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Directors Report of Rain Industries Ltd.

Dec 31, 2016

Dear Members,

The Directors have pleasure in presenting the 42nd Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2016.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2016 are as under:

The financial summary

(In Rs. Million)

S.No.

PARTICULARS

December 31, 2016

December 31, 2015

1

Net revenue from operations

448.46

862.08

2

Total expenditure before finance cost and depreciation (net of expenditure transferred to capital)

481.77

906.13

3

Operating Profit / (Loss)

(33.31)

(44.05)

4

Add: Other income

683.65

561.02

5

Profit before finance cost, depreciation items and taxes

650.34

516.97

6

Less: Finance costs

300.50

235.43

7

Profit before depreciation, exceptional items and taxes

349.84

281.54

8

Less: Depreciation

15.29

15.71

9

Profit before taxes

334.55

265.83

10

Less: Provision for current taxation

21.14

4.96

11

Profit after taxes

313.41

260.87

12

Add: Balance brought forward from the previous year

820.78

923.99

13

Less: Adjustments on account of transitional provisions of the Companies Act, 2013.

1.64

14

Less: On account of merger of a subsidiary

0.20

-

15

Balance

1133.99

1183.22

16

Appropriations:

(i) Interim dividend

336.35

336.35

(ii) General Reserve

31.34

26.09

17

Total Appropriations

367.69

362.44

18

Balance to be carried forward

766.30

820.78

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2016 are as under:

The financial summary

(In Rs. Million)

S.No.

PARTICULARS

December 31, 2016

December 31, 2015

1

Net revenue from operations

93164.00

102185.31

2

Total expenditure before finance cost and depreciation (net of expenditure transferred to capital)

79626.91

88693.30

3

Operating Profit

13537.09

13492.01

4

Add: Other income

1214.09

796.36

5

Profit before finance cost, depreciation, exceptional items and taxes

14751.18

14288.37

6

Less: Finance costs

6001.87

5964.47

7

Profit before depreciation, exceptional items and taxes

8749.31

8323.90

8

Less: Depreciation

3461.39

3278.16

9

Profit before exceptional items and taxes

5287.92

5045.74

10

Less: Exceptional items

1370.40

60.91

11

Profit before taxes

3917.52

4984.83

12

Less: Provision for current taxation

2837.92

3416.18

13

Less: Provision for deferred taxation

(1189.97)

(1454.10)

14

Profit/(Loss) after taxes

2269.57

3022.75

15

Add/(Less): Minority interest

63.83

(217.14)

16

Add: Share of Profit/(Loss) of associates

41.53

(6.50)

17

Profit/(Loss) after tax, minority interest and share of profit of associates

2247.27

3233.39

18

Add: Balance brought forward from the previous year

27499.52

25072.11

19

Less: Adjustments on account of

transitional provisions of the Companies Act, 2013

21.17

20

Less: Additional depreciation on account of Component accounting

15.84

21

Balance

29730.95

28284.33

Appropriations:

(i) Interim dividend

336.35

336.35

(ii) Tax on dividend

54.61

183.46

(iii) General Reserve

78.26

265.00

22

Total Appropriations

469.22

784.81

23

Balance to be carried forward

29261.73

27499.52

State of the Company''s Affairs

During the year, the Company has achieved revenue (including other income) of Rs. 1,132.11 million and net profit of Rs. 313.41 million on a standalone basis. During the same period, the Consolidated revenue was Rs. 94,378.09 million and net profit was Rs. 2,247.27 million.

BUSINESS OUTLOOK Cautionary Statement

Statements in this business outlook describing RAIN Group''s estimates and expectations may be forward-looking statements. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to RAIN Group''s operations include economic conditions affecting demand and supply for the products manufactured by the Group; price conditions in the domestic and overseas markets in which the Group operates; changes in Government regulations, tax laws, statutes and other incidental factors.

Overview

RAIN Group operates in three business segments;

(a) Carbon (b) Chemicals and (c) Cement. We are a leading vertically integrated global producer of a diversified portfolio of carbon-based and chemical products that are essential raw materials for staples in everyday life.

Our Carbon Business segment converts the by-products of oil refining (i.e. GPC) and steel production (i.e. Coal Tar) into high-value carbon-based products (i.e. CPC, CTP & Other Carbon Products) that are critical raw materials for the aluminium, graphite, carbon black, wood preservation, titanium dioxide, refractory and several other industries globally.

Our Chemicals Business segment extends the value chain of our carbon processing through downstream refining of a portion of this output into high-value chemical products that are critical for end users from the specialty chemicals, coatings, construction, petroleum and several other industries globally.

Our Cement Business segment produces and markets high quality OPC & PPC cement consumed largely by the civil and infrastructure construction industry.

We have longstanding relationships with most of our major customers that includes the largest companies in the global aluminium, graphite and specialty chemicals industries, and with most of our major raw material suppliers, that includes the world''s largest oil refiners and steel producers.

Our scale and process sophistication provides us the flexibility to capitalize on market opportunities by selecting from a wide range of raw materials, adjusting the composition of our product mix and producing products that meet customer specifications, including several specialty products.

Our production facility locations are spread worldwide and integrated global logistics network have strategically positioned us to capitalize on market opportunities by addressing raw material supply and product demand on a global basis in both established (mainly North America and Europe) and emerging markets (mainly Asia and the Middle-East).

BUSINESS SEGMENT WISE OUTLOOK

1. Carbon Products

Carbon Products include Calcined Petroleum Coke ("CPC"), Coal Tar Pitch ("CTP"), Green Petroleum Coke ("GPC"), and other derivatives of Coal Tar distillation including Creosote Oil, Naphthalene, Phthalic Anhydride, CARBORES® and others. Energy produced through waste-heat recovery in manufacturing of CPC is included within Carbon Business segment. This segment contributed about 71.3% of the consolidated revenue of RAIN Group for CY 2016.

1.1. Calcined Petroleum Coke ("CPC") and Green Petroleum Coke ("GPC")

RAIN Group carries-on the business of manufacturing and selling of CPC through its Wholly Owned Subsidiaries in India and the USA. RAIN Group has six CPC manufacturing plants in USA and one CPC plant in India with an aggregate production capacity of approximately

2.1 metric tons per annum along with an exclusive blending facility of 1.0 million metric tons CPC per annum.

CPC is produced from GPC, a porous black solid that is a by-product of the crude refining process, through a process known as "claiming". This process removes moisture and volatile matter from GPC at a very high temperature. CPC is produced in two primary forms: (i) Anode Grade CPC (for use in the Aluminium smelting process), and (ii) Industrial Grade CPC (for use in the manufacturing of Titanium Dioxide and other industrial applications). Anode Grade CPC represents approximately 85% of Global CPC production and Industrial Grade CPC represents the remaining 15%. For every metric ton of primary Aluminium produced, approximately 0.4 metric tons of CPC is consumed.

Worldwide CPC production for CY 2016 was about 27.8 million metric tons, 73% of which was produced in China and North America. China continues to play a dominant role in the CPC industry and its share of the world''s CPC production is estimated to remain at 55%in the near term.

As per recent industry estimates, world-wide demand for CPC aggregated to approximately 27.8 million metric tons in CY 2016. The Demand is expected to grow to approximately 30.5 million metric tons by CY 2020, representing a CAGR of 2.2%. Worldwide production of CPC aggregated to approximately 27.8 million metric tons in CY 2016 and is expected to grow to approximately 30.8 million metric tons by CY 2020, representing a CAGR of 2.3%.

RAIN Group estimates that over 130 oil refineries worldwide produce and sell GPC in varying forms and qualities. Generally, the sale of GPC does not constitute a material portion of oil refineries'' revenues. The price of GPC varies depending on the quality and the market in which it will be used. The price of GPC is largely driven by prevailing demand and supply conditions. A refinery typically realizes higher prices for Anode Grade GPC that is used in production of Anode Grade CPC than Non-Anode / Industrial Grade GPC that is used in production of Industrial Grade CPC. As the quality of GPC (whether Anode Grade or Industrial Grade) cannot be controlled by a refinery; the manufacturers of CPC blend various grades of GPC and CPC, to meet the stringent quality specifications of Aluminium Smelters.

It has been advantageous to Oil refineries to switch over from Sweet-Crude to Sour-Crude due to cost considerations. As the spread between Sweet-Crude to Sour-Crude has narrowed, it is expected that few Oil refineries would shift to Sweet-Crude resulting in improved availability of Anode Grade GPC.

In general, CPC and GPC prices move in parallel. Hence, CPC producers are converters with ability to pass on the increase/decrease in GPC cost to their customers. However, there may be a time lag of one or two quarters for adjusting the changes in prices of GPC and CPC and in the interim the difference if any may have to be absorbed by the CPC producers.

US Fuel Grade GPC prices reduced during CY 2016 and this trend is expected to continue. This will provide some cost relief to US Calciners as Fuel Grade GPC prices set the floor price for Anode Grade GPC.

The proposed environmental regulations in China for stricter control of emissions would impact their production costs and supplies would be less than favourable prices to customers thus reducing CPC exports from China. In addition, the curtailment of capacities in claimers in North America is expected to improve the availability of Anode Grade GPC.

Threats & Challenges

The main threat for the supply of CPC is the availability of suitable quality GPC. GPC is a by-product of the oil refining process and is not produced to meet the supply or quality needs of the World''s CPC or Aluminium producers. Changes in the economics of oil refineries over the past 15 - 20 years have resulted in a trend towards refining sour-crude. While petroleum refineries continue to build refining capacity (and, therefore, indirectly increase GPC production), the global supply of traditional Anode Grade GPC is expected to grow at a slower pace as refineries are processing more sour crude, which results in production of lower quality (Fuel Grade) GPC. Thus, global CPC producers have experienced, and may continue to experience decline in the availability of Anode Grade GPC .

CPC quality directly influences anode quality in the performance of smelters. To meet the demand for consistent quality of Anode Grade CPC, from the Aluminium industry, RAIN Group works closely with Aluminium Smelters to expand existing quality specifications for Anode Grade CPC, and allow for use of more Non-Traditional Anode Coke ("NTAC") blends in the production of Anode Grade CPC without compromising on quality. RAIN Group''s patented Isotropic Coke Experiment ("ICE") technology is one method of utilizing inferior grades of GPC to produce CPC.

Additionally, RAIN Group''s infrastructure and vocational advantages is uniquely placed in the industry to be able to quickly respond to meet the increased demand for CPC in the Middle-East, Russia and India. To meet the increase in domestic and global demand, RAIN Group has set-up a new CPC Blending Facility in India with a capacity of 1,000,000 metric tons. Recent strategic investments in Chalmette FGD plant in Louisiana, the USA has allowed RAIN Group to unlock an unmatchable advantage of utilizing inferior grade GPC more efficiently to serve the growing demand from Aluminium smelters.

In the near future, it is expected that India will lead CPC demand growth in the world (ex-China) on the back of significant capacity expansions by Aluminium majors in India. Indian Aluminium production is set to grow by about 51% by CY 2020. Due to the logistical synergies and recent implementation of stringent environmental policies by the Chinese Government thereby increasing costs, India will remain competitive against Chinese CPC suppliers.

1.2. Coal Tar Pitch ("CTP") and Other Carbon products

RAIN Group has four Coal Tar Distillation Facilities in Belgium, Canada, Germany and Russia, with an aggregate primary coal tar distillation capacity of approximately 1.3 million metric tons per annum. Coal Tar Distillation is carried-out in Belgium, Canada and Germany through wholly owned subsidiaries, and Coal Tar Distillation is carried-out in Russia through a Joint Venture with PAO Reversal, Russia.

Coal Tar is a liquid by-product derived from the conversion process of coal into metallurgical coke. During this conversion process, approximately 80% of the coal volume is processed into metallurgical coke. Metallurgical coke is used as an important reducing agent and energy source in blast furnaces to produce pig iron and steel.

As per recent industry estimates, the supply of global metallurgical coke will increase from 700.9 million metric tons in CY 2016 to 714.2 million metric tons by CY 2020 reflecting a Compound Annual Growth Rate ("CAGR") of 0.5%. The afore-mentioned, long-term growth is expected to be driven through recovery of coke production in Europe, Japan and Korea. Nevertheless, demand for and production of steel in China will remain the single most determining factor for the global metallurgical coke market.

Consequently, the supply of Coal Tar is correlated to pig iron production, which, in turn, is driven by steel production. Asia (including 61% from China) contributes approximately 78% of total global pig iron production and Europe contributes about 6% of total global pig iron production.

Every metric ton of metallurgical coke produced yields on average 0.04 metric tons of Coal Tar. As per the latest industry estimates, Global Coal Tar supply will increase from 22.6 million metric tons in CY 2016 to 23.1 million metric tons in CY 2020, which corresponds to a CAGR of 0.6%.

Coal Tar is the main raw material in the Coal Tar Distillation process. The Coal Tar Distillation process can be categorized into two stages: (i) primary Coal Tar Distillation business ("Primary Distillation") and (ii) downstream processing of selected products of Primary Distillation into co-generated refined products ("downstream"). Primary Distillation products co-generated are CTP (about 48% of Tar distilled), naphthalene oil (about 12%) and aromatic oils (about 40%).

With a distillation yield of 48%, CTP is the main end-product in Coal Tar Distillation business and therefore crucial for its growth. While the consumption of CTP in the rest of the world was shrinking, consumption of CTP in Asia (including China and Middle East) and in Europe has increased by 5.5% and 2.4%, respectively due to increase in production of Aluminium and Anode Industry.

As per recent industry estimates, global demand for CTP aggregated to approximately 6.7 million metric tons in CY 2016. This is expected to grow to approximately 8.0 million metric tons by CY 2020, representing a CAGR of 4.3%.Global production of CTP aggregated approximately 6.8 million metric tons in CY 2016 and is expected to grow to approximately 8.1 million metric tons by CY 2020, representing a CAGR of 4.6%.

Geographically, CTP production is led by China; followed by Europe and Asia / Australasia with an aggregate share of 92% in CY 2016. These are the only regions with surplus production. Europe will maintain this positive surplus through CY 2020 with a CAGR of 18.6%. The levels of surplus production over demand for CTP in China and the remaining Asian countries are expected to decline in future years

Eighty percent of the world''s CTP production is primarily used to produce carbon anodes for the Aluminium smelting process. For every metric ton of Primary Aluminium, approximately 0.1 metric ton of CTP is consumed. Therefore, production of Primary Aluminium is one of the most important determinants demand for CTP. The second largest CTP end-users, consuming approximately 11% of global production are Graphite Electrode producers. Graphite Electrodes are used in the manufacturing of steel in electric arc furnaces.

The global Aluminium industry consumed about 5.4 million metric tons of CTP in CY 2016. During CY 2016, approximately 55% of total global primary Aluminium production was in China, 14% in Europe (including Russia) and 7% in North America. As per recent industry forecasts, the demand for CTP from the Aluminium industry will increase from 5.4 million metric tons in CY 2016 to 6.4 million metric tons in CY 2020, representing a CAGR of over 4.5%.

Further, global demand for primary Aluminium aggregated to approximately 59.8 million metric tons in CY 2016 and is expected to grow to approximately 69.2 million metric tons by CY 2020, representing a CAGR of 3.7%. Of the total demand in CY 2016, 52% was from China, 15% from Europe (including Russia) and 11% from North America. As observed earlier, it is expected that China will increase its share in Aluminium consumption to about 53% of total demand for primary Aluminium by CY 2020.The said demand will be driven by electrical conductors and significant growth in the packaging industry. Western Europe is expected to see an increase in Aluminium consumption of about 1.0% CAGR, which will be mainly driven by the transportation and packaging industries.

Other Products in Tar Distillation:

Naphthalene, as a chemical intermediate, is mainly used as a precursor to other chemicals or as a solvent for chemical reaction. Naphthalene is used both in the production of dispersants, used in the construction industry, and as super plasticizers to produce concrete and gypsum. Therefore, demand for naphthalene is correlated to the building materials industry.

Naphthalene is also used in the production of Ophthalmic Anhydride as a substitute for Ortho-xyleneas it is more cost-effective. Phthalic Anhydride is used in the manufacturing of plastics, polyester resins and alkyd resins. Additionally, phthalate esters made from Phthalic Anhydride are used as plasticizers in the production of several PVC products.

Aromatic oils, such as Creosote Oil and Carbon Black

Oil, are sold to a variety of industries. Creosote Oil is used by the wood treatment industry for the impregnation of wood. Carbon Black Oil is primarily used by the rubber and automobile tyre industries.

After industrial processing, the downstream products made from Naphthalene and Aromatic Oils such as Phthalic Anhydride, Toluene, etc. form indispensable constituents of many articles of daily life. For example, they are used in the leather, construction, car tyres and pharmaceutical industries as a key raw material.

Threats & Challenges:

The main threat for the supply of CTP is the availability of reliable quantity of Coal Tar from the Steel Industry. With approximately 8% of total Coal Tar production in EU''s 27 Countries, supply of Coal Tar to meet most of RAIN Group''s Coal Tar Distillation requirements (which is located predominantly in Europe) is currently not an issue.

During the year, RAIN Group strengthened its Coal Tar sourcing through its Russian Joint Venture. With approximately 5% of Global Coal Tar production, Russia will contribute significantly to Coal Tar supply in the region.

Although the Aluminium industry has experienced production and consumption growth on a long-term basis, there may be cyclical periods of weak demand which could result in decreased primary Aluminium production. RAIN Group''s sales have historically declined during such cyclical periods of weak global demand for Aluminium.

The recent curtailment of coal tar production by some manufacturers in North America and Europe minimizes the competition and works for the advantage of RAIN Group with improved availability of raw material for distillation units.

Naphthalene and Aromatic Oils (other by-products in Primary Distillation) are subject to the demand & supply forces of the construction industry and the changes in prices of correlated commodities. Any decrease in prices of Fuel oil and Ortho-xylene could reduce margins and competiveness of Naphthalene and Aromatic Oils.

1.3. Co-generated Energy

RAIN Group runs on energy efficient lines. It co-generates energy through waste heat recovered in the calcining process. Currently RAIN Group co-generates energy at five out of seven CPC plants with a combined power generation capacity of approximately 125 MW.

RAIN Group is committed to maintain a clean and efficient industry that works in harmony with the environment. As part of this commitment, RAIN Group has made significant investment in waste-heat recovery systems at its CPC plants. Heat recovery process reduces greenhouse gas emissions and results in carbon-neutral co-generation of energy. Further, RAIN Group has made substantial investments in Flue Gas Desulfurization plants in its CPC Plants in India and US to minimize these emissions.

2. Chemicals

RAIN Group produces Chemicals in two parallel production streams. One stream is derived from the downstream refining of primary coal tar distillates, while the other stream from petroleum derivatives, such as C9 and C10 fractions as its raw material. The Chemicals produced include: resins, modifiers, aromatic chemicals and super plasticizers. Consequently, the production of RAIN Group''s Chemicals depends on the Coal Tar Distillation process and on the proximity to petroleum refineries and their availability of suitable-quality petroleum derivatives like C9 and C10. These Chemicals are used in a broad variety of end-markets including paints, coatings, construction, plastics, paper, tyres, rail ties, insulation and foam. About 18.4% of the consolidated revenue for CY 2016 is from this segment. RAIN Group''s Chemicals business can be classified broadly into three sub-product categories:

2.1. Resins & Modifiers

We produce aromatic hydro carbon resins that are based on either coal tar distillates or petro-chemical raw materials. Our coal tar distillate based resins are produced from the downstream refining of the carboindene we produce internally. Our petro-chemical based resins are produced from C9 aromatic resin oil and several other petro-chemical raw materials we procure from third-party suppliers. Similarly, we also produce modifiers from the downstream refining of naphthalene and other inputs procured externally.

We sell our coal tar and petro-chemical based resins under the brand name Novares®, which are customized resins with softening points up to 170oC. We also sell petro-chemical based resins under the brand name Multires®, which are low cost resins. Our coal tar-based resins are used primarily for applications in coatings, rubber tires and other end-user rubber products, and our petro-chemical based resins are used primarily for applications in adhesives and printing inks. We produce resins with different chemical compositions and softening points, which allows our resins to have different hardening and adhesive properties depending on the intended application and customer specification. Our resins are specialty products, based as coal tar such as the only coal tar based resins that are currently produced commercially in Europe for rubber tire applications inelectric cars. Our resins also include by-products of the resins production process that we sell under the brand names Novaboost® and Novadest®, for applications in petroleum products.

We sell modifiers under the brand names KMC® and RUETASOLV®. KMC® modifiers are used for carbon less copy papers, carrier and insulation oils and flooring production. RUETASOLV® modifiers are used for epoxy based coatings, which are highly resistant to extreme temperatures and chemical stresses as well as extreme dry or wet conditions.

In addition, we offer various services to our customers of resins and modifiers, which include technical advice, customized production, research and development and technical know-how. We have dedicated product development and applications group team that works closely with our customers to tailor the quality & grade of resins and modifiers to meet their specific application needs. We have achieved success in several innovative products developed by our in-house Product Development and Application group. For example : (a) coal tar-based resins used for rubber tire applications in electric car;

(b) introducing a family of colourless water-white resins used in color sensitive adhesive applications, such as tape and book bindings and (c) developing new generation eco-friendly resins, such as those with water-miscibility to be used in novel waterborne coatings and adhesive formulations with reduced volatile organic emissions.

2.2. Aromatic Chemicals

The aromatic chemicals we produce and sell comprise ofa wide range of phenolics, such as Phenol, O-Cresol, M/P-Cresol and Xylenol. We also produce and sell Anthracene, Carbazole, Acetophenone and 3.5-Xylenol. Phenolics are produced from the downstream refining of carbolic oil that we internally distil from coal tar, as well as carbolic oil and other raw materials we purchase from third parties. Anthracene and Carbazole are produced from the downstream refining of anthracene oil that we internally distill from coal tar. Acetophenone and 3.5-Xylenol are produced from petro-chemical based raw materials we purchase from third parties. We also produce Carboindene from the downstream refining of carbolic oil for use as a raw material in our coal tar-based resins.

Our aromatic chemical products, certain of which can be custom mixed to meet exacting customer specifications, are used as precursors for several end-user products. For example, our phenolics productgroup is used for applications in leather treatment, electric wire enamels and foodstuff and pharmaceutical applications, and our carbozole product is an important constituent for the high-performance pigment violet, PV23, which is used in textiles, printing inks and plastics.

2.3. Super plasticizers

Super plasticizers are specialty polymers produced from the downstream refining, polymerization and purification of naphthalene oil and naphthalene that we produce internally, as well as several raw materials we purchase from third-party suppliers. Our super plasticizers products are a class of polymer based dispersant materials, principally used as in-process aides in the manufacture of products, such as concrete and gypsum, as well as a variety of other industrial and agricultural applications. High-performance super plasticizers provide end-users with meaningful reductions in their process water demand, which serves to enhance properties such as strength, elasticity, flow, spreading, permeability, latex coalescence, wetting, color-fastness, resistance to wear and useful life. We produce a range of differentiated naphthalene (''''PNS'''') and melamine (''''PMS'''') super plasticizers in both liquid and powder form, as well as carboxylate (''''PCE'''') dispersants in liquid form.

The Chemical industry is in the process of gradual recovery after a setback caused by recession. Global chemical production increase of 2.2%, growth in 2016 was slightly lower than the increase of 2.7% during 2015. The U.S. reached an annual growth rate of 0.9%, Western Europe of 1.0% and Central/Eastern Europe of 4.2%. The growth in demand for Chemicals primarily depends on the manufacturing sector, and correlates with development of GDP. After a global annual GDP growth of 3.0% in 2016, annual growth is projected to be 3.3% in 2017 and 3.6% in 2018, in particular led by Asia (esp. China and India) and North America.

With improving economic prospects, in particular through the development of the manufacturing sector, global annual growth in Chemicals is projected to be 2.9% in 2017 and 3.3% in 2018. The strongest effects will originate from the developing nations of Asia-Pacific, Africa and the Middle East.

Threats & Challenges

Key threats for RAIN Group''s Chemical business are volatility in commodity prices and exchange rate fluctuations. The price of Benzene and C9 and C10 fractions depend especially on exchange rates and the price of crude and fuel oil.

RAIN Group is containing its pricing and procurement risks through an integrated global management of sales and supply procurement, optimized processes, and long term agreements with suppliers to ensure reliable sourcing of raw material.

The quarterly operating results fluctuate due to a variety of factors that are outside our control, including inclement weather conditions, which in the past have affected operating results. For example, adverse weather conditions such as heavy snowfall particularly in North America and Canada have at times negatively affected our supply chain in turn, this has impacted the supply of our raw materials, delayed the delivery of our products and increased the cost of transportation. Historically, our operating results have been lower in the first and fourth quarters as compared to the second and third quarters.

3. Cement

RAIN Group has two integrated Cement Plants, one each in the States of Telangana and Andhra Pradesh with an aggregate installed capacity of 3.5 million metric tons per annum. RAIN Group also has a Fly-Ash Handling and Cement Packing unit in the State of Karnataka. About 10.3% of the consolidated revenue of RAIN Group for CY 2016 is from the Cement business segment.

RAIN Group''s cement plants manufacture two grades of Cement (i.e., OPC and PPC). The plants are strategically located near the primary raw material source of limestone. The Fly-Ash handling Unit in the State of Karnataka has a Cement Packing Unit which converts the bulk cement into packed cement and enable supplies to neighbouring areas. Out of the total cement produced, PPC grade accounts for about 75% and OPC grade is about 25%.

The Company has been constantly reducing the output cost by introducing efficient energy measures. It has a Waste Heat recovery power plant. It has supplemented with the use of Pet Coke ("GPC") in heating its furnaces. Stringent BIS standards are applied in cement production to attain consistency in quality.

The Company has built a vast dealer network in the southern states. It has made additional inroads into other neighbouring states of Maharashtra, Goa, Orissa & Kerala. Sales in the new market regions account for 18% of total sales.

The major costs in the production of cement are Freight & Transportation costs (about 31%) followed by Power & Fuel (about 26%). We have entered into long term contract with Transport agencies for deliveries. The Company constantly works to improve efficiencies in logistics. The downside risk is that an increase in fuel prices will adversely affect the freight costs.

The Company has long term arrangements with The Singareni Collieries Company Limited for supply of coal, which meets about 50% of its total requirement. In addition about 30% of high quality coal is imported and blended with pet coke ranging from 15% to 20%.

The Cement Business segment consumes power up to 29 MW. The Company supplements its requirements for power in the Cement business segment from power generated in its CPC Plant in Vizag and also from its new 6 MW Waste-heat Recovery Power Plant in Kurnool Cement Plant commissioned during September 2016. With these measures, the Company expects significant savings in its energy costs in the coming years.

The Indian cement industry is estimated to have a total production capacity of over 395 million metric tons during CY 2016, which is expected to increase to around 550 million metric tons by CY 2025. Cement is a cyclical commodity with a high correlation to GDP. The Indian housing sector is the most critical demand driver of cement, accounting for about 67% of total consumption. The other major consumers of cement include infrastructure (13%), commercial construction (11%) and industrial construction (9%). During the last few years, low capacity utilization coupled with weak prices and increasing input costs have impacted the performance of the Cement industry in India. Subdued operating profits and high debt service obligations have even led some Indian cement producers to defer expansion plans.

With improved demand resulting from infrastructure and housing sectors coupled with limited capacity additions, the cement capacity utilization on a pan India basis is expected to gradually improve during CY 2017. Demand is expected to be boosted by infrastructure development in Tier 2 and Tier 3 cities, growth in real estate sector and initiatives to build 100 Smart Cities to give a further stimulus.

Cement, being a bulk commodity, is a freight intensive industry and transporting it over long distances can be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions in India: North, South, West, East and the Central region. The Southern region of India has the highest installed capacity, accounting for about 37% of the Country''s total installed capacity.

Current Position

During CY 2016, demand in India''s cement industry grew by 4% year-on-year ("YoY"). The subdued growth was mainly attributable to a slowdown in construction activities, regulatory delays in infrastructure projects, high interest rates, prolonged monsoons, and natural disasters particularly in southern India. The industry witnessed high operating costs, which included all major cost heads such as raw materials, energy and freight.

Near Future

As stated elsewhere, cement demand is closely linked to the overall economic growth, particularly in the housing and infrastructure sectors. With the Government of India introducing plans with a thrust on housing and infrastructure development, cement demand is expected to increase.

Historically, positive incremental demand over supply has resulted in higher cement prices and vice versa. Levels of capacity utilization aggravate the quantum of increase or decrease in cement prices. Rebound in demand growth from CY 2017is expected to support prices in the Southern region.

Due to the limited capacity additions and demand revival, the sector is expected to enter a multi-year earnings growth cycle where it gains pricing and operating leverage.

Threats & Challenges

The Indian cement industry has witnessed a massive capacity addition of over approximately 212 million metric tons during last 8 years. This capacity addition is disproportionately high and concentrated in South India. During the same period, cement capacity alone has increased by approximately 79 million metric tons. This has resulted in significant pressure on capacity utilization and price realization, as well.

Indian cement industry''s average utilization has come down drastically from approximately 95% in CY 2008 to approximately 71% in CY 2016, led by weak demand and an oversupply in the industry. Cement demand and capacity utilization are expected to improve, led by a slower pace in capacity addition and better demand prospects.

Until CY 2014, the Southern region (especially in Telangana and Andhra Pradesh) faced demand issues due to political instability and delays in sanctioning projects across the sectors. However, now the Government of Telangana is undertaking major irrigation projects, and the Government of Andhra Pradesh is building a new Capital City. More than 90% of RAIN Group''s cement sales volumes are in the Southern region, almost 33% of which is sold in Andhra Pradesh and Telangana. Hence, the above developments planned for these two states will contribute to the growth in the Cement Business of RAIN Group.

There is a lack of adequate cement production capacity in the state of Maharashtra due to absence of limestone mines, and hence approximately 50% of its demand is met by the Southern region''s cement plants. With no new capacity additions coming online in Maharashtra during the next 3 years, rising utilization of the Southern region''s cement facilities will lead to an increase in performance. Volume growth will benefit most Southern-based companies due to their high operating / financial leverage. RAIN Group has already expanded intonew market such as Maharashtra, Odisha, Kerala, Goa and Pondicherry. These new geographical markets contributed 18% of Cement Sales during CY2016.

Note: Others Include: Maharashtra, Odisha, Kerala, Goa and Pondicherry.

Source: Company Data

Listing of Equity Shares

The Company''s Equity shares are listed on the following Stock Exchanges:

(i) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001; and

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2016-17.

Subsidiary Companies

As per the provisions of Section 129 of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies/ Associate Companies/Joint Ventures in Form AOC-1 is annexed to this Boards'' Report (Annexure- 1).

Performance and contribution of each of the subsidiaries, associates and joint ventures

As per Rule 8 of Companies (Accounts) Rules, 2014 a Report on the financial performance of subsidiaries, associates and joint venture companies along with their contribution to the overall performance of the Company during the Financial Year ended December 31, 2016 is annexed to this Boards'' Report (Annexure- 2).

Consolidated Financial Statements

The consolidated financial statements prepared in accordance with the Accounting Standards 21 and 23 as prescribed under Section 133 of the Companies Act, 2013 and Guidelines issued by Securities and Exchange Board of India ("SEBI") also forms part of this Annual Report.

As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.rain-industries.com and copy of separate audited financial statements of its subsidiaries will be provided to the shareholders upon their request.

Share Capital

The Paid-up Share Capital of the Company as on December 31, 2016 is Rs. 672,691,358 divided into 33,63,45,679 Equity Shares of Rs. 2/- each fully paid up.

Number of Meetings of the Board of Directors

During the year, Five Board Meetings were held.

The dates on which the Board meetings were held are February 19, 2016, May 6, 2016, August 13, 2016, October 8, 2016 and November 11, 2016.

The details of the attendance of the Directors at the Board meetings held during the year ended December 31, 2016 are as follows:

Number of

Name of the Director

Board Meetings

Held

Attended

Mr. N. Radhakrishna Reddy

5

5

Mr. N. Jagan Mohan Reddy

5

5

Mr. N. Sujith Kumar Reddy

5

5

Mr. S L Rao

5

4

Mr. Dipankar Basu

5

1

Mr. H L Zutshi

5

4

Ms. Radhika Vijay Haribhakti

5

3

Ms. Nirmala Reddy1

5

2

Mr. G. Krishna Prasad1

5

3

Mr. V. Narayanamurthy2

5

1

Mr. Krishnan Narayanan3

5

N.A.

1 Ms. Nirmala Reddy was appointed as an Independent Director w.e.f. September 30, 2016.

Responsibility Statement, the Board of Directors of the Company hereby confirms:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2016 and of Profit and Loss Account of the Company for that period;

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

iv) that the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2016 on a going concern basis;

v) that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Statement on Declaration given by Independent Directors under Section 149

The independent directors have submitted their declaration of independence, as required pursuant to sub-section (7) of Section 149 of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6) of Section 149.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of the following Directors:

Mr. S. L. Rao, Chairman, Mr. H. L. Zutshi, Mr. Dipankar Basu, Ms. Radhika Vijay Haribhakti, Ms. Nirmala Reddy and Mr. Krishnan Narayanan.

- Brief description of terms of reference:

- Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal;

- Formulation of criteria for evaluation of Independent Directors and the Board;

- Carry on the evaluation of every Director''s performance;

- Formulation of the criteria for determining qualifications, positive attributes and independence of a Director; and

- Recommend to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other Employees.

V Nomination and Remuneration policy

Policy objectives:

1. To lay down criteria, terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed to Senior Management and Key Managerial positions and to determine their remuneration.

2. To determine remuneration based on the Company''s size and financial position comparable with trends and practices on remuneration prevailing in peer companies.

3. To carry out evaluation on the performance of Directors.

4. To provide them with reward linked directly to their effort, performance, dedication and achievement relating to the Company''s operations.

5. To retain, motivate and promote talent to ensure long term sustainability of talented managerial persons and create competitive advantage.

Nomination and Remuneration Committee meetings

- During the period from January 1, 2016 to December 31, 2016, Nomination and Remuneration Committee Meetings were held on August 12, 2016 and November 10, 2016.

Attendance at the Nomination and Remuneration Committee Meetings

Name of the Director

Designation

Number of Meetings

Held

Attended

Mr. S L Rao

Chairman

2

2

Mr. Dipankar Basu

Member

2

0

Mr. H L Zutshi

Member

2

2

Ms. Radhika Vijay Haribhakti

Member

2

1

Ms. Nirmala Reddy3

Member

2

1

Mr. V. Narayanamurthy4

Member

2

0

Mr. Krishnan Narayanan2

Member

2

N.A.

Transfer of Amount to Reserves

The Company transferred Rs. 31.14 million to the general reserve for the Financial Year ended December 31, 2016. An amount of Rs. 766.30 million is retained in the profit and loss account.

Dividend

The Board of Directors of the Company at its meeting held on August 13, 2016 have declared interim dividend @ 50% on the paid up Equity share capital of the Company i.e., Rs. 1 per Equity share on face value of Rs. 2 each and no further dividend has been recommended for the Financial year ended December 31, 2016.

Extract of Annual Return

The Extract of Annual Return as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 in Form MGT-9 is annexed to this Boards'' Report (Annexure - 5).

The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is annexed to this Boards'' Report (Annexure - 6).

Risk Management Committee

The Risk Management Committee consists of the following Directors:

Mr. N. Radhakrishna Reddy, Chairman, Mr. N. Jagan Mohan Reddy, Managing Director and Mr. N. Sujith Kumar Reddy, Director.

Mr. T. Srinivasa Rao is the Chief Risk Officer and Mr. S. Venkat Ramana Reddy acts as Secretary to the Committee.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat risks. The Risk management procedures are reviewed by the Audit Committee and the Board of Directors on a Quarterly basis at the time of review of the Quarterly Financial Results of the Company.

During the Financial Year, Risk Management Committee Meeting was held on November 8, 2016.

Attendance at the Risk Management Committee Meeting:

Name of the Director

Designation

Number of Meetings

Held

Attended

Mr. N. Radhakrishna Reddy

Chairman

1

1

Mr. N. Jagan Mohan Reddy

Member

1

1

Mr. N. Sujith Kumar Reddy

Member

1

1

Corporate Social Responsibility (CSR)

Corporate Social Responsibility reflects the strong commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in a way that will lead to overall development of all stake holders and Society.

The Board of Directors of the Company have constituted a Corporate Social Responsibility Committee comprising of following Directors:

Mr. N. Jagan Mohan Reddy, Chairman, Mr. N. Sujith Kumar Reddy, Member and Ms. Nirmala Reddy, Member (Independent Director).

Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee.

During the last three years the Company has spent Rs. 7.80 million on CSR activities.

A Report on Corporate Social Responsibility as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Boards'' Report (Annexure - 7).

During the Financial Year, Corporate Social Responsibility Committee Meeting was held on August 10, 2016. Attendance at the Corporate Social Responsibility Committee Meeting:

Name of the Director

Designation

Number of Meetings

Held

Attended

Mr. N. Jagan Mohan Reddy

Chairman

1

1

Mr. N. Sujith Kumar Reddy

Member

1

1

Ms. Nirmala Reddy1

Member

1

N.A.

Mr. G. Krishna Prasad2

Member

1

1

1 Ms. Nirmala Reddy was appointed as an Independent Director w.e.f. September 30, 2016.

2 The term of appointment of Mr. G. Krishna Prasad, Independent Director of the Company has expired on September 30, 2016. Accordingly, Mr. G. Krishna Prasad is ceased to be an Independent Director of the Company w.e.f. September 30, 2016.

Mechanism for Evaluation of the Board

Evaluation of all Board members is performed on an annual basis. The evaluation is performed by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

Major criteria for evaluation of Independent Directors:

- Participation at the Board/Committee meetings, Commitment (including guidance provided to senior management outside of Board/Committee meetings);

- Effective deployment of knowledge and expertise;

- Effective management of relationship with stakeholders;

- Integrity and maintaining of confidentiality, Independence of behaviour and judgment;

- Impact and influence;

- Exercise of objective independent judgment in the best interest of the Company;

- Ability to contribute to and monitor corporate governance practice; and

- Adherence to the code of conduct for Independent Directors.

Major criteria for evaluation of Board of Directors:

- Development of suitable strategies and business plans at appropriate time and its effectiveness;

- Implementation of robust policies and procedures; and

- Determining the Size, structure and expertise of the Board.

Major criteria for evaluation of Managing Director:

- Achievement of financial/business targets prescribed by the Board;

- Developing and managing/executing business plans, operational plans, risk management and financial affairs of the organization; and

- Development of policies and strategic plans aligned with the vision and mission of Company and which harmoniously balance the needs of shareholders, clients, employees and other stakeholders.

Major criteria for evaluation of Non-Executive Directors :

- Participation at the Board/Committee meetings;

- Effective deployment of knowledge and expertise; and

- Independence of judgment.

Major criteria for evaluation of Committees:

- Discharge of its functions and duties as per its terms of reference, process and procedures followed for discharging its functions effectively; and

- Effectiveness of suggestions and recommendations received.

Major criteria for evaluation of Chairperson of the Board:

- Managing relationships effectively with the members of the Board and management;

- Providing ease of raising of issues and concerns by the Board members; and

- Promoting constructive debate and effective decision making at the board meetings.

On the basis of performance evaluation of Board of Directors, Managing Director, Independent Directors, Non-Executive Directors, Committees of Directors and Chairperson of the Board of the Company, all the Directors are recommended for continuation as Directors of the Company. The Directors expressed their satisfaction with the evaluation process.

Directors

Mr. N. Radhakrishna Reddy and Mr. N. Sujith Kumar Reddy, Directors of the Company retire by rotation and being eligible offer themselves for re-appointment.

Mr. Dipankar Basu, Mr. S.L. Rao and Mr. H.L. Zutshi were re-appointed for a Second term as Independent Directors of the Company w.e.f. September 30, 2016 and Ms. Nirmala Reddy was appointed as an Independent Director of the Company w.e.f. September 30, 2016.

The term of appointment of Mr. G. Krishna Prasad, Independent Director of the Company has expired on September 30, 2016. Accordingly, Mr. G. Krishna Prasad is ceased to be an Independent Director of the Company w.e.f. September 30, 2016.

IDBI Bank Limited vide their letter No. MCG-SSCB.53/586/Nom.8, dated November 19, 2016 has informed the Company that they have appointed Mr. Krishnan Narayanan as the Nominee Director on the Board of the Company in place of Mr. V. Narayanamurthy, w.e.f. November 28, 2016.

There has been no change in the Key Managerial Personnel during the year.

Deposits

The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Statutory Auditors

The Company''s Auditors, M/s. BSR and Associates LLP , Chartered Accountants (ICAI Regn. No.116231W/W-100024), were appointed as the Statutory Auditors of the Company for a period of 3 years at the 40th Annual General Meeting of the Company i.e., upto the conclusion of the 43rd Annual General Meeting of the Company, subject to ratification by members at every Annual General Meeting of the Company.

The Auditors have confirmed their eligibility under Section 141 of the Act and the Rules framed thereunder for reappointment as Auditors of the Company. As required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Accordingly, a resolution seeking Members'' ratification on the appointment of M/s. B S R & Associates LLP, Chartered Accountants, as the Statutory Auditors of the Company for the financial year ending December 31, 2017 is included in the Notice convening the Annual General Meeting.

Auditors Report

There are no qualifications, reservations or adverse remarks made by M/s. B S R & Associates LLP, Chartered Accountants (ICAI Regn. No.116231W/W-100024) Statutory Auditors in their report for the Financial Year ended December 31, 2016.

Secretarial Auditors Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed M/s. DVM Gopal & Associates, Practising Company Secretaries as Secretarial Auditors to conduct Secretarial Audit of the Company for the Financial year ended December 31, 2016.

The Secretarial Audit Report issued by M/s. DVM Gopal & Associates, Practising Company Secretaries in Form MR-3 is annexed to this Boards'' Report (Annexure - 8).

The Secretarial Audit Report does not contain any qualifications, reservation or adverse remarks.

Board''s response on Auditor''s qualification, Reservation or adverse Remarks or disclaimer made

There are no qualifications, reservations or adverse remarks made by the statutory auditors in their report or by the Practicing Company Secretary in the secretarial audit report for the year.

During the year, there were no instances of frauds reported by auditors under Section 143(12) of the Companies Act, 2013.

Internal Auditors

The Board of Directors of the Company have appointed M/s. Ernst & Young LLP as Internal Auditors to conduct Internal Audit of the Company for the Financial Year ended December 31, 2016.

Audit Committee

The Audit Committee consists of the following Directors:

Mr. H.L. Zutshi, Chairman, Mr. S. L. Rao, Mr. Dipankar Basu, Ms. Radhika Vijay Haribhakti, Ms. Nirmala Reddy and Mr. Krishnan Narayanan.

Except Mr. Krishnan Narayanan, Nominee Director, IDBI Bank Limited, all the members of the Audit Committee are Independent Directors.

There has been no such incidence where the Board has not accepted the recommendation of the Audit Committee during the year under review.

Four Audit Committee Meetings were held during the Financial year ended December 31, 2016. The maximum time gap between any two meetings was not more than one Hundred and Twenty days.

The Audit Committee meetings were held on February 18, 2016, May 4, 2016, August 12, 2016 and November 10, 2016.

Attendance at the Audit Committee Meetings:

Name of the Director

Designation

Number of Meetings

Held

Attended

Mr. H.L. Zutshi

Chairman

4

4

Mr. Dipankar Basu

Member

4

1

Mr. S.L. Rao

Member

4

4

Ms. Radhika Vijay Haribhakti

Member

4

3

Ms. Nirmala Reddy1

Member

4

1

Mr. V. Narayanamurthy5

Member

4

1

Mr. Krishnan Narayanan2

Member

4

N.A.

1Ms. Nirmala Reddy was appointed as an Independent Director w.e.f. September 30, 2016.

Corporate Governance Report

A separate report on Corporate Governance is annexed as part of the Annual Report along with the Auditor''s Certificate on its compliance.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of this mechanism and provides direct access to the Chairperson of the Audit Committee in exceptional cases. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The policy of vigil mechanism is available on the Company''s website.

The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. All employees of the Company are covered under the Whistle Blower Policy.

Statement of particulars of appointment and remuneration of managerial personnel

The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Boards'' Report (Annexure - 9).

Insurance

All properties and insurable interests of the Company have been fully insured.

Adequacy of internal financial controls with reference to the Financial Statements

1. The Company maintains all its records in ERP (SAP) System and the work flow and approvals are routed through ERP (SAP);

2. The Company has appointed Internal Auditors to examine the Internal Controls and verify whether the workflow of the organization is in accordance with the approved policies of the Company. In every Quarter, during approval of Financial Statements, the Internal Auditors present to the Audit Committee the Internal Audit Report and Management Comments on the Internal Audit observations; and

3. The Board of Directors of the Company have adopted various policies such as:

Related Party Transactions Policy, Whistle Blower Policy, Material Subsidiaries Policy, Corporate Social Responsibility Policy, Anti Corruption and Anti Bribery policy, Risk Management Policy, Dissemination of Material Events Policy, Documents preservation policy, Monitoring and Reporting Trading by Insiders, Code of Internal Procedures and Conduct for Regulating monitoring and reporting of trading by Insiders, Code of Practices and Procedures for Fair Disclosures, Policy on Prevention of Fraud 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.

Names of companies which have become or ceased to be Company''s Subsidiaries, joint ventures or associate companies during the year

During the Financial Year, Moonglow Company Business Inc., (a Step down wholly owned Subsidiary) is merged with the Company, Rain Global Holdings LLC, (a Step down wholly owned Subsidiary) merged with Rain Carbon Inc. (a Step down wholly owned Subsidiary), Rain CII Carbon Mauritius Limited has ceased to be subsidiary of the Company and Rain CTP Inc. (a Step down wholly owned Subsidiary) is merged with Rain CII Carbon LLC (a Step down wholly owned Subsidiary) and no Company has been added as Subsidiary / Joint Venture / Associate of the Company during the period under review.

Change in the nature of business

There has been no change in the nature of business of the Company.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future

There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

Material changes and commitments

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

Scheme of Arrangement between the Company, Rain Cements Limited (Wholly Owned Subsidiary Company) and Moonglow Company Business Inc. (Step down Wholly Owned Subsidiary Company).

The Hon''ble High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh vide its order dated July 29, 2016 approved the Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 read with Section 100 to 104 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013, between Rain Cements Limited (Wholly owned Subsidiary Company), Rain Industries Limited (Holding Company), Moon glow Company Business Inc. (Step down wholly owned Subsidiary Company) and their respective shareholders and creditors for Amalgamation of Moon glow Company Business Inc., (Step down wholly owned subsidiary) with Rain Industries Limited (Ultimate Holding Company).

The Board of Directors of the Company at their meeting held on October 8, 2016 have taken on record the order of Hon''ble High Court.

Form INC-28 along with Hon''ble High Court order was filed with the Registrar of Companies, Andhra Pradesh and Telangana at Hyderabad on October 20, 2016.

Financial Year of the Company

The Company Law Board vide its order dated October 16, 2015 permitted the Company to follow the Financial year from January 1 to December 31.

Accordingly, the Financial Year of the Company is from January 1 to December 31.

Meeting of Independent Directors

A Separate meeting of the Independent Directors was held on November 10, 2016, inter-alia, to discuss evaluation of the performance of Non- Independent Directors, the Board as a whole, evaluation of the performance of the Chairman, taking into account the views of the Executive and Non-Executive Directors and the evaluation of the quality, content and timelines of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

The Independent Directors expressed satisfaction with the overall performance of the Directors and the Board as a whole.

Business Responsibility Report

Pursuant to the Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Business Responsibility Report is annexed to this Boards'' Report (Annexure -10).

Human Resources

The Company believes that the quality of the employees is the key to its success and is committed to providing necessary human resource development and training opportunities to equip employees with additional skills to enable them to adapt to contemporary technological advancements.

Industrial relations during the year continued to be cordial and the Company is committed to maintain good industrial relations through effective communication, meetings and negotiation.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has not received any complaints during the year.

The Company regularly conducts awareness programs for its employees.

S.No.

Particulars

No.

1

Number of complaints on Sexual harassment received

Nil

2

Number of Complaints disposed off during the year

Not Applicable

3

Number of cases pending for more than ninety days

Not Applicable

4

Number of workshops or awareness programme against sexual harassment carried out

The Company regularly conducts necessary awareness programmes for its employees

5

Nature of action taken by the employer or district officer

Not Applicable

Environment, Health and Safety

The Company considers it is essential to protect the Earth and limited natural resources as well as the health and well being of every person.

The Company strives to achieve safety, health and environmental excellence in all aspects of its business activities. Acting responsibly with a focus on safety, health and the environment to be part of the Company''s DNA.

Indian Accounting Standards (Ind AS)

The company will adopt Indian Accounting Standards (Ind AS) with effect from 1st January, 2017 pursuant to Ministry of Corporate Affairs'' notification of the Companies (Indian Accounting Standards) Rules, 2015.

Dividend distribution policy

Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, requires that the top 500 listed companies based on the market capitalization to formulate Dividend Distribution Policy. In compliance of the said requirement, the company has formulated its Dividend Distribution Policy, the details of which are available on the company''s website at: http://www.rain-industries.com/investors.html

Compliance with Secretarial Standards on Board and General Meetings:

The company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

Prevention of Insider Trading Code.

As per SEBI (Prohibition of Insider Trading) Regulation, 2015, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Mr. S. Venkat Ramana Reddy, Company Secretary as Compliance Officer, who is responsible for setting forth procedures and implementation of the code for trading in Company''s securities. During the year under review there has been due compliance with the said code.

Acknowledgement

We express our sincere appreciation and thank our valued Shareholders, Customers, Bankers, Business Partners/ Associates, Financial Institutions, Insurance Companies, Central and State Government Departments for their continued support and encouragement to the Company.

We are pleased to record our appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors for Rain Industries Limited

N. Jagan Mohan Reddy N. Sujith Kumar Reddy

Place: Hyderabad Managing Director Director

Date : February 23, 2017 DIN: 00017633 DIN: 00022383


Dec 31, 2015

Dear Members,

The Directors have pleasure in presenting the 41st Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2015.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2015 are as under:

The financial summary

(INR Million)

PARTICULARS December 31, 2015 December 31, 2014

Total Revenue 1423.10 689.17

Profit before finance cost, depreciation and tax expense 516.97 566.69

Finance cost 235.43 221.56

Profit before depreciation and tax expense 281.54 345.13

Depreciation 15.71 5.16

Profit before tax expense 265.83 339.97

Tax expense 4.96 94.18

Net Profit for the year 260.87 245.79

Profit brought forward from earlier year 923.99 1,014.55

Profit available for appropriation 1184.86 1,260.34

Appropriations:

Dividend (Including Tax on Dividend) 336.35 336.35

Transfer to general reserve 26.09 -

Depreciation as per Transitional provisions of Companies Act, 2013 1.64 -

Surplus in Statement of Profit and Loss 820.78 923.99

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2015 are as under:

The financial summary

(INR Million)

PARTICULARS December 31, 2015 December 31, 2014

Total Revenue 1,02,981.67 120,143.37

Profit before finance cost, depreciation and amortization, impairment loss, exceptional items and tax expense 14,288.37 12,918.10

Finance cost 5,964.47 6,198.72

Profit before depreciation and amortization, impairment loss, exceptional items and tax expense 8,323.90 6,719.38

Depreciation and amortization 3,278.16 3,469.79

Profit before Impairment loss, exceptional items and tax expense 5,045.74 3,249.59

Impairment loss - 95.23

Profit before exceptional items, tax expense, share of loss of Associates and Minority Interest 5,045.74 3,154.36

Exceptional items 60.91 2,577.42 Profit before tax expense, share of loss of Associates and Minority Interest 4,984.83 576.94

Tax expense/ (Profit) 1,962.08 (120.61)

Profit after tax and Before share of loss of Associates and Minority Interest 3,022.75 697.55

Share of loss of associates 6.50 1.24

Minority interest (217.14) (188.99)

Net profit for the year 3,233.39 885.30

Profit brought forward from earlier year 25,072.11 24,523.16

Profit available for appropriation 28,305.50 25,408.46

Appropriations:

Dividend (Including Tax on Dividend) 519.81 336.35

Transfer to general reserve 265.00 -

Depreciation as per Transitional provisions of Companies Act, 2013 21.17 -

Surplus in Statement of Consolidated Profit and Loss 27,499.52 25,072.11

State of the Company's Affairs

During the period under review, the Company has achieved revenue of Rs.1,423.10 Million and net profit of Rs.260.87 Million on a standalone basis. During the same period, the Group has achieved revenue of Rs.102,981.67 Million and net profit of Rs.3,233.99 Million on a consolidated basis.

Overview of Carbon Products Business

Rain Group is one of the leading producers of Carbon products with Six operating facilities in North America, three operating facilities in Europe and one facility each in India, Canada, Russia and Egypt. Rain Group has expertise to co-generate Energy from waste heat recovered in the calcining process. Rain Group is co-generating Energy from four of its Carbon plants in the United States and one Carbon plant in India. In addition to the revenues generated from the sale of energy to third-parties, these co-generation facilities also reduce overall energy costs and dependence on third party suppliers for sourcing electricity.

Rain Group owns and operates dedicated deep-water vessel loading terminals at three of the Claimed Petroleum Coke (CPC) facilities (Lake Charles, Chalmette and Gramercy) and a barge dock at West Virginia CPC facility in the United States. Rain Group also operates two full- service petroleum coke laboratories.

The Group has recorded net revenue of Rs.71,814 million from the Carbon Products business during the financial year ended December 31, 2015 as compared to net revenue of Rs.83,972 million during the year ended December 31, 2014.

The Company has successfully completed the construction of its fourth Coal Tar Distillation Plant (CTP Plant) with a capacity of 300,000 metric tons per annum in Cherepovets, Russia on February 11, 2016 via a Joint Venture with PAO Severstal, Russia. The CTP Plant is expected to operate at about 70% of its capacity in the first year of its operation. The advanced technologies installed in this CTP Plant will enable production of vacuum-distilled CTP, which is of a higher quality vaccum in a higher margin product. The Joint Venture Partner, "PAO Severstal", has brought a long-term supply contract for the raw material - Coal Tar into this Joint Venture.

Outlook for Carbon Products Business

Calcined Petroleum Coke ("CPC") is produced from Green Petroleum Coke ("GPC"), a by-product of Crude Oil Refining process, through a process known as "Calcining" that removes moisture and volatile matter from GPC at high temperature. Similarly, the key raw material for Coal Tar Pitch ("CTP") is Coal Tar, a liquid by product produced in the coking process of converting coal into Metallurgical Coke.

Together, CPC and CTP constitute the critical component of Carbon Anodes used in the Aluminum smelting process. CPC and CTP are considered as essential materials for the Aluminum industry, as there are no known economically viable substitutes for these products.

As per the recent industry reports, approximately 77% of the world's CPC production and 79% of the world's CTP production is used in the production of Carbon Anodes in the Aluminum Smelting Process.

Production of primary Aluminum is one of the most important determinants of CPC and CTP demand. World production of primary Aluminum totaled approximately 57.6 million metric tons in 2015 and is expected to grow to approximately 68.4 million metric tons by 2020, representing a compounded annual growth rate of 3.5%. The growth in demand for Aluminum is expected to be driven by increasing use of lightweight materials in many key industries such as Automobiles, Aerospace, construction, packing and consumer electronics. This demand growth is expected to be met through the addition of new Aluminum smelters, largely in Asia and the Middle East.

From a medium to long term perspective, the performance of Rain Group, being one of the leading carbon producers with operating facilities across Globe is expected to be stable with continued demand from the growing Aluminum industry and the long term relationship with Aluminum Smelters, Crude Oil Refineries and Steel Producers.

Overview of Chemical Business

The Chemical products of Rain Group are derived from the downstream refining of primary coal tar distillates into chemical products such as aromatic chemicals, superplasticizers, resins and modifiers. These chemical products are used in a broad variety of end-markets including paints, coatings, construction, plastics, paper, tyres, rail ties, insulation and foam.

The Coal Tar distillation business of Rain can be grouped into two categories, the primary coal tar distillation business ("primary distillation") and the follow-on processing of selected co-products of primary distillation into chemicals ("downstream"). Therefore, the supply of Chemicals mostly depends on CTP production. Primarily the Chemicals business can be categorized into four sub product categories:

Super plasticizers: Super plasticizer business comprises of polymer-based products that are used especially as additives for concrete, gypsum and for other applications.

Resins & Modifiers: Resins business delivers specialty resins under the brand name NOVARES to niche markets with applications in the adhesives, coatings, rubber and printing ink industries as well as modifiers for high-performance coating systems, alternative environmental friendly substitutes for coatings applications and paper production applications.

Aromatic Chemicals: Aromatic Chemicals comprises aromatic hydrocarbons including anthracene, carbazole and other specialty chemicals that are used in a wide range of industries, such as paper, pharmaceutical, pigments and fragrance industries. They are even used in applications for growing high-tech industries including magnet wire for electrical motors.

Chemical Trading: ChemTrade business comprises the trading of crude benzene between coke operators and crude benzene processors as well as the trading of diverse chemical raw materials and products.

The Group has recorded net revenue of Rs.19,616 Million from the Chemical Business during the financial year ended December 31, 2015 as compared to net revenue of Rs. 24,629 Million during the year ended December 31, 2014.

Outlook for Chemical Business

With improving economic prospects, particularly through the development of the manufacturing sector, global annual growth in Chemicals is projected to be 3.3% in CY16 and 3.7% in CY17. The most significant growth will originate in the developing nations of Asia-Pacific, Africa and the Middle-East.

Due to competitive advantages from shale gas, which led to an increasing supply of cheap shale-derived raw materials like natural gas, North America is also expected to generate strong growth. According to the US chemical industry association, American Chemistry Council (ACC), chemical output in the US is expected to grow by 2.9% in CY16 and by 4.4% in CY17.

Growth is estimated to be moderate in Europe since reliable access to low-cost feedstock from shale gas is not available. But European chemical exports are expected to be supported by favorable Euro exchange rates. According to ACC chemical production in Western Europe is expected to grow by 2% and in Central/Eastern Europe by 3.1% and 3.7% in CY16 and CY17 respectively.

In general, the global chemical industry expects improvement for years to come through stronger global growth in both the manufacturing industry and by consumer demand.

Overview of Cement Business

Rain Industries Limited, through one of its wholly owned subsidiaries, is engaged in the business of production and sale of Cement.

Rain Group is operating one Cement plant in the state of Andhra Pradesh and another Cement plant in the state of Telangana and one Fly Ash Handling and Cement Packing facility in the state of Karnataka.

Rain Group through its vast chain of dealer network sells Cement, under the brand name "Priya Cement", in the states of Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Maharashtra, Odisha and Kerala.

The Group has recorded net revenue of Rs.10,288 Million from Cement Business during the Financial Year ended December 31, 2015 compared to net revenue of Rs. 8,735 Million during the year ended December 31, 2014.

Outlook for Cement Industry

The Indian cement industry has witnessed a massive capacity addition of over approximately 197 million metric tons during last 7 years. This capacity addition is disproportionately high in South India. During the same period, South Indian cement capacity alone has increased by approximately 78 million tons. This has resulted in significant pressure on capacity utilization and price realization, as well.

India's cement industry's average utilization has come down drastically from approximately 95% in CY08 to approximately 71% in CY15, led by weak demand and an oversupply in the industry. Cement demand and capacity utilization are expected to improve, led by a slower pace in capacity addition and better demand prospects.

Until CY14, the Southern region (especially Andhra Pradesh) was facing demand issues due to political instability and delays in projects across the sectors. However, with the split of Andhra Pradesh into two states, which required the establishment of a new government in the new state of Telangana, we expect demand to pick up and utilization to improve on the back of fresh demand for housing, urban and infrastructure development from the new states. Telangana is undertaking major irrigation projects and Andhra Pradesh is committed to building a new capital city by CY18.

Listing of Equity Shares

The Company's Equity shares are listed at the following Stock Exchanges:

(i) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001; and

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2015-16.

Subsidiary Companies

As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the Subsidiary Companies/ Associate Companies/Joint Ventures in Form AOC-1 is enclosed as Annexure- 1 to this Report.

Performance and financial position of each of the subsidiaries, associates and joint ventures As per Rule 8 of Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies of the Company is enclosed as Annexure - 1A to this Report.

Consolidated Financial Statements

The consolidated financial statements prepared and annexed in accordance with the Accounting Standards 21 and 23 as prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014 and Guidelines issued by Securities and Exchange Board of India ("SEBI") also forms part of this Annual Report.

As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.rain-industries.com and copy of separate audited financial statements of its subsidiaries will be provided to the shareholders at their request.

Share Capital

The Paid-up Share Capital of the Company as on 31st December, 2015 is Rs. 672,691,358.

Number of Meetings of the Board of Directors

During the year under review, six Board Meetings were held.

The dates on which the Board meetings were held are 27th February, 2015, 5th May, 2015, 11th June, 2015, 14th August, 2015, 10th November, 2015 and 30th December, 2015.

The details of the attendance of the Directors at the Board meetings held during the year ended December 31, 2015 are given below:

Number of Name of the Director Board Meetings

Held Attended

Mr. N. Radhakrishna Reddy 6 5

Mr. N. Jagan Mohan Reddy 6 6

Mr. N. Sujith Kumar Reddy 6 4

Mr. G. Krishna Prasad 6 5

Mr. V. Narayanamurthy 6 1

Mr. S L Rao 6 5

Mr. Dipankar Basu 6 4

Mr. H L Zutshi 6 6

Ms. Radhika Vijay Haribhakti 6 6

Management Discussion And Analysis

The Management Discussion and Analysis forms an integral part of this Report and gives details of the overall industry structure, developments, performance and state of affairs of the Company's various businesses viz., Carbon Products, Chemicals, Cement, internal controls and their adequacy, risk management systems and other material developments during the financial year.

Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013 Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2015 and of Profit and Loss Account of the Company for that period;

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

iv) that the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2015 on a going concern basis;

v) that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149 The independent directors have submitted the declaration of independence, as required pursuant to sub-section (7) of section 149 of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6) of Section 149.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of the following Directors namely Mr. H. L. Zutshi, Chairman, Mr. S. L. Rao, Mr. Dipankar Basu, Mr. V. Narayanamurthy and Ms. Radhika Vijay Haribhakti.

* Brief description of terms of reference:

- Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal;

- Carry on the evaluation of every director's performance;

- Formulation of the criteria for determining qualifications, positive attributes and independence of a director;

- Recommend to the Board a policy relating to the remuneration of the directors, key managerial personnel and other employees; and

- Formulation of criteria for evaluation of Independent Directors and the Board.

- Nomination and Remuneration policy The objectives of the Policy

1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

2. To determine remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in peer companies.

3. To carry out evaluation of the performance of Directors.

4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company's operations.

5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

Nomination and Remuneration Committee meetings

- During the period from January 1, 2015 to December 31, 2015, Nomination and Remuneration Committee Meetings were held on February 27, 2015, November 9, 2015 and December 30, 2015.

Attendance at the Nomination and Remuneration Committee Meeting

Name of the Director Designation Number of Meetings

Held Attended

Mr. H L Zutshi Chairman 3 3

Mr. Dipankar Basu Member 3 1

Mr. S L Rao Member 3 2 Mr. V. Narayanamurthy Member 3 1 Ms. Radhika Vijay Haribhakti Member 3 3

Mr. G. Krishna Prasad1 Member 3 1

1Mr. G. Krishna Prasad is ceased to be member of Nomination and Remuneration Committee with effect from February 28, 2015.

Particulars of Loans, Guarantees or Securities or Investments under Section 186 The details of Loans, Guarantees, Securities and Investments made during the Financial Year ended December 31, 2015 are given in Annexure - 2 in compliance with the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Particulars of Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements with related parties in Form No. AOC-2 are enclosed as Annexure - 3 to this Report.

Transfer of Amount to Reserves

The Company proposes to transfer 10% of its Net Profits for the Financial Year ended 31st December, 2015 i.e., Rs. 26.09 Million to the general reserve for the Financial Year ended 31st December, 2015.

Dividend

The Board of Directors of the Company at its meeting held on August 14, 2015 have declared interim dividend @ 50% on the paid up Equity share capital of the Company i.e., Rs.1.00 per Equity share on face value of Rs.2 each.

The Board of Directors of the Company now recommend that the Interim Dividend be the Final Dividend for the financial year ended December 31, 2015.

Extracts of Annual Return

The Extracts of Annual Return as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 in Form MGT-9 are enclosed as Annexure - 4 to this Report.

The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014 Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is enclosed as Annexure - 5 to this Report.

Risk Management Committee

Risk Management Committee consists of the following persons namely Mr. N. Jagan Mohan Reddy, Managing Director, Mr. N. Sujith Kumar Reddy, Director and Mr. T. Srinivasa Rao, Chief Financial Officer.

Mr. T. Srinivasa Rao is the Chief Risk Officer and Mr. S. Venkat Ramana Reddy acts as Secretary to the Committee.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management procedure will be reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company.

During the Financial Year, Risk Management Committee Meeting was held on November 7, 2015.

Attendance at the Risk Management Committee Meeting:

Name of the Director Designation Number of Meetings

Held Attended

Mr. N. Jagan Mohan Reddy Chairman 1 1

Mr. N. Sujith Kumar Reddy Member 1 1

Mr. T. Srinivasa Rao Chief Risk Officer 1 1

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and Society.

The Board of Directors of the Company have constituted Corporate Social Responsibility Committee consisting of following persons namely Mr. N. Jagan Mohan Reddy, Chairman, Mr. N. Sujith Kumar Reddy, Member and Mr. G. Krishna Prasad, Member (Independent Director) and adopted policy for Corporate Social Responsibility.

Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee.

Report on Corporate Social Responsibility as Per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure - 6 to this Report.

During the Financial Year, Corporate Social Responsibility Committee Meeting was held on November 9, 2015. Attendance at the Corporate Social Responsibility Committee Meeting

Name of the Director Designation Number of Meetings

Held Attended

Mr. N. Jagan Mohan Reddy Chairman 1 1

Mr. N. Sujith Kumar Reddy Member 1 1

Mr. G. Krishna Prasad Member 1 1

Mechanism for Evaluation of Board

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

The criteria covered various aspects for evaluation of Independent Directors such as Participation at the Board/Committee meetings, Commitment (including guidance provided to senior management outside of Board/Committee meetings), Effective deployment of knowledge and expertise, Effective management of relationship with stakeholders, Integrity and maintaining of confidentiality, Independence of behaviour and judgment, Impact and influence, Exercise of objective independent judgment in the best interest of the Company, Ability to contribute to and monitor corporate governance practice and Adherence to the code of conduct for independent directors, for Evaluation of the Board aspects such as Development of suitable strategies and business plans at appropriate time and its effectiveness, Implementation of robust policies and procedures and Size, structure and expertise of the Board were considered, for Evaluation of the Whole Time Director aspects such as Achievement of financial/business targets prescribed by the Board, Developing and managing/executing business plans, operational plans, risk management and financial affairs of the organization and Development of policies and strategic plans aligned with the vision and mission of Company and which harmoniously balance the needs of shareholders, clients, employees and other stakeholders were considered, for evaluation of Non-Executive Directors aspects such as Participation at the Board/Committee meetings, Effective deployment of knowledge and expertise; Independence of behaviour and judgment were considered, for evaluation of the Committees aspects such as Discharge of its functions and duties as per its terms of reference, Process and procedures followed for discharging its functions, Effectiveness of suggestions and recommendations received were considered, for evaluation of Chairperson of the Board aspects such as Managing relationship with the members of the Board and management, Providing ease of raising of issues and concerns by the Board members and Promoting constructive debate and effective decision making at the board were considered.

Directors

Mr. N. Radhakrishna Reddy and Mr. N. Sujith Kumar Reddy, Directors of the Company retires by rotation and being eligible offer themselves for re-appointment.

The Board of Directors of the Company at their meeting held on November 10, 2015 re-appointed Mr. N. Jagan Mohan Reddy (DIN: 00017633) as a Managing Director of the Company for a period of 5 years with effect from November 10, 2015 (i.e., from November 10, 2015 to November 9, 2020) subject to the approval of shareholders of the Company.

Except Mr. N. Jagan Mohan Reddy, Managing Director no other Director or Key Managerial Personnel were Appointed or have resigned during the Year.

Deposits

The Company has not accepted any deposits from public in terms of Section 73 of the Companies Act, 2013 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Statutory Auditors

The shareholders of the Company at the 40th Annual General Meeting held on 11th June, 2015 approved the appointment of M/s. B S R & Associates LLP, Chartered Accountants, (ICAI Regn. No.116231W/W-100024) as Statutory Auditors of the Company to hold office till the conclusion of 43rd Annual General Meeting subject to ratification of shareholders at every Annual General Meeting.

M/s. B S R & Associates LLP, Chartered Accountants (ICAI Regn. No.116231W/W-100024) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013.

Accordingly, a resolution seeking Members' ratification on appointment of M/s. B S R & Associates LLP, Chartered Accountants, as the Statutory Auditors of the Company for the financial year ending 31st December, 2016 is included at Item No.6 of the Notice convening the Annual General Meeting.

Auditors Report

There are no qualifications, reservations or adverse remarks made by M/s. B S R & Associates LLP, Chartered Accountants (ICAI Regn. No.116231W/W-100024) Statutory Auditors in their report for the Financial Year ended December 31, 2015.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

Internal Auditors

The Board of Directors of the Company have appointed M/s. Ernst & Young LLP as Internal Audtiors to conduct Internal Audit of the Company for the Financial Year ended 31st December, 2015.

Audit Committee

Audit Committee consists of the following Directors namely Mr. S. L. Rao, Chairman, Mr. Dipankar Basu, Mr. H. L. Zutshi, Ms. Radhika Vijay Haribhakti and Mr. V. Narayanamurthy.

Except Mr. V. Narayanamurthy, Nominee Director, IDBI Bank Limited, all the members of the Audit Committee are Independent Directors.

There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review.

Six Audit Committee Meetings were held during the Financial year ended December 31, 2015. The maximum time gap between any of the two meetings was not more than one Hundred and Twenty days.

The Audit Committee meetings were held on February 26, 2015, May 4, 2015, June 11, 2015, August 13, 2015, November 9, 2015 and December 30, 2015.

- Attendance at the Audit Committee Meetings:

Name of the Director Designation Number of Meetings

Held Attended

Mr. S L Rao Chairman 6 5

Mr. Dipankar Basu Member 6 4

Mr. H L Zutshi Member 6 6

Mr. V. Narayanamurthy Member 6 1

Ms. Radhika Vijay Haribhakti Member 6 5

Mr. G. Krishna Prasad1 Member 6 1

1Mr. G. Krishna Prasad is ceased to be member of Audit Committee with effect from February 28, 2015.

Corporate Governance

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditor's Certificate on its compliance.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and provides direct access to the Chairperson of the Audit Committee in exceptional cases. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The policy of vigil mechanism is available on the Company's website The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy.

Secretarial Auditor Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013, and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. DVM Gopal & Associates, Practising Company Secretaries as Secretarial Auditors to conduct Secretarial audit of the company for the Financial year ended December 31, 2015.

The Secretarial Audit Report issued by M/s. DVM Gopal & Associates, Practising Company Secretaries in Form MR-3 is enclosed as Annexure - 7 to this Annual Report.

The Secretarial Audit Report does not contains any qualifications, reservation or adverse remarks.

Statement of particulars of appointment and remuneration of managerial personnel The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 8 to this Annual Report.

Insurance

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

Details in respect of adequacy of internal financial controls with reference to the Financial Statements

1. The Company maintains all its records in SAP System and the work flow and approvals are routed through SAP;

2. The Company has appointed Internal Auditors to check the Internal Controls and also check whether the workflow of the organization is in accordance with the approved policies of the Company. In every Quarter, during approval of Financial Statements, Internal Auditors will present to the Audit Committee, the Internal Audit Report and Management Comments on the Internal Audit observations; and

3. The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Material Subsidiaries Policy, Corporate Social Responsibility Policy, Anti corruption and Anti Bribery 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, policy on prevention of fraud 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.

The names of companies which have become or ceased to be Company's Subsidiaries, joint ventures or associate companies during the year:

During the Financial Year, Zhenjiang Xin Tian Tansu Co. Ltd ceased to be subsidiary of the Company and Rain RÜTGERS CTP LLC, Rain Holding Germany GmbH, RÜTGERS Wohnimmobilien GmbH & Co. KG and RÜTGERS Gewerbeimmobilien GmbH & Co. KG have become Subsidiaries of the Company.

Change in the nature of business

There is no change in the nature of business of the Company.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

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 December, 2015 to which the financial statements relates and the date of signing of this report.

Scheme of Arrangement between the Company, Rain Cements Limited (Wholly Owned Subsidiary Company) and Moonglow Business Inc., (Step down Wholly Owned Subsidiary Company).

The Company made an application with the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh for approval of the Scheme of Arrangement between the Company, Rain Cements Limited (Wholly Owned Subsidiary Company) and Moonglow Business Inc., (Step down Wholly Owned Subsidiary Company) and their respective Shareholders and Creditors under Section 391 to 394 of the Companies Act, 1956.

The Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh vide its order dated November12, 2015, directed the Company to convene Meeting of the Shareholders of the Company on January19, 2016 at 11.00 a.m. at K L N Prasad Auditorium, FTAPCCI, Red Hills, Hyderabad for obtaining approval for the Scheme of Arrangement between the Company, Rain Cements Limited, Moonglow Company Business Inc., and their respective shareholders and creditors.

The Company has duly convened the meeting of the Shareholders and obtained approval for the Scheme of Arrangement with the requisite majority.

The Company has filed a Petition with the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh for approval of the Scheme of Arrangement.

Company Law Board Order allowing Company to follow calendar year as financial year

As per the provisions of Section 2(41) of the Companies Act, 2013, every Company is required to follow a uniform financial year i.e., from 1st April to 31st March.

The Company follows financial year which is from 1st January to 31st December.

As per the provisions of Section 2(41) of the Companies Act, 2013, a Company is allowed to have financial year different from the financial year prescribed under Companies Act, 2013, provided such Company takes approval from Company Law Board.

The Company made an application to Company Law Board to seek its approval to follow the financial year from 1st January to 31st December.

The Company Law Board vide its order dated 16th October, 2015 permitted the Company to follow the Financial year from 1st January to 31st December.

Human Resources

The industrial relations of the Company continued to be harmonious during the year under review.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31st December, 2015, the Company has not received any Complaints pertaining to Sexual Harassment.

Acknowledgement

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors

for Rain Industries Limited



N. Jagan Mohan Reddy N. Sujith Kumar Reddy

Place: Hyderabad Managing Director Director

Date : February 19, 2016 DIN: 00017633 DIN: 00022383


Dec 31, 2014

Dear Members,

The Directors have pleasure in presenting the 40th Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2014.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2014 is as under:

The financial summary

(Rs. in thousands)

PARTICULARS December 31, December 31, 2014 2013

Total Revenue 689,172 1,291,667

Profit before finance cost, depreciation and tax expense 566,698 542,229

Finance cost 221,558 256,687

Profit before depreciation and tax expense 345,140 285,542

Depreciation 5,160 5,034

Profit before tax expense 339,980 280,508

Tax expense 94,184 127,533

Net Profit for the year 245,796 152,975

Profit brought forward from earlier year 1,014,549 1,205,317

Profit available for appropriation 1,260,345 1,358,292

Appropriations:

Dividend (Including Tax on Dividend) 336,346 333,031

Transfer to general reserve - -

Transfer to capital redemption reserve - 10,712

Surplus in Statement of Profit and Loss 923,999 1,014,549

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2014 is as under:

The financial summary

(Rs. in thousands) PARTICULARS December 31, December 31, 2014 2013

Total Revenue 120,143,369 118,009,670

Profit before finance cost, depreciation and amortization, impairment loss, exceptional items and tax expense 12,918,098 15,040,536

Finance cost 6,198,722 5,933,911

Profit before depreciation and amortization, impairment loss, exceptional items and tax expense 6,719,376 9,106,625

Depreciation and amortisation 3,469,794 3,568,226

Profit before impairment loss, exceptional items and tax expense 3,249,583 5,538,399

Impairment loss 95,230 1,303,560

Profit before exceptional items, tax expense, share of loss of Associates and Minority Interest 3,154,353 4,234,839

Exceptional items 2,577,419 -

Profit before tax expense, share of loss of Associates and Minority Interest 576,934 4,234,839

Tax expense/(Profit) (120,614) 367,236

Profit after tax and Before share of loss of Associates and Minority Interest 697,548 3,867,603

Share of loss of associates 1,238 12,143

Minority interest (188,992) 10,205

Net profit for the year 885,302 3,845,255

Profit brought forward from earlier year 24,523,153 21,046,248

Profit available for appropriation 25,408,455 24,891,503

Appropriations:

Dividend (Including Tax on Dividend) 336,346 343,162

Transfer to general reserve - 14,476

Transfer to capital redemption reserve - 10,712

Surplus in Statement of Consolidated Profit and Loss 25,072,109 24,523,153

State of the Company''s Affairs

During the period under review, the Company has achieved revenue of Rs. 689,172 (in thousands) and net profit of Rs. 245,796 (in thousands) on a standalone basis. During the same period, the Company has achieved revenue of Rs. 120,143,369 (in thousands) and net profit of Rs. 885,302 (in thousands) on a consolidated basis.

OVERVIEW OF CARBON PRODUCTS BUSINESS

Rain Group is one of the leading producers of the Carbon products with Six operating facilities in North America, Three operating facilities in Europe and One facility each in India, Canada, and Egypt. Rain Group has expertise to co-generate Energy from waste heat recovered in the calcining process. With the installation of the new facility at Lake Charles calcining facility in the United States, currently Rain Group is co-generating Energy from four of its Carbon plants in the United States and one Carbon plant in India. In addition to the revenues generated from the sale of energy to third-parties, these co-generation facilities also reduce overall energy costs and dependence on third party suppliers for sourcing electricity.

Rain Group owns and operates dedicated deep-water vessel loading terminals at three of the Calcined Petroleum Coke (CPC) facilities (Lake Charles, Chalmette and Gramercy) and a barge dock at West Virginia CPC facility in the United States. Rain Group also operates two full-service petroleum coke laboratories.

The Group has recorded net revenue of Rs. 83,972.4 Million from the Carbon Products business during the financial year ended December 31, 2014 as compared to net revenue of Rs. 82,707.3 Million during the year ended December 31, 2013.

The Company is in the process of setting up its fourth Coal Tar Distillation plant with a capacity of 300,000 tons per annum in Russia as a Joint Venture with Severstal, one of the leading steel producers in Russia. The project is progressing well and the detailed engineering has been finalized, all key equipment reached the construction site and construction is in progress. The operations are expected to commence in second half of 2015.

The Brownfield expansion of Phthalic Anhydride ("PA") Project of RÜTGERS Belgium N.V. in Zelzate, Belgium was successfully completed on time and within budget. The PA Project has started commercial production from October 6, 2014 and the plant has achieved its rated capacity and quality.

OUTLOOK FOR CARBON PRODUCTS BUSINESS

Calcined Petroleum Coke ("CPC") is produced from Green Petroleum Coke ("GPC"), a by-product of Crude Oil Refining process, through a process known as "Calcining" that removes moisture and volatile matter from GPC at high temperature. Similarly the key raw material for Coal Tar Pitch ("CTP") is Coal Tar, a liquid by product produced in the coking process of converting coal into Metallurgical Coke.

Together, CPC and CTP comprise the critical component of Carbon Anodes used in the Aluminum smelting process. CPC and CTP are considered as essential materials for the Aluminum industry, as there are no known economically viable substitutes for these products.

As per the recent industry reports, approximately 77% of the world''s CPC production and 79% of the world''s CTP production is used in the production of Carbon Anodes in the Aluminum Smelting Process.

Production of primary Aluminum is one of the most important determinants of CPC and CTP demand. World production of primary Aluminum totaled approximately 53.8 million metric tons in 2014 and is expected to grow to approximately 62.6 million metric tons by 2017, representing a compounded annual growth rate of 5.2%. The growth in the demand for Aluminum is expected to be driven by increasing use of lightweight materials in many key industries such as Automobiles, Aerospace, Construction, packing and consumer electronics. This demand growth is expected to be met through the addition of new Aluminum smelters, largely in Asia and the Middle East.

From a medium to long term perspective, the performance of Rain Group, being one of the leading carbon producers with operating facilities across Globe is expected to be stable with the continued demand from the growing Aluminum industry and the long term relationship with Aluminum Smelters, Crude Oil Refineries and Steel Producers.

OVERVIEW OF CHEMICAL BUSINESS

The Chemicals products of Rain Group are derived from the downstream refining of primary coal tar distillates into chemical products such as aromatic chemicals, superplasticizers, resins and modifiers. These chemical products are used in a broad variety of end-markets including paints, coatings, construction, plastics, paper, tires, rail ties, insulation and foam.

The Coal Tar distillation business of Rain can be grouped into two categories, the primary coal tar distillation business ("primary distillation") and the follow-on processing of selected co-products of primary distillation into chemicals ("downstream"). Therefore, the supply of Chemicals mostly depends on CTP production. Primarily the Chemicals business can be categorized into four sub product categories:

Superplasticizers: Superplasticizer business comprises polymer-based products that are used especially as additives for concrete, gypsum and for other applications.

Resins & Modifiers: Resins business delivers specialty resins under the brand name NOVARES to niche markets with applications in the adhesives, coatings, rubber and printing ink industries as well as modifiers for high- performance coating systems, alternative environmental friendly substitutes for coatings applications and paper production applications.

Aromatic Chemicals: Aromatic Chemicals comprises aromatic hydrocarbons including anthracene, carbazole and other specialty chemicals that are used in a wide range of industries, such as paper, pharmaceutical, pigments and fragrance industries. They are even used in applications for growing high-tech industries including magnet wire for electrical motors.

Chemical Trading: ChemTrade business comprises the trading of crude benzene between coke operators and crude benzene processors as well as the trading of diverse chemical raw materials and products.

The Group has recorded net revenue of Rs.24,629.1 Million from the Chemical Business during the financial year ended December 31, 2014 as compared to net revenue of Rs. 23,935.7 Million during the year ended December 31, 2013.

OUTLOOK FOR CHEMICAL BUSINESS

With improving economic prospects, in particular through the development of the manufacturing sector, global annual growth in Chemicals is projected to be 3.6% in 2015 and 3.9% in 2016. The strongest effects will be originated by the developing nations of Asia, Africa and the Middle East.

Due to competitive advantages from shale gas, which led to increasing supply of cheap shale derived raw materials, like natural gas, North America is also expected to generate strong growth. According to U.S.''s chemical industry association ACC (American Chemistry Council), chemical output in the U.S. is expected to grow by 3.7% in 2015 and by 3.9% in 2016.

As in Europe reliable access to low-cost feedstock from shale gas is not available, growth is estimated to be more moderate. According to Europe''s leading chemical industry association CEFIC, chemical production in Europe is expected to grow by only 1% in 2015.

For Germany an estimated 1.5% growth for 2015 is expected, compared to a decrease of 0.5% in 2014.

In general the global Chemical industry expects an improvement for the years to come through strengthening production volumes and global capacity utilization.

OVERVIEW OF CEMENT BUSINESS

Rain Industries Limited, through one of its wholly owned subsidiaries, is engaged in the business of production and sale of Cement.

Rain Group is operating one Cement plant in the state of Andhra Pradesh and one Cement plant in the state of Telangana and one Fly Ash Handling and Cement Packing facility in the state of Karnataka.

Rain Group through its vast chain of dealer network sells Cement, under the brand name "Priya Cement", in the states of Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Maharashtra, Odisha and Kerala.

The Group has recorded net revenue of Rs.8,734.8 Million from Cement Business during the Financial Year ended December 31, 2014 compared to net revenue of Rs. 8,395.6 Million during the year ended December 31, 2013.

OUTLOOK FOR CEMENT INDUSTRY

The Indian Cement industry has witnessed massive capacity addition of over 125 million tons during last five years with the growth in capacity addition is disproportionately high in South India. During the same period, South Indian Cement Capacity has increased by approximately 55 million tons. This has resulted in significant pressure on capacity utilization. While the capacity utilizations on Pan India basis is still around 73% for FY 2014 the capacity utilization in South India is only about 55% for FY 2014.

With a stable new government at the centre and in the states of Telangana and Andhra Pradesh, we expect the core thrust to be on infrastructure-driven growth. Based on the recent reports which suggests that cement demand in India is expected to reach 550-600 MT by 2025, against a current capacity of 360 MT (second largest after China).

Listing of Equity Shares

The Company''s Equity shares are listed at the following Stock Exchanges:

(i) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001; and

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2014-15.

Performance and financial position of each of the subsidiaries, associates and joint venture.

Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies of the Company is prepared and same is enclosed as Annexure -1 to this Report.

Subsidiary Companies

As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies/ Associate Companies/Joint Ventures is prepared in Form AOC-1 and same is enclosed to this Report.

Consolidated Financial Statements

Consolidated financial statements have been prepared by the Company''s Management in accordance with the requirements of Accounting Standards 21 issued by Institute of Chartered Accountants of India (ICAI) and as per the provisions of Companies Act, 2013.

As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.rain-industries.com and copy of separate audited financial statements of its subsidiaries will be provided to the shareholders at their request.

Number of Meetings of the Board of Directors

During the year ended December 31, 2014, five Board Meetings were held.

The dates on which the Board meetings were held are February 26, 2014, March 28, 2014, May 8, 2014, August 14, 2014 and November 6, 2014.

Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors'' Responsibility Statement, the Board of Directors of the Company hereby confirms:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2014 and of Profit and Loss Account of the Company for that period;

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

iv) that the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2014 on a going concern basis;

v) that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6).

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of the following Directors namely Mr. H. L. Zutshi, Chairman, Mr. S. L. Rao, Mr. Dipankar Basu, Mr. V. Narayanamurthy, Mr. G. Krishna Prasad and Ms. Radhika Vijay Haribhakti.

- Brief description of terms of reference:

- identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal;

- carry on the evaluation of every director''s performance;

- formulation of the criteria for determining qualifications, positive attributes and independence of a director;

- recommend to the Board a policy relating to the remuneration of the directors, key managerial personnel and other employees;

- formulation of criteria for evaluation of Independent Directors and the Board;

- devising a policy on Board diversity; and

- any other matter as the Board may decide from time to time.

- Nomination and Remuneration policy

The objectives of the Policy

1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

2. To determine remuneration based on the Company''s size and financial position and trends and practices on remuneration prevailing in peer companies.

3. To carry out evaluation of the performance of Directors.

4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company''s operations.

5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

Particulars of Loans, Guarantees or Investments under Section 186

The details of Loans, Guarantees, Investments given during the Financial Year ended on December 31, 2014 is given in Annexure-2 in compliance with the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Particulars of Contracts or Arrangements with Related Parties Referred to in Sub-Section (1) of Section 188

The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 is prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure - 3 to this Report.

Transfer of Amount to Reserves

The Company does not proposes to transfer any amount to the general reserve for the Financial Year ended 31st December, 2014.

Dividend

The Board of Directors of the Company at its meeting held on November 6, 2014 have declared interim dividend @ 50% on the paid up Equity share capital of the Company i.e., Rs.1.00 per Equity share on face value of Rs.2 each.

The Board of Directors of the Company now recommend that the Interim Dividend be the Final Dividend for the financial year ended December 31, 2014.

Extracts of Annual Return

The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - 4 to this Report.

The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - 5 to this Report.

Risk Management Committee

Risk Management Committee consists of the following persons namely Mr. N. Jagan Mohan Reddy, Managing Director, Mr. N. Sujith Kumar Reddy, Director and Mr. T. Srinivasa Rao, Chief Financial Officer.

Mr. T. Srinivasa Rao is the Chief Risk Officer and Mr. S. Venkat Ramana Reddy acts as Secretary to the Committee.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management procedure will be reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company.

Corporate Social Responsibility Committee

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stakeholders and Society.

The Board of Directors of the Company have constituted Corporate Social Responsibility Committee consisting of following persons namely Mr. N. Jagan Mohan Reddy, Chairman, Mr. N. Sujith Kumar Reddy, Member and Mr. G. Krishna Prasad, Member (Independent Director) and adopted policy for Corporate Social Responsibility.

Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee.

Report on Corporate Social Responsibility as Per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is prepared and the same is enclosed as Annexure - 6 to this Report.

Mechanism for Evaluation of Board

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

A) Criteria for evaluation of Board of Directors as a whole

i. The frequency of meetings;

ii. The length of meetings;

iii. The administration of meeting;

iv. The number of committees and their roles;

v. The flow of information to board members and between board members;

vi. The quality and quantity of information; and

vii. The Disclosure of Information to the stakeholders.

B) Criteria for evaluation of the Individual Directors

i. Ability to contribute and monitor corporate governance practices;

ii. Ability to contribute by introducing best practices to address top management issues;

iii. Participation in long term strategic planning;

iv. Commitment to the fulfillment of director obligations and fiduciary responsibilities;

v. Guiding strategy;

vi. Monitoring management performance and development;

vii. Statutory compliance & Corporate governance;

viii. Attendance and contribution at Board / Committee meetings;

ix. Time spent by each of the member; and

x. Core competencies.

Directors

Mr. N. Radhakrishna Reddy and Mr. N. Sujith Kumar Reddy, Directors of the Company retires by rotation and being eligible offer themselves for re-appointment.

Details of Directors or Key Managerial Personnel Who Were Appointed or have resigned during the Year

The shareholders of the Company have re-appointed Mr. Dipankar Basu, Mr. S.L. Rao, Mr. H.L. Zutshi and Mr. G. Krishna Prasad as Independent Directors of the Company for a period of 2 years with effect from September 30, 2014 to September 29, 2016.

To broad base the Board the Board of Directors have appointed Ms. Radhika Vijay Haribhakti as an Additional Director (Independent Woman Director) on the Board.

Mr. T. Srinivasa Rao, has been designated as Chief Financial Officer of the Company pursuant to provisions of Section 203 of the Companies Act, 2013.

Deposits

The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013.

Statutory Auditors

The Shareholders of the Company at the Annual General Meeting held on May 8, 2014 have appointed M/s. B S R & Associates LLP, Chartered Accountants as Statutory Auditors of the Company.

The term of M/s. B S R & Associates LLP, Chartered Accountants, Statutory Auditors will expire on the date of 40th Annual General Meeting to be held on June 11, 2015.

It is proposed to re-appoint them as Statutory Auditors of the Company for a period of 3 consecutive years. The members are requested to consider their re-appointment and authorize the Board of Directors to fix their remuneration.

M/s. B S R & Associates LLP, Chartered Accountants (ICAI Regn. No.116231W/W-100024) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013.

Auditors Report

M/s. B S R & Associates LLP, Chartered Accountants (ICAI Regn. No.116231W/W-100024) have issued Auditors Report for the Financial Year ended 31st December, 2014 and there are no qualifications in Auditors'' Report.

Internal Auditors

The Board of Directors of the Company have appointed M/s. Ernst & Young LLP to conduct Internal Audit of the Company for the Financial Year ended 31st December, 2014.

Audit Committee

Audit Committee consists of the following Directors namely Mr. S. L. Rao, Chairman, Mr. Dipankar Basu, Mr. H. L. Zutshi, Mr. G. Krishna Prasad, Ms. Radhika Vijay Haribhakti and Mr. V. Narayanamurthy.

Except Mr. V. Narayanamurthy, Nominee Director, IDBI

Bank Limited, all the members of the Audit Committee are Independent Directors.

There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review.

Corporate Governance

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditor''s Certificate on its compliance.

Vigil Mechanism

The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases.

Secretarial Auditor Report

As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed Mr. DVM Gopal, Practising Company Secretary (C.P.No: 6798) as Secretarial Auditor to conduct Secretarial audit of the company for the Financial year ended on December 31, 2014.

Secretarial Audit Report issued by Mr. DVM Gopal, Practising Company Secretary in form MR-3 is enclosed as Annexure - 7 to this Annual Report.

There are no qualifications in Secretarial Audit Report.

Statement of particulars of appointment and remuneration of managerial personnel

The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 8 to this Annual Report.

Insurance

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

Details in respect of adequacy of internal financial controls with reference to the Financial Statements

1. The Company maintains all its records in SAP System and the work flow and approvals are routed through SAP;

2. The Company has appointed Internal Auditors to observe the Internal Controls, whether the work flow of organization is being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; and

3. The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Fixed Assets Policy, Whistle Blower Policy, Policy to determine Material Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The names of companies which have become or ceased to be Company''s Subsidiaries, joint ventures or associate companies during the year

During the Financial Year, M/s. Ruetgers Resins GmbH (A Step-down wholly owned Subsidiary Company) is merged with M/s. "Ruetgers Novares GmbH (A Step-Down Wholly owned Subsidiary Company) and M/s. RÜTGERS (Shangai) Trading Co. Ltd has become Company''s Subsidiary.

Change in the nature of business

There is no change in the nature of business of the Company.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future

No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Material changes and commitments

There are no Material changes and commitments in the business operations of the Company from the Financial year ended 31st December, 2014 to the date of signing of the Director''s Report.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31st December, 2014, the Company has not received any Complaints pertaining to Sexual Harassment.

Acknowledgement

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors for Rain Industries Limited

N. Jagan Mohan Reddy N. Sujith Kumar Reddy Managing Director Director DIN: 00017633 DIN: 00022383

Place: Hyderabad Date : February 27, 2015


Dec 31, 2012

Dear Members,

The Directors have pleasure in presenting the 38th Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2012.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2012 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2012 December 31, 2011

Revenue from operations 690,888 2,395,445

Profit before finance cost, depreciation and tax expense 884,199 645,449

Finance cost 236,755 305,997

Profit before depreciation and tax expense 647,444 339,452

Depreciation 5,015 5,142

Profit before tax expense 642,429 334,310

Tax expense 78,689 39,574

Profit After tax expense 563,740 294,736

Profit brought forward from earlier year 1,082,044 1,229,617

Profit available for appropriation 1,645,784 1,524,353

Appropriations:

Proposed dividend 371,189 380,242

Tax on dividend (2,660) 23,214

Transfer to general reserve 56,374 29,474

Transfer to capital redemption reserve 15,564 9,379

Surplus in Statement of Profit and Loss 1,205,317 1,082,044

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2012 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2012 December 31, 2011

Revenue from operations (net) 53,614,485 56,395,150

Profit before finance cost, depreciation and amortization. 11,755,669 13,657,564

Finance cost 3,727,632 2,455,560

Profit before depreciation and Tax expense 8,028,037 11,202,004

Depreciation and amortisation 1,199,682 1,129,391

Profit before tax expense 6,828,355 10,072,613

Provision for tax expense 2,180,220 3,425,533

Profit after tax expense before minority interests 4,648,135 6,647,080

Minority interest (70,647) (5,832)

Profit after tax expense 4,577,488 6,641,248

Profit brought forward from earlier year 17,010,242 10,944,397

Profit available for appropriation 21,587,730 17,585,645

Appropriations:

Proposed dividend 371,189 380,242

Tax on dividend 58,746 61,895

Transfer to general reserve 95,983 149,908

Transfer to capital redemption reserve 15,564 9,379

Reversal of dividend Proposed in earlier year - (26,021)

Surplus in Statement of Consolidated Profit and Loss 21,046,248 17,010,242

OPERATIONS

During the period under review, the Company has achieved revenue from operations of Rs. 690,888 (in thousands) and net profit of Rs. 563,740 (in thousands) on a standalone basis. During the same period, the Company has achieved net revenue from operations of Rs. 53,614,485 (in thousands) and net profit of Rs. 4,577,488 (in thousands) on a consolidated basis.

OVERVIEW OF CARBON PRODUCTS BUSINESS

Rain Commodities Limited, through its wholly owned subsidiaries, is engaged in the business of production and sale of Calcined Petroleum Coke ("CPC"), Co-generation of Energy (Steam and/or Electricity) through Waste-heat recovery and trading of Fuel Grade Petroleum Coke.

Rain Group is currently operating seven CPC plants in United States, one CPC plant each in India and China. With the total CPC capacity of about 2.4 million tons, Rain Group is one of the leading producers of CPC in the World with a Global market share of about 8%.

Rain Group is well known for its ability to co-generate Energy from the waste heat recovered in the calcining process. Currently Rain Group is co-generating Energy at four of its CPC plants in the United States and one CPC plant in India.

In addition to the revenues generated from the sale of energy to third-parties, these co-generation facilities also reduce our energy costs and dependence on third party suppliers for sourcing electricity.

Rain Group owns and operates dedicated deep-water vessel loading terminals at three of the CPC facilities (Lake Charles, Chalmette and Gramercy) and a barge dock at West Virginia CPC facility in the Unites States. Rain Group also operates two full-service petroleum coke laboratories.

The Group has recorded net revenue of Rs. 44,356,811 (in thousands) from the Carbon Products Business during the financial year ended December 31, 2012 as compared to net revenue of Rs. 47,528,071 (in thousands) during the year ended December 31, 2011.

Rain Group has diversified its end markets with entry into Coal Tar distillation business through the acquisition of Belgium based Ruetgers Group ("Ruetgers") on January 4, 2013. Ruetgers is Europe''s leading and world''s second largest Coal Tar distiller and is a leading producer of Coal Tar Pitch ("CTP" or "Pitch"). Ruetgers also produces other Chemicals, Resins, Modifiers and Superplasticizers by further processing carbon products through its down-stream operations. With eight operating facilities spread across North America and Europe, Ruetgers currently has more than a million tons of Coal Tar distillation capacity. The ninth facility, a Joint Venture in Russia with about 300,000 tons of coal tar distillation capacity is under construction and is expected to commence operations in CY 2014.

OUTLOOK FOR CARBON PRODUCTS BUSINESS

Calcined Petroleum Coke ("CPC") is produced from Green Petroleum Coke ("GPC"), a by-product of Crude Oil Refining process, through a process known as "Calcining" that removes moisture and volatile matter from GPC at high temperature. The key raw material for Ruetgers is Coal Tar, a by-product by Steel producers in the conversion process of Coal into Metallurgical Coke.

Together, CPC and CTP comprise the critical component of Carbon Anodes used in the Aluminum smelting process. CPC and CTP are considered as essential materials for the Aluminum industry, as there are no known economically viable substitutes for these products.

As per the recent industry reports, approximately 77% of the world''s CPC production and 80% of the world''s CTP production is used in the production of Carbon Anodes in the Aluminum Smelting Process.

Demand for Aluminum is one of the most important determinants of CPC and CTP demand. World production of primary Aluminum totaled approximately 47.1 million metric tons in 2012 and is expected to grow to approximately 59.6 million metric tons by 2016, representing a compounded annual growth rate of 6.1%. The growth in the demand for Aluminum is expected to be driven by increasing use of light weight materials in many key industries such as transportation (including aerospace and automobiles), construction, packaging and consumer electronics. This demand growth is expected to be met through the addition of new Aluminum smelters, largely in Asia and the Middle East due to low cost structure in these regions, including low cost power, labor and raw materials.

The performance of Rain Group, being one of the leading producers of CPC and CTP with operating facilities across Globe is expected to be reasonably strong in the medium term with the continued demand from the growing Aluminum industry and the long term relationship with Aluminum Smelters, Crude Oil Refineries and Steel Producers.

OVERVIEW OF CEMENT BUSINESS

Rain Commodities Limited, through its wholly owned subsidiary, is engaged in the business of production and sale of Cement.

Rain Group is operating two fully integrated Cement plants in the state of Andhra Pradesh and one Fly Ash Handling and Cement Packing facility in the state of Karnataka.

Rain Group through its vast chain of dealer network sells Cement, under the brand name "Priya Cement", in the states of Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra

OUTLOOK FOR CEMENT INDUSTRY

The Indian Cement industry has witnessed massive capacity additions of approximately 100 million tons, CAGR of 13.6%, during FY 2009-2012, the growth in capacity addition is disproportionately high in South India. During the same period of FY 2009-2012, South Indian Cement Capacity has increased by approximately 55 million tons, representing a CAGR of 22.5%. This has resulted in significant pressure on price realization and also on capacity utilizations. Although the estimated capacity utilization, for FY 2012-2013, on Pan India basis is around 75% levels, South India''s capacity utilization is estimated to fall below 60% level.

The increased thrust on infrastructure development by Government of India and the projected growth in the housing sector coupled with the increasing per capita income is expected to provide support to the Cement prices and hedge against the current oversupply situation. With the initiatives taken by the Government of India for infrastructure development coupled with many state elections in FY 2013 and central elections in FY 2014, Cement demand is expected to rise marginally during FY 2012-2014. The management expects that the supply demand gap would narrow down in next couple of years, as there are no major capacity expansions expected post FY 2013.

Considering these market conditions and continued excess capacity in South India, the management continues to concentrate on controlling costs by improving the Cement to Clinker blend ratio and trying to improve the capacity utilization and blended realization by entering into new market regions in Karnataka and Maharashtra.

DIVIDEND

The Board of Directors of the Company have recommended a Dividend @ 55% on the Paid up Equity Share Capital of the Company, i.e., Rs.1.10 per Equity Share for the financial year ended December 31, 2012.

BUYBACK OF EQUITY SHARES

The Board of Directors at their meeting held on August 13, 2012 have approved to buy back upto maximum of 1,27,00,000 equity shares and minimum of 31,75,000 equity shares of Rs. 2/- each at a price not exceeding Rs. 46 per equity share for a maximum amount not exceeding Rs. 46 Crores through open market operations on Stock Exchange.

The members of the Company have approved buyback of equity shares on October 1, 2012 through Postal Ballot.

The Buy-back commenced on October 22, 2012 and last date for completion of buy-back is March 25, 2013 or the date on which total maximum of 1,27,00,000 equity shares would have been bought back or total deployed amount of Rs. 46 cores is exhausted.

The Company has bought back 7,801,056 equity shares through electronic mode as on March 20, 2013 and incurred an amount of Rs.296,428.78 (in thousands) towards buy-back of shares.

The Board of Directors of the Company, during their meeting held on October 25, 2011, approved the buyback of 10,000,000 equity shares of Rs. 2/- each at maximum price of Rs. 41/- per share for an amount not exceeding Rs. 350,000,000. The Buyback Offer was opened on November 14, 2011 and closed on March 29, 2012. The Company has bought back 100% of maximum number of 10,000,000 equity shares approved by the Board of Directors and the amount invested for buyback is Rs.321,183.79 (in thousands).

LISTING OF EQUITY SHARES

The Company''s Equity shares are listed at the following Stock Exchanges:

(i) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001;

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051; and

(iii) The Delhi Stock Exchange Limited, DSE House, 3/1 Asaf Ali Road, New Delhi - 110002.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2012-13.

SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs (MCA), New Delhi, vide its Circular No.51/12/2007-CL-III, dated February 8, 2011 and Circular No.5/12/2007-CL-III, dated February 21, 2011 has granted general exemption from attaching the annual accounts of the Subsidiary Companies to the Annual Report of the Holding Company under Section 212(8) of the Companies Act, 1956.

Based on the circular, the Board of Directors at its meeting held on February 20, 2013 gave their consent for not attaching the Subsidiary Companies'' Financial Statements, Auditors Report and Directors Report to the Annual Report of the Company for the Financial Year ended December 31, 2012.

Your Company will provide copies of the Annual Accounts of the Subsidiary Companies and other related information upon request by any member of your Company or its Subsidiary Companies. The Annual Accounts of the Subsidiary Companies are also kept at the registered office of the Company and the Subsidiary Companies, for inspection by any investor.

The information of Subsidiary Companies as required to be disclosed as per the directions given by MCA is enclosed and forms part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

As prescribed by Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Audited Consolidated Financial Statements are annexed. The Company has consolidated the Financial Statements of Rain Cements Limited; Rain CII Carbon (Vizag) Limited; Rain Coke Limited; Renuka Cement Limited; Rain Commodities (USA) Inc; Moonglow Company Business Inc, BVI; Rain Global Services LLC; RGS Egypt Limited; Rain Carbon USA, LLC; Carbon Holdings USA, LLC; CPC Holdings USA, LLC; Rain CII Carbon LLC; CII Carbon Corp; Rain CII Carbon Mauritius Limited; Zhenjiang Xin Tian Tansu Co. Ltd; Rain CTP Inc; Rain Escrow Corp; 9274 5520 Quebec Inc; Rain (0952853) Holdings Ltd.

FIXED DEPOSITS

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. N. Radhakrishna Reddy and Mr. S.L. Rao, Directors of the Company who retires by rotation and being eligible offer themselves for reappointment.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company who retires at the ensuing Annual General Meeting have not offered themselves for re-appointment. Your Company proposes to appoint M/s. B S R & Associates, Chartered Accountants (ICAI Regn. No.116231W) as its Statutory Auditors from the conclusion of the 38th Annual General Meeting till the conclusion of the 39th Annual General Meeting.

M/s. B S R & Associates, Chartered Accountants have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 224(1B) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, the Board of Directors of the Company hereby confirms:

(i) That in the preparation of the Annual Accounts for the Financial year ended December 31, 2012, the applicable accounting standards have been followed;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2012 and of statement of Profit and Loss of the Company for the period ended December 31, 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; and

(iv) That the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2012 on a going concern basis.

AUDITORS REPORT

There are no qualifications in Auditors Report.

AUDIT COMMITTEE

Audit Committee consists of the following Directors namely Mr. S.L.Rao, Chairman, Mr. Dipankar Basu, Member, Mr. H.L.Zutshi, Member, Mr. Yogesh Rastogi, Member, Mr. E S Ravisekar, Member and Mr. G. Krishna Prasad, Member.

All the members of the Audit Committee are independent Directors.

CORPORATE GOVERNANCE

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditor''s Certificate on its compliance.

INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND PARTICULARS OF EMPLOYEES.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 217(1)(e) of the Act read with Rule 2 of the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 and information on particulars of employees under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 (as amended) form part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and Society.

Education

In order to provide better educational facilities, Rain Cements Limited, a wholly owned subsidiary is maintaining schools at plant location and imparting education in English medium. The school provides education from LKG to 10th Standard to the children of the employees and also the students of surrounding villages near the plant.

Health

In order to provide good health facilities, Rain Cements Limited, a wholly owned subsidiary is maintaining hospital at Plant locations. The hospitals provide medical treatment to the workers and their families and also people living in surrounding villages near the plant location.

Rain Cements Limited, a wholly owned subsidiary has ambulance service facilities at its plant locations and also conducts medical camps regularly.

Environment

The Company has taken initiatives to reduce the pollution. Anti-pollution measures taken by the Company help minimize the impact of industrial process on the environment.

Pragnya Priya Foundation

Pragnya Priya Foundation is established under section 25 of the Companies Act, 1956 as a Non-Profit Organisation to grant donations to poor and the needy for meeting expenditure of education, medical treatments and any other charitable purpose; to establish, run, support and grant aid or other financial assistance to schools, colleges, libraries, reading rooms, universities, laboratories, research and other institutions of the like nature in India.

The Company through its subsidiaries namely Rain Cements Limited and Rain CII Carbon (Vizag) Limited contributed donation of Rs.50 lakhs each to the foundation for providing Scholarships to Economically Backward students as part of Corporate Social Responsibility.

The Pragnya Priya Foundation has disbursed Scholarships to 373 students for the period 2012-2013.

ACKNOWLEDGEMENTS

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors

for RAIN COMMODITIES LIMITED

N. Jagan Mohan Reddy N. Sujith Kumar Reddy

Managing Director Director

Place: Hyderabad

Date : March 21, 2013


Dec 31, 2011

The Directors have pleasure in presenting the 37th Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2011.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2011is as under:

(Rs. in thousands)

PARTICULARS December 31, 2011 December 31, 2010

Net sales 2,395,445 3,324,826

Profit before interest, depreciation, exceptional item and taxation 457,916 465,324

Less: interest & finance charges 118,464 190,911

Profit before depreciation, exceptional item and taxation 339,452 274,413

Less: Depreciation 5,142 83,243

Profit before exceptional item and taxation 334,310 191,170

Less: Exceptional item - (1,994,989)

Profit /(Loss) before taxation 334,310 (1,803,819)

Less: Provision for taxation 39,574 56,536

Profit /(Loss) after taxation 294,736 (1,860,355)

Profit brought forward 1,229,617 3,436,745

Profit available for appropriation 1,524,353 1,576,390 Appropriations:

Transfer to general reserve 29,474 -

Transfer to capital redemption reserve 9,379 -

Proposed dividend 380,242 325,839

Tax on dividend 23,214 20,934

Surplus carried to balance sheet 1,082,044 1,229,617

@ Consequent to the approval of the Hon'ble High Court of Andhra Pradesh to the Scheme of Arrangement, the Cement business of the Company is transferred to Rain Cements Limited, a wholly owned subsidiary Company with effect from April 1, 2010. Hence, the figures for the current Financial Year ended December 31, 2011 are not comparable with the figures of the previous Financial Year ended December 31, 2010.

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2011 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2011 December 31, 2010

Net sales 56,201,065 37,649,667

Profit before interest, depreciation, exceptional item and taxation 13,518,735 7,906,875

Less: interest & finance charges 2,316,731 2,123,005

Profit before depreciation, exceptional item and Taxation 11,202,004 5,783,870

Less: Depreciation and amortisation 1,129,391 1,156,847

Profit before exceptional item and taxation 10,072,613 4,627,023

Less: Exceptional items - (1,249,392)

Profit before taxation 10,072,613 3,377,631

Less: Provision for taxation 3,425,533 950,920

Profit after Taxation before minority interests 6,647,080 2,426,711

Less: Minority interests (5,832) (19,543)

Profit after taxation 6,641,248 2,407,168

Profit brought forward 10,944,397 8,715,575 Add: Adjustment on account of:

- Receipt of Dividend (including tax thereon) from subsidiary - 227,632

Profit available for appropriation 17,585,645 11,350,375 Appropriations:

Transfer to general reserve 149,908 -

Transfer to capital redemption reserve 9,379 -

Proposed dividend 380,242 351,860

Tax on dividend 61,895 54,118

Reversal of Dividend proposed in earlier year (26,021) -

Surplus carried to balance sheet 17,010,242 10,944,397

OPERATIONS

During the period under review, the Company has achieved net sales of Rs. 2,395,445 (in thousands) and net profit of Rs. 294,736 (in thousands) on a standalone basis. During the same period, the Company has achieved net sales of Rs. 56,201,065 (in thousands) and net profit of Rs. 6,641,248 (in thousands) on a consolidated basis.

OVERVIEW OF CARBON PRODUCTS BUSINESS

Rain Commodities Limited, through its wholly owned subsidiaries engaged in the business of production and sale of Calcined Petroleum Coke ("CPC"), co-generation of Energy (Steam and/or Electricity) through Waste-heat recovery and trading of Fuel Grade Green Petroleum Coke.

Rain Group is currently operating seven CPC plants in United States, one CPC plant in India and one CPC plant in China. Rain Group is one of the leading producers of CPC in the World with a Global market share of about 9%.

Rain Group is well known for its ability to co-generate Energy from the waste heat recovered in the calcining process. Currently Rain Group is co-generating Energy at three of its CPC plants in the United States and one CPC plant in India.

Further, the waste heat recovery facility, set up during 2005, in India is certified as a project under Clean Development Mechanism by United Nations Framework Convention on Climate Change ("UNFCCC") and is eligible to receive 164,677 Carbon Emission Reductions ("CERs") per annum up to July 2017.

Rain Group also owns and operates three captive deep- water shipping terminals at its CPC plants in the United States and also operates two full-service petroleum coke laboratories.

The Group has recorded net revenue of Rs. 47,528,071 (in thousands) from the Carbon Products Business during the financial year ended December 31, 2011 as compared to net revenue of Rs. 30,485,272 (in thousands) during the year ended December 31, 2010.

OUTLOOK FOR CALCINED PETROLEUM COKE ("CPC") INDUSTRY

Calcined Petroleum Coke is produced from Green Petroleum Coke ("GPC"), a byproduct of Crude Oil Refining. CPC is an essential component of carbon anode for the Aluminum industry and is also used as a source of carbon for the Titanium Dioxide and Steel industries. Aluminum Industry, which contributes about 82% of total world demand for CPC, was growing at about 5% per annum globally in the past ten years. During 2011, Aluminum industry has witnessed healthy growth of 10%.

The demand growth is expected to continue in 2012, but at a slower rate of 6%, due to the persistent sovereign debt crisis in Europe which has resulted in negative market sentiment. However, the long term growth expectation of Aluminum consumption is still robust with about 6% Compounded Annual Growth Rate (CAGR) between 2012 and 2016.

The performance of Rain Commodities, being one of the leading producers of CPC with operating facilities in United States, India, China and Africa is expected to be reasonably strong with improved demand from the growing Aluminum industry and the long term relationship with both the Aluminum Smelters and the Crude Oil Refineries.

OVERVIEW OF CEMENT BUSINESS

Rain Commodities Limited, through its wholly owned subsidiary engaged in the business of production and sale of Cement.

Rain Group is operating two fully integrated Cement plants with an aggregate installed capacity of 2,900,000 tons per annum in the state of Andhra Pradesh and one Fly Ash Handling and Cement Packing facility in the state of Karnataka.

Rain Group through its vast chain of dealer network sells Cement, under the brand name "Priya Cement", in the states of Andhra Pradesh, Tamilnadu and Karnataka.

OUTLOOK FOR CEMENT INDUSTRY

The Indian Cement industry has witnessed massive capacity additions of over 120 Million tons during the past four years which has resulted in significant pressure on price realization and also capacity utilizations. During

2010 the average national gross Cement prices were corrected by about 14% between April and August, the decline in price was even higher in the Southern Region that witnessed majority of the added capacity, mostly due to the large lime-stone reserves and the strong demand growth over the past few years. Driven by renewed demand and seasonal factors, prices have started recovering from October 2010 from those exaggerated lows. The rise in input costs and moderate increase in demand has helped the prices to sustain through 2011.

The increased thrust on infrastructure development by Government of India and the projected growth in the housing sector coupled with the increasing per capita income is expected to provide support to the cement prices and hedge against the transitory oversupply situation. With the initiatives taken by the Government of India for infrastructure development, Cement demand is expected to rise marginally in 2012. The irrigation and housing projects initiated by the Government of Andhra Pradesh, although temporarily going on a slower pace, are expected to increase the demand for cement in the State of Andhra Pradesh, where the Company sells a major portion of its production. The management expects that the supply demand gap would narrow down in the next

couple of years, as there are no major capacity expansions post Financial Year 2013.

Considering these market conditions, the management continues to concentrate on controlling costs, including

(i) reduction in the cost of fuel with increased use of domestic coal, during 2011; (ii) optimizing the freight cost by setting up Fly Ash Handling and Cement Packing facility at Bellary in the state of Karnataka, and (iii) reduction in the interest cost by accelerating the pre-payment of debt and by optimizing the working capital.

DIVIDEND

The Board of Directors of the Company have recommended a Dividend @ 55% on the Paid up Equity Share Capital of the Company, i.e., Rs.1.10 per Equity Share for the financial year ended December 31, 2011.

SUB-DIVISION OF EQUITY SHARES

The Board of Directors at its meeting held on February

25, 2011 have recommended for sub-division of one Equity share of Rs. 10 (Face Value) into Five Equity Shares of Rs. 2 (Face Value) each.

The shareholders of the Company at its meeting held on May 12, 2011 have approved for sub-division of equity shares.

The Company has fixed June 16, 2011 as the record date to identify the shareholders eligible to receive sub-divided shares.

The Company has credited the equity shares to all the shareholders in electronic mode on June 17, 2011 who are holding equity shares in electronic mode (demat) and physical share certificates were also despatched to the shareholders who are holding equity shares in physical form.

BUYBACK OF EQUITY SHARES

The Board of Directors of the Company at its meeting held on October 25, 2011 approved the Buy-back of minimum of 6,000,000 equity shares and maximum of 10,000,000 Equity shares at a price not exceeding Rs. 41 per Equity Share for an amount not exceeding Rs. 350,000 (in thousands) from the open Market through Stock Exchange.

The Company has bought back 8,498,368 equity shares through electronic mode as on February 21, 2012 (the

date of Board Meeting at which the Directors Report is approved) and incurred an amount of Rs. 263,836 (in thousands) towards buy-back of shares.

LISTING OF EQUITY SHARES

The Company's Equity shares are listed at the following Stock Exchanges:

(i) Bombay Stock Exchange Limited, PhirozeJeeJeebhoy Towers, Dalal Street, Mumbai-400 001;

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051; and

(iii) The Delhi Stock Exchange Limited, DSE House, 3/1 Asaf Ali Road, New Delhi - 110002.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2011-12.

SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs (MCA), New Delhi, vide its Circular No.51/12/2007-CL-III, dated 8th February,

2011 has granted general exemption from attaching the annual accounts of the Subsidiary Companies to the Annual Report of the Holding Company under Section 212(8) of the Companies Act, 1956.

Based on the circular, the Board of Directors at its meeting held on February 21, 2012 gave their consent for not attaching the Subsidiary Companies' Financial Statements, Auditors Report and Directors Report to the Annual Report of the Company for the Financial Year ended December 31, 2011.

Your Company will provide copies of the Annual Accounts of the Subsidiary Companies and other related information upon request by any member of your Company or its Subsidiary Companies. The Annual Accounts of the Subsidiary Companies are also kept at the registered office of the Company and the Subsidiary Companies, for inspection by any investor.

A statement of Rain Commodities Limited's interest in Subsidiary Companies, as required under Section 212 of the Companies Act, 1956, is enclosed.

The information of Subsidiary Companies as required to be disclosed as per the directions given by MCA is enclosed and forms part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

As prescribed by Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Audited Consolidated Financial Statements are annexed. The Company has consolidated the accounts of Rain Cements Limited; Rain CII Carbon (Vizag) Limited; Renuka Cement Limited (formerly Birla Cement and Industries Limited); Rain Commodities (USA) Inc; Rain CII Carbon LLC, USA; Moonglow Company Business Inc, BVI; Rain Global Services LLC; Rain CII Carbon Mauritius Limited; CII Carbon Corp.; Zhenjiang Xin Tian Tansu Company Limited; Carbon Holdings USA, LLC; CPC Holdings USA, LLC; Rain Carbon USA, LLC; and RGS Egypt Limited.

FIXED DEPOSITS

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. N. Sujith Kumar Reddy and Mr. G. Krishna Prasad, Directors of the Company who retires by rotation and being eligible offer themselves for reappointment.

Mr. E.S. Ravisekar has been appointed as Nominee Director of IDBI Bank Limited in place of Mr. R.S. Vidya Sagar with effect from August 10, 2011.

Mr. S.L. Rao has been appointed as an Additional Director of the Company with effect from May 13, 2011.

Mr. Dipankar Basu and Mr. H.L. Zutshi were appointed as Additional Directors of the Company with effect from July 29, 2011.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company retires at the ensuing Annual General Meeting. They have expressed their willingness to accept appointment.

M/s. Deloitte Haskins & Sells, Chartered Accountants (ICAI Registration No.008072S) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 224(1B) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms:

(i) That in the preparation of the Annual Accounts for the Financial year ended December 31, 2011, the applicable accounting standards have been followed;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2011 and of Profit and Loss Account of the Company for the period ended on December 31, 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; and

(iv) That the Directors have prepared the Annual Accounts for the Financial Year ended December 31,2011 on a going concern basis.

AUDITORS REPORT

There are no qualifications in Auditors Report.

AUDIT COMMITTEE

Audit Committee consists of the following Directors namely Mr. S.L.Rao, Chairman, Mr. Dipankar Basu, Member, Mr. H.L.Zutshi, Member, Mr. Yogesh Rastogi, Member, Mr. E S Ravisekar, Member and Mr. G. Krishna Prasad, Member.

All the members of the Audit Committee are independent Directors.

CORPORATE GOVERNANCE

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part

of the Annual Report along with the Auditor's Certificate on its compliance.

INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND PARTICULARS OF EMPLOYEES.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 217(1)(e) of the Act read with Rule 2 of the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 and information on particulars of employees under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 (as amended) form part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and Society.

Education

In order to provide better educational facilities, Rain Cements Limited, a wholly owned subsidiary is maintaining schools at plant location and imparting education in English medium. The school provides education from LKG to 10th Standard to the children of the employees and also the students of surrounding villages near the plant.

Health

In order to provide good health facilities, Rain Cements Limited, a wholly owned subsidiary is maintaining hospital at Plant locations. The hospitals provide medical treatment to the workers and their families and also people living in surrounding villages near the plant location.

Rain Cements Limited, a wholly owned subsidiary has ambulance service facilities at its plant locations and also conducts medical camps regularly.

Rain Cements Limited has also contributed Rs. 1,500 (in thousands) to Hrudaya Cure a little Heart Foundation.

Environment

The Company has taken initiatives to reduce the pollution. Anti-pollution measures taken by the Company help minimize the impact of industrial process on the environment.

Pragnya Priya Foundation

Pragnya Priya Foundation is established under section 25 of the Companies Act, 1956 as a Non-Profit Organisation to grant donations to poor and the needy for meeting expenditure of education, medical treatments and any other charitable purpose; to establish, run, support and grant aid or other financial assistance to schools, colleges, libraries, reading rooms, universities, laboratories, research and other institutions of the like nature in India.

The Company through its subsidiaries namely Rain Cements Limited and Rain CII Carbon (Vizag) Limited proposes to grant donation to said foundation for providing Scholarships to Economically Backward students as part of Corporate Social Responsibility.

ACKNOWLEDGEMENTS

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors for RAIN COMMODITIES LIMITED

N. Radhakrishna Reddy N. Jagan Mohan Reddy Chairman Managing Director

Place: Hyderabad

Date : February 21, 2012


Dec 31, 2010

The Directors have pleasure in presenting the 36th Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2010.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2010 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2010* December 31, 2009

Net sales 3,324,826 8,415,983

Profit before interest, depreciation, amortization and taxation 455,986 2,086,852

Less: interest & finance charges 181,573 292,020

Profit before depreciation and taxation 274,413 1,794,832

Less: Depreciation 83,243 310,344

Profit before exceptional item and taxation 191,170 1,484,488

(Less)/Add: Exceptional item (1,994,989) 507,954

(Loss)/Profit before taxation(1,803,819) 1,992,442

Less: Provision for taxation 56,536 445,789

(Loss)/Profit after taxation (1,860,355) 1,546,653

Profit brought forward 3,436,745 2,377,847

Profit available for appropriation 1,576,390 3,924,500

Appropriations:

Transfer (from) debenture redemption reserve -- (80,975)

Transfer to general reserve -- 262,100

Proposed dividend 325,839 262,088

Tax on dividend - current year 54,118 44,542

Tax on dividend - earlier year (33,184) --

Surplus carried to balance sheet 1,229,617 3,436,745

* Consequent to the approval of the Honble High Court of Andhra Pradesh to the Scheme of Arrangement, the Cement business of the Company is transferred to Rain Cements Limited (formerly Rain CII Carbon (India) Limited), a wholly owned subsidiary Company with effect from April 1, 2010. Hence, the figures for the current Financial Year ended December 31, 2010 are not comparable with the figures of the previous Financial Year ended December 31, 2009.

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2010 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2010 December 31, 2009

Net sales 37,455,280 36,338,164

Profit before interest, depreciation, amortization and taxation 7,680,099 9,120,353

Less: Interest & finance charges 1,896,229 2,259,658

Profit before depreciation, exceptional item and Taxation 5,783,870 6,860,695

Less: Depreciation and amortisation 1,156,847 1,226,483

Profit before exceptional item and taxation 4,627,023 5,634,212

(Less)/Add: Exceptional items (1,249,392) 513,354

Profit before taxation 3,377,631 6,147,566

Less: Provision for taxation 950,920 1,714,356

Profit after Taxation before minority interests 2,426,711 4,433,210

(Less)/Add: Minority interests (19,543) 5,211

Profit after taxation 2,407,168 4,438,421

Profit brought forward 8,715,575 5,217,495

Less: Adjustment on account of

- Change in holding in subsidiary - (25,928)

- Receipt of dividend (including tax thereon) from subsidiaries 227,632 -

Profit available for appropriation 11,350,375 9,629,988

Appropriations:

Transfer (from) debenture redemption reserve - (80,975)

Transfer to general reserve - 462,100

Proposed dividend 351,860 455,821

Tax on dividend 54,118 77,467

Surplus carried to balance sheet 10,944,397 8,715,575

OPERATIONS

During the period under review, the Company has achieved Net sales of Rs.3,324,826 (in thousands) and incurred a loss of Rs.1,860,355 (in thousands) on standalone basis. The Company has achieved a Net sales of Rs.37,455,280 (in thousands) and net profit of Rs.2,407,168 (in thousands) on a consolidated basis.

OUTLOOK FOR CEMENT INDUSTRY

The Indian Cement industry has witnessed massive capacity additions of over 100 Million tons during the past three to four years which has resulted in significant pressure on price realization and also capacity utilization during 2010, with average national gross Cement prices correcting by about 14% between April and August 2010. The decline in price was even higher in the Southern Region that witnessed majority of the added capacity, mostly due to the large lime-stone reserves and the strong demand growth over the past few years. Driven by renewed demand and seasonal factors, prices have recovered from October 2010 from these exaggerated lows. However, with the rising surplus capacity over the next few quarters due to new expansions commencing operations, there is a concern on the capacity utilizations and the sustainability of the sales realizations.

The increased thrust on infrastructure development by Government of India and the projected growth in the housing sector combined with the increasing per capita income and the favorable monsoon in 2010 is expected to provide support to the cement prices and hedge against the transitory oversupply situation. With the initiatives taken by the Government of India for infrastructure development, Cement demand is expected to rise further in 2011. The irrigation and housing projects, initiated taken by the Government of Andhra Pradesh, although temporarily going on a slower pace, are expected to increase the demand in the State of Andhra Pradesh, where the Company sells a major portion of its production. The management expects that the supply demand gap would narrow down in next couple of years, as there are no major capacity expansions post FY 2011-12.

In these market conditions, the management is continuing to concentrate on controlling costs, including (i) reduction in the cost of fuel with increased use of domestic coal, (ii) optimizing the freight cost by setting up Fly Ash Handling and Cement Packing facility at Bellary in the state of Karnataka and (iii) reduction in the interest cost by accelerating the pre-payments of debt and by optimizing the working capital.

With the commencement of operations at Fly Ash Handling and Cement Packing facility in Bellary; there will be improvement in the Cement-Clinker Blend Ratio resulting in reduction in the per tonne cost of cement and improvement in operating margins.

OVERVIEW OF CALCINED PETROLEUM COKE ("CPC") BUSINESS

Rain Commodities Limited, through its wholly owned subsidiaries Rain CII Carbon LLC, USA ("RCC"), Rain CII Carbon (Vizag) Limited ("RCCVL") and Zhenjiang Xin Tian Tansu Company Limited, China ("ZXTTCL"); is engaged in the production and sale of Calcined Petroleum Coke ("CPC") and generation of Energy through Waste-heat recovery.

Rain CII Carbon LLC is operating seven CPC plants in the United States, with a total capacity of 1,895,000 tonnes

per annum. Further, RCC co-generates steam and electricity from the waste heat recovered in the calcining process at three of its plants. RCC owns three deepwater shipping terminals and operates two full-service petroleum coke laboratories.

RCCVL is operating a calcining plant at Visakhapatnam, Andhra Pradesh, India with an installed capacity of 480,000 tonnes per annum of CPC that also co-generates 49MW of electricity through waste heat recovery. Further, the waste heat recovery facility, set up during 2005, in Visakhapatnam is certified as a project under Clean Development Mechanism by United Nations Framework Convention on Climate Change and is eligible to receive 164,677 Carbon Emission Reductions ("CERs") per annum up to July 2017.

During the year 2009, the Group through its wholly owned subsidiary, RCC acquired ZXTTCL, a Chinese calcining plant with a capacity of 20,000 tonnes per annum and gained access to Chinese CPC industry, which is a key market for CPC in the world.

The Group has recorded a gross revenues of Rs. 28,702 million from the CPC Business during the financial year ended December 31, 2010 as compared to gross revenues of Rs. 26,759 million during the year ended December 31, 2009.

OUTLOOK FOR CALCINED PETROLEUM COKE ("CPC") INDUSTRY

Calcined Petroleum Coke is produced from Green Petroleum Coke ("GPC"), a byproduct of Crude Oil Refining. CPC is an essential component of carbon anode for the Aluminum industry and is also used as a source of carbon for the Titanium Dioxide and Steel industries. Aluminium Industry which contributes about 90% of total world demand for CPC was growing at about 5% per annum globally in the past ten years, with an exception to 2009. In 2009, Aluminum industry has witnessed substantial reduction in global aluminum production due to global economic downturn coupled with unprecedented decline in the Aluminum metal prices. However, the recovery in the aluminum industry started in the last quarter of 2009 has shown improvement throughout 2010 both in the form of increase in Aluminum metal price and Global Aluminum production and consumption. During 2010, the primary Aluminum metal price at London Metal Exchange ("LME") has averaged about US$ 2,200 and the world primary Aluminum production has increased by over 11%.

The world demand for Aluminum, particularly in automotive, construction and commercial transportation is likely to grow at about 9% in 2011 and is expected to grow at an average Compounded Annual Growth Rate ("CAGR") of 7% between 2011 and 2015. With the expected robust growth in the Aluminum industry, the predominant end user of CPC, the outlook for CPC industry is expected to be strong from 2011 onwards.

The performance of the Rain Group, being one of the leading producers of CPC with operating facilities in United States, India and China is expected to be reasonably strong in the medium term with improved demand from the growing Aluminum industry and the long term relationship with both the Aluminum Smelters and the Crude Petroleum Refineries.

DIVIDEND

The Board of Directors of the Company has recommended a Dividend @ 46% on the Paid up Equity Share Capital of the Company, i.e., Rs.4.60 per Equity Share for the financial year ended December 31, 2010.

BUYBACK OF EQUITY SHARES

The Board of Directors of the Company at their meeting held on March 28, 2009 approved the Buy-back of 4,056,801 Equity Shares at a price not exceeding Rs.127 per equity share for an amount not exceeding Rs.515,213,727 from the Open Market through Stock Exchange.

The shareholders of the Company have approved the Buyback of equity shares through Postal Ballot on June 17, 2009.

As the price quoted on the stock exchange was higher than the maximum offer price for buy back of equity shares approved by the shareholders, the Company could not buy back shares from the shareholders.

LISTING OF EQUITY SHARES

The Companys Equity shares are listed at the following Stock Exchanges:

(i) Bombay Stock Exchange Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001;

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot # C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051; and

(iii) The Delhi Stock Exchange Limited, DSE House, 3/1 Asaf Ali Road, New Delhi - 110002.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2010-11.

SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs (MCA), Government of India vide their letter No.47/717/2010-CL-III, dated January 7, 2011, granted exemption from attaching the Balance sheet, Profit & Loss Account, Directors Report and Auditors Report of Subsidiary Companies to the Balance sheet of the Company. Your Company will provide with the copy of the Annual Accounts of the subsidiary companies and other related information upon request by any member of your Company or its Subsidiary Companies. The Annual Accounts of the Subsidiary Companies are kept for inspection by any investor at the registered office of the Company and the subsidiary companies.

A statement of Rain Commodities Limited (Holding Company) interest in Rain Cements Limited (formerly Rain CII Carbon (India) Limited), Rain CII Carbon (Vizag) Limited, Rain Commodities (USA) Inc, Rain CII Carbon LLC, Moonglow Company Business Inc, Rain Global Services LLC, RGS Egypt Limited, Rain CII Carbon Mauritius Limited, CII Carbon Corporation, Zhenjiang Xin Tian Tansu Company Limited, Rain Carbon (USA) LLC, CPC Holdings (USA) LLC, Carbon Holdings (USA) LLC (Subsidiary Companies/step subsidiary Companies) is enclosed as required under Section 212 of the Companies Act, 1956.

The information of Subsidiary Companies as required to be disclosed as per the directions given by MCA while granting exemption under section 212(8) of the Companies Act, 1956 is enclosed and forms part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

As prescribed by Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Audited Consolidated Financial Statements are annexed. The Company has consolidated the Accounts of Rain Cements Limited (formerly Rain CII Carbon (India) Limited), Rain CII Carbon (Vizag) Limited, Rain Commodities (USA) Inc, Rain CII Carbon LLC, Moonglow Company Business Inc, Rain Global Services LLC, RGS Egypt Limited, Rain CII Carbon Mauritius Limited, CII Carbon Corporation,

Zhenjiang Xin Tian Tansu Company Limited, Rain Carbon (USA) LLC, CPC Holdings (USA) LLC and Carbon Holdings (USA) LLC.

FIXED DEPOSITS

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. N. Radhakrishna Reddy and Mr. P. Venugopal Reddy, Directors of the Company who retires by rotation and being eligible offer themselves for reappointment.

Mr. N. Sujith Kumar Reddy has resigned from the position of Executive Director with effect from February 10, 2011, but continues to be the Director of the Company.

Mr. Yogesh Rastogi has been appointed as Nominee Director of ICICI Bank Limited in place of Mr. V. Prakash with effect from January 20, 2011.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company retires at the ensuing Annual General Meeting. They have expressed their willingness to accept appointment.

M/s. Deloitte Haskins & Sells, Chartered Accountants (ICAI Registration No. 008072S) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 224(1B) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms:

(i) That in the preparation of the Annual Accounts for the Financial year ended December 31, 2010, the applicable accounting standards have been followed;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2010 and of Profit and Loss Account of the Company for the period ended on December 31, 2010;

(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; and

(iv) That the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2010 on a going concern basis.

AUDITORS REPORT

There are no qualifications in Auditors Report.

AUDIT COMMITTEE

Audit Committee consists of the following Directors namely Mr. P.Venugopal Reddy, Chairman, Mr. R.S. Vidyasagar, Member, Mr. Yogesh Rastogi, Member and Mr. G. Krishna Prasad, Member.

All the members of the Audit Committee are independent Directors.

CORPORATE GOVERNANCE

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditors Certificate on its compliance.

SCHEME OF ARRANGEMENT BETWEEN THE COMPANY, RAIN CEMENTS LIMITED (FORMERLY RAIN CII CARBON (INDIA) LIMITED), RAIN CII CARBON (VIZAG) LIMITED AND THEIR RESPECTIVE SHAREHOLDERS AND CREDITORS

The Honble High Court of Andhra Pradesh vide its order dated December 29, 2010 had approved the Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 consisting of the following:

(a) Transfer of Cement Business from Rain Commodities Limited (Holding Company) to Rain Cements Limited (Formerly Rain CII Carbon (India) Limited) (Wholly owned Subsidiary Company) with effect from April 1, 2010 (First appointed date); and

(b) Transfer of Calcined Petroleum Coke (CPC) and Power Business from Rain Cements Limited (Formerly Rain CII Carbon (India) Limited) to Rain CII Carbon (Vizag) Limited with effect from April 1, 2010 (Second appointed date).

The Board of Directors of the Company at their meeting held on January 24, 2011 have taken on record the aforesaid order of the Honble High Court of Andhra Pradesh. The Company has filed the Honble High Court of Andhra Pradesh order dated December 29, 2010 with the Registrar of Companies, A.P., Hyderabad on February 10, 2011. Accordingly, the Scheme of Arrangement has became effective from February 10, 2011 taking effect from April 1, 2010 (appointed date).

Consequent to the approval of the Honble High Court of Andhra Pradesh to the aforesaid Scheme of Arrangement, the Cement business is transferred from Rain Commodities Limited to Rain Cements Limited (Formerly Rain CII Carbon (India) Limited) and the Calcined Petroleum Coke and Power business is transferred from Rain Cements Limited (Formerly Rain CII Carbon (India) Limited) to Rain CII Carbon (Vizag) Limited with effect from April 1, 2010.

ACQUISITION OF BIRLA CEMENT AND INDUSTRIES LIMITED

Your Company has acquired Birla Cement and Industries Limited from Yash Birla Group on January 14, 2011 by acquiring the equity shares. Birla Cement and Industries Limited holds certain Limestone Mining Leases in the State of Andhra Pradesh.

Consequent to the said acquisition, Birla Cement and Industries Limited has become a Wholly owned subsidiary of the Company.

INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND PARTICULARS OF EMPLOYEES.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 217(1)(e) of the Act read with Rule 2 of the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 and information on particulars of employees under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 (as amended) form part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and Society.

EDUCATION

In order to provide better educational facilities, the Company is maintaining schools at plant location and imparting education in english medium. The school provides education from LKG to 10th Standard to the children of the employees and also the students of surrounding villages near the plant.

HEALTH

In order to provide good health facilities, the Company is maintaining hospital at Plant locations. The hospitals provide medical treatment to the workers and their families and also people living in surrounding villages near the plant location.

The Company has ambulance service facilities at one of its plant location and also conducts medical camps regularly.

ENVIRONMENT

The Company has taken significant initiatives to reduce the pollution. Anti-pollution measures taken by the Company help minimize the impact of industrial process on the environment.

ACKNOWLEDGEMENTS

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors for RAIN COMMODITIES LIMITED

Sd/- Sd/- N. Radhakrishna Reddy N. Jagan Mohan Reddy Chairman Managing Director

Place: Hyderabad

Date : February 25, 2011


Dec 31, 2009

The Directors have pleasure in presenting the 35th Annual Report and the Audited Financial Statements for the Financial Year ended December 31, 2009.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31, 2009 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2009 December 31, 2008

Net Sales 84,15,983 1,00,38,968

Profit before Interest, Depreciation, Amortization and Taxation 20,86,852 19,23,243

Less: Interest & Finance Charges 2,92,020 4,85,434

Profit before Depreciation, Exceptional Item and Taxation 17,94,832 14,37,809

Less: Depreciation and Amortisation 3,10,344 2,24,855

Profit before Exceptional Item and Taxation 14,84,488 12,12,954

Add: Exceptional Item 5,07,954 -

Profit before Taxation 19,92,442 12,12,954

Less: Provision for Taxation 4,45,789 3,62,417

Profit after Taxation 15,46,653 8,50,537

Profit brought forward 23,77,847 18,74,132

Profit available for appropriation 39,24,500 27,24,669

Appropriations:

Transfer (from) Debenture Redemption Reserve (80,975) (62,029)

Transfer to Capital Redemption Reserve - 12,000

Transfer to General Reserve 2,62,100 85,100

Proposed Dividend 2,62,088 2,66,465

Tax on Dividend 44,542 45,286

Surplus carried to Balance Sheet 34,36,745 23,77,847

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31, 2009 is as under:

(Rs. in thousands)

PARTICULARS December 31, 2009 December 31, 2008

Net Sales 3,63,38,164 4,45,47,203

Profit before Interest, Depreciation, Amortization and Taxation 91,20,353 1,21,94,272

Less: Interest & Finance Charges 22,59,658 42,34,255

Profit before Depreciation, Exceptional Item and Taxation 68,60,695 79,60,017

Less: Depreciation and Amortisation 12,26,483 10,60,226

Profit before Exceptional Item and Taxation 56,34,212 68,99,791

Add: Exceptional Items 5,13,354 (6,86,236)

Profit before Taxation 61,47,566 62,13,555

Less: Provision for Taxation 17,14,356 21,75,684

Profit after Taxation before Minority Interests 44,33,210 40,37,871

Minority Interests 5,211 -

Profit after Taxation 44,38,421 40,37,871

Profit brought forward 52,17,495 15,26,446

Less: Adjustment on account of change in holding in subsidiary (25,928) --

Profit available for appropriation 96,29,988 55,64,317 Appropriations:

Transfer (from) Debenture Redemption Reserve (80,975) (62,029)

Transfer to Capital Redemption - 12,000

Transfer to General Reserve 4,62,100 85,100

Proposed Dividend 4,55,821 2,66,465

Tax on Dividend 77,467 45,286

Surplus carried to Balance Sheet 87,15,575 52,17,495

OPERATIONS

During the period under review, the Company has achieved a turnover of Rs.84,15,983 (in thousands), including turnover of Rs.5,31,319 (in thousands) from trading in Carbon Products, earned a Net Profit of Rs.15,46,653 (in thousands) and production was recorded at 23,72,299 Metric tonnes.

OUTLOOK FOR CEMENT INDUSTRY

Outlook for the cement industry continues to be moderate in 2010. Growth in the housing sector and infrastructure projects is likely to provide support to the prices and hedge against any demand slowdown in the near future. The Brown Field cement capacity expansion of 1.5 million tons at Kurnool unit completed in 2008, got stabilized during the second quarter of 2009 and resulted in improved capacity utilization during the current year. With the initiatives taken by the Government of India for infrastructure development, cement demand is expected to rise further in 2010.

The irrigation and housing projects being undertaken by the Government of Andhra Pradesh will further increase the demand in the state, where the Company sells a major portion of its produce.

However, with the new Cement Greenfield and Brownfield expansions commencing operations,. Cement supply is expected to be far higher than the demand resulting in lower capacity utilizations and reduced sales realizations.

In these conditions, the management continues to concentrate on cost reduction in power, other inputs and freight, such as increased use of domestic coal and optimizing the freight cost by setting up Fly Ash Handling and Cement Packing Unit at Bellary, accelerated repayments of debt in order to reduce the interest cost and optimizing the working capital.

PACKING PLANT

The Karnataka Power Corporation Limited (KPCL) has granted permission to collect Dry Fly Ash from its Thermal Power Station, located at Kuditini Village, Bellary Dist., Karnataka for a period of 10 years.

In order to optimize the freight cost, the Company is setting-up a Packing Unit at the said location with a capacity of packing 6 lakh tonnes of Cement per annum with a capital expenditure of Rs.1,000 lakhs.

OVERVIEW OF CALCINED PETROLEUM COKE (CPC) BUSINESS

Rain CM Carbon (India) Limited is a wholly owned subsidiary of Rain Commodities Limited; Rain Cll Carbon (India) Limited in turn has wholly owned subsidiaries namely Moonglow Company Business Inc, Rain Cll Carbon LLC, Cll Carbon Corporation and majority owned subsidiaries Rain Cll Carbon Mauritius Limited, Zhenjiang Xin Tian Tansu Company Limited.

Rain Cll Carbon (India) Limited is operating a 100% Export Oriented Unit (EOU) in Visakhapatnam, Andhra Pradesh, India with an installed capacity of 480,000 tonnes per annum of Calcined Petroleum Coke (CPC) and also generates 49MW of electricity from its co-generation plant.

Rain Cll Carbon (India) Limited has recorded a turnover of Rs.88,861 lakhs and net profit of Rs.12,355 lakhs for the financial year ended December 31, 2009.

Rain Cll Carbon (India) Limiteds wholly owned subsidiary Rain Cll Carbon LLC, USA is operating seven Calcined Petroleum Coke plants in USA, with an aggregate capacity of 1,895,000 tonnes per annum. Further, Rain Cll Carbon LLC also generates electricity/steam in three of its plants, through waste-heat recovery.

Rain Cll Carbon LLC, USA has recorded a turnover of Rs.2,20,843 lakhs and net profit of Rs. 18,288 lakhs for the financial year ended December 31, 2009.

During the year under review Rain Cll Carbon LLC had acquired a calcining plant in China with a capacity of 20,000 tonnes per annum.

OUTLOOK FOR CALCINED PETROLEUM COKE (CPC) INDUSTRY

Aluminum industry, the largest consumer industry of CPC, was growing at about 5% per annum globally in the past ten years. However, in the year 2009 due to global economic downturn that coupled with unprecedented decline in the Aluminum metal prices resulted in substantial reduction of global aluminum production. The demand for CPC was also reduced in the similar percentage. In these circumstances management took a holistic response by initiating various actions including curtailment of CPC production, overhead rationalization and working capital improvement.

The world demand, particularly in automotive and commercial transportation, for aluminum is likely to grow from 2010. The demand for global primary aluminum is expected to grow at about 10% in 2010 and is expected to get doubled in next fifteen years. Accordingly, the outlook for CPC industry would be moderate in the year 2010 and become strong from the year 2011 onwards.

The performance of the Group, being the worlds largest calciner with operations in both US and Asia, in CPC Industry would be stable in the medium term with improved availability of raw-materials and the long term relationship with both the Aluminum Smelters and the Petroleum Refineries.

CERTIFIED EMISSION REDUCTIONS

The waste heat recovery facility in the Calcined Petroleum Coke Plant of Rain Cll Carbon (India) Limited, a wholly owned subsidiary is approved as a Project under Clean Development Mechanism by United Nations Framework Convention on Climate Change on July 12, 2007 and is eligible for 164,777 Certified Emission Reductions per annum for a period of ten years from July 12, 2007.

DIVIDEND

The Board of Directors of the Company has recommended a Dividend @ 37% on the Paid up Equity Share Capital of the Company, i.e., Rs.3.70 per Equity Share for the financial year ended December 31, 2009.

TRANSFERRED TO GENERAL RESERVE

It is proposed to transfer Rs.2,621 lakhs to the General Reserves of the Company, constituting 16.95% of the profits made during the year.

LISTING OF EQUITY SHARES

The Companys Equity shares are listed at the following Stock Exchanges:

(i) Bombay Stock Exchange Limited, Phirozejeejeebhoy Towers, Dalai Street, Mumbai-400 001;

(ii) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot # C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051; and

(iii) The Delhi Stock Exchange Limited, DSE House, 3/1 Asaf Ali Road, New Delhi - 110002.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2010-11.

JOINT VENTURE

Pursuant to the approval of Board of Directors at their meeting held on April 23, 2009, the Company has sold 17,250,000 shares (including 75,000 shares held by Rain Commodities (USA) Inc., a wholly owned subsidiary) held in Petroleum Coke Industries Company, Kuwait (Joint Venture) to AL-Mal Investment Company, Kuwait for a consideration of Rs.7,658 lakhs. With this sale, the Company has divested its entire equity holding of 11.50% in Petroleum Coke Industries Company, Kuwait.

By Selling the stake in Petroleum Coke Industries Company, Kuwait, the Company has made a profit of Rs.5,080 lakhs.

SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs (MCA), Government of India.vide their letter No.47/710/2009-CL-lll, Dated December 4, 2009 granted exemption from attaching the Balance sheet, Profit & Loss Account, Directors Report

and Auditors Report of Subsidiary Companies to the Balance sheet of the Company. Your Company will provide with the copy of the Annual Accounts of the subsidiary companies and other related information upon request by any member of your Company or its Subsidiary Companies. The Annual Accounts of the Subsidiary Companies are kept for inspection by any investor at the registered office of the Company and the subsidiary companies.

A statement of Rain Commodities Limited (Holding Company) interest in Rain Cll Carbon (India) Limited, Rain CM Carbon (Vizag) Limited (formerly Rain Calciner Limited), Rain Cll Carbon LLC, Rain Cll Carbon Mauritius Limited, Rain Global Services HK Limited, Rain Global Services LLC, Rain Commodities (USA) Inc., Cll Carbon Corporation, Zhenjiang Xin Tian Tansu Company Limited, and Moonglow Company Business Inc (Subsidiary Companies/step subsidiary Companies) is enclosed as required under Section 212 of the Companies Act, 1956.

The information of Subsidiary Companies as required to be disclosed as per the directions given by MCA while granting exemption under section 212(8) of the Companies Act, 1956 is enclosed and forms part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

As prescribed by Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Audited Consolidated Financial Statements are annexed. The Company has consolidated the Accounts of Rain Cll Carbon (India) Limited, Rain Cll Carbon (Vizag) Limited (formerly Rain Calciner Limited), Rain Cll Carbon LLC, Rain Cll Carbon Mauritius Limited, Rain Global Services HK Limited, Rain Global Services LLC, Rain Commodities (USA) Inc., Cll Carbon Corporation, Zhenjiang Xin Tian Tansu Company Limited and Moonglow Company Business Inc.

FIXED DEPOSITS

The Company has not accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. N. Sujith Kumar Reddy and Mr. G. Krishna Prasad, Directors of the Company who retires by rotation and being eligible offer themselves for reappointment.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company retires at the ensuing Annual General Meeting. They have expressed their willingness to accept appointment.

M/s. Deloitte Haskins & Sells, Chartered Accountants have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 224(1 B) of the Companies Act, 1956.

COST AUDIT

As per the Governments directive, the Companys Cost records in respect of Cement for the Financial Year ended December 31, 2009 are being audited by Cost Auditor M/s. Sagar & Associates, Practising Cost Accountants, who are appointed by the Board with the approval of the Central Government.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956:

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, wfth respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms:

(i) That in the preparation of the Annual Accounts for the Financial year ended December 31, 2009, the applicable accounting standards have been followed;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2009 and of Profit and Loss Account of the Company for the period ended December 31, 2009;

(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; and

(iv) That the Directors have prepared the Annual Accounts for the Financial Year ended December 31, 2009 on a going concern basis.

AUDIT COMMITTEE

Audit Committee consists of the following Directors namely Mr. P. Venugopal Reddy, Chairman, Mr. G. Krishna Prasad, Member, Mr. V. Prakash, Member and Mr. R. S. Vidyasagar, Member.

All the members of the Audit Committee are independent Directors.

CORPORATE GOVERNANCE

A separate report on Corporate Governance and Management Discussion and Analysis is annexed as part of the Annual Report along with the Auditors Certificate on its compliance.

INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO AND PARTICULARS OF EMPLOYEES.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 217(1 )(e) of the Act read with Rule 2 of the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 and information on particulars of employees under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 (as amended) form part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility (CSR) is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and Society.

As part of Corporate Social Responsibility, the Company has undertaken following activities:

Education

In order to provide better educational facilities, the Company is maintaining schools at plant location and imparting education in english medium. The school provides education from LKG to 10th Standard to the children of the employees and also the students of surrounding villages near the plant.

Health

In order to provide good health facilities, the Company is maintaining hospital at Plant locations. The hospitals provide medical treatment to the workers and their families and also people living in surrounding villages near the plant location.

The Company has ambulance service facilities at one of its plant location and also conducts medical camps regularly.

The Company has made donation to Hrudaya Cure A Little Heart Foundation, which is established for providing the medical treatment to the poor children who are suffering with heart diseases. The Foundation also educates the public about the causes, prevention and eradication of heart diseases in children. 16 Children have undergone heart surgery with the financial assistance provided by the Company.

Environment

The Company has taken significant initiatives to reduce the pollution. Anti-pollution measures taken by the Company help minimize the impact of industrial process on the environment.

ACKNOWLEDGEMENTS

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of-the sincere and dedicated services of the employees and workmen at all levels. On behalf of the Board of Directors for RAIN COMMODITIES LIMITED

N. Radhakrishna Reddy N. Jagan Mohan Reddy

Chairman Managing Director

Place: Hyderabad Date: April 26, 2010

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