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Directors Report of Sagar Cements Ltd.

Mar 31, 2015

Dear Members

The Directors are pleased to present their Thirty Fourth Report together with the audited financial statements of the Company for the year ended 31st March, 2015.

Financial Results Rs. in Lakhs

As-on

Partlculars 31-03-2015 31-03-2014

Revenue from Operations (Net) 57557.47 48893.83

Other Income 36626.48 1781.62

Total Revenue 94183.95 50675.45

Earnings before Interest, tax, Depreciation and Amortization (EBITDA) 42288.68 1912.94

Finance costs 2308.23 2954.74

Depreciation 2150.47 2693.40

Profit before Tax 37829.98 -3735.20

Total of tax expenses 8141.70 1177.09

Less: Expenditure towards Corporate Social Responsibility 23.11 0.00

Profit after Tax 29665.17 - 2558.11

Add : Profit brought forward from the previous year 8211.30 10769.40

Profit available for appropriation 37876.47 8211.29

Appropriations:

Less: Dividend 1304.10 0.00

Less: Tax on Proposed Dividend on Equity Shares 262.37 0.00

Less: Transfer to General Reserves 0.00 0.00

Less: Additional Depreciation on account of adjustment as per Companies Act, 2013 51.97 0.00

Total Appropriations 1618.44 0.00

Earnings Per Share (Basic and Diluted) (Rs.) 170.61 - 14.71

Dividend

Based on the company's performance, your directors are pleased to recommend for approval of the members, a final dividend of Rs.2.50 per equity share of Rs.10/- each for the financial year 2014-15 taking the total dividend for the said year to Rs.7.50 per share which includes the interim dividend of Rs.5.00 per share already paid by the company for the said year.

The total dividend for the financial year 2014-15, including the interim dividend amounting to Rs.7.50 per share would absorb Rs.1566.47 lakhs including the dividend tax of Rs.262 lakhs.

Transfer to reserves

No transfer to reserves is proposed and accordingly the entire balance available in the Profit and Loss Account is retained in it.

Management Discussion Analysis

To avoid repetition in Directors Report and the Management Discussion Analysis Report, we furnish below the information under these reports as a composite summary of the performance of the various aspects of the business of the company.

Company's performance

Notwithstanding the bifurcation of the erstwhile State of Andhra Pradesh, which was hoped to result in a spurt in the infrastructure activities in both the resultant States, cement industry continued to face challenges during the year 2014-15 with pricing pressure, weak demand and high input costs. The expected revival in the construction activities in both Telangana and Andhra Pradesh, is yet to pick-up in a big way, though there were signs of marginal revival during the last two quarters of the said financial year.

The performance of the company during the year 2014-15 needs to be evaluated against backdrops of the above scenario. Your company's performance in terms of production and sale of cement and average net sales realization per ton are given below:

Particulars 2014-15 2013-14

Cement Production in MTs 1551598 1419943

Cement Sales in MTs 1550076 1419857

Average Net Sales Realisation per MT (Rs.) 3713 3444

Total Revenue - Rs. In lakhs 94184 50675

During the year, your company sold 15,50,076 tons of cement with an average net realization of Rs.3713/- per ton indicating an increase of 11% over the previous year. During the year, the company earned a net revenue of Rs.94184 lakhs as against Rs.50675 lakhs in the previous year. This includes the sum of Rs.34900 lakhs earned from the sale of its investment in the erstwhile JV.

Future outlook

The demand for cement, being a derived one, depends mainly on the industrial activities, real estate business, construction activities and investment in the infrastructure sector. Your directors are optimistic that the thrust and importance given in the Union Budget for the development of National Highways, Rural and Urban Roads, Affordable Housing, Port Connectivity, Development of 100 smart cities etc., should help in boosting the muted growth of the cement industry. Your company, with its aggressive marketing, is poised to grab the opportunity available in the above scenario.

The railway siding project currently under implementation by your company will become operational during the second quarter of the current year, which would enable your company to optimize its freight cost and reach out to newer markets. As the members are aware, your company is in the process of acquiring BMM Cements Limited (BMM), which has its manufacturing facilities consisting of 1 million ton capacity cement plant and a 25 MW capacity captive power plant at Gudipadu village, Yadiki Mandal, Ananthapur district, Andhra Pradesh, at an enterprise value of Rs.540 crores as reduced by the aggregate of the net off current assets and debts as on 31st March 2015 with adjustments for transactions taking place from the said date to the date of actual acquisition. The process of acquisition is in the advance stage and barring unforeseen circumstances, the same is expected to be completed within a couple of months, which would enable your company to expand its markets in Southern States. Pending the completion of the said process, as an interim arrangement, your company is procuring cement from BMM and marketing the same under the brand name of "Sagar Cement" in those areas which are currently served by BMM, Your directors hope that this would popularize the brand of "Sagar Cement" in these areas and would enable your company in expanding its marketing network post acquisition. Under these circumstances, your directors are confident that the pace of growth of your company will accelerate significantly.

It is fervently hoped that the division of erstwhile Andhra Pradesh into Telangana and Andhra Pradesh with the new Governments firmly in their saddle in their respective States would ensure more focus on the development of infrastructure. This would augur well for the cement industry. With the completion of the identification process for a new capital for Andhra Pradesh, it is hoped that further steps in the construction activities in the new capital would push the demand for cement. In these two States, infrastructure activities by the private players have also started picking-up. The Governments of the respective States on their part are expected to supplement these activities, as had been hoped prior to the bifurcation. However, till such time, your company may have to face the problems like rising input and distribution costs. Your company therefore attaches greater importance to keep its energy cost which forms part of significant portion of input costs to the minimum by ensuring an optimum combination in the consumption of imported and indigenous coal.

Taking an overall view of the above, your Board, is cautiously optimistic about the future outlook for your company.

Opportunities and threats:

Constrains on inputs:

The cement industry is a highly energy intensive sector. Energy, along with other raw materials mainly comprising coal and lime stone, forms the most critical component in the manufacture of cement. There are no problems with respect to the availability of limestone. There is also a marginal relief in the coal front due to optimization of consumption of indigenous and imported coal. However, logistics continues to be the main area of concern with the distribution cost remaining a significant component of the cost structure. As hoped elsewhere in this report, the completion of the ongoing project for providing a railway siding near the plant will go a long way in reducing the freight cost.

Stagnant demand

Housing sector which accounts for 60% - 70% of cement demand is yet to pick-up notwithstanding the promise held out by the division of the erstwhile Andhra Pradesh. It will be some time before the cement industry sees a significant revival in demand.

Impact of entry of global players:

The Indian cement industry with its huge potential continues to attract the entry of more global cement majors and encourages the strengthening of production bases by existing companies. This may lead to a substantial part of the cement capacity being controlled by a few players. Sagar Cements proposes to meet some of the challenges posed by this development by further improving its brand image, greater expenditure on advertising, strengthening its distribution networks as well as by customer-focused initiatives. Apart from these, Sagar Cements is looking for opportunities to expand its own manufacturing facilities geographically.

Outlook

On the macro level, the per capita consumption of cement being very low in India, there is a vast scope for growth in demand for cement on the long term. The main drivers for the growth in demand for cement being road and housing projects, the increased spending by the Government in these areas and the revival of the real estate sector would ensure no let up in the demand for cement, notwithstanding the substantial additions to capacity that the industry may witness in the coming years.

Risk Management System:

The Company attaches utmost importance to the assessment of internal risks and the management thereof in all its dealings. Company is constantly on the look out for identifying opportunities to enhance the enterprise value and keeping the need to minimize the risks associated with such efforts, every proposal of significant nature is screened and evaluated for the risks involved and then approved at different levels in the organization before implementation.

With a view to overcoming the risk of dependence upon any particular marketing segment or region, the Company is trying to reach out a wider section of its ultimate consumers. As the cement industry is witnessing rapid additions to its capacity, in order to mitigate the risk associated with it, Sagar Cements whose revenue is mainly from its sales in Telangana and Andhra regions, is looking for growth opportunities in other States, where infrastructure spending is set to get a boost.

The Company has adequate system to manage the financial risks of its operations. The system is implemented through imposition of checks and balances on extending credit to the customers, internal audit, statutory, cost and secretarial audit, which are periodically carried out through external audit firms, proper appraisal of major capital expenditure, adherence to the budget covering all areas of its operations and by insurance coverage for the company's facilities.

To further strengthen this area, the board of directors have recently adopted a Risk Management System, which is under active implementation.

Internal Control System and its adequacy:

The Board of Directors are satisfied with the adequacy of the internal control system in force in all its major areas of operations of the Company. The company has an ERP and compliance management system in all major areas of its operations. The audit committee assists the board of directors in monitoring the integrity of the financial statements, reservations, if any, expressed by the company's auditors including, the financial, cost, internal and secretarial auditors and based on their inputs, the board is of the opinion that the company's internal controls are adequate and effective.

Joint Venture Company

In accordance with the approval given by the shareholders, your company has since exited from its JV with Vicat Group, by selling its entire investment of 6,52,36,399 equity shares of Rs.10/- each held by your company in Vicat Sagar Cement Private Limited, the JV company, realizing a sum of Rs.435 crores on the said sale. As the shareholders are aware, your company had invested a sum of Rs.86 crores in the said JV. The proceeds realized in the said stake sale will be utilized for expanding the operations of your company, inter-alia, through acquisition of promising units.

Human resource development and Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel at its Plant, Office and on the field.

Your company is organizing training programmes wherever required for the employees concerned. Employees are also encouraged to participate in the seminars organized by the external agencies related to the areas of their operations.

Your company continues to focus on attracting and retaining competent personnel and providing a holistic environment where they get opportunities to realize their full potential. Your company is committed to provide to all of its employees a healthy and safe work environment.

Sexual Harassment

Regarding the Sexual Harassment of Women at the work place (Prevention, Prohibition & Redressal) Act, 2013, the company has constituted the Internal Complaints Committee. No complaints were received or disposed off during the year under the above Act.

Awards and Recognitions

Your Board is pleased to inform that your company is the recipient of the prestigious "Best Management Award" for the year 2015 from the Government of Telangana.

Your company has successfully achieved ISO Certification ISO 9001:2008 for Quality Management System Standard, ISO 14001:2004 for Environmental Management System Standard and OHAS 18001:2007 for Occupational Health and Safety Management System Standard.

Your Board is also pleased to inform you that your company's Laboratory at its Plant in Mattampally has recently been awarded with the Accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL), which is the sole accreditation body for testing and calibration laboratories under the aegis of Department of Science and Technology, Government of India. With this achievement, your company has joined the elite group of companies in the cement industry in the country.

Your directors are also pleased to inform that your company has been awarded with golden award by the Indian Green Building Counsel for its corporate office located in Hyderabad.

Subsidiaries, Joint Ventures or Associate Companies

Your company does not have any subsidiary or associate companies. As earlier mentioned in this report, Vicat Sagar Cement Private Limited, a joint venture of your company ceased to be so during the year under report.

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

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

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

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;

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

Directors and Key Managerial Personnel

Shri G.Suneel Babu, a Nominee director of IDBI, ceased to be director with effect from 5th August, 2014 consequent upon the withdrawal of the said nomination by IDBI. The Board places on record its appreciation of the valuable contribution and guidance provided by Shri G.Suneel Babu during his tenure as Nominee director on the Board of the company.

Pursuant to the provisions of Section 149 of the Companies Act, 2013 (Act) which came in to force on 1st April, 2014, Shri O.Swaminatha Reddy and Shri K.Thanu Pillai were appointed as Independent Directors at the 33 rd Annual General Meeting of the company held on 24th September, 2014. The terms and conditions of the appointment of these directors are as per Schedule IV of the Act. They had submitted declaration that each of them met the criteria of the independence as provided in Section 149 (6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.

Shri V.H.Ramakrishnan was appointed as an Independent Director by the Board on 30th March, 2015 for a period of five years, which is subject to the approval of the shareholders at the ensuing Annual General Meeting. Shri V.H.Ramakrishnan has submitted a declaration that he meets the criteria for independence as prescribed under Section 149 (6) of the Act. His terms and conditions of appointment are as per Schedule IV of the Act.

Mrs.S.Rachana was appointed as an additional director on 18th March, 2015 under Section 161 (1) read with Section 149 (1) (b) of the Companies Act, 2013 and Rule (3) of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Clause 49 (II) (A) (1) of the Listing Agreement with the Stock Exchanges. Under the said Section 161 (1), she will be holding her office up to the ensuing Annual General Meeting. The company has received a notice under Section 160 of the Act along with the requisite deposit proposing the appointment of Mrs.S.Rachana as director liable to retire by rotation.

The resolutions seeking the approval of the members for the appointment of Shri V.H.Ramakrishnan as an independent director as well as appointment and re-appointment of Mrs.S.Rachana and Shri S.Sreekanth Reddy respectively as directors liable to retire by rotation have been incorporated in the notice of the forthcoming annual general meeting of the company along with their profile.

Pursuant to the provisions of the Section 203 of the Act, the appointments of Shri S.Veera Reddy, Managing Director, Shri R.Soundararajan, Company Secretary and Shri K.Prasad, Chief Financial Office as Key Managerial Personnel of the company have been formalized.

Excepting Mrs.S.Rachana, who is a director in Panchavati Polyfibres Limited and RV Consulting Services Pvt.Ltd., whose transactions with the company have been reported under the related parties disclosure under notes to the accounts, none of the other non-executive directors has had any pecuniary relationship or transactions with the company, other than the receipt of sitting fee for the meetings attended by them.

Number of meetings of the board

Seven meetings of the board were held during the year. Details of such meetings have been given in the corporate governance report, which forms part of the Annual Report.

Policy on directors' appointment and remuneration and other details

Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel. A gist of the policy is available in the Corporate Governance Report.

Board evaluation

The Board of directors have carried out an evaluation of its own performance and of its committee as well as its individual directors on the basis of criteria such as composition of the board / committee structure, effectiveness, its process, information and functioning etc.

Auditors

M/s.P.Srinivasan & Co., Chartered Accountants, the present Auditors have expressed their non-availability due to their other pre-occupations, to continue as auditors of the company after conclusion of the ensuing Annual General Meeting. The Board and Audit Committee considered this and after placing on record the long valuable association of the said auditors with the company, have recommended the appointment of M/s. M/s.Deloittee Haskins & Sells, Chartered Accountants (F.R.No.0098072S), as Statutory Auditors of the company from the conclusion of the ensuing Annual General Meeting till the conclusion of the 39th Annual General Meeting, subject to the approval of the shareholders for which a Special Notice under Section 140 (4) of the Companies Act, 2013 has been received by the company.

M/s. Deloittee Haskins & Sells, Chartered Accountants (F.R.No.0098072S) have given consent for their proposed appointment and confirmed their appointment, if made, will be in compliance with the applicable provisions of the Companies Act, 2013. Accordingly, a proposal is being placed before the shareholders as part of the Notice of the ensuing Annual General Meeting, seeking its approval for the said appointment.

Auditors' Report and Secretarial Auditors' Report

Auditors' Report

The auditors' report does not contain any qualifications, reservations or adverse remarks.

Secretarial Auditors' Report

In accordance with Section 204 (1) of the Companies Act, 2013, the report furnished by the Secretarial Auditors, who carried out the secretarial audit of the company under the said Section is given in the Annexure-1, which forms part of this report. Regarding the observations made by the Secretarial Auditors on the delay in appointing independent director, as they are selfexplanatory, your Board has no comments thereon.

Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

Transactions with related parties

None of the transactions with related parties falls under the scope of Section 188 (1) of the Act. Information on transactions with related parties pursuant to Section 134 (3) (h) of the Act read with rule 8 (2) of the Companies (Accounts) Rules, 2014 are given in Annexure-2 in Form AOC-2 and the same forms part of this report.

All related party transactions that are entered into during the financial year were on arms length basis and in the ordinary course of business. There were no material significant related party transactions made by the company with promoters, key management personnel or other designated persons that may have potential conflict with the interests of the company at large. All related party transactions were placed before the Audit Committee and Board which approved the same.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the company and the initiatives undertaken by it on CSR activities during the year are set out in Annexure-3 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the company, http://www.sagarcements.in/ csr.html.

Extract of Annual Return

As provided under Section 92 (3) of the Act, an extract of annual return is given in Annexure-4 in the prescribed Form MGT-9, which forms part of this report.

Particulars of Employees

The information required under Section 197 of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules are given in the Annexure-5, which forms part of this report.

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Particulars Ratio to Median Remuneration

Non-Executive Directors *

Executive Directors

Shri S.Veera Reddy 33.95

Dr.S.Anand Reddy 23.77

Shri S.Sreekanth Reddy 17.83

* Non-Executive Directors are not paid any remuneration, other than sitting fee.

b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Shri O.Swaminatha Reddy These directors were not paid any

Shri K.Thanu Pillai remuneration, other than sitting fee, in which Shri K.Rajendra Prasad there was no increase (APIDC Nominee) during the financial year

Shri John-Eric Fernand Pascal Cesar Bertrand

Shri V.H.Ramakrishnan

Mrs.S.Rachana

Shri S.Veera Reddy

Dr.S.Anand Reddy No increase during the financial year

Shri S.Sreekanth Reddy

Shri R.Soundararajan 12.47

Shri K.Prasad 20.82

c. The percentage increase in the median remuneration of employees in the financial year: 9.08%.

d. The number of permanent employees on the rolls of Company: 429.

e. The explanation on the relationship between average increase in remuneration and Company performance:

On an average, employees received an annual increase of around 10% in India.

In order to ensure that remuneration reflects Company performance, the performance of the company is also one of the parameter for fixing the remuneration to the employees.

f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:



Aggregate remuneration of key managerial personnel (KMP) in FY15 (Rs. crores) 1.64

Revenue (Rs. crores) (includes Rs.349 crores realised on stake sale) 941.84

Remuneration of KMPs (as % of revenue) 0.17

Profit before Tax (PBT) (Rs. crores) 378.30

Remuneration of KMP (as % of PBT) 0.43

g. Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year

Particulars March 31, March 31, 2015 2014 % Change

Market capitalization (in Crores) 534.94 286.90 88.74

Price Earning Ratio 1.80 -11.02 -

h. Percentage increase over decrease in the market quotations of the shares of the company, comparison to the rate at which the company came out with the last public offer:

Particulars March 31, June 22, 2015 1992 % Change

Market Price in NSE 307.65 Not listed Not listed

Market Price in BSE 295.50 45.00 556%

i. Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was around 10% for personnel other than managerial personnel.

Increase in the managerial remuneration for the year was Nil.

j. Comparison of each remuneration of the key managerial personnel against the performance of the Company:

MD CS CFO

Remuneration in FY2014-15 (lakhs) 120.00 20.33 23.34

Revenue (lakhs) 94183.95

Remuneration as % of revenue 0.127 0.022 0.025

Profit before Tax (PBT) (lakhs) 37829.98

Remuneration 0.317 0.054 0.062 (as % of PBT)

k. The key parameters for any variable component of remuneration availed by the directors:

Commission is the only variable component which depends on profit earned during the relevant year.

i. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: None.

m. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms remuneration is as per the remuneration policy of the Company.

Disclosure requirements

As per Clause 49 of the listing agreements entered into with the stock exchanges, corporate governance report with auditors' certificate thereon and Management Discussion and Analysis form part of the Directors Report.

Policy on dealing with related party transactions is available on the website of the company (www.sagarcements.in).

The company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees of the company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177 (9) of the Act and the Listing Agreement with Stock Exchanges and the same is available on the company's web site.

Deposits from public

The company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 have been provided in the Annexure-6, which forms part of the Report.

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has an ESP system at the plant.

Sub Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee, Investment Committee, Corporate Social Responsibility Committee and Stakeholders' Relationship Committee, the composition and other details of all of which have been given in the Report on the Corporate Governance forming part of the Annual Report.

Compliance Certificate

A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with a report on Corporate Governance.

Cautionary Statement

Statements in these reports describing company's projections statements, expectations and hopes are forward looking. Though, these expectations etc., are based on reasonable assumption, the actual results might differ.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy 29th July 2015 Chairman


Mar 31, 2014

Dear Members

The Directors are pleased to present their Thirty Third Report together with the audited financial statements of the Company for the year ended 31st March, 2014.

Financial Results Rs. in Lakhs As on Particulars 31-03-2014 31-03-2013

Revenue from Operations (Net) 48893.83 55851.55

Other Income 1781.62 2602.95

Total Revenue 50675.45 58454.50

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) 1912.94 6822.15

Finance costs 2954.74 3055.38

Depreciation 2693.40 2674.39

Profit before Tax -3735.20 1092.38

Total of tax expenses 1177.09 214.40

Profit after Tax -2558.11 877.98

Add : Profit brought forward from the previous year 10769.40 10094.85

Profit available for appropriation 8211.29 10972.83 Appropriations:

General Reserves 0.00 0.00

Proposed Dividend on Equity Shares 0.00 173.88

Tax on Dividend proposed 0.00 29.55

Total Appropriations 0.00 203.43

Balance carried to Balance Sheet 8211.29 10769.40

Earnings Per Share (Basic and Diluted) (Rs.) -14.71 5.05

Dividend

In view of the absence of profit, your directors haves not recommended any dividend for the year 2013-14.

Transfer to reserves

No transfer to reserves is proposed and accordingly the entire balance available in the Profit and Loss Account is proposed to be carried to Balance Sheet.

Company’s performance

Cement industry remained challenging during the year 2013-14 with pricing pressures, weak demand and higher input costs. The undivided Andhra Pradesh, a major market for your product, could not see any revival in the construction activities due to economic slowdown caused by uncertainties that had prevailed both in politics and in bureaucracy on the eve of bifurcation of the state and the general election.

The performance of your company in terms of production and sale of cement and average net sales realization per ton are given below:

Particulars 2013-14 2012-13

Cement Production in MTs 1419943 1587419

Cement Sales in MTs 1419857 1585003

Average Net Sales Realisation per MT (Rs.) 2608 2773

Total Revenue - Rs. In lakhs 50675 58454

Future outlook

It is fervently hoped that the division of Andhra Pradesh, into Telangana and Andhra Pradesh, where new governments have since assumed office would end the uncertainties and usher in era of all-round development, This augurs well particularly for the cement industry, as these Governments, in order to woo investors, are likely to announce fresh incentives on new investments and expansions and also take up more infra projects, housing and urban development. In fact, setting up of a new capital for Andhra Pradesh alone may require infrastructure to tune of anywhere around Rs 1 lakh crore. However, till such time, your company may have to face the problems like rising input costs, higher freight and distribution costs and low price realizations due to weak demand. Your company therefore attaches greater importance to keep its energy cost to the minimum by ensuring an optimum combination in the consumption of imported and indigenous coal. As a long term measure, your company proposes to set up a waste heat recovery plant to ease the pressure on energy cost. Further, as you are aware, a railway siding project is under implementation near your plant at Mattampally and it is hoped that, barring unforeseen circumstances, the same would be completed in the current year and this project would see the optimization of the transportation cost and reduced dependence on road transport apart from enabling your company to reach newer markets. Taking an overall view of the above, your Board, is cautiously optimistic about the future outlook for your company.

Joint Venture Company

As the shareholders are now aware, your Board has decided to exit from the joint venture with Vicat Group and accordingly proposes to sell the entire investment of 6,52,36,399 equity shares of Rs.10/- held by your company in the joint venture company, Vicat Sagar Cement Private Limited for a consideration of Rs.435 crores. Your company had invested a sum of Rs.86 crores in the joint venture. Necessary approval for the said decision of the Board is being sought from the shareholders through postal ballot in accordance with Section 180(1)(a) of the Companies Act, 2013. The result of this postal ballot is likely to be announced on 20th August 2014. Your board hopes that the decision to exit from the joint venture would enable your company to look for new opportunities in the industry.

Corporate Governance Report and Management Discussion and Analysis Report

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, Corporate Governance Report for the period ended 31st March, 2014 with the auditors’ certificate thereon and the Management Discussion and Analysis Report are attached to form part of this report.

Internal Control Systems

Your Company has adequate internal control systems in all important areas of its operations and effectiveness of these is periodically reviewed for possible improvement in them.

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

There were no employees as on 31.03.2014 whose details are required to be furnished pursuant to Section 217 (2A) of the previous Companies Act, 1956.

Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel at the Plant, Office and on the field.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Section 217 (1) (e) of the Companies Act, 1956 have been provided in the annexure, which forms part of the Report.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has an ESP system at the plant.

Directors

Shri Gilbert Noel Claude Natta resigned from the Board with effect from 17.12.2013. Your Directors wish to place on record their deep sense of appreciation of the invaluable contribution made by him during his tenure as a Board member.

Dr.S.Anand Reddy, would be retiring by rotation at the ensuing Annual General Meeting and seeking re-appointment. As of the date of this report, Shri O.Swaminatha Reddy and Shri K.Thanu Pillai are independent directors as per Clause 49 of the Listing Agreement and were appointed under the Companies Act, 1956 as directors liabile to retire by rotation. In order to give effect to the applicable provisions of Section 149 and 152 of the Companies Act, 2013, it is proposed that these Directors be appointed as Independent Directors, to hold office for five consecutive years. Shri John-Eric Fernand Pascal Cesar Bertrand, who was appointed in the casual vacancy caused by the resignation of Shri Werner C.R.Poot would be holding the office upto the ensuing Annual General Meeting, whereat it is proposed to appoint him as a director liable to retire by rotation.

Sub Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee, Investment Committee and Investors’ Grievance Committee, the composition and other details of which have been given in the Report on the Corporate Governance forming part of the Annual Report.

Auditors

Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company hold their office up to the ensuing Annual General Meeting and are eligible for re-appointment. In accordance with the provisions of Section 139, 142 and other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, it is proposed to re-appoint them as the Auditors of the Company for a period of three consecutive years commending from the conclusion of this Annual General Meeting, until the conclusion of the 36th Annual General Meeting in the calendar year 2017.

Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material developments;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgement and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the company for the period;

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

(iv) that the directors had prepared the annual accounts on a going concern basis.

Public Deposits

Your Company had not accepted any Deposits from the public and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Compliance Certificate

A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with a report on Corporate Governance.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy 13th August 2014 Chairman


Mar 31, 2012

The Directors are pleased to present their Thirty First Report together with the audited accounts of the Company for the year ended 31st March, 2012.

Financial Results

The performance of your company during the year 2011-12 was satisfying in the context of the slowdown of the economy in general and infrastructure industry in particular during the said period.

A summarized financial performance of your company during the year under review is given below:

Rs. in Millions

Discribtion 2011-12 2010-11

Net Sales 6061 4250

Other Income 7 89

Total Income 6068 4339

Profit before Depreciation, Financial Charges and Tax 1247 814

Less: Depreciation 259 276

Financial Charges 342 601 311 587

Profit before Tax 646 227

Less: Net Provision for Tax 205 53

Profit After Tax 441 174

Add : Profit brought forward 829 711

Profit available for appropriation 1270 885 Appropriations proposed

Dividend @ 30% (Rs.3.00 per equity share) 52 35

Dividend Tax 9 4

Transfer to General Reserve 200 17

Carried to Balance Sheet 1009 829

Basic Earnings Per Share 25.37 11.61

Diluted Earnings Per Share 25.37 10.01

Dividend

Based on the Company's performance, the Directors are pleased to recommend for approval of the members a dividend of Rs.3/- per share for the financial year 2011-12.

Transfer to reserves

The Company proposes to transfer Rs.200 millions to the general reserve out of the amount available for appropriations and an amount of Rs.1009.48 million is proposed to be retained in the Balance Sheet.

Company's performance

While the total income of your Company rose by 40%, the Profit before and after tax went up by 185% and 153% respectively over the previous year.

The performance of your company in terms of production and sale of clinker / cement is given below:

Descrintion 2011-12 2010-11 Production ( in MT)

Clinker 1348080 1510135

Cement 1625336 1490662

Sales (MT) Clinker 0 30840

Cement 1631392 1470049

Sagar Cements could register a reasonable level of growth in 2011-12, both in terms of volume as well as price. Its sales in quantitative terms went up by 11% over the previous year. The average net sales realization per ton of cement was also higher at Rs.2,945/-, an increase of 32 %, over the previous year, resulting in an net operating revenue of Rs.6061 million.

Corporate Governance

Your Company has complied with the mandatory provisions relating to Corporate Governance as prescribed under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report detailing such compliance together with the Certificate obtained from the Statutory Auditors in connection therewith is included as part of the Annual Report.

Internal Control Systems

Your Company has adequate internal control systems in all important areas of its operations and effectiveness of these systems is periodically reviewed for possible improvement in them.

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

Particulars of employees required to be furnished in this Report pursuant to Sec.217 (2A) of the Companies Act, 1956 are given in the annexure.

Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel at the Plant, Office and on the field. Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Sec.217 (1) (e) of the Companies Act, 1956 have been provided in the annexure, which forms part of the Report.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has an ESP system at the plant.

Directors

The APIDC, has appointed Shri K.Rajendra Prasad as its nominee director in the place of its earlier nominee Shri P.Rajeswara Rao. Your Board placed on record its appreciation of the guidance and co-operation extended by Shri Rajeswara Rao during his tenure as the nominee director. In compliance with Sec.256 of the Companies Act, 1956, Dr.S.Anand Reddy and Shri Werner C.R.Poot retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Sub Committees of the Board

The Board has Audit Committee, Remuneration Committee, Investment Committee and Investors' Grievances Committee, the composition and details of which have been given in the Report on the Corporate Governance forming part of the Annual Report.

Auditors

Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company will be holding their office up to the ensuing Annual General Meeting. Shareholders are requested to appoint Auditors to the Company to hold office from the conclusion of its ensuing Annual General Meeting until the conclusion of its next Annual General Meeting. Your Board has accepted the recommendation of its Audit Committee to re-appoint the retiring auditors, who, being eligible for re-appointment, have since consented to the proposed re-appointment and confirmed that the said re- appointment, if approved by the shareholders, would be within the limits specified in Sub Section (1B) of Section 224 of the Companies Act, 1956.

Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material developments;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the period;

(iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the directors had prepared the annual accounts on a going concern basis.

Public Deposits

Your Company has not accepted any Deposits from the public and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Compliance Certificate

A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with a report on Corporate Governance.

Management Discussion and Analysis Report

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report is given in the Annexure, to form part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy

18th July 2012 Chairman


Mar 31, 2011

Dear Members

The Directors are pleased to present their Thirtieth Report together with the audited accounts of the Company for the year ended 31s' March, 2011

As you are aware, your Company saw in the year 2010-11 one of the major developments in its history, namely, the merger of Amareswari Cements Limited (ACL) with it. This merger, which is the logical outcome of the relationship that was existing between these two companies for well over a decade, is expected to result in a lot of synergy in the operations of your company and place your company in a stronger footing as far as the availability of lime stone and other incidental matters are concerned.

Financial Results

The financial results achieved by your company for the year 2010-11 are given below. As these results include the operations of erstwhile Amareswari Cements Limited, they are not strictly comparable with the financial results relating to the previous year.

Rs. In lakhs

Description 2010-11 2009-10

Net Sales 47685 47957

Other Income 1930 679

Total Income 49615 48636

Profit before Depreciation, Financial Charges and Tax 8139 8646

Less: Depreciation 2760 2769

Financial Charges 3114 5874 2895 5664

Profit before Tax 2265 2982

Less: Net Provision for Tax 524 1070

Profit After Tax 1741 1912

Add: Profit brought forward 7115 6127

Profit available for appropriation 8856 8039

Appropriations proposed

Dividend @ 20% (Rs. 2.00 per Equity Share) 348 375

Dividend Tax 45 49

Transfer to General Reserves 174 500

Carried to Balance Sheet 8289 7115

Total 8856 8039

Basic Earning Per Share 11.61 12.75

Diluted Earning Per Share 10.01 12.75

Dividend

Your Board has recommended for declaration at the forthcoming Annual General Meeting, a dividend @ Rs.2 per share (20%) on the Equity Shares for the year ended 31- March, 2011.

Operations review

While there was a marginal increase of 2% in the total income of your company as compared to the previous year, Operating Profit and PAT were however marginally lower as compared to the previous year.

The performance of your company in terms of quantity of production and sale is given below:

Description 2010-11 2009-10

Production ( in MT)

Clinker 1510135 1430000

Cement 1490662 1120350

Sales (MT)

Clinker 30840 350133

Cement 1469172 1127739

Cement - Second sales 0 204191

Self consumption 877 2897

Total Cement Sales 1470049 1334827

Andhra Pradesh, which is a major market for your Company saw a lull in the construction and infrastructure industries in 2010-11 causing a fall in the demand for cement. Despite this, your company, marginally improved its market shares in the said State. There was also a respite in the form of a marginal improvement on the price front in the form of better sales realisation, mainly due to the efforts initiated in the recent past to improve upon its brand image among the intermediaries and end users and to extend its reach further. These factors saw your company avoiding any significant fall in its revenue and profitability.

Share Capital

Pursuant to the Scheme of Arrangement for the merger of ACL with your Company, your Board of Directors, at their meeting held on 12'h July 2011, have allotted 32,85,714 Equity Shares to the shareholders of ACL. 900000 equity shares of your Company held by ACL as its investments have been cancelled pursuant to the said Scheme. Reflecting these developments, the equity share capital of your company now stands at Rs.17,38,80,140 divided into 1,73,88,014 Equity Shares of Rs.10/- each.

Future Outlook

Fresh investments in infrastructure projects have slowed down in the recent times. The projects already announced are also not implemented with the speed with which they were initiated. Nor is there any sign of revival in the construction activities. In such a scenario, we do not foresee any significant increase in demand for cement in the next couple of years atleast. This, along with increasing inputs costs, will continue to put the margins under pressure. However, in the longer term , growth of the cement industry is expected to turn robust, as infrastructure development is vital for the development of any country and cannot therefore be allowed to be ignored for a long in a welfare State like that of ours. We therefore remain cautiously optimistic of maintaining our growth amidst aggressive competition by improving our market share through innovative strategies and by cutting costs and improving efficiency in all areas of our operations.

Subsidiary Company

In our previous report we had conveyed your company's proposal to divest its holdings in Sagar Power Limited, with a view to enabling your company to focus more on its core area namely cement business. The entire stake held by your company in Sagar Power having since been divested, the latter ceased to be a subsidiary of your Company.

Vicat Sagar Cement

As you are aware, your Company and Parficim S.A.S., a wholly owned subsidiary of Vicat S.A. of France have jointly promoted Vicat Sagar Cement Private Limited as a special purpose vehicle, to set up a 5.5 mtpa capacity cement plant along with a captive power unit of 60MW capacity in Culbarga District of Karnataka State. Sagar Cements and the Vicat Croup have so far invested a sum of Rs.860 million and Rs. 4140 million respectively in the project. This project is implemented in two phases, each phase with a capacity of 2.75 mtpa. The major part of the acquisition of land in respect of first phase having since been completed, the civil works in respect of the project is in progress. Financial closure has already been achieved for this phase through tie-up with International Lending Institutions. This phase, barring unforeseen circumstances, is expected to go on stream by the middle of 2012.

Corporate Governance

Your Company has complied with the mandatory provisions relating to Corporate Governance as prescribed under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report detailing such compliance together with the Certificate obtained from the Statutory Auditors in connection therewith is included as part of the Annual Report.

Internal Control Systems

Your Company has adequate internal control systems in all important areas of its operations and effectiveness of these systems is periodically reviewed for possible improvement in them.

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

Particulars of employees required to be furnished in this Report pursuant to Sec.217 (2A) of the Companies Act, 1 956 are given in the annexure.

Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel at the Plant, Office and on the field.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Sec.217 (1) (e) of the Companies Act, 1956 have been provided in the annexure, which forms part of the Report.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has an ESP system at the plant.

Directors

The IDBI, has appointed Shri G. Suneel Babu as its nominee director in the place of its earlier nominee director Shri V.V.S.Ravindra. Your Board placed on record its appreciation of the guidance and co-operation received by it from Shri Ravindra during his tenure as the nominee director. In compliance with Sec.256 of the Companies Act, 1956, Shri OSwaminatha Reddy and Shri K.Thanu Pillai retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Audit Committee

The Audit Committee of the Board, constituted pursuant to Sec.292 (A) of the Companies Act, 1 956 read with Clause 49 of the Listing Agreement, currently consists of the following directors as its members:

Shri CSwaminatha Reddy Chairman

Shri K.Thanu Pillai Member

Shri C. Suneel Babu Member

Shri P.Rajewara Rao Member

Shri R.Soundararajan, Company Secretary is the Secretary to the Committee. The Committee had met five times during the year ended 31s' March 2011 and, inter-alia, reviewed the financial results of the Company for the respective quarters.

Remuneration Committee

The Remuneration Committee of the Board, constituted pursuant to Schedule XIII to the Companies Act 1956 read with Clause 49 of the Listing Agreement has the following Directors as its members:

Shri K.Thanu Pillai Chairman

Shri CSwaminatha Reddy Member

Shri P.Rajeswara Rao Member

During the year 2010-11 this committee did not hold any meeting as there was no occasion for the same. However, a meeting of the committee was later held on 17'h May 2011 to recommend a suitable remuneration to the Managing Director on his proposed re-appointment and to review the remuneration paid to other whole time directors of the Company. The Committee's recommendations, which have since been accepted by the Board of Directors, are placed before the shareholders for their approval under the relevant provisions of the Companies Act, 1956.

Investment Committee

With a view to evaluating investment opportunities available to the Company from time to time, your Board has constituted an Investment Committee with the following directors as its members:

Shri CSwaminatha Reddy Chairman

Shri S.Veera Reddy Member

Shri K.Thanu Pillai Member

Auditors

Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company will be holding their office up to the ensuing Annual General Meeting. Shareholders are requested to appoint Auditors to the Company to hold office from the conclusion of its ensuing Annual General Meeting until the conclusion of its next Annual General Meeting. Your Board has accepted the recommendation of its Audit Committee to re-appoint the retiring auditors, who, being eligible for re-appointment, have since consented to the proposed re-appointment and confirmed that the said re- appointment, if approved by the shareholders, would be within the limits specified in Sub Section (1 B) of Section 224 of the Companies Act, 1956.

Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material developments;

(ii) that the directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the period;

(iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the directors had prepared the annual accounts on a going concern basis.

Public Deposits

Your Company had not accepted any Deposits from the public under Section 58A of the Companies Act, 1 956 during the year 2010-11.

Compliance Certificate

A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with a report on Corporate Governance.

Listing

As stipulated under Clause 32 of the Listing Agreement, the names and addresses of Stock Exchanges on which the Company's equity shares have been listed are given below:

1. National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex Bandra East, Mumbai - 400051

2. Bombay Stock Exchange Limited Phiroze jeejeebhoy Towers Dalai Street, Mumbai - 400001

Management Discussion and Analysis Report

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report is given in the Annexure, to form part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board of Directors

Hyderabad O.Swaminatha Reddy

12th July 2011 Chairman












Mar 31, 2010

The Directors are pleased to present their Twenty Ninth Report together with the audited accounts of the Company for the year ended 31st March, 2010.

As you are aware, during the later part of the previous year, your Company had completed a major expansion of its plants capacity from 0.297 mtpa to 2.35 mtpa and your Directors are pleased to inform you that the production from the said expanded facility has since stabilized.

Financial Results

Rs. in lakhs

Description 2009-10 2008-09

Net Sales 479S7 306S4

Other income 679 84

Total Income 48636 30738

Profit before Depreciation,

Financial Charges and Tax 8646 5986

Less : Depreciation 2769 1872

Financial Charges 2895 5664 1590 3462

Profit before Tax 2982 2524

Less : Net Provision for Tax 1070 878

Profit After Tax 1912 1646

Add : Profit brought forward 6127 5327

Profit available for

appropriation 8039 6973

Appropriations proposed

Dividend @ 25 % (Rs.2.50 per

equity share) 375 385

Dividend Tax 49 61

Transfer to General Reserve 500 400

Balance carried to Balance Sheet 7115 6127

Total 8039 6973

Basic and Diluted Earning Per Share 12.75 11.48

Dividend

Your Board has recommended for declaration at the forthcoming Annual General Meeting, a dividend @ Rs.2.50 per share (25%) on the 15002300 Equity Shares of Rs.10/- each for the year ended 31st March, 2010.

Operations review

The total income of your Company grew by 58% to Rs.48636 lakhs during the year under report as compared to Rs.30738 lakhs in the previous year. Operating Profit grew by 44.4 % to Rs.8646 lakhs. Profit after Tax was higher at Rs. 1912 lakhs as

compared to Rs. 1646 lakhs in the previous year, registering a growth of 16%. Earnings per share for the year were also higher at Rs. 12.75 as against Rs. 11.48 in the previous year.

The performance of your company in terms of production and sale of cement / clinker is given below:

Particulars Cliker (MTs) Cement (MTs)

2009-10 2008-09 2009-10 2008-09

Production 1430000 737710 1120351 431250

Sales 350133 307152 1130636 415835

Sale of Traded Cement - - 204191 225650

The increase in the production was on account of (he expanded capacity having become fully operational during the year under review, which enabled your company to record a sharp rise in sales. The year also saw a marginal increase of Rs.63/- and Rs. 126/- in the average net sales realisation per tonne of clinker and packed cement respectively.

Share Capital

There was no change in the capital structure of your Company during the year under report. Future Outlook

The long-term prospects for the cement industry as a whole look bright as the cement consumption, driven by higher off-take by all user segments, is expected to remain robust. However, the capacity additions, which are taking place across the industry and the entry of global cement companies, both through organic and inorganic routes, have intensified the competition within the industry offering little scope for any significant improvement in the realization in the near term. This, coupled with increasing inputs costs, may put the margins under pressure.

While the growth in the cement consumption is generally expected to overcome any possible conflict arising due to excess supply and attendant set backs, your Company, on its part, is confident of maintaining its growth amidst aggressive competition by improving its market share through innovative strategies and by cutting costs and improving efficiency in all areas of its operations.

Subsidiary Company

Documents and Information pursuant to Sec.212 of the Companies Act, 1956 in respect of Sagar Power Limited, the subsidiary of your Company, have been provided as attachment to the Balance Sheet, together with the consolidated financial statements. The performance of this subsidiary would have been much better, but for the fact that one of the two units belonging to this subsidiary continued to be almost non-operational for the second year in succession due to stoppage of flow of water in the relevant canal caused by on-going construction of an aqua-duct across the said canal. With a view to focusing more on the core area of your Company namely the cement business, your Company is divesting its stake in this subsidiary.

Joint Venture

As you are aware, your Company and Parficim S.A.S., a wholly owned subsidiary of Vicat S.A. of France have jointly promoted Vicat Sagar Cement Private Limited as a special purpose vehicle, to set up a 5.5 mtpa capacity cement plant along with a captive power unit of 60MW capacity in Gulbarga District of Karanataka State. Sagar Cements and the Vicat Group have so far invested a sum of Rs.410 million and Rs. 1196 million respectively in the project. This project is implemented in two phases, each phase with a capacity of 2.75 mtpa. The acquisition of land in respect of first phase is nearing completion. This phase, for which financial closure is expected to be achieved soon, is being planned, barring unforeseen circumstances, to go on stream by 2012.

Corporate Governance

Your Company has complied with all the mandatory provisions relating to Corporate Governance as prescribed under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report detailing such compliance together with the mandatory Certificate obtained from the Statutory Auditors in connection therewith is included as part of the Annual Report.

Internal Control Systems

Your Company has adequate internal control systems in all important areas of its operations and effectiveness of these systems is periodically reviewed for possible improvement in them.

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

Particulars of employees required to be furnished in this Report pursuant to Sec.217 (2A) of the Companies Act, I956 are given in the annexure.

Industrial Relations

Your Company continues to en]oy cordial relationship with all its personnel at the Plant, Office and on the field. Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Sec.217 (I) (e) of the Companies Act, 1956 have been provided in the annexure, which forms part of the Report.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has installed an ESP system at the plant.

Directors

In compliance with Sec.256 of the Companies Act, 1956, Shri S.Sreekanth Reddy and Shri Werner C.R.Poot will be retiring by rotation at the ensuing Annual General Meeting and these retiring directors, being eligible, are proposed for re-appointment. Shri Gilbert Noel Claude Natta, who was appointed as additional directors on the Board on 17th September 2009, will be holding his office up to the ensuing Annual General Meeting in accordance with Sec.260 of the Companies Act, 1956 and a notice proposing his re-appointment U/s.257 of the said Act has been received from a member of the Company. Your Board recommends the re-appointment of all the above mentioned directors at the ensuing Annual General Meeting.

Sub Committees of the Board

The Board has Audit Committee, Remuneration Committee, Investment Committee and Investors Grievances Committee, the composition and details of which have been given in the Report on the Corporate Governance forming part of the Annual Report.

Auditors

Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company will be holding their office up to the ensuing Annual General Meeting. Shareholders are requested to appoint Auditors to the Company to hold office from the conclusion of its ensuing Annual General Meeting until the conclusion of its next Annual General Meeting. Your Board has accepted the recommendation of its Audit Committee to re-appoint the retiring auditors, who, being eligible for re-appointment, have since consented to the proposed re-appointment and confirmed that the said re-appointment would be within the limits specified in Sub Section (IB) of Section 224 of the Companies Act, 1956.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material developments;

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

(iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the directors had prepared the annual accounts on a going concern basis.

Public Deposits

Your Company had not accepted any Deposits from the public under Section 58A of the Companies Act, 1956 during the year 2009-10.

Management Discussion and Analysis Report

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report is given in the Annexure, to form part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of

the Board of Directors



O.Swaminatha Reddy

Chairman

Hyderabad

31 st July, 2010



 
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