any.

A separate meeting of Independent Directors was held on 23rd December, 2014 to evaluate the performance evaluation of the Chairman, the Non Independent Directors, the Board and flow of information from management.

VIGIL MECHANISM

The Board of Directors, on recommendation of the Audit Committee, established a vigil mechanism by framing a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Vigil Mechanism framework ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination shall be meted out to any person for a genuinely raised concern. The designated officer/ Audit Committee Chairman can be directly contacted to report any suspected or confirmed incident of fraud / misconduct on cs@hil.in. A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board.

The Whistle Blower Policy is also posted in the Investors section of the Company's website www.hil.in on the following link http://hil.in/investors/codes-policies/.

REMUNERATION POLICY

The Board of Directors, on recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy for selection, appointment and remuneration of Directors, KMP and Senior Management and matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report. The Policy is also posted in the Investors section of the Company's website www.hil.in on the following link http://hil.in/investors/codes-policies/.

SEXUAL HARASSMENT POLICY

The Company as required under the provisions of "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto.

In the year under review, the Company has not received any complaint under the said Policy.

RELATED PARTY TRANSACTIONS

The Board of Directors, on recommendation of the Audit Committee framed a policy for Related Party Transaction which includes policy for selection, appointment and remuneration of Directors, KMP and Senior Management and matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report. The Policy is also posted in the Investors section of the Company's website www.hil.in on the following link http:/ /hil.in/investors/codes-policies/.

All Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The requisite details of the related party transactions entered into during the financial year are provided as Annexure (II) to this report. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval, where ever required. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors on a quarterly basis.

None of the Directors, other than to the extent of their shareholding, receipt of remuneration / commission, has any pecuniary relationships or transactions vis-a-vis the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Directors' Responsibility Statement as required under the provisions of Section 134(3)(c) of the Companies Act, 2013, is given in the Annexure (III) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

Your Company is committed to good Corporate Governance coupled with good corporate practices. As per the

requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2014-15 and a Certificate from the Auditors of the Company M/s. S R Batliboi & Associates LLP., Chartered Accountants, [ICAI Firm Registration Number: 101049W] is furnished as part of the Annual Report.

The Ministry of Corporate Affairs has issued Corporate Governance Guidelines in December, 2009. While these Guidelines are recommendatory in nature, your Company has already adopted most of the Guidelines. The Company will be reviewing its Corporate Governance Practices in the context of other recommendations under the said Guidelines for appropriate adoption.

AUDIT COMMITTEE

Your Company has constituted an Audit Committee as per the requirements of section 177 of the Companies Act, 2013. The details of the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act, 2013, is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Audit Committee.

HUMAN CAPITAL

The strong performance of your Company has been achieved through excellent work and team-spirit of the Company's employees. Your Company believes that the human capital is of utmost importance to sustain the market leadership in all product segments and also to capture new markets.

The changes in the Organisation Structure implemented last year has given the Company rich dividends in terms of higher focus on individual businesses to optimise best resources & to leverage the market potential. We have benchmarked ourselves with the market and have identified the high Performers on critical roles and rewarded them appropriately, which has helped to achieve better employee engagement and financial results. Through appropriate Performance Management systems the Company differentiates the employees with potential to take higher challenges and devise a separate career program for their retention and advancement. A customized Competency based Leadership Program has been devised for High - Potential employees with focus on their Individual Development Plan & helping them to become future leaders. Nurturing young, hi potential talent has been our focus through the CEO Circle program wherein the selected participants are provided rigorous leadership training for 2 years to prepare them to take-up higher roles in the organization. We continue to strive to build a performance driven culture and create an environment conducive for the employee's growth.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors, on recommendation of the Corporate Social Responsibility Committee framed a Corporate Social

Responsibility Policy in consonance with Section 135 of the Companies Act, 2013 read with the rules framed there under duly indicating the activities to be undertaken by the Company as specified in the Schedule VII of the Companies Act, 2013. The Corporate Social Responsibility Policy is posted in the Investors section of the Company's website www.hil.in on the following link http://hil.in/investors/codes-policies/.

The Annual Report on CSR activities is annexed herewith as Annexure (IV) and forms part of this report.

RISK MANAGEMENT

The Risk Management programme at HIL is focused on ensuring that risks are known and addressed. The Board of Directors, on recommendation of the Audit Committee, established a robust Risk Management framework by framing a Risk Management Policy to deal with all risks including possible instances of fraud and mismanagement, if any. The Risk Management Policy details the Company's objectives and principles of Risk Management along with an overview of the Risk Management process, procedures and related roles and responsibilities.

As a part of the Risk Management framework, the Company has implemented an online Risk Management tool to help monitor and mitigate risks by assigning the risks to different officers/committees. The Board is of the opinion that there are no elements of risks that may threaten the existence of the Company. The board periodically tracks the progress of implementation of the Risk Management policy.

STATUTORY AUDITORS

The Statutory Auditors of the Company, M/s. S R Batliboi & Associates LLP., [ICAI Firm Registration Number: 101049W], were re-appointed by the members at the 67th Annual General Meeting held on 18th July, 2014 for a term of 3(Three) years till the conclusion of 70th Annual General Meeting to be held in 2017. Members are requested to ratify the same at the ensuing Annual General Meeting of the company, in accordance with section 139 of the Companies Act 2013.

The Audit Report issued by the Statutory Auditors for the financial year ended 31st March, 2015 forms part of this Report. There are no qualifications, reservations or adverse remarks made by the Statutory Auditors which requires explanation or comments from the Board.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 read with the rules framed thereunder, the cost audit records maintained by the Company in respect of its cement products manufacturing activity are required to be audited by a Cost Auditor. The Board of Directors, on recommendation of the Audit Committee, appointed M/s S S Zanwar & Associates, as Cost Auditors of the Company, to conduct the audit of the cost records of the Company for the financial year ending 31st March, 2016 at a remuneration of Rs.6.00 (Six) lakhs. Members are requested to ratify the remuneration payable to the Cost Auditors at the ensuing Annual General Meeting of the company, in accordance with section 148 of the Companies Act 2013.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules framed there under, the Board of Directors, on recommendation of the Audit Committee, appointed M/s P S Rao and Associates, Practicing Company Secretaries to undertake the secretarial audit of the Company. The secretarial audit report issued by M/s P S Rao and Associates, Practicing Company Secretaries for the financial year ending 31st March, 2015 is given in the Annexure (V) attached hereto and forms part of this Report. There are no qualifications, reservations or adverse remarks made by the secretarial auditor and the observation made is self explanatory and requires no further explanation from the Board.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed there under, the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure (VI) and forms part of this Report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 are given in the Annexure (VII) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to the provision of Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, are set out in Annexure (VIII) of this Report.

ACKNOWLEDGEMENTS

The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Regulatory Bodies, Suppliers and other Business Associates.

The Directors also wish to place on record their deep sense of gratitude and appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

Sd/- CK BIRLA New Delhi, 27th April, 2015 Chairman


Mar 31, 2014

TO THE SHAREHOLDERS

The Directors have pleasure in presenting their Report and the Audited Financial Statements of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS Rs. in lacs 2013-14 2012-13

Net Revenue from operations 86947 103651

Earnings Before Interest, Depreciation & Tax 5239 12867

Less: Interest 1023 1061

Depreciation 2872 2671

Profit Before Tax and Exceptional items 1344 9135

Less: Exceptional items 355 -

Profit before Tax 989 9135

Less: Taxes 276 3072

Profit for the year 713 6064

Balance as per last year 4708 5387

AVAILABLE FOR APPROPRIATION 5421 11450

General Reserve 100 5000

Interim Dividend on Equity Shares - 560

Proposed Final Dividend on Equity Shares 373 933

Corporate Dividend Tax 63 249

Balance Carried to Balance Sheet 4885 4708

DIVIDEND

Your directors are pleased to recommend a dividend of Rs. 5/- per equity share (50% of the paid-up capital) as against the total dividend of Rs. 20/- paid last year (200% of the paid up capital) for your consideration and approval at the ensuing Annual General Meeting of the Company.

The total dividend outgo will be Rs. 436.54 lacs (including dividend distribution tax)

OVERALL ECONOMIC OUTLOOK

The year 2013-14 witnessed the recovery of global economy from the global crisis of 2009. Global activity has broadly strengthened and is expected to improve further in 2014-15, according to the April 2014 World Economic Outlook, with much of the impetus for growth coming from advanced economies. Although downside risks have diminished overall, lower-than-expected inflation poses risks for advanced economies, there is increased financial volatility in emerging market economies, and increases in the cost of capital will likely dampen investment and weigh on growth.

The Indian Economic growth in 2013- 14 slowed down to a decade low of less than 5%. The growth slowdown was mainly attributable to contraction in manufacturing sector coupled with low investment and consumption in infrastructure sectors although the effect was partly offset by modest growth in Agriculture and allied sectors and growth in exports due to rupee depreciation.

PERFORMANCE

In the year 2013-14, the Company''s revenue stood at Rs. 978 Crores as compared to Rs. 1166 crores in the previous year. Consequently, Profit Before Tax for the year under review witnessed steep decline to Rs. 9.89 crores as compared to Rs. 91.35 crores reported last year. The drop in profitability is mainly attributable to subdued market conditions coupled with overall rise in all costs on account of various external factors. The Company''s continued focus on managing costs through various initiatives helped to minimise the overall impact of cost increase to some extent.

While the external factors beyond the control of the Company have seriously impacted the bottom line, the Company has managed to increase it''s market share in the sheeting which is its largest revenue segment generating business. To improve the liquidity the Company reduced its working capital.

During the year under review the Company has undertaken various strategic initiatives such as diversification into manufacture of Advanced Polymer Products, expansion of Golan and Kondapally plants, addition of fuel efficient boilers etc.,

Fibre Cement Sheet Products

Fibre Cement Sheets continue to be the major revenue earner for the Company. The year under review was challenging for the manufacturing sector especially so for companies engaged in the building material sector. The Fibre cement industry witnessed a de-growth of 19% during the year under review mainly due to poor demand from housing and infrastructure sectors and also change of consumption pattern among the users. However, your company could reduce the said impact to some extent by aggressive marketing strategies which have helped the company to outperform the industry by increasing its market leadership. The fibre cement sheet industry is expected to grow at a modest rate of 3% during the current year.

During the year under review, Company terminated the lease agreement entered with M/s. Sturdy Industries Limited in view of subdued market conditions and optimised capacity at its other locations by optimal planning.

Your Company expects that the focus on low cost mass housing, providing school shelter and developing proper infrastructure in the rural areas continue to be main focus of the Government and expect this will gain momentum during the current year. These initiatives will be the key drivers which will influence the demand for construction material. The Fibre cement sheets will continue to be the preferred choice for the roofing requirement of millions of rural population in India as still around 65% of the population lives in rural India. With augmenting of existing capacities, your company is confident of its growth aspirations and maintaining its market leadership.

Green Building Products

The Government''s continued support, focus and encouragement for using green building products has given an additional impetus to the growth of the building material industry. HIL continued its initiative of educating masses on carbon foot print reduction by using Environment friendly products during last year also.

A commitment towards producing green building products and solutions with an ultimate aim of helping the Construction and Infrastructure Industry to build green and sustainable habitats has been the vision followed by the Company consistently.

Many initiatives were undertaken during this period to create pull for the brand. Event sponsorship and awards helped establish connect with the right target group, and is helping in establishing a strong bond with all our customers.

Aerocon AAC - Blocks

AAC blocks manufacturing is a low entry barrier business. This has lead to substantial addition in AAC capacity during 2013-14, especially by regional players in the West and South markets, resulting in a huge over supply scenario.

This has resulted in intense price war in the market, especially in Gujarat and Maharashtra, leading to a 20% drop in sales as compared to 2012-13.

Well planned and successful marketing strategies have made Aerocon Blocks a much preferred choice over competition. HIL continue to retain its core strength like Customer focus, quality and speed of delivery leading to enhanced customer satisfaction.

With increasing awareness and acceptance for usage of green building products, market for AAC blocks is expected to grow multi-fold in the years to come. Your company has put in place aggressive sales strategies like key account management, branding and premium service levels, to ensure increase in market share and full utilisation of the manufacturing facilities.

Aerocon Panels

Continued slow down in the infrastructure projects which generally offers maximum potential for usage of Aerocon Panels, adversely affected this business in 2013-14. However, with your company focussing on alternative consumer segments like healthcare, industrial segments etc., and the momentum in infrastructure segment expected to pick up, the outlook for 2014-15 is very robust. Your company will continue its focus on Tier 2 and Tier 3 towns which are witnessing good growth in real estate and infrastructure projects.

Thermal Insulation - HYSIL

With the absence of major green field projects or capacity expansion by existing players on account of poor growth in infrastructure industry, this has led to drop in sales of thermal insulation products manufactured by your company. However the export market contributed modestly to this segment performance. Your Company is vigorously working on the couple of leading players in the UAE and Iran markets to promote export of HYSIL product which will accelerate growth in current year. HYSIL has received international certifications from of TUV-SUD and CE which will give it access to market in other countries as well. Your company will continue its focus on exports primarily to GCC countries.

NEW PROJECTS

In tandem with our motto- "Upgrading India''s life spaces", and adding to our portfolio of building materials your Company ventured into manufacturing of Advanced Polymer Products, with cPVC and uPVC plumbing products. Looking at the attractive growth of the Plastic plumbing products market and with intent to leverage the Company''s pan India manufacturing, distribution and selling facilities, HIL forayed into this segment with the commissioning of its state of art cPVC and uPVC Pipes and Fittings manufacturing unit at Faridabad, Haryana on 7th October''2013 with an initial capacity of 6000 MT. The products are being marketed under the brand name of "AEROCON Pipes and Fittings".

As mentioned in our last year report, in order to sustain the existing market and grow at a faster phase, the Company has started the process of setting up a project for manufacture of AAC Blocks in Jhajjar in Haryana. The project is progressing as per the timelines envisaged and expected to start its commercial production latest by beginning of last quarter of current fiscal.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (IV) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr. C.K.Birla, Chairman and Director of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment. In accordance with the provisions of Companies Act, 2013 and the Listing Agreement, the office of directorship of Mr. P Vaman Rao and Mr. Yash Paul, existing Independent Directors pursuant to Clause 49 of the listing agreement, was liable to retirement by rotation. With the enactment of the Companies Act, 2013 (Act'') it is now incumbent upon every listed Company to appoint ''Independent Directors'' as defined in section 149 of the Act, which has been notified w.e.f 1st April 2014, who are not liable to retire by rotation and shall hold office for a term up to 5 (five) consecutive years. Accordingly, It is proposed to appoint Shri. P. Vaman Rao & Shri. Yash Paul as Independent Directors under Section 149 of the Act and Clause 49 (revised) of the Listing Agreement to hold office for 5 (five) consecutive years from 18th July 2014 up to 17th July 2019, whose office shall not be liable to retire by rotation, at the ensuing Annual General Meeting of the Company. The Resolution proposing their reappointment as Independent Directors will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the Company.

Shri. Krishnagopal Maheshwari, Director of the company due to personal reasons resigned from the directorship of the Company w.e.f 5th May, 2014. The Board places on record its deep appreciation for the valuable services rendered by him during association of about 50 years as a Director of the Company.

Shri. Shreegopal Daga, Director of the company due to his personal reasons resigned from the directorship of the Company w.e.f 7th May, 2014. The Board places on record its deep appreciation for the valuable services rendered by him during association of about 39 years as a Director of the Company.

The Board of Directors of the Company co-opted Shri. Desh Deepak Kehetrapal as an Additional Director of the Company with effect from 28th October 2013, in the category of Non-Executive and Non-Independent Director, pursuant to Section 260 of the Companies Act, 1956 read with Article 114 of the Articles of Association of the Company. The Board of Directors of the Company also co-opted Smt. Gauri Rasgotra as an Additional Director of the Company with effect from 8th May 2014, in the category of Independent Director, pursuant to Section 149, 161 of the Companies Act, 2013 read with Article 114 of the Articles of Association of the Company.

Shri. Desh Deepak Kehetrapal and Smt. Gauri Rasgotra holds the office of Director, as Additional Director, until the date of the ensuing Annual General Meeting of the Company and are eligible for appointment as a Director. Keeping in view their experience and expertise, the Board considers it desirable that the Company should continue to avail the services of Shri. Desh Deepak Kehetrapal and Smt. Gauri Rasgotra, as their presence as Director on the Board would be of immense benefit to the Company. The Resolution proposing their appointment will be placed before the Shareholders for their approval at the ensuing Annual General Meeting of the company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Directors'' Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956, is given in the Annexure (I) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

The Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance coupled with good corporate practices. As per the requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2013-14 and a Certificate from the Auditors of the Company M/s. S.R. Batliboi & Associates LLP., Chartered Accountants, [ICAI Firm Registration Number: 101049W] is furnished as part of this Annual Report.

The Ministry of Corporate Affairs has issued Corporate Governance Guidelines in December, 2009. While these Guidelines are recommendatory in nature, the Company has already adopted most of the Guidelines. The Company will be reviewing its Corporate Governance Practices in the context of other recommendations under the said Guidelines for appropriate adoption.

HUMAN CAPITAL

Human Capital has gained prime importance in last few years. Our Company believes that the human capital is of utmost importance to sustain the market leadership in all product segments and also to capture new markets.

We have changed the Organisation Structure to optimise best resources & to leverage the market potential. We have identified the high Performers and rewarded them appropriately, which has helped to achieve better employee engagement. Through Performance Management the Company differentiates the employees with potential to take higher challenges and devise a separate career program for their retention and advancement. A customized Competency based training program has been devised for High - Potential employees with focus on their Individual Development Plan & helping them to become future leaders.

We are striving to build a performance driven culture and create an environment conducive for the employee''s growth.

AUDITORS

The Statutory Auditors of the Company, M/s. S.R.Batliboi & Associates LLP., ICAI Firm Registration Number: 101049W, who retire at the conclusion of ensuing Annual General Meeting, being eligible, offer themselves for re- appointment for a term of 3(Three) years in accordance with section 139 of the Companies Act 2013.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect 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 are given in the Annexure (ii) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other required particulars of the employees are set out in Annexure (III) attached hereto and forms part of this Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEDGEMENTS

The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Suppliers and other Business Associates.

The Directors also wish to place on record their appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

C.K. BIRLA

New Delhi, 8th May, 2014 Chairman


Mar 31, 2013

TO THE SHAREHOLDERS

The Directors have pleasure in presenting their Report and the Audited Accounts of the Company for the year ended 31st March 2013.

FINANCIAL RESULTS

Rs.in lacs

2012-13 2011-12

Earnings before Interest, Depreciation and Tax 12867 11599

Less: Interest 1061 746

Depreciation 2671 2117

Profit before Tax 9135 8736

Less:Taxes 3071 2681

Profit for the year 6064 6055

Balance as per last year 5386 4933

AVAILABLE FOR APPROPRIATION 11450 10988

APPROPRIATION

General Reserve 5000 4000

Interim Dividend on Equity Shares 560 448

Proposed Final Dividend on Equity Shares 933 933

Corporate Dividend Tax 249 221

Balance carried to Balance Sheet 4708 5386

DIVIDEND

During the year the Board has declared an Interim Dividend of Rs.7.50/- per equity share (75% of the paid-up capital). Your directors are now pleased to recommend a final dividend of Rs.12.50/- per equity share (125 % of the paid-up capital) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2012-13 would be Rs.20/- per share (200% of the paid-up equity capital).

The total dividend outgo will be Rs.1741.83 lacs (including dividend distribution tax)

CHANGE OF COMPANY''S NAME:

Your directors are pleased to inform that as approved by the members at the previous Annual General Meeting, the request for change of name of your Company from "Hyderabad Industries Limited" to "HIL Limited" has been approved by the Registrar of Companies, Andhra Pradesh effective from 16th August 2012. The new name depicts your Company''s diversified business activities with a pan India presence and reflects the new and vibrant corporate image.

OVERALL ECONOMIC OUTLOOK

The global economy which is yet to shake off from the fallout crisis of 2008-2009, dropped to almost a growth of 3 percent in 2012, which indicates that about half a percentage point has been wiped off from the long-term trend since the crisis emerged. The East Asia and Pacific region continues to be the main driver for global growth, contributing around 40 percent of global growth in 2012. Driven by strong domestic demand, the region grew at 7.5 percent in 2012, higher than any other region in the world. While developing economies excluding China grew 6.2 percent in 2012, up from 4.5 percent in 2011 China''s growth slowed to 7.8 percent in 2012.

The Indian Economy posed the lowest annual growth in the last decade with its Gross Domestic Product (GDP) growth estimated to be just over 5%. Industrial production figures show a worrying slowdown and lack of spending in Infrastructure has posed severe challenges for the related industries.

PERFORMANCE

In the year 2012-13, the Company''s revenue increased to Rs.1,166 crores from Rs.949 crores in the previous year, a growth of 23% over the previous year. Profit Before Tax posted a modest growth of 5% from Rs.87.36 crores last year to Rs.91.35 crores in the year under review. The company witnessed an overall rise in all costs during the year under review on account of various external factors. However with an all round focused and un-relented approach by the Management on various cost saving initiatives your Company could reduce the overall burden of cost increase to a great extent.

Fibre Cement Sheet Products

Fibre Cement Sheets continue to be the major revenue earner for the Company. Year 2012-13 was difficult for the manufacturing sector, especially for the building material sector. The Fibre cement industry registered a growth of an only 3% mainly due to poor demand from housing and infrastructure sectors. However, despite all the odds, the company''s sales volume grew by 5.5 % and your company continues to maintain its market leadership. A silver lining is seen on the horizon of 2013-14. The Indian economy is on its path of recovery as is the Government''s increased spending on housing infra projects. The Fibre Cement Sheet Industry is estimated to grow between 5% and 6% during the financial year 2013-14.

The Government''s increased focus on low cost mass housing, providing school shelter and developing proper infrastructure in the rural areas are gaining momentum. These initiatives will be the key drivers which will influence the demand for construction material. The Fibre cement sheets will continue to be the preferred choice for the roofing requirement of millions of rural population in India. With augmenting of existing capacities established and new facilities being planned, your company is confident of its growth aspirations and maintaining its market leadership.

Green Building Products

The Government''s continued support, focus and encouragement for using green building products has given an additional impetus to the growth of the building material industry. Environment sustainability, reduction of carbon emissions, educating masses on green building products, providing eco-friendly solutions have been HIL''s approach. A commitment towards producing green building products and solutions with an ultimate aim of helping the Construction and Infrastructure Industry to build green and sustainable habitats has been the vision followed by the Company consistently.

In addition to IGBC, Aerocon Panels and Blocks obtained GRIHA green product certification in 2012-13. Many strategic initiatives were undertaken during this period to create pull for the brand. Event sponsorship and awards

helped establish connect with the right target group, and is helping in establishing a strong bond with all our customers.

The year 2012-13 was also a year of recognition of HIL''s efforts by the industry. Your Company is proud to receive Manufacturing Excellence award by ITP publishing, Design Wall award by ET Acetech, Outstanding Entrepreneur by GOI, Best Innovation in Brand Management, Innovation in HR practices, Best Innovation in sustainability and Innovative product category, the awards and accolades received is a testimony of HIL''s commitment to excellence and market leadership.

Aerocon AAC - Blocks

Well planned and successful marketing strategies have made Aerocon Blocks a much preferred choice over competition. Customer focus, quality and speed of delivery have been HIL''s core strength. Today, Aerocon is a preferred choice of the customers.

Aerocon blocks registered an impressive growth of 26% in volume terms during 2012-13. The acceptance of AAC blocks has increased many folds in the building industry due to its economy, reduced consumption of high value materials like steel, cement, sand, water, labour etc. This has led to a higher penetration in this product category and an increase in demand. AAC blocks manufacturing is a low entry barrier business leading to many regional players mushrooming in a short span of time. Due to this, the competition is likely to intensify further. Branding and aggressive sales strategies will be the key differentiators for Aerocon blocks.

Aerocon Panels

In view of considerable slow down in the infrastructure projects where Aerocon Panels are mostly used, the business was adversely affected in 2012-13. However, the infrastructure segment is expected to pick up momentum during second half of 2013-14 with major focus on segments such as Hospitality, Healthcare, Education, Industrial, IT and ITES. Your company will also focus on Tier 2 and Tier 3 towns which are witnessing good growth in real estate and infrastructure projects.

Thermal Insulation - HYSIL

The Thermal insulation industry did see a modest growth in 2012-13, majorly due to postponement of most of the green field projects and expansions. Hysil''s increased focus on exports ensured sustainable growth. In 2013-14, sales grew by 9% of which exports contributed to 5%. Breakthrough in UAE and Iran markets will accelerate growth. HYSIL has received international certifications "TUV-SUD” and "CE” which will give access in other countries as well. Your company will continue its focus on exports primarily to GCC countries.

NEW PROJECTS

As a part of our market share enhancement strategy, the Company is constantly exploring options for augmenting capacity at the existing locations and also by setting up new plants in strategic locations to keep pace with the growing demand for our products.

During the year under review the Company has started land acquisition process for its proposed new AAC Blocks unit.

Wind Power: - Expanding its footprint into the renewable energy sector your Company has set up a 2.50 MW Wind Power Project in Jodhpur District of Rajasthan during the year. With this the total Wind Power installed Capacity of the Company has increased to 7.35MW.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (IV) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

In accordance with the provisions of Companies Act, 1956 and the Articles of Association of the Company, Mr. Krishnagopal Maheshwari and Mr. Yashpaul, Directors of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, will be offering themselves for re-appointment.

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Directors'' Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956, is given in the Annexure (I) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

The Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance coupled with good corporate practices. As per the requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2012-13 and a Certificate from the Auditors of the Company M/s. S.R. Batliboi & Associates LLP., Chartered Accountants, (ICAI Firm Registration Number: 101049W) is furnished as part of this Annual Report.

The Ministry of Corporate Affairs has issued Corporate Governance Guidelines in December, 2009. While these Guidelines are recommendatory in nature, the Company has already adopted most of the Guidelines. The Company will be reviewing its Corporate Governance Practices in the context of other recommendations under the said Guidelines for appropriate adoption.

HUMAN CAPITAL

Your Company focus has increased over the years towards Human Capital. Your Company believes that the support of human capital is of utmost importance to sustain the market leadership in all product segments and also to capture new markets.

Your Company has successfully migrated to an improved Performance Management System to identify the high Performers & reward them appropriately which has helped to achieve better employee engagement score. Through

Performance Management the Company differentiates the employees with potential to take more challenges and devise a separate career program for their retention and advancement. A customized Competency based training program has been devised for High - Potential employees with focus on their Individual Development Plan & helping them to become future leaders.

We are striving to build a performance driven culture and create an environment conducive for the employee''s growth.

AUDITORS

The Statutory Auditors of the Company, M/s. S.R.Batliboi & Associates LLP., (converted their existing partnership firm into LLP w.e.f. 01.04.2013) ICAI Firm Registration Number: 101049W, who retire at the conclusion of ensuing Annual General Meeting, being eligible, offer themselves for re-appointment.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect 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 are given in the Annexure (II) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other required particulars of the employees are set out in Annexure (III) attached hereto and forms part of this Report.

ACKNOWLEDGEMENTS

The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Suppliers and other Business Associates.

The Directors also wish to place on record their appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

C.K. BIRLA

Chairman

New Delhi, 3rd May, 2013


Mar 31, 2012

The Directors have pleasure in presenting their Report and the Audited Accounts of the Company for the year ended 31st March 2012.

FINANCIAL RESULTS Rs. in lacs

2011-2012 2010-2011

Earnings before Interest,

Depreciation and Tax 11599.32 9771.68

Less: Interest 746.05 562.94

Depreciation 2117.58 1794.93

Profit before Tax 8735.69 7413.81

Less:Taxes 2681.14 2353.39

Profit for the year 6054.55 5060.42

Balance as per last year 4933.66 4262.68

AVAILABLE FOR APPROPRIATION 10988.21 9323.10

APPROPRIATION

General Reserve 4000.00 3000.00

Interim Dividend on Equity Shares 447.75 447.75

Proposed Final Dividend on

Equity Shares 932.82 746.26

Corporate Dividend Tax 221.08 195.43

Balance carried to Balance Sheet 5386.56 4933.66

DIVIDEND

During the year the Board has declared an Interim Dividend Rs. of 6/- per equity share (60% of the paid-up capital). Your directors are now pleased to recommend a final dividend of Rs. 12.50/- per equity share (125% of the paid-up capital) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2011-12 would be Rs. 18.50/- per share (185% of the paid-up equity capital).

The total dividend outgo will be Rs. 1601.65 lacs (including dividend distribution tax)

OVERALL ECONOMIC OUTLOOK

After the extended phase of slowdown starting from

2008-09 on account of global recession, the economic prospects in US and Asia showed signs of improvement in 2011-12. As per the latest IMF forecast, IMF has increased world output growth projections to 3.5% for the year. However, it has also cautioned that though the outlook for the global economy is slowly improving but it is still fragile.

The Euro zone crisis has rocked the economy again with shocks of sovereign debt crisis emerging from various major economies of the Euro Zone. As Europe enters a recessionary phase, its impact may trickle down to the rest of the world as well. The biggest risks to the global economy in 2012-13 stems from the oil price spikes, deterioration in the European crisis and the investment slump in other developing economies.

The Indian Economy's overall Gross Domestic Product (GDP) growth is estimated at 6.9% in 2011-12. India's current account deficit is expected to touch 4%of GDP in the 2011-12 fiscal year compared to 2.6% in the previous year, the worst in at least eight years on account of a widening trade gap. Government in its latest fiscal budget showed its fiscal deficit to have ballooned to 5.9% of the GDP in 2011-12 which is projected to come down to 5.1% in 2012-13. India's balance of payments slipped into negative territory for the first time in last three years.

High inflation continues to be an area of concern for the common man and would pose a serious challenge for the Government during 2012-13, driven mainly by food inflation and increasing cost of living. Government was compelled to take tough measures such as raising the interest rates, revising the quota restrictions for import/export of commodities etc. However, the long-term prospect of the Indian economy, including the infrastructure and industrial sectors, continue to remain positive. The Economic growth can accelerate if the government implements its various policy reforms and initiatives such as more efficient use of fuel and fertilizer subsidies and an early implementation of the GST and Direct Tax Code, thereby reducing structural fiscal deficits and improve India's investment climate. With good monsoons in the last year and healthy food stocks together with forecasts of a normal monsoon this year, we expect the Indian Economy and especially the rural demand to register a reasonable growth.

PERFORMANCE

In the year 2011-12 the Company's revenue increased to

Rs. 949 Crores from Rs. 802 Crores in the previous year, a growth of 18% over the previous year. The Profit Before Tax has also increased from Rs. 74.14 crores to Rs. 87.36 crores registering a growth of 18 %. The growth in turnover and profitability is mainly attributed to aggressive marketing strategy and ongoing cost saving initiatives.

Fibre Cement Sheet Products

Fibre Cement Sheets continue to be the major revenue earner for the Company. During the year under review it registered a growth of 13% in revenue over the previous year. The Fibre Cement Sheet Industry is estimated to grow at around 5% - 7% during the financial year 2012-13 on account of good monsoon in 2011-12, increase in rural income on account of good agricultural production coupled with increase in minimum support price.

The housing shortage continues to be large which offers opportunity for growth to the Company. Implementation of Government of India's infrastructure development projects have started gaining momentum. This together with other Government sponsored initiatives in providing low cost housing and schools for the masses are expected to increase demand for construction materials including fibre cement sheets. With the additional capacities established during the year under review and new facilities planned in 2012-13, your Company is confident of maintaining its market leadership.

Green Building Products

Increasing concern and importance being given to conserve environment and its sustainability, is resulting into increasing preference for Green building products. The Company's drive in growing the Green Building Products business has achieved considerable success. Your Company is committed towards producing sustainable green building products and solutions with an ultimate aim of helping the Construction and Infrastructure Industry to build green habitats.

Aerocon AAC - Blocks

The Aerocon Blocks, a key offering in the Company's product basket as part of its Green Building Products initiative, registered an impressive growth of over 100% during the period under review, mainly on account of stabilization and full capacity utilization of the Golan plant in Gujarat and Company's aggressive and successful marketing strategies in developing this business. This has resulted in an increase in market share from 20% to 26% in the Southern & Western regions of the Country. Our Aerocon Blocks besides being environment friendly (Green) has several advantages for the user in terms of speed of construction and cost savings. This is resulting in increased demand and preference for our AAC Blocks over the conventional products such as red clay bricks which is no longer a favoured product. This division will continue to grow although there will be pressure on prices as competition is likely to intensify further with new entrants in the market. High acceptance of our Aerocon brand and our focus on quality, reliability and customer service has helped us to attain our leadership position. Your Company has ambitious plans to setup new capacities to cater to the growing demand in the forthcoming years.

Aerocon Panels

Aerocon Panels, for construction of prefab structures and partition walls, have been extensively used in the infrastructure sectors like roadways, power plants and airports as well as in the commercial buildings such as malls and modern offices. An innovative and new age product, these panels have created a niche for themselves due to ease of installation and speedy construction as benefits to the users.

During the year under review, the sales of Aerocon Panels in quantity terms has increased by 21% over the previous year while the industry grew by 16% during the same period. The Company's Aerocon Panels enjoys a domestic market share of 58%.

Thermal Insulation - HYSIL

The augmented capacity in 2011-12 helped us to retain our market share of 65% despite the entry of new manufacturers within India and continued imports from China.

The sales in quantity terms of thermal insulation segment grew by 7% over the previous year, keeping pace with the industry growth. However, the future outlook is critically dependent on the commissioning of green field projects. The industry is likely to grow at a rate of 5 % p.a. This division has chalked out plans to expand the market by entering into pipe insulation and renewed thrust on exports, primarily to GCC countries.

NEW PROJECTS

As a part of our market share enhancement strategy, the Company is constantly exploring options for augmenting capacity at existing locations and also by setting up new plants in strategic locations to keep pace with the growing demand for our products.

During the year under review the Company has started commercial production of its second Line at its Fibre Cement Sheet Plant at Sathariya, U.P. With this additional line the total installed capacity of our plant at Sathariya, in Uttar Pradesh has increased to 1,80,000 TPA.

Wind Power :- Expanding its footprint into renewable energy sector your Company has set up a 1.25 MW Wind Power Project near Coimbatore, Tamilnadu. The Wind Turbine was commissioned in September 2011 and the energy generated from the project was used for captive consumption at our AAC Blocks manufacturing unit near Chennai, Tamilnadu. With this, both the AAC Blocks manufacturing units of the Company are now operating with captive Wind Energy Turbines, making the Company's green Blocks greener.

The Company is also setting up a 2.50 MW Wind Power Project in Jodhpur District of Rajasthan which is expected to commission by May, 2012. With this the total Wind Power installed Capacity of the Company would be 7.35MW. Your Company has ambitious growth plans in Renewable energy sector, but future expansion plans grossly depends on the consistency of the policies of the Government of India.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (IV) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

In accordance with the provisions of Companies Act, 1956 and the Articles of Association of the Company, Mr. C.K. Birla and Mr .P Vaman Rao, Directors of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, will be offering themselves for re-appointment.

The term of Mr.Abhaya Shankar, as Managing Director of the Company is due for renewal on 30th April, 2012. On recommendation of the Remuneration Committee the Board at its meeting held on 24th January, 2012 duly considering the performance and achievement of the Company under his supervision and leadership, subject to the approval of the members at the forthcoming Annual General Meeting, reappointed Mr.Abhaya Shankar as Managing Director of the Company for a period of 3 (Three) years w.e.f 1st May, 2012.

For Directors seeking appointment/ re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Directors' Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956, is given in the Annexure (I) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

The Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance with ethical corporate practices. As per the requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2011-12 and a Certificate from the Auditors of the Company are furnished as part of this Annual Report.

The Ministry of Corporate Affairs has issued Corporate Governance Guidelines in December, 2009. While these Guidelines are recommendatory in nature, the Company has already adopted most of the Guidelines. The Company will be reviewing its Corporate Governance Practices in the context of other recommendations under the said Guidelines for appropriate adoption.

HUMAN CAPITAL

At HIL, amongst all our assets, we consider People as most valuable. To achieve the ambitious goal of doubling our revenues in next four to five years and to sustain our market leadership in all our product segments, we have built a competent and motivated team across the organization.

One of the major achievements during the year 2011-12 was Organizational Restructuring to equip the Leadership team to achieve its goals. We have strengthened our senior leadership Team which will bring in transformation and improvement across all functions. Various initiatives towards acquiring fresh talent, training and providing career growth to retain talent are being put in place.

We have developed a robust mechanism to identify high potential employees and to train them as future leaders, we have institutionalized Management Development Programs (MDPs) & competency based training. We are taking up various initiatives for employee engagement including Performance Management Systems, effective rewards and recognition programs which will build a performance driven culture and create a conducive environment for the employee's growth.

AUDITORS

The Statutory Auditors of the Company, M/s. S.R.Batliboi & Associates., who retire at the conclusion of ensuing Annual General Meeting, being eligible, offer themselves for re-appointment.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect 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 are given in the Annexure (ii) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other required particulars of the employees are set out in Annexure (III) attached hereto and forms part of this Report.

ACKNOWLEDGEMENTS

The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Suppliers and other Business Associates.

The Directors also wish to place on record their appreciation for all the employees for their commitment and contribution towards achieving the goals of the Company.

Annexure (I): Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 and on the basis of compliance certificate received from the executives of the Company and subject to disclosures in the Annual Accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, and to the best of their knowledge and information furnished, the Board of Directors states:

i) That in preparation of the Annual Accounts for the year ended 31st March, 2012; all the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanation relating to material departures, if any.

ii) That the Directors have adopted such accounting policies, as selected in consultation with Statutory Auditors, and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year ended 31st March, 2012.

iii) That the Directors 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 the Company and for preventing and detecting fraud and other irregularities.

iv) That the Annual Accounts for the year ended 31st March, 2012, has been prepared on a going concern basis.

On behalf of the Board of Directors

C.K. BIRLA New Delhi, 1st May, 2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting their Report and the Audited Accounts of the Company for the year ended 31st March 2011.

FINANCIAL RESULTS Rs. in lacs

2010-2011 2009-2010

Profit before Interest, Depreciation, Exceptional Items and Taxation 9759.27 15772.12

Less:Interest 550.53 625.14

Depreciation 1794.93 1554.71

Profit before Exceptional Items & Taxation 7413.81 13592.27

Exceptional Items – 18.37

Profit after Exceptional Items 7413.81 13573.90

Taxes (2353.39) (4602.08)

Profit after Tax 5060.42 8971.82

Balance as per last year 4262.68 5181.10

AVAILABLE FOR APPROPRIATION 9323.10 14152.92

APPROPRIATION

General Reserve 3000.00 8493.30

Interim Dividend on Equity Shares 447.75 447.75

Proposed Final Dividend on Equity Shares 746.26 746.26

Corporate Dividend Tax 195.43 202.93

Balance carried to Balance Sheet 4933.66 4262.68

DIVIDEND

During the year the Board has declared an Interim Dividend of Rs. 6/- per equity share (60% of the paid-up capital). Your directors are now pleased to recommend a final dividend of Rs. 10/- per equity share (100% of the paid- up capital) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2010-11 would be Rs. 16/- per share (160% of the paid-up equity capital).

The total dividend outgo would be Rs 1389.44 lacs (including dividend distribution tax)

OVERALL ECONOMY

The Indian Economy in 2010-11 has been considered as one of the fastest growing economies of the world, and is known to have made one of the most rapid recoveries after the global financial meltdown of 2008-09 and the affect of two poor monsoons in 2008-09 & 2009-10. Although the monsoon in 2009-10 was poor which resulted in unsatisfactory yield of Kharif crop, the recovery of both agricultural and manufacturing sectors in the early months of 2010 resulted in an overall GDP of 8.6% in 2010-11. However, the agricultural GDP rate of 0.4% in 2009-10, and unseasonal rains affecting winter crops in 2010-11, combined with high inflation has resulted in lower demand and absence of growth in our industry.

High inflation continues to be an area of concern for the common man and was a serious challenge for the Government during 2010-11. Driven mainly by food inflation and increasing cost of living, Government was compelled to take stern actions such as raising the interest levels. The weaker segments of the population were affected the most, which to a large extent explains the lack of growth in demand for some of the rural/semi-urban products including the fibre cement roof sheeting.

However, the medium to long-term prospect of the economy, including the infrastructure and industrial sectors, continue to remain positive. India is today rated as one of the most attractive investment destinations across the globe. In 2011-12 the growth in our industry is expected to be between 5% to 7%.

PERFORMANCE

In the year 2010-11 the Companys revenue increased to Rs. 801 Crores, a growth of 6% over the previous year and a CAGR of 12% in the last 5 years.

Sales, in quantity terms, of Fibre Cement Sheets increased by 4% over the previous year, as compared to 2% growth in the industry. Poor monsoon in 2009-10 coupled with high inflation had an impact on the spend for new shelter or upgradation. The Industry saddled with excess capacity faced severe pricing pressure. Inspite of escalation in raw material prices the Industry could not pass on the increase to its customers. On account of these two major factors, the Industry saw a drop in profitability. HIL increased its sales volume and market share marginally over the previous year due to its competitive strength.

The Fibre Cement Sheet Industry is estimated to grow at about 5% - 7% in financial year 2011-12 on account of good monsoon in 2010-11, increase in rural income on account of record agriculture production coupled with increase in minimum support price. The housing shortage continues to be large which offers opportunity for growth. With the additional capacities established and further enhancement in capacity planned during the year, your Company is confident of maintaining its market leadership.

Implementation of Government of Indias infrastructure development projects have started gaining momentum. This together with other Government sponsored initiatives in providing homes and schools for the masses in general and the poor in particular is expected to increase demand for construction materials.

Green Building Products

Emphasis on environment and preference for Green building products remains a focus area for the construction Industry. The Companys drive in growing the Green Building Products business also met with considerable success.

Aerocon Panels

Aerocon Panels, used for construction of prefab structures and partition walls, has been extensively used in the infrastructure sectors like roadways, irrigation, power plants, airports etc and also in the construction of malls, schools, colleges etc.

The production in quantity terms of Aerocon Panels has increased by 40% and the sales have increased by 39% respectively over the previous year. The business is expected to grow in excess of 25 % p.a. for next few years.

Aerocon AAC - Blocks

The Aerocon Blocks, another key offering of the Company as part of its Green Building Products initiative, also registered a good growth in 2010-11. This was possible due to the newly commissioned Plant at Golan. After the stabilization period of six months of operation, the Golan plant is operating at above 60% of its capacity. This has helped your Company to capture significant portion of the markets in west and south in a short time amidst intense competition, which is a reflection of the Companys aggressive and successful strategies in developing this business. The division will continue to grow in volumes in the coming year, although there will be pressure on prices as competition is likely to intensify further with new entrants in the market. However, the high acceptance of our

Aerocon brand and our focus on quality and reliability will help the company to grow this business.

The Company has started offering building solutions to its customers, which will help the customers use our products more efficiently and utilize the full value of these products.

Production and Sales, in quantity terms, of AAC Blocks have increased by 42% and 63% respectively over the previous year largely contributed by our newly commissioned Gujarat facility.

Thermal Insulation

During 2010-11, the Thermal Insulation product, which faced capacity constraints also suffered due to surge in imports from China. The augmented capacity, improvements in efficiency and costs will help in recovery of this product segment in 2011-12.

Production and Sales, in quantity terms, of Thermal Insulation products have decreased by 20% and 21% respectively over the previous year on account of the reasons cited above.

NEW PROJECTS

During the year under review the Company started commercial production of its AAC Blocks manufacturing unit at Golan, near Surat, Gujarat in July 2010. This unit will help the company to cater to the growing market for AAC Blocks in the western part of the country, as the demand for this product is expanding due to its inherent advantages of being environment friendly, light weight, good compressive strength and providing better heat insulation.

Wind Power :- The Company has forayed into renewable energy sector in the year under review, in line with the Companys mission of pursuing green businesses. HIL took the initial step by setting up a 3.60 MW (2x1.80MW) Wind Power Project in Vandhiya Village, Kutch Dist, Gujarat. The two Wind Turbines have been commissioned in March and April 2011, respectively. A part of the energy generated from the project shall be used for captive consumption at our AAC Blocks manufacturing unit at Golan, Gujarat and the surplus energy generated shall be sold to Gujarat Electricity Board.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (IV) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

In accordance with the provisions of Companies Act, 1956 and the Articles of Association of the Company, Mr. Shreegopal Daga and Mr. Yash Paul, Directors of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, will be offering themselves for re-appointment.

For Directors seeking re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

DIRECTORS RESPONSIBILITY STATEMENT

Directors Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956, is given in the Annexure (I) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

The Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance with ethical corporate practices. As per the requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2010-11 and a Certificate from the Auditors of the Company are furnished as part of this Annual Report.

The Ministry of Corporate Affairs has issued Corporate Governance Guidelines in December, 2009. While these Guidelines are recommendatory in nature, the Company has already adopted most of the Guidelines. The Company will be reviewing its Corporate Governance Practices in the context of other recommendations under the said Guidelines for appropriate adoption.

HUMAN RESOURCES DEVELOPMENT

The Companys growth and profitability plans can be achieved only through a competent and motivated team of employees. Various initiatives towards having high quality talent, retaining talent and training have been put in place.

A separate cell PACE (Performance And Career Enhancement) has been established to design talent development plans that ensures attracting and retaining the talent and prepare them for taking up critical positions in the future.

We have rolled out the YUVA (Young Unique Vibrant Achievers) programme under which high calibre young talent is hired from top ranking institutes to create a pipeline of talent within the company.

The Industrial Relations at all plants of HIL continue to be cordial, except for the disturbance in our Dharuhera Plant for a period of four weeks.

AUDITORS

The Statutory Auditors of the Company, M/s. S.R.Batliboi & Associates., who retire at the conclusion of ensuing Annual General Meeting, being eligible, offer themselves for re-appointment.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect 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 are given in the Annexure (ii) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other required particulars of the employees are set out in Annexure (III) attached hereto and forms part of this Report. Annexure (I): Directors Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 and on the basis of compliance certificate received from the executives of the Company and subject to disclosures in the Annual Accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, and to the best of their knowledge and information furnished, the Board of Directors states:

i) That in preparation of the Annual Accounts for the year ended 31st March, 2011; all the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanation relating to material departures, if any.

ii) That the Directors have adopted such accounting policies, as selected in consultation with Statutory Auditors, and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year ended 31st March, 2011.

iii) That the Directors 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 the Company and for preventing and detecting fraud and other irregularities.

iv) That the Annual Accounts for the year ended 31st March, 2011, has been prepared on a going concern basis.

ACKNOWLEDGEMENTS

The Board of Directors places on record their appreciation for the co-operation and support extended by all stakeholders in the Company including the Shareholders, Bankers, Suppliers and other Business Associates.

The Directors also wish to place on record their appreciation of all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

C.K. BIRLA Chairman

New Delhi, 27th April, 2011


Mar 31, 2010

The Directors have pleasure in presenting their Report and the Audited Accounts of the Company for the year ended 31st March 2010.

FINANCIAL RESULTS Rs. in lacs

2009-2010 2008-2009

Profit before Interest,

Depreciation, Exceptional

Items and Taxation 15772.12 9393.46

Less:Interest 625.14 941.90

Depreciation 1554.71 1398.30

Profit before Exceptional

Items & Taxation 13592.27 7053.26

Exceptional Items 18.37 110.62

Profit after Exceptional Items 13573.90 6942.64

Taxes (4602.08) (2533.81)

Profit after Tax 8971.82 4408.83

Balance as per last year 5181.10 2145.36

AVAILABLE FOR APPROPRIATION 14152.92 6554.19

APPROPRIATION

General Reserve 8493.30 500.00

Interim Dividend on Equity Shares 447.75 -

Proposed Final Dividend on Equity Shares 746.26 746.26

Corporate Dividend Tax 202.93 126.83

Balance carried to Balance Sheet 4262.68 5181.10

DIVIDEND

During the year the Board has declared an Interim Dividend of Rs. 6/- per equity share (60% of the paid-up capital). Your directors are now pleased to recommend a final dividend of Rs. 10/- per equity share (100% of the paid-up capital) for your consideration and approval at the ensuing Annual General Meeting of the Company.

With the proposed final dividend, the total dividend for the year 2009-10 would be Rs 16/- per share (160% of the paid-up equity capital).

The total dividend outgo would be Rs 1396.94 lacs (including dividend distribution tax) as against Rs. 873.09 lacs - (100% of the paid-up equity capital) for the year 2008-09.

HOMAGE TO LATE SHRI G. P. BIRLA

We, on behalf of all our stakeholders, wish to place on record our profound sorrow and grief on the sad demise of Shri G.P. Birla on 5th March 2010.

He was a doyen in the industrial world and established a large number of industries in various sectors in India and abroad like automobile, paper, cement, electrical, building products and precision engineering products. He was a noble hearted soul and a great philanthropist and established several large foundations, hospitals and institutions for charitable and educational purposes.

He was awarded "Padma Bhushan" in the year 2006 by the Government of India for his outstanding services to the nation. In his death, the country has lost a great industrialist and a philanthropist.

OVERALL ECONOMY

The year 2009-10 started in a subdued note after the global economy witnessed financial crisis and hefty bailout schemes. However with all-round efforts by the Government of India to face challenge posed by the Global Economy, the Indian Economy sailed through difficult times and responded swiftly. The effectiveness of the policy measures became evident as the year ended on a positive note with a GDP growth of around 7.2% in 2009-10. While most of the sectors have performed reasonably well in the last year, the rural and semi-urban areas contributed significantly to our growth on account of improvement in their net household income, which enabled the Company to perform better.

PERFORMANCE

The year 2009-10 proved to be an another successful year in the history of the Company in all metrics, resulting in higher sales revenues and profits. The Company achieved a growth rate of 14% with overall Gross Turnover of Rs. 756 crores during the year under review. The growth in turnover is mainly attributed to better marketing efforts and the favourable market conditions, both for sheeting and green building products. The Operating Profit margin (PBIDT) improved from 15% to 22% during the year, as a result of all round efforts by the team HIL.

Production and Sales, in quantity terms, of Fibre Cement Sheets have increased by 15% and 5% respectively over the previous year. During the year under review the industry growth of the Fibre Cement Sheets was estimated to be around 6% over the previous year. Due to volatility in the markets and rising price trends the input costs had gone up during the year. However on account of various cost saving measures, improved quality and better realisation, the Fibre Cement Sheet Business reported a significant improvement in profitability during the year.

Our brand "Charminar" established over six decades as a superior brand based on quality, strength and durability, continues to enjoy premium brand equity in the market. The Fibre Cement Sheet Industry is estimated to grow at about 8% in financial year 2010-11 on account of increased income in rural areas coupled with various initiative by Government by way of low-cost/affordable housing scheme for the betterment of the rural population. With the additional capacities established and planned further during the year, your Company is confident of maintaining its market leadership.

With the special focus given to the Companys GREEN BUILDING PRODUCTS DIVISION during the earlier year, the Company could garner the attention of the new generation builders/consumers of the products across India. The market growth for Aerocon Panels has improved considerably during the year. Thermal Insulation segment also reported a reasonable growth during the year. However the AAC Blocks division, on account of increased competition and aggressive pricing by the competitors as well as slackness in the construction industry for the major part of the year, witnessed a decline in revenues. With more focus towards environment protection and sustainability across all Industries and your company being a pioneer in promoting Green Building Products, coupled with various other inherent advantages of the products, the Company is confident to attract a larger customer base going forward. To face the competition in marketing and staying ahead with the curve, the Green Products Division substantially increased its sales team and embarked on new marketing strategies for its various products and is also working with different verticals in the market to increase the awareness of the products and grow the revenue.

The production in quantity terms of Aerocon Panels has increased by 40% and the sales have increased 22% respectively over the previous year.

Production and Sales, in quantity terms, of AAC Blocks have decreased by 10% and 17% respectively over the previous year.

Production and Sales, in quantity terms, of Thermal Insulation products have increased by 16% and 13% respectively over the previous year.

NEW PROJECTS

As part of our market share retention strategy, the Company is constantly exploring the option of enhancing the capacity at its existing location and also to set up new plants in new strategic locations to keep pace with the growing demand for our products.

During the year under review the Company has started commercial production of its second Line at Kondapally village near Vijayawada, AP. Setting up of a new unit at Golan, near Surat, Gujarat for manufacture of AAC Blocks was completed in a record time of 14 months and trial production was started in March 2010. After satisfactory completion of trial runs, we expect the plant to start its commercial production during mid of May 2010. This will help the company to cater to the growing market for AAC Blocks in the western part of the country, as the demand for this product is expanding due to its inherent advantages of light weight, good compressive strength heat and sound insulation and faster rate of construction.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis is appended as Annexure (IV) to this report as per the requirements of Listing Agreement with the Stock Exchange(s).

DIRECTORS

In accordance with the provisions of Companies Act, 1956 and the Articles of Association of the Company, Mr. P. Vaman Rao and Mr. Krishnagopal Maheshwari, Directors of the Company will retire by rotation at the ensuing Annual General Meeting and, being eligible, will be offering themselves for re-appointment.

For Directors seeking re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance with Clause 49 (Corporate Governance) of Listing Agreement, forms part of Corporate Governance Report.

DIRECTORS RESPONSIBILITY STATEMENT

Directors Responsibility Statement as required under the provisions of Section 217 (2AA) of the Companies Act, 1956 is given in the Annexure (I) attached hereto and forms part of this Report.

CORPORATE GOVERNANCE

The Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance with ethical corporate practices. As per the requirements of Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance for the year 2009-10 and a Certificate from the Auditors of the Company are furnished as part of this Annual Report.

HUMAN RESOURCE DEVELOPMENT

The various efforts and initiatives being taken by the Company to grow the top line and improve operational efficiencies will be possible with a highly motivated and a competent team. The Company is continually striving towards these objectives. The Industrial Relations at all plants of the Company continued to be cordial. As an important part of HR initiatives, continued focus is being given on training and development of people in the Company and in creating an environment of learning.

AUDITORS

The present Auditors of the Company, M/s. S.R. Batliboi & Co., Chartered Accountants, have expressed their unwillingness to be re-appointed as Auditors of the Company on their retirement at the forthcoming Annual General Meeting. The Board records its appreciation for the assistance and guidance provided by them during their long tenure with the Company. The Board recommends the appointment of M/s. S.R. Batliboi & Associates, Chartered Accountants as Auditors of the Company.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect 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 are given in the Annexure (II) attached hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other required particulars of the employees are set out in Annexure (III) attached hereto and forms part of this Report.

TOTAL PRODUCTIVE MAINTENANCE (TPM)

The Company has adopted Total Productive Maintenance (TPM) practices in four of its plants during the year under the guidance of Confederation of Indian Industry. The said practices are continuously followed in the respective areas during the year under review also which has helped the Company to improve operational efficiencies and better utilization of the available resources. Company has plans to implement TPM across all the units in the forthcoming year. Your Directors are confident that the continued practice of the said methodology will help the Company to improve productivity, ensure quality, reduce costs and improve profitability in the coming years.

ACKNOWLEDGEMENTS

Your Directors wish to thank all the Shareholders, the Companys Customers, Business Associates, Trade Partners, Bankers and Suppliers for the continuous support and cooperation extended by them.

The Directors also wish to place on record their appreciation of all the employees for their commitment and contribution towards achieving the goals of the Company.

On behalf of the Board of Directors

C.K. BIRLA New Delhi, 5th May, 2010 Chairman