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Directors Report of The Ramco Cements Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 57th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2015.

FINANCIAL RESULTS (Rs. in Crores) STANDALONE Year ended Year ended 31-03-2015 31-03-2014

Total Revenue 3731.77 3769.23

Operating Profit: Profit before Interest, Depreciation and Tax (PBIDT) 800.12 648.76

Less: Interest 193.81 188.13

Profit before Depreciation and Tax (PBDT) 606.31 460.63

Less: Depreciation 249.88 306.29

Net Profit before tax 356.43 154.34

Less: Provision for Tax

Current Tax 74.91 32.30

Deferred Tax 105.31 21.01

MAT Credit Entitlement (66.14) (36.67)

Net Profit After Tax 242.35 137.70

Add: Balance Profit from last year 100.00 90.31

342.35 228.01

Less: Depreciation adjustment on transition to Schedule II of the Companies Act, 2013 on fixed assets (Net of Deferred Tax) 36.22 -

Surplus for appropriation 306.13 228.01

Appropriations:

1. Transfer to General Reserve 163.11 100.13

2. Dividend 35.75 23.83

3. Tax on Dividend 7.27 4.05

Balance carried over to Balance Sheet 100.00 100.00

TOTAL 306.13 228.01

SHARE CAPITAL

During the year under review, the Company has allotted 1,07,400 shares of Rs.1/- each, which were kept in abeyance out of the previous Bonus issues. Consequently, the paid up capital of the Company has increased from Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each to Rs.23,80,76,780/- consisting of 23,80,76,780 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs.1.50 per share on the equity capital of the Company, as against Rs.1.00 per share for the previous year. The total dividend for the year amounts to Rs.35.75 Crores as against Rs.23.83 Crores for the previous year.

TAXATION

An amount of Rs.74.91 Crores towards Current Tax, Rs.105.31 Crores towards Deferred Tax and Rs.7.27 Crores towards Dividend Tax has been provided for the year under review. The Company''s entitlement of MAT credit of Rs.66.14 Crores has been recognised in the books during the year.

MANAGEMENT DISCUSSION & ANALYSIS REPORT CEMENT DIVISION

PRODUCTION (In Tons) PARTICULARS April 2014 to April 2013 to Change over March 2015 March 2014 previous year

Clinker 56,67,867 65,39,471 - 8,71,604 - 13%

Cement 76,96,266 85,90,194 - 8,93,928 - 10%

SALES

During the year under review, the sale of cement was at 76.68 lakh tons, compared to 85.97 lakh tons of the previous year, showing a decrease of 11%.

The general slowdown in the economy has affected the infrastructure activities, thereby affecting the cement industry as a whole. The Government spending on infrastructure has not seen any appreciable growth, affecting the demand for cement.

In Southern States, the construction industry has faced scarcity of raw materials like, river sand and blue metal, affecting the construction activities. Prolonged monsoon, floods and cyclones that hit some states, financial constraints and increasing rate of interest caused a slow down in Realty and Housing Sectors. Due to this, there has been no growth in the Realty Sector, both with respect to Commercial and Residential Projects. Subsequent to the bifurcation of Andhra Pradesh into Telengana and Andhra Pradesh, the fillip to the investments by the Private Sector is yet to materialise.

All the above factors have led to a decrease in the Company''s production and sales compared to the previous year.

During the year under review, the Company has exported 1.91 lakh tons as against 2.25 lakh tons during the previous year. The export turnover of the Company for cement and dry mortar products for the year was Rs.73.24 Crores as against Rs.82.45 Crores of the previous year.

COST

During the year under review, the price of diesel which was Rs.59.17 per litre as on 01-04-2014 has increased upto Rs.62.92 per litre in the first half of the financial year and subsequently softened and reduced to Rs.52.92 per litre as on 31-03-2015. This has resulted in reduction in transportation cost of both incoming and outgoing materials.

The year has also seen decline in the prices of fuel in international market, mainly due to lesser demand from China. The Company was able to source fuel at economical rates, which has reduced the cost of power and fuel.

READY MIX CONCRETE DIVISION

The Division has produced 30,836 cu.m of concrete during the year, accounting for a sale revenue of Rs.13.21 Crores (Net of Excise Duty and VAT) as against 44,037 cu.m. of concrete accounting for a sale revenue of Rs.16.36 Crores during the previous year.

DRY MORTAR DIVISION

The Division has produced 44,025 tons of Dry Mortar during the year as against 37,483 tons produced during the previous year. The Division has sold 43,997 tons of Dry Mortar accounting for a sale revenue of Rs.27.32 Crores (Net of Excise Duty and VAT) during the year as against 36,971 tons of Dry Mortar accounting for a sale revenue of Rs.22.84 Crores during the previous year.

WIND FARM DIVISION

The Division has generated 2,106 lac units as compared to 2,667 lac units of the previous year. Out of this 2,012 lac units were generated from the wind farms in Tamil Nadu and 94 lac units from the wind farms in Karnataka. Out of the units generated in Tamil Nadu, 275 lac units are meant for adjustment against the power consumed in our plants and balance 1,737 lac units have been sold to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for a value of Rs.52.15 Crores. The units generated in Karnataka were fully consumed at our Mathodu Cement Plant.

Due to dip in wind velocity, the period of high wind season for the year under review was less compared to previous year. The Company continued to face evacuation constraints imposed by TANGEDCO. There were frequent backing down of the wind electric generators by TANGEDCO. In addition, the company had sold 121 Nos. of wind electric generators aggregating to 33.235 MW to its subsidiary, Ramco Windfarms Limited in March 2014. Because of the above factors, the generation of electricity during the year was less compared to the previous year.

The installed capacity of the wind farm of the company is 125.95 MW as on 31-03-2015 comprising of 108 Wind Electric Generators.

The income during the year from the Division was Rs.53.44 Crores as against Rs.68.24 Crores of the previous year.

VIZAG GRINDING UNIT

In the Directors'' Report for the year ended 31-03-2014, it was informed about the progress of establishment of Company''s 4th grinding unit at Vizag and the proposal to commission the same during the second quarter of 2014-15. As informed in the said Directors'' Report, the project implementation was affected because of Phailin Cyclone that attacked North Coastal Andhra Pradesh in October 2013. During the year under review, there was another cyclone, namely Hudhud, during the month of October 2014, which further hampered the construction activities. By mobilising additional resources, all the equipments were installed and commissioned in the month of March 2015.

POWER PLANTS

In the Directors'' Report for the year ended 31-03-2014, it was informed about the proposal to enhance the capacity of the thermal power plants at Alathiyur, Ariyalur and Jayanthipuram by adding one turbine each of 6 Mw capacity. The projects would be commissioned in the current year. With the completion of these projects, the aggregate capacity of the thermal power plants of the Company would go up from 157 MW to 175 Mw.

Due to lower demand and consequently lower production of cement during the year under review, there had been a higher surplus of power from the thermal power plants. The surplus power was sold to HT consumers / State Electricity Boards. During the year under review, the Company had sold 3,866 lac units from the thermal power plants at Ramasamy Raja Nagar, Alathiyur, Ariyalur and Jayanthipuram units as against the sale of 2,491 lac units in the previous year. The higher realisation for the power sold, coupled with the increase in units sold had contributed to the increase in the profits for the year under review.

TURNOVER AND PROFITABILITY

The total revenue for the year (net of Excise Duty and VAT) was Rs.3,731.77 Crores as against Rs.3,769.23 Crores of the previous year.

The operating profit and net profit for the year had increased to Rs.800.12 Crores and Rs.242.35 Crores as against Rs.648.76 Crores and Rs.137.70 Crores respectively of the previous year.

As already explained, the reduction in costs, higher realisation, increased contribution from thermal power plants and lower charge of depreciation consequent to the introduction of Companies Act,

2013, have contributed to the increase in the profits for the year, compared to the previous year.

SUBSIDIARY COMPANY

The Company has a subsidiary, Ramco Windfarms Limited, whose capital is Rs.1.00 Crore, out of which 71.50% is held by our Company. The rest of the share capital is held by Ramco Group of Companies.

The Subsidiary Company has 121 Nos. of wind electric generators aggregating to 33.235 MW capacity.

The revenue and net profits for the subsidiary company for the year ended 31-03-2015 are Rs.10.53 Crores and Rs.1.35 Crores respectively.

In accordance with Rule 5 of Companies (Accounts) Rules,

2014, a statement containing the salient features of the Financial Statements of the subsidiary is attached in Form AOC-1 as Annexure - 1 to the Directors'' Report.

CONSOLIDATED FINANCIAL STATEMENTS

As per provisions of Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement, Companies are required to prepare consolidated financial statements of its Subsidiaries and Associates to be laid before the Annual General Meeting of the Company. Accordingly, the consolidated financial statements incorporating the accounts of Subsidiary Company, viz. Ramco Windfarms Limited and Associate Company, viz. Ramco Systems Limited along with the Auditors'' Report thereon, forms part of this Annual Report.

In the month of April 2015, Ramco Systems Limited had gone for Qualified Institutional Placement and consequent to allotment of 51,18,100 equity shares of Rs.10/- each to Qualified Institutional Buyers on 29-04-2015, its share capital had increased from Rs.24.42 Crores to Rs.29.54 Crores. Due to this, our share of investment in the capital of the company has decreased from 22.21% to 18.34%. Because of this, Ramco Systems Limited had ceased to be our Associate Company with effect from 29-04-2015, in accordance with Section 2(76) of the Companies Act, 2013.

The consolidated net profit of the company amounted to Rs.246.13 Crores for the year ended 31st March 2015 as compared to Rs.114.55 Crores of the previous year.

DIRECTORS

Shri.P.R.Ramasubrahmaneya Rajha, was reappointed as CMD of the Company for a period of three years starting from 01-04-2014 at the AGM held on 28-07-2014.

Shri.R.S.Agarwal, Shri.M.B.N.Rao and Shri.M.M.Venkatachalam were also appointed as Independent Directors of the Company for a period of five years starting from 01-04-2014, at the AGM held on 28-07-2014.

Smt. Justice Chitra Venkataraman (Retd.) (DIN: 07044099) has been co-opted on 20-03-2015 as an Additional Director under Independent Director category. She will hold the office till the date of the forthcoming Annual General Meeting. A Notice in writing has been received from a Member signifying his intention to propose the appointment of Smt. Justice Chitra Venkataraman (Retd.) as a Director under Independent Director category at the Annual General Meeting to hold office for 5 consecutive years with effect from 20-03-2015, without being subject to retirement by rotation.

In accordance with the provisions of the Companies Act, 2013 and the Company''s Articles of Association, Shri.P.R.Venketrama Raja (DIN:00331406) retires by rotation and is eligible for re-election.

The Government of Tamil Nadu appointed Shri.Swaran Singh, I.A.S. (DIN:01359580), Industries Commissioner and Director of Industries and Commerce, as their Nominee Director with effect from 15-05-2014 in the place of Shri.Harmander Singh, I.A.S. (DIN: 03291250).

Shri.Swaran Singh, I.A.S. ceased to be a Director with effect from 15-05-2015.

The Directors wish to place on record the valuable guidance and services rendered by the Nominee Directors during their tenure as Directors of the Company.

Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules, 2014, it is reported that, other than the above, there have been no changes in the Directors or Key Managerial Personnel during the year.

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

The Audit Committee has three members, out of which two are Independent Directors. Pursuant to Section 177(8) of the Companies Act, 2013, it is reported that there has not been an occasion, where the Board had not accepted any recommendation of the Audit Committee.

In accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors have approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company.

As required under Clause 49(II)(B)(7) of the Listing Agreement, the details of the Familiarisation Programme for Independent Directors is available at the Company''s website, at the following link at http://www.ramcocements.in/Familiarisation.aspx

Board Evaluation

Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Clause 49(II)(B)(6)(b)(iii) of the Listing Agreement, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Clause 49(II)(B)(5) of the Listing Agreement, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of reappointment of Independent Director.

Meetings

During the year four Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report.

PUBLIC DEPOSITS

The Company had fixed deposits amounting to Rs.1.74 Crores at the beginning of the year. The Company has decided not to accept fresh deposits from 01-04-2014 and to avail the option provided under Section 74 of the Companies Act, 2013 to repay all the existing deposits by complying with the formalities required in this regard. Accordingly, during the year, the Company has repaid deposits to an extent of Rs.1.67 Crores together with the accrued interest thereon. An amount of Rs.0.07 Crores representing 19 deposits were remaining unclaimed as on 31-03-2015. On the date of this report, Rs.0.02 Crores thereof have been claimed and refunded in respect of 7 deposits.

ORDERS PASSED BY REGULATORS

Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, impacting the going concern status and Company''s operations in future.

INTERNAL FINANCIAL CONTROLS

In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls Policy by means of Policies and Procedures commensurate with the size & nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that

a. the Company has not given any loans.

b. the particulars of the guarantees and investments are provided under Note No.47(e) and 47(k) respectively of Notes forming part of financial statements. The guarantees are to secure the loans from Banks/Financial Institutions to the borrowers.

AUDITS

STATUTORY AUDIT

At the Annual General Meeting held on 28-07-2014, M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company for three consecutive years being their remaining eligible period in terms of Rule 6 of Companies (Audit and Auditors) Rules, 2014. The matter relating to their appointment for the second year of their term is being placed before the Members for ratification at the ensuing Annual General Meeting, in accordance with the requirements of Section 139(1) of the Companies Act, 2013.

The Auditors have confirmed their eligibility to the effect that their reappointment, if made, would be within the prescribed limits under the Companies Act, 2013, and that they are not disqualified for reappointment.

The report of the Statutory Auditors for the year ended 31st March 2015 does not contain any qualification, reservation or adverse remark.

COST AUDIT

The Board of Directors had approved the appointment of M/s. Geeyes & Co., Cost Accountants as the Cost Auditors of the Company to audit the Company''s Cost Records relating to manufacture of cement and generation of wind energy for the years 2014-15 to 2016-17.

The appointment and the remuneration of the cost auditor is required to be ratified by the members in accordance with the provisions of Section 148(3) of the Companies Act, 2013 and Rule 14 of Companies (Audit and Auditors) Rules, 2014. Accordingly, the matter is being placed before the Members for ratification at the ensuing Annual General Meeting.

The Cost Audit Report for the financial year 2013-14 due to be filed with Ministry of Corporate Affairs by 27-09-2014, had been filed on 15-09-2014. The Cost Audit Report for the financial year 2014-15 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period.

SECRETARIAL AUDIT

M/s.S.Krishnamurthy & Co., Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company. Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report submitted by the Secretarial Auditors for the year ended 31st March 2015 is attached as Annexure - 2. The report does not contain any qualification, reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT-9 is attached herewith as Annexure - 3.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement. As required under Clause 49(X) of the Listing Agreement, a Report on Corporate Governance being followed by the Company is attached as Annexure - 4. As required under Clause 49(XI) of the Listing Agreement, a Certificate from the Secretarial Auditors confirming compliance is also attached as Annexure - 5 to this Report.

CORPORATE SOCIAL RESPONSIBILITY

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy which is based on the philosophy that "As the Organisation grows, the Society and Community around it also grows."

The Company has undertaken various projects in the areas of education, health, rural development, water and sanitation, promotion and development of traditional arts, protection of national heritage, livelihood enhancement projects, etc. largely in accordance with Schedule VII of the Companies Act, 2013.

The CSR obligations pursuant to Section 135(5) of the Companies Act, 2013, for the year 2014-15 is Rs.8.66 Crores. As against this, the Company has spent Rs.7.80 Crores on CSR, leaving a shortfall of Rs.0.86 Crores. Because of want of identification of projects, the shortfall had occurred. However, the company had spent a sum of Rs.2.17 Crores on other social causes and projects during the year, which are not qualifying under the classifications listed out in Schedule VII of the Companies Act, 2013.

The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - 6.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Clause 49(II)(F) of the Listing Agreement, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Company''s website.

RISK MANAGEMENT POLICY

Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimisation of risk thereof.

RELATED PARTY TRANSACTIONS

The transactions with related parties entered into by the Company are periodically placed before the Audit Committee for its approval. The particulars of contracts entered into by the Company during the year as per Form AOC 2 is enclosed as Annexure - 7. No transaction with the related party is material in nature, in accordance with Company''s "Related Party Transaction Policy" and Clause VII(C) of the Listing Agreement. In accordance with AS-18, the details of transactions with the related parties are set out in Note No:47 to the Balance Sheet.

As required under Clause 49(VIII)(A)(2) of the Listing Agreement, the Company''s Related Party Transaction Policy is disclosed in the Company''s website and its weblink is - http://www. ramcocements.in/pdffiles/policies/RELATED%20PARTY%20 TRANSACTION%20POLICY.pdf

As required under Clause 49(V)(D) of the Listing Agreement, the Company''s Material Subsidiary Policy is disclosed in the Company''s website and its weblink is - http://www.ramcocements.in/pdffiles/policies/MATERIAL%20

SUBSIDIARY%20POLICY.pdf

FUTURE OUTLOOK

The present Government''s policies are expected to give a big push to the economic activities. The thrust given in the Union Budget 2015-16 for development of Roads and Highways, Ports, Development of Smart Cities, etc. is expected to accelerate the growth of the cement industry. The investments in infrastructure are expected to give a boost to the construction activities. The moderate inflation will encourage investments in housing sector. The Government''s commitment to reforms and its initiatives relating to "Make in India" and ease of doing business are expected to make the GDP grow in excess of 8%. All these will positively impact the demand for cement in future. As all our plants are fully equipped with railway siding, stand-by power back up facility and are supported with grinding units, our Company will be able to take full advantage of the economic momentum in the coming years.

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

Pursuant to Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as Annexure - 8.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1), (2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration, are provided in Annexure - 9.

Having regard to the first proviso to Section136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is also available on the Company''s website.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 2,883 employees as on 31-03-2015. Industrial relations in all the Units continue to be cordial and healthy. Employees at all levels are extending their full support and are actively participating in the various programmes for energy conservation and cost reduction. There is a special thrust on Human Resources Development with a view to promoting creative and group effort.

SHARES

The Company''s shares are listed in BSE Limited and National Stock Exchange of India Limited.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that

(a) i n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they had 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 and loss of the company for that period;

(c) they had 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;

(d) they had prepared the annual accounts on a going concern basis;

(e) they had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors For THE RAMCO CEMENTS LIMITED,

Chennai P.R.RAMASUBRAHMANEYA RAJ HA 29-05-2015 Chairman & Managing Director


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their 56th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2014.

(Rs. in crores)

FINANCIAL RESULTS STANDALONE CONSOLIDATED

Year ended Year ended Year ended 31.03.2014 31.03.2013 31.03.2014

Total Revenue 3,769.23 3,872.66 3,746.81

Operating Profit: Profit before Interest, Depreciation and Tax (PBIDT) 648.76 1,047.30 625.57

Less : Interest 188.13 178.51 188.13

Profit before Depreciation and Tax (PBDT) 460.63 869.79 437.44

Less : Depreciation 306.29 280.58 306.43

Net Profit before Tax 154.34 588.21 131.01

Less : Provision for Tax

Current Tax 32.30 117.38 32.30

Deferred Tax 21.01 67.18 20.90

MAT Credit Entitlement (36.67) 0.00 (36.67)

Net Profit After Tax before Minority Interest 137.70 403.65 114.48

Minority Interest - - (0.07)

Net Profit After Tax 137.70 403.65 114.55

Add : Balance Profit from last year 90.31 69.93 90.31

Surplus for Appropriation 228.01 473.58 204.86

Appropriations:

1. Transfer to General Reserve 100.13 300.00 100.13

2. 1st Interim Dividend - 23.83 -

3. 2nd Interim Dividend - 23.83 -

4. Final Dividend 23.83 23.83 23.83

5. Tax on Dividends 4.05 11.78 4.05

Balance carried over to Balance Sheet 100.00 90.31 76.85

TOTAL 228.01 473.58 204.86

SHARE CAPITAL

The paid up capital of the Company is Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs.1/- per share on the equity capital of the Company, as against Rs.3/- per share for the previous year. The total dividend for the year amounts to Rs.23.83 crores as against Rs.71.49 crores for the previous year.

TAXATION

An amount of Rs.32.30 crores towards Current Tax, Rs.21.01 crores towards Deferred Tax and Rs.4.05 crores towards Dividend Tax has been provided for the year under review. The Company''s entitlement of MAT credit of Rs.36.67 crores has been recognised in the books during the year.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

CEMENT DIVISION

PRODUCTION (In Tonnes)

April 2013 to April 2012 to PARTICULARS Change over previous year March 2014 March 2013

Clinker 65,39,471 63,23,033 2,16,438 3%

Cement 85,90,194 84,75,412 1,14,782 1%

SALES

During the year under review, the sale of cement has increased to 85.97 lakh tonnes, compared to 83.60 lakh tonnes of the previous year, showing an increase of 3%.

The general slowdown in the economy has affected the infrastructure activities, thereby affecting the cement industry as a whole.

The political disturbances in Andhra Pradesh due to bifurcation of the state, has adversely affected the construction activities in the State. In Southern States, the construction industry has faced scarcity of raw materials like, river sand and blue metal, affecting the construction activities. There has only been marginal growth in the Reality Sector, both with respect to Commercial and Residential Projects. In Kerala, which is another major market for the Company, the excess rain fall during the monsoon season has also affected the off-take.

Considering the difficult circumstances and factors in the domestic sector, the Company has concentrated in expanding the export market where we are normally selling and also exploring new markets abroad. Due to the efforts taken during the year 2.25 lakh tonnes were exported as against 0.84 lakh tonnes during the previous year. The export turnover of the Company for the year was Rs.82.45 crores as against Rs.28.70 crores of the previous year.

The grinding unit at West Bengal has helped in establishing and in expanding the markets for our cement in the Eastern Region of the country.

COST

During the year under review there has been consistent increase in the diesel prices. The price of diesel which was Rs.51.78 per litre on 01-04-2013 has undergone periodical increase during the year and price was Rs.59.17 per litre as on 31-03-2014, which works out to 14% of increase compared to the previous year. This has resulted in increase in the cost of transport of inward materials and also in distribution cost of finished goods.

During the year the Rupee has depreciated against US Dollar. Further there were wide fluctuations during the year. Due to this our regular imports of Coal, Pet Coke, Gypsum and other materials have become costlier. As our thermal power plants are also dependent upon imported coal, the rupee depreciation has adversely affected our power generation cost also. However, the Company was able to source coal in international market at competitive rates thereby reducing the impact of adverse exchange fluctuations. The Company follows a conservative policy of covering all its foreign currency exposures at the time of commitment itself.

The interest cost has increased because of increase in the borrowings for expansion and also increase in the interest rates.

The Sales realisation was lower by 10% compared to that of previous year. This was due to lower prices for cement prevailed during the year and also due to increase in the logistics cost. In logistics, the railways have increased the freight rates by about 5% during the year, impacting the cost of movement of cement through wagons. Further, for factors already explained for the states of Andhra Pradesh and Tamil Nadu, we had to transport materials to other states and far off markets, thereby incurring more freight for longer distances.

READY MIX CONCRETE DIVISION

The Division has produced 44,307 cu.m of concrete during the year, accounting for a revenue of Rs.16.36 Crores (Net of Excise Duty and VAT) as against 49,410 cu.m. of concrete accounting for a revenue of Rs.18.13 Crores during the previous year.

DRY MORTAR DIVISION

The Division has produced 37,483 tonnes of Dry Mortar during the year as against 25,360 tonnes produced during the previous year. The Division has sold 36,971 tonnes of Dry Mortar accounting for a revenue of Rs.22.84 crores (Net of Excise Duty and VAT) during the year as against 25,306 tonnes of Dry Mortar accounting for a revenue of Rs.16.89 Crores during the previous year.

FORMATION OF A SUBSIDIARY COMPANY

Your Board of Directors at their meeting held on 29-07-2013 approved to establish a Subsidiary Company by name, RAMCO WINDFARMS LIMITED. Accordingly, the Company was incorporated on 26-11-2013 with a paid up capital of Rs.1 crore. The Ramco Cements Limited holds 71.50 lakh shares of Rs.1/- each amounting to 71.50% of the paid up share capital and the rest of the share capital is held by Ramco Group of Companies.

The Ramco Cements Limited has sold 121 Nos. of Wind Electric Generators aggregating to 33.235 MW to the Subsidiary Company in March 2014 for a value of Rs.31.39 crores.

The power generated by Ramco Windfarms Limited will be consumed by the shareholder companies depending upon their requirements.

WIND FARM DIVISION

The Division has generated 2,667 lakh units as compared to 3,247 lakh units of the previous year. Out of this, 2,564 lakh units were generated from the wind farms in Tamil Nadu and 103 lakh units from the wind farms in Karnataka. Out of the units generated in Tamil Nadu, 296 lakh units are meant for adjustment against the power consumed in the Company''s plants and balance 2,268 lakh units have been sold to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for a value of Rs.67.32 crores. The units generated in Karnataka were fully consumed at our Mathodu Cement Plant.

The generation from wind farms in Tamil Nadu has been adversely affected due to evacuation constraints imposed by TANGEDCO. Hence we could not evacuate the full generation of power produced during the year. Because of this, even though our wind farm areas had witnessed good wind season, we were not able to generate power to its full potential. The backing down of the Wind Electric Generators by TANGEDCO had caused generation loss of upto 50% during certain periods.

The income during the year from the Division was Rs.68.24 Crores as against Rs.87.08 Crores of the previous year.

Subsequent to the sale of 121 Nos. of Wind Electric Generators to Ramco Windfarms Limited, the installed capacity of the wind farm of the Company is 125.95 MW comprising of 108 Wind Electric Generators.

TURNOVER AND PROFITABILITY

The total revenue for the year (Net of Excise Duty and VAT) was Rs.3,769 crores as against Rs.3,873 crores of the previous year.

The operating profit and net profit for the year were Rs.648.76 crores and Rs.137.70 crores as against Rs.1,047.30 crores and Rs.403.65 crores respectively of the previous year.

As already explained, the reduction in realisation and the increase in costs have contributed to the steep fall in profits for the year, compared to the previous year.

NEW PROJECTS

In the Directors'' Report for the year ended 31-03-2013, it was informed about the Company''s proposal to establish its 4th grinding unit at Vizag with a capacity to grind 1 Million Tonnes Per Annum, at a cost of Rs.360 crores. The establishment of the grinding unit is under way.

During the month of October 2013, there was incessant rains due to Phailin Cyclone that attacked North Coastal Andhra Pradesh and Odisha State, which hampered the construction activities for a period of nearly 50 days.

However, by increasing the efforts and by mobilising additional resources, we are planning to commission the grinding unit in the second quarter of 2014-15 as originally informed in the Directors'' Report for the year ended 31-03-2013.

Commissioning of the Grinding Unit at Vizag would help the Company in increasing its market share in the Vizag Region and also in the States of Odisha and Chattisgarh.

POWER PLANTS

In the Directors'' Report for the year ended 31-03-2013, it was informed about the proposal to enhance the capacity of the thermal power plants at Alathiyur, Ariyalur and Jayanthipuram by adding 1 turbine each of 6 MW capacity at a total cost of Rs.55 crores. Orders have been placed for Alathiyur and Ariyalur and the works have started. The projects would be commissioned in the 3rd quarter of the current year.

The enhancement of capacity of the thermal power plant at Jayanthipuram is yet to commence.

The existing thermal power plants were operated in optimal manner to meet the power requirements of the cement plants and the surplus power was sold to HT consumers / State Electricity Board.

FUTURE OUTLOOK

Consequent to the completion of the general elections and assumption of the new Government at the Centre, the economic activities which had slowed down during the election period is expected to pick up. The new Government''s economic policies are expected to give a big push and the Indian Economy is expected to record a GDP growth of 5.4% to 5.7% in the current year. The infrastructure activities are expected to enthuse the construction activities thereby positively impacting the demand for cement. As all our plants are fully equipped with railway siding, stand-by power back up facility and are supported with grinding units, our Company will be able to take full advantage of the economic momentum in the coming years.

CONSERVATION OF ENERGY, ETC.

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1)(e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are set out in Annexure I to this report.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 2,937 employees as on 31-03-2014. Industrial relations in all the Units continue to be cordial and healthy. Employees at all levels are extending their full support and are actively participating in the various programmes for energy conservation and cost reduction. There is a special thrust on Human Resources Development with a view to promoting creative and Group effort.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary.

SUBSIDIARY COMPANIES

Ministry of Corporate Affairs, Government of India, has vide its Circular No. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively has exempted companies from attaching the annual accounts and other particulars of its subsidiary companies along with the Annual Report of the Company as required under Section 212 of the Companies Act, 1956. Therefore, the annual accounts of the subsidiary viz. Ramco Windfarms Limited are not attached with this Annual Report. However, a statement giving information as required vide aforesaid circulars is placed along with the Consolidated Accounts.

The Annual Accounts of the subsidiary company and the related information shall be made available to the shareholders of the Company upon receipt of a request from them. The same is also kept open for inspection at the Registered Office of the Company as well as its subsidiary.

CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Financial Statements have been prepared in order to comply, in all material respects, with the accounting standards notified under section 211(3C) of the Companies Act 1956, which continue to be applicable in respect of section 133 Companies Act 2013 along with the provisions of the Listing Agreement with the Stock Exchanges. The audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.

The consolidated net profit of the Company and its subsidiary amounted to Rs.114.48 crores for the financial year ended 31st March 2014.

AWARDS

The Company''s Units secured many Awards during the year in Mines Safety, Mines Environment & Mineral Conservation and Quality Circles.

The Alathiyur unit has been awarded as an Excellent Energy Efficient Unit with a shield and certificate of merit by Confederation of Indian Industry. This is the 10th time, the unit is getting such an award.

The Alathiyur Unit had won the following awards at the 13th International Seminar conducted by National Council for Cement and Building Materials:

- Best Improvement in Energy Performance in Manufacture of Blended Cements for 2011-12.

- Second Best Environmental Excellence in Plant Operation for 2011-12.

- Best Environmental Excellence in Limestone Mines for 2011-12.

- Second Best Environmental Excellence in Limestone Mines for 2012-13.

DIRECTORS

We regret to report the sad demise of Dr.A.Ramakrishna on 20-08-2013. The Directors place on record Dr.A.Ramakrishna''s valuable and constructive contribution in the Board and Committee Meetings during his association of 8 years with the Company.

At the Board Meeting held on 23rd October 2013, Shri.M.M.Venkatachalam has been co-opted as an Additional Director and will hold the office till the date of the forthcoming Annual General Meeting. A Notice in writing has been received from a Member signifying his intention to propose the appointment of Shri.M.M.Venkatachalam as a Director at the Annual General Meeting.

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Shri.M.B.N.Rao retires by rotation and is eligible for re-election.

In accordance with Clause 49 of the Listing Agreement, ½ of the total number of Directors should be Independent Directors. Accordingly, Members'' approval is being sought to have the following as Independent Directors.

1. Shri.R.S.Agarwal

2. Shri.M.B.N.Rao

3. Shri.M.M.Venkatachalam

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March 2014 were Rs.1.74 crores including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. This also includes 29 deposits aggregating to Rs.7.71 lakhs which had fallen due for payment on or before 31-03-2014 but not claimed by the depositors. Reminders have been sent to these depositors for disposal instructions. On the date of this report, Rs.2.25 lakhs thereof have been claimed and refunded/renewed in respect of 7 depositors.

Section 74 of the Companies Act, 2013 has provided an option to repay the existing deposits accepted on or before 31-03-2014. The Company has decided not to accept fresh deposits from 01-04-2014 and to repay all the existing deposits by complying with the formalities required in this regard.

SHARES

The Company''s shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

AUDITORS

M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates, Chartered Accountants, are Auditors of the Company.

Under Section 139 of the Companies Act, 2013, a listed Company can appoint an Audit Firm as Auditor for a maximum of 2 terms of 5 consecutive years. However, they are eligible for reappointment after a period of 5 years from the completion of such term. Both the Auditors have completed the maximum threshold limit of 10 consecutive years. However, a period of 3 years is given for compliance of the new requirement. Since a period of 3 years is available to continue with the existing auditors, it is proposed to appoint them for the remaining eligibility period of 3 years.

COST AUDITOR

The Government has approved the Company''s proposal to appoint M/s.Geeyes & Co., Cost Accountants, Chennai for audit of cost accounts of the Company relating to manufacture of Cement and generation of Electricity for the year ended 31-03-2014 on a remuneration of Rs.2,50,000/- exclusive of out-of-pocket expenses.

The Cost Audit Report for the financial year 2012-13 due to be filed with Ministry of Corporate Affairs by 27-09-2013, had been filed on 18-09-2013. The Cost Audit Report for the financial year 2013-14 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period.

Under Section 148 of the Companies Act, 2013, the Government is yet to notify the class of companies to which the Cost Audit is applicable. Based upon such notifications as and when issued, the Company will be taking steps for implementation.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors confirm that –

- In the preparation of the annual accounts for the year ended 31st March 2014, the applicable accounting standards had been followed;

- The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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;

- Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Annual Accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors, For THE RAMCO CEMENTS LIMITED,

Chennai P.R.RAMASUBRAHMANEYA RAJHA

22-05-2014 Chairman & Managing Director


Mar 31, 2013

The Directors have pleasure in presenting their 55th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2013.

FINANCIAL RESULTS

Year ended Year ended 31-03-2013 31-03-2012 (Rs. in crores) (Rs. in crores)

Total Revenue 3872.66 3256.58

Operating Profit: Profit before Interest,

Depreciation and Tax (PBIT) 1047.77 970.26

Less : Interest 178.51 158.45

Profit before Depreciation and Tax (PBDT) 869.26 811.81

Less : Depreciation 280.58 253.90

588.68 557.91

Less : Prior Period & Extraordinary items 0.47 0.49

Net Profit before Tax 588.21 557.42

Less : Provision for Tax

Current Tax 117.38 112.13

Deferred Tax 67.18 60.18

Net Profit After Tax 403.65 385.11

Add: Balance Profit from last year 69.93 54.06

Surplus for Appropriation 473.58 439.17

Appropriations:

1. Transfer to General Reserve 300.00 300.00

2. 1st Interim Dividend 23.83 47.66

3. 2nd Interim Dividend 23.83

4. Final Dividend 23.83 11.92

5. Tax on Dividends 11.78 9.66

Balance carried over to Balance Sheet 90.31 69.93

TOTAL 473.58 439.17

SHARE CAPITAL

The paid up capital of the Company is Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a Final Dividend of Rs.1/- per share on the equity capital of the Company. Together with the 1st Interim Dividend of Rs.1/- per share and 2nd Interim Dividend of Rs.1/- per share paid during the year, the total dividend for the year is Rs.3/- per share. For the previous year, the Company had paid a dividend of Rs.2.50 per share.

The total dividend for the year amounts to Rs.71.49 crores as against Rs.59.58 crores for the previous year.

TAXATION

In the Directors'' Report for the year 2011-12, it was informed that the Line-2 at Ariyalur with 2 Million Tonnes Per Annum (MTPA) capacity was commissioned upto clinkerisation in 2011-12. The cement grinding with Polycom Roll Press mill was completed in 2012-13. With this the cement manufacturing capacity of the Company has increased to 12.49 MTPA.

The projects of installing a Roll Press Mill at Ramasamy Raja Nagar Cement Plant and at Salem Grinding Unit for increasing the cement grinding capacity were also completed during the year.

During the year, the Company has undertaken the following improvements:

RAMASAMY RAJA NAGAR

Installation of new impact crusher with screening system to increase the limestone crushing capacity.

Installation of new fly ash handling system, consisting of fly ash silo, bucket elevators and airslide gallery for transfer of fly ash.

Installation of new bagfilter for the Line-2 Coal Mill.

Installation of alternate fuel feeding system, comprising of an elevator and belt conveyor with dosing arrangement.

The above projects have contributed towards increase in the productivity by way of removing criticality in the production processes, reduction in emissions, optimisation of fuel consumption levels, etc.

SALES

During the year under review, even though on All India basis, the cement industry has shown a growth of 7%, Madras Cements Ltd has registered a growth of 11% in Sale of Cement. In absolute terms, the sale of cement has increased to 83.60 lakh tonnes compared to 75.50 lakh tonnes of the previous year.

The sale value of cement for the current year, net of Excise Duty and VAT amounts to Rs.3,627.30 crores as against Rs.3,093.83 crores for the previous year.

Out of the total sales for the year, 0.84 lac tonnes of cement was exported as against 0.46 lac tonnes during the previous year. The export turn over of the Company for the year was Rs.28.70 crores as against Rs.14.26 crores of the previous year.

COST

During the year under review, there had been constant upward revision in the price of diesel, in aggregate amounting to an increase of Rs.7.83 per litre, which works out to 18% over previous year. This had resulted in increase in the cost of road transport for inward raw materials as well as the distribution cost of the finished goods. Further, the adoption of dual price strategy by the Government has also impacted the diesel price for the Company.

The Railways had revised the freight rates and restructured the distance slabs which has adversely affected the cost of movement of cement by rail. Because of this, the railway freight for the Company as a whole has increased by more than 20%.

During the year under review, the cost of electrical energy has also increased in the States of Tamil Nadu and Andhra Pradesh. Tamil Nadu Generation and Distribution Corporation Limited has increased the unit rate by Rs.1.50 in April 2012. The Andhra Pradesh Transmission Corporation Limited has increased the unit rate by Rs.1/- in March 2012, which impacted the electrical energy cost for the year. In West Bengal, the rate for the normal hours has increased by Rs.1/- per unit and for peak hours by Rs.2/- per unit.

Due to the power cut imposed by the Government of Tamil Nadu, the units generated from wind mills could not be utilised fully. The grinding units situated in Tamil Nadu, had to run by using Heavy Fuel Oil based power generating sets, thereby resulting in increase in the power cost.

The quality of indigenously available Gypsum has deteriorated and hence, the Company has resorted to import the Gypsum to maintain the quality of cement. During the year, we had also imported high quality limestone for quality corrections. The weakening of the Rupee has impacted the increase in the cost of Gypsum and limestone consumed.

The cost of fly ash has increased partly due to increase in demand and partly due to increase in the cost of transportation.

The depreciation cost has gone up due to addition of assets during the year.

The interest cost has also increased due to increase in the interest rates.

The increase in Excise Duty, Customs Duty for import of coal, Service Tax and Value Added Tax has also resulted in the overall increase in the cost.

All the above factors have contributed to an overall increase in manufacturing and distribution costs.

READY MIX CONCRETE DIVISION

The Division has produced 49,410 cu.m of concrete during the year, accounting for a revenue of Rs.18.13 Crores (Net of Excise Duty and VAT) as against 48,807 cu.m. of concrete accounting for a revenue of Rs.17.15 Crores during the previous year.

DRY MORTAR DIVISION

The Division has produced 25,360 tonnes of Dry Mortar during the year as against 26,558 tonnes produced during the previous year. The Division has sold 25,306 tonnes of Dry Mortar accounting for a revenue of Rs.16.89 crores (Net of Excise Duty and VAT) during the year as against 26,682 tonnes of Dry Mortar accounting for a revenue of Rs.16.13 Crores during the previous year.

WIND FARM DIVISION

The Division has generated 3,247 Lac Kwh as compared to 2,855 Lac Kwh of the previous year. Out of this 3,145 lac units were generated from the wind farms in Tamil Nadu and 102 lac units from the wind farms in Karnataka. Out of the units generated in Tamil Nadu, 401 lac units are meant for adjustment against the power consumed in the cement plants and balance 2,744 lac units have been sold to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for a value of Rs.81.63 crores. The units generated in Karnataka were fully consumed at Mathodu Cement Plant.

The income during the year from the Division was Rs.87.08 Crores as against Rs.61.59 Crores of the previous year.

The installed capacity of the wind farm of the Company is 159.19 MW comprising of 229 Wind Electric Generators.

TURNOVER AND PROFITABILITY

With the increase in production and sale and growth in realisation, the total revenue for the year, net of Central Excise and VAT had increased to Rs.3,873 crores as against Rs.3,257 crores of the previous year, registering an increase of 19%.

During the year under review, the Company had taken various measures to reduce the impact of the raising costs. To minimise the cost of transportation in raw materials and finished goods, the grinding units were operated strategically. The rail-road transport mix was also constantly reviewed and changed to have an overall control in the transportation cost for the Company as a whole.

The thermal power plants were operated to generate electrical energy for own consumption besides sale of power to TANGEDCO and Third parties under Open Access System, so that the cost of operating the thermal power plants was maintained at optimum level.

These measures, coupled with better sales and realisation, have made the operating profit and net profit for the year higher at Rs.1,047.77 crores and Rs.403.65 crores, as against Rs.970.26 crores and Rs.385.11 crores respectively of the previous year.

CHANGES IN STATUTORY LEVIES

The following are the changes that have taken place in the Statutory Levies.

VALUE ADDED TAX (VAT)

In the States of Kerala and West Bengal, the rate of VAT has been increased from 13.5% to 14.5%, with effect from 01-04-2013.

NEW PROJECTS

The Company has established three grinding units, near the fly ash availability areas / major cement consumption areas. This has helped the company in economising transportation cost, besides resulting in better servicing of markets. In line with that, the Company is proposing to install its fourth grinding unit at Vizag with a capacity to grind 1 Million Tonnes Per Annum, at a cost of Rs.360 crores. The project is expected to be commissioned in the second quarter of 2014-15. The necessary clinker for this plant would be transported from the Jayanthipuram plant. Fly ash and slag are available within a radius of 25 kms, which would help the Company in minimising the transportation cost of raw materials. The output from this plant would be marketed in Coastal Andhra Pradesh with Vizag being the main market and also in the States of Odisha and Chattisgarh.

POWER PLANTS

At Ariyalur, the Company had commissioned 20 MW thermal power plant. With this, the capacity of the captive thermal power generation at Ariyalur had increased to 60 MW.

At Ramasamy Raja Nagar, the 25 MW thermal power plant was commissioned.

Due to acute power shortage being experienced, it is felt that it would be advantageous to invest further in power. Accordingly, it is proposed to enhance the capacity of the thermal power plants at Alathiyur, Jayanthipuram and Ariyalur by adding one turbine each of 6 MW capacity at a total cost of Rs.55 crores.

FUTURE OUTLOOK

The cement industry is expected to grow by 8% during the year 2013-14. The demand increase is expected to be sustained due to Government spending on infrastructure projects, rural housing and development and the general increase in the economic activities. However, the excess capacity created by the cement industry during the past years will have an impact on production of cement and sales realisation. The capacity-demand mismatch is expected to come down over a period of next few years, improving the capacity utilisation of the industry. The Company would continue to focus on cost control measures and strategic decisions on production and distribution to protect and improve its profitability.

STRATEGIC INVESTMENTS

The Company over a period of time has been continuously investing in assets of enduring benefits.

The Company has been augmenting limestone bearing lands for ensuring availability of raw material to take care the limestone requirement for future years at enhanced capacity levels.

The cement manufacturing plants are equipped with latest technologies which would serve the Company well for many years to come. The Company''s investments in Pollution Control Equipments would ensure clean and pollution free environment for the neighbourhood. The Company has constructed covered silos for storage of various materials like Fly ash, Clinker and Cement, which would ensure minimum loss in storages, besides keeping the plant clean and healthy.

The limestone and coal are stored and transported through stacker reclaimers and belt conveyors involving minimum manual handling.

All the cement plants are provided with railway sidings which would help in handling huge quantity of incoming raw materials, besides meeting increased despatch requirements. The railway sidings enable direct movement of materials from and to the port and provides flexibility in planning of despatch strategies, keeping cost and market service in focus.

Establishment of Grinding Units and Packing Plants have greatly helped the Company to reduce the overall cost of transport. Besides, as the grinding units and packing plants are situated near the core market areas, better customer service is ensured by prompt deliveries and meeting of customer needs.

The Company has continuously invested in captive generation of power. The investments in wind farms, thermal power plants and heavy fuel oil based power generating sets have ensured that the Company has a variety of captive sources of power, besides getting grid power. The liberalisation of the power sector will enable the Company to utilise these captive generating sources in a most advantageous manner for self-consumption as well as sale of power under Intra State Open Access Policy. The usage of the above alternate sources of power would be decided in a cost judicial manner as power is one of the most important elements in the cost of production of cement.

Your Directors believe that these strategic investments made over a period of time has created assets and infrastructure which would help the Company to reap maximum benefits in good times and withstand even during adverse market conditions.

CHANGE OF NAME OF THE COMPANY

It is proposed to change the name of the Company from MADRAS CEMENTS LIMITED to "THE RAMCO CEMENTS LIMITED". RAMCO is the brand name under which the Company''s products are sold. The name - "The Ramco Cements Limited" will make it easy to identify the name of the company with the brand under which the Company''s cement is sold.

Your Directors are of the opinion that identification of the Company''s name with the brand name will be advantageous in the long run in Brand building. Necessary resolution seeking Members'' approval for the change of name of the Company has been included in the Notice convening 55th Annual General Meeting.

CONSERVATION OF ENERGY, ETC.

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1)(e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are set out in Annexure I to this report.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 2787 employees as on 31-03-2013. Industrial relations in all the Units continue to be cordial and healthy. Employees at all levels are extending their full support and are actively participating in the various programmes for energy conservation and cost reduction. There is a special thrust on Human Resources Development with a view to promoting creative and Group effort.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company Secretary.

AWARDS

The Company''s Units secured many Awards during the year in Mines Safety, Mines Environment & Mineral Conservation and Quality Circles.

The Alathiyur unit has secured Second Price among the cement sector for the National Energy Conservation award for 2012, constituted by Bureau of Energy Efficiency under the Ministry of Power. The award was presented by the Honourable President of India, Shri.Pranab Mukherjee in the presence of Honourable Minister of State for Power, Shri.Jyotiraditya M.Scindia.

The Alathiyur unit has also secured "Gold Award" in cement sector for outstanding achievement in Environment Management. The award was constituted by Greentech Foundation, New Delhi and supported by Indian Institute of Corporate Affairs, Ministry of Corporate Affairs, Government of India.

The Alathiyur unit has also been presented "Green Award" by Tamil Nadu Pollution Control Board for the year 2012.

Andhra Pradesh Pollution Control Board has given award to Jayanthipuram unit for the year 2012, in recognition of practicing Cleaner Production Measures.

DIRECTORS

The Government of Tamil Nadu appointed Shri.Harmander Singh, I.A.S., Industries Commissioner and Director of Industries and Commerce, as their Nominee Director on the Company''s Board with effect from 18-10-2012 in the place of Shri.Vibhu Nayar, I.A.S.

The Directors wish to place on record the valuable guidance and services rendered by Shri.Vibhu Nayar, I.A.S., during the tenure of his office as Nominee Director on the Company''s Board.

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Dr.A.Ramakrishna retires by rotation and is eligible for re-election.

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March 2013 were Rs.2.08 crores including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. This also includes 28 deposits aggregating to Rs.5.35 lacs which had fallen due for payment on or before 31-03-2013 but not claimed by the depositors. Reminders have been sent to these depositors for disposal instructions. On the date of this report, Rs.2.41 lacs thereof have been claimed and refunded/renewed in respect of 13 depositors.

SHARES

The Company''s shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

AUDITORS

M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates, Chartered Accountants, Auditors of the Company retire at the end of the 55th Annual General Meeting and are eligible for reappointment.

COST AUDITOR

The Government has approved the Company''s proposal to appoint M/s.Geeyes & Co., Cost Accountants, Chennai for audit of cost accounts of the Company relating to manufacture of Cement and generation of Electricity for the year ended 31-03-2013 on a remuneration of Rs.2,50,000/- exclusive of out-of-pocket expenses. As per Central Government''s direction, cost audit will be done every year.

The Cost Audit Report for the financial year 2011-12 due to be filed with Ministry of Corporate Affairs by 28-02-2013, had been filed on 30-01-2013. The Cost Audit Report for the financial year 2012-13 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors confirm that -

* In the preparation of the annual accounts for the year ended 31st March 2013, the applicable accounting standards had been followed;

* The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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;

* Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

* The Annual Accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors,

For MADRAS CEMENTS LTD.,

Chennai P.R.RAMASUBRAHMANEYA RAJHA

30-05-2013 Chairman & Managing Director


Mar 31, 2012

The Directors have pleasure in presenting their 54th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2012.

FINANCIAL RESULTS

Year ended Year ended 31-3-2012 31-3-2011 (Rs. in crores) (Rs. in crores)

Operating Profit: Profit before Interest,

Depreciation and Tax (PBIT) 970.26 657.24

Less : Interest 158.45 139.28

Profit before Depreciation and Tax (PBDT) 811.81 517.96

Less : Depreciation 253.90 220.77

557.91 297.19

Less : Prior Period & Extraordinary items 0.49 (0.07)

Net Profit before Tax 557.42 297.26

Less : Provision for Tax

Current Tax 112.13 82.38

Deferred Tax 60.18 3.90

Net Profit After Tax 385.11 210.98

Add: Balance Profit from last year 54.06 52.70

Surplus for Appropriation 439.17 263.68

Appropriations:

1. Transfer to General Reserve 300.00 175.00

2. Interim Dividend 47.66 -

3. Tax on Interim Dividend 7.73 -

4. Final Dividend 11.92 29.79

5. Tax on Final Dividend 1.93 4.83

Balance carried over to Balance Sheet 69.93 54.06

TOTAL 439.17 263.68

SHARE CAPITAL

The paid up capital of the Company is Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a Final Dividend of Rs.0.50 per share on the equity capital of the Company. Together with the Interim Dividend of Rs.2/- per share paid during the year, the total dividend for the year is Rs.2.50 per share. For the previous year, the Company had paid a dividend of Rs.1.25 per share.

The total dividend for the year amounts to Rs.59.58 crores as against Rs.29.79 crores for the previous year.

TAXATION

An amount of Rs.112.13 crores towards Current Tax, Rs.60.18 crores towards Deferred Tax and Rs.9.66 crores towards Dividend Tax has been provided for the year under review.

MANAGEMENT DISCUSSION & ANALYSIS REPORT CEMENT DIVISION

2011-12 2010-11 (In lakh tonnes) (In lakh tonnes)

PRODUCTION & SALES Ramasamy Raja Nagar (TN) Factory

Clinker Produced 6.77 7.05

Cement Produced 11.92 12.57

Cement Despatched 11.92 12.59

Jayanthipuram (AP) Factory

Clinker Produced 17.53 15.75

Cement Produced 16.32 15.82

Cement Despatched 16.29 15.78

Alathiyur (TN) Factory

Clinker Produced 15.68 19.21

Cement Produced 20.13 20.49

Cement Despatched 20.46 20.28

Ariyalur (TN) Factory

Clinker Produced 15.06 12.69

Cement Produced 14.41 13.82

Cement Despatched 14.64 13.81

Mathodu (Karnataka) Factory

Clinker Produced 0.98 1.03

Cement Produced 1.35 1.66

Cement Despatched 1.31 1.69

Salem (TN) Grinding Plant

Cement Produced 3.89 3.51

Cement Despatched 3.92 3.54

Chengalpattu (TN) Grinding Plant

Cement Produced 3.21 3.01

Cement Despatched 3.15 3.03

Kolaghat (WB) Grinding Plant

Cement Produced 3.99 2.17

Cement Despatched 3.95 2.20

During the year under review, the cement production has increased to 75.22 lakh tonnes from 73.05 lakh tonnes of the previous year.

At Ariyalur the Company has installed Line 2 with a capacity of 2 Million Tonnes Per Annum (MTPA). The project was commissioned upto clinkerisation in August 2011. The cement grinding is scheduled to commence in June 2012. Consequently the cement production capacity of the Company will go up from 10.49 MTPA to 12.49 MTPA.

SALES

DOMESTIC

During the year under review, even though, on All India basis the cement industry has shown a growth of 6%, the Southern Region witnessed a decline of 1%. This was primarily due to a fall of 11% in Andhra Pradesh. As against this, Madras Cements Ltd has registered an increase from 72.48 lac tonnes to 75.04 lac tonnes in sale of cement, representing a growth of 4%. The sale value of cement for the current year, net of Excise Duty and VAT amounts to Rs.3,092.37 crores as against Rs.2,448.61 crores for the previous year.

EXPORTS

During the year 0.46 lac tonnes of cement was exported to Sri Lanka as against 0.07 lac tonnes during the previous year. The export turn over of the Company for the year was Rs.14.26 crores as against Rs.1.86 crores of the previous year.

COST

During the year under review, there had been increase in diesel price which had resulted in increase in the cost of road transport for inward raw materials as well as the distribution cost of the finished goods. The increase in the Railway freight rates had also impacted the transportation cost.

In addition to the high cost charged by Tamil Nadu Generation and Distribution Corporation Limited for flyash, the availability of flyash was also poor from the State owned thermal power plants.

The cost of power has also increased during the year under review. In Tamil Nadu, due to the power cut imposed by the State Government, the units generated from wind mills could not be utilised in full. In order to maintain the production levels, the company had resorted to use of Heavy Fuel Oil based power generating sets, thereby resulting in increase in the power cost.

The state electricity boards in Andhra Pradesh and West Bengal have also increased their electricity tariff. This has resulted in increase in the cost of power for the plants situated in the respective states.

Due to increase in the cost of imported coal, the generation cost of the Company's captive thermal power plants and the fuel cost have increased during the current year compared to the previous year.

The depreciation cost has gone up due to addition of assets and commissioning of Ariyalur Line 2 upto clinkerisation and Power Plants during the year.

The interest cost has also increased due to increase in the interest rates.

All the above factors have contributed to an overall increase in manufacturing and distribution costs.

READY MIX CONCRETE DIVISION

The Division has produced 48,807 cu.m of concrete during the year, accounting for a revenue of Rs.17.14 Crores as against 59,589 cu.m. of concrete accounting for a revenue of Rs.18.06 Crores during the previous year.

DRY MORTAR DIVISION

The Division has produced 26,558 tonnes of Dry Mortar during the year as against 27,156 tonnes produced during the previous year. The Division has sold 26,682 tonnes of Dry Mortar accounting for Rs.16.13 crores during the year as against 27,089 tonnes of Dry Mortar accounting for Rs.14.08 Crores during the previous year.

WIND FARM DIVISION

The Division has generated 2,855 Lac Kwh during the year as compared to 3,572 Lac Kwh of the previous year. Out of 2752 lac units generated in Tamil Nadu, 697 lac units are meant for adjustment against the power consumed in our plants and balance 2055 lac units have been sold to Tamil Nadu Electricity Board (TNEB) for a value of Rs.61.59 crores. Inclusive for the power sold during the previous year, a sum of Rs.64.91 crores is outstanding from TNEB.

The income during the year from the Division was Rs.96.18 Crores as against Rs.122.28 Crores of the previous year. The installed capacity of the wind farm of the Company is 159.19 MW comprising of 229 Wind Electric Generators.

TURNOVER AND PROFITABILITY

With the increase in production and sale and growth in realisation, the total revenue for the year, net of Central Excise and VAT had also increased to Rs.3288 Crores as against Rs.2645 Crores of the previous year. This is the first time, the Company's turnover has crossed trois mille milestone. It is gratifying to report that the Company reached Rs.100 crore mark on completion of 30 years; Rs.1000 crore mark on completion of 48 years; Rs.2000 crore mark on completion of 50 years and Rs.3000 crore mark on completion of 54 years.

During the year under review, the Company had taken various measures to reduce the impact of the raising costs. The captive power generating sources were utilised in an optimal manner to have the power cost under control. The Company has increased the sale quantity of blended cement. These measures, coupled with better sales and realisation, have made the operating profit and net profit for the year higher at Rs.970.26 crores and Rs.385.11 crores, as against Rs.657.24 crores and Rs.210.98 crores respectively of the previous year.

CHANGES IN STATUTORY LEVIES

The following are the changes that have taken place in the Statutory Levies.

EXCISE DUTY

With effect from 17.3.2012, in the Union Budget for the year 2012-13, the Excise Duty on cement has been increased from 10% ad valorem Rs.160 per tonne to 12% on MRP after abatement of 30% Rs.120/- per tonne. For Cement cleared other than in packaged form, the duty has been increased from 10% ad valorem to 12% ad valorem.

CUSTOMS DUTY

Customs duty on imported coal was levied at the rate of 2% for Indonesian Origin & 5% for other than Indonesian sources. The customs duty on coal is removed irrespective of its origin with effect from 17.3.2012.

SERVICE TAX

Service Tax has been increased from 10% to 12% with effect from 1.4.2012.

VALUE ADDED TAX (VAT)

In Tamil Nadu, the rate of VAT has been increased from 12.5% to 14.5% with effect from 12.7.2011.

In Puducherry, the rate of VAT has been increased from 12.5% to 14.5% with effect from 1.1.2012.

In Kerala, the rate of VAT has been increased from 12.5% to 13.5% with effect from 1.4.2012.

ENTRY TAX

In West Bengal, Entry Tax @ 1% has been introduced with effect from 1.4.2012.

NEW PROJECTS

As already reported, at Ramasamy Raja Nagar the Company is in the process of installing a Roll Press for increasing the cement grinding capacity from the present level of 210 TPH to 260 TPH. The cost of the project, including installation of Kankar Crusher and Flyash Handling System is Rs.110 crores. The project is expected to be commissioned in March 2013.

At Salem Grinding Unit, the Company is in the process of installing a Roll Press for increasing the cement grinding capacity from the present level of 90 TPH to 230 TPH at a cost of Rs.60 crores. The project is expected to be commissioned in the year 2012-13.

POWER PLANTS

In Salem Grinding Unit, a Heavy Fuel Oil based power generator of 5 MW was commissioned in August 2011.

In Ariyalur, the Company had commissioned 2 x 20 MW thermal power plant in 2010-11 and another 20 MW thermal power plant is proposed to be commissioned in the first quarter of 2012-13.

In Ramasamy Raja Nagar, a 25 MW thermal power plant would be commissioned in the first quarter of 2012-13. PROSPECTS FOR 2012-2013

Demand for cement is expected to grow at 8% in the coming year due to the continued fillips given for the infrastructure projects. The Company expects to sustain and improve the output levels of all the units during the year. Also, the Company will have the benefit of increased production from its new projects, which will enable the Company to meet the increased market demand for cement. The Company continues its endeavour for the sale of Blended Cement. The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability.

CONSERVATION OF ENERGY, ETC.

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1)(e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are set out in Annexure I to this report.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 2626 employees as on 31.3.2012. Industrial relations in all the Units continue to be cordial and healthy. Employees at all levels are extending their full support and are actively participating in the various programmes for energy conservation and cost reduction. There is a special thrust on Human Resources Development with a view to promoting creative and Group effort.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company Secretary.

AWARDS

The Company's Units secured many Awards during the year in Mines Safety, Mines Environment & Mineral Conservation and Quality Circles.

DIRECTORS

The Government of Tamil Nadu withdrew the nomination of Shri.G.Sundaramurthi, I.A.S with effect from 8.7.2011 and had appointed Shri.Vibhu Nayar, I.A.S as their Nominee Director on the Company's Board with effect from 11.8.2011. The Directors wish to place on record the valuable guidance and services rendered by Shri.G.Sundaramurthi, I.A.S., during the tenure of his office as Nominee Director on the Company's Board.

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Shri.P.R.Venketrama Raja retires by rotation and is eligible for re-election.

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March 2012 were Rs.2.36 crores including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. This also includes 44 deposits aggregating to Rs.12.11 lacs which had fallen due on or before 31.3.2012 but not claimed by the depositors. Reminders have been sent to these depositors for disposal instructions. On the date of this report, Rs.2.62 lacs thereof have been claimed and refunded/renewed in respect of 10 depositors.

SHARES

The Company's shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

AUDITORS

M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates, Chartered Accountants, Auditors of the Company retire at the end of the 54th Annual General Meeting and are eligible for reappointment.

COST AUDITOR

The Government has approved the Company's proposal to appoint M/s.Geeyes & Co., Cost Accountants, Chennai for audit of cost accounts of the Company relating to manufacture of Cement and generation of Electricity for the year ended 31.3.2012 on a remuneration of Rs.2,50,000/- exclusive of out-of-pocket expenses. As per Central Government's direction, cost audit will be done every year.

The Cost Audit Report for the financial year 2010-11 due to be filed with Ministry of Corporate Affairs by 27th September 2011, had been filed on 24th September 2011. The Cost Audit Report for the financial year 2011-12 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that -

- In the preparation of the annual accounts for the year ended 31st March 2012, the applicable accounting standards had been followed;

- The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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;

- Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Annual Accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors,

For MADRAS CEMENTS LTD.,

Chennai P.R.RAMASUBRAHMANEYA RAJHA

24-5-2012 Chairman & Managing Director


Mar 31, 2011

The Directors have pleasure in presenting their 53rd Annual Report and the Audited Accounts of the Company for the year ended 31st March 2011.

FINANCIAL RESULTS

Year ended Year ended 31-3-2011 31-3-2010 (Rs. in lacs) (Rs. in lacs)

Operating Profit: Profit before Interest,

Depreciation and Tax (PBIDT) 65724 87729

Less: Interest 13928 15088

Profit before Depreciation and Tax (PBDT) 51796 72641

Less: Depreciation 22077 19608

29719 53033

Add: Extraordinary items 7 11

Net Profit before Tax 29726 53044

Less: Provision for Tax

Current Tax 8238 8155

Deferred Tax 390 9521

Net Profit After Tax 21098 35368

Add: Balance Profit from last year 5270 2974

Surplus for Appropriation 26368 38342

Appropriations:

1. Transfer to General Reserve 17500 27500

2. Interim Dividend – 3575

3. Final Dividend 2979 1191

4. Tax on Dividends 483 806

Balance carried over to Balance Sheet 5406 5270

TOTAL 26368 38342

SHARE CAPITAL

The paid up capital of the Company is Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs.1.25 per share on the equity capital of the Company, as against Rs.2.00 per share for the previous year. The dividend for the year amounts to Rs.29.79 crores as against Rs.47.66 crores for the previous year.

TAXATION

An amount of Rs.82.38 crores towards Current Tax, Rs.3.90 crores towards Deferred Tax and Rs.4.83 crores towards Dividend Tax has been provided for the year under review.



MANAGEMENT DISCUSSION & ANALYSIS REPORT

CEMENT DIVISION

2010-2011 2009-2010 (In lac tonnes) (In lac tonnes)

PRODUCTION & SALES

Ramasamy Raja Nagar (TN) Factory

Clinker Produced 7.05 6.90

Cement Produced 12.57 14.39

Cement Sold 13.88 14.40

Jayanthipuram (AP) Factory

Clinker Produced 15.75 19.02

Cement Produced 15.82 19.96 Cement Sold 15.69 19.90

Alathiyur (TN) Factory

Clinker Produced 19.21 21.54

Cement Produced 20.49 27.94

Cement Sold 19.20 27.60 Ariyalur (TN) Factory

Clinker Produced 12.69 12.17

Cement Produced 13.82 11.79

Cement Sold 13.33 11.54

Mathodu (Karnataka) Factory

Clinker Produced 1.03 1.60

Cement Produced 1.66 2.29

Cement Sold 1.69 2.28

Salem (TN) Grinding Plant

Cement Produced 3.51 1.57

Cement Sold 3.54 1.58

Chengalpattu (TN) Grinding Plant

Cement Produced 3.01 2.14

Cement Sold 3.03 2.11

Kolaghat (WB) Grinding Plant

Cement Produced 2.17 0.18

Cement Sold 2.19 0.13

During the year under review, the cement production was 73.05 lac tonnes, compared to 80.26 lac tonnes of the previous year.

At Ramasamy Raja Nagar, subsequent to the installation of a Vertical Roller Mill as a pre-grinder to Raw Mill, the combined clinkerisation capacity of both the kilns had increased to 3200 Tonnes Per Day (TPD).

At Jayanthipuram, the Line-1 kiln was stopped during October 2010 to March 2011 for upgrading the pyro processing system. The upgradation had resulted in reduction in emission levels, besides increasing the clinkerisation capacity to 3400 TPD.

At Alathiyur, the Line-1 kiln was stopped during November 2010 to February 2011 for carrying out upgradation activities. The upgradation included modification of the pre-heater, changing the cooler and installation of a higher size venting system. The upgradation was completed and the kiln restarted in the month of February 2011. The upgradation had resulted in increasing the clinkerisation capacity to 3500 TPD.

SALES

During the year under review, the sale of cement was at 72.55 lac tonnes compared to 79.54 lac tonnes of the previous year.

The demand growth for the cement industry as a whole for the year was 5%, compared to the growth of 11% for the previous year. The growth percentage is the lowest in last several years.

The Southern Region witnessed a decline of 4% compared to a growth of 5% during the previous year. Within the Southern Region, the States of Andhra Pradesh and Kerala, which are important market segments for the Company, had witnessed negative growth. Lower infrastructure spending and slow-down in the realty sector have contributed to this subdued growth. While there has been a decline in the demand, the cement industry has seen a growth in the capacity additions on All India basis and specifically in the Southern Region. These factors have adversely affected the sales volume of the Company for the year.

EXPORTS

During the year 6825 tonnes of cement was exported to Sri Lanka. The export turnover of the Company for the year was Rs.1.86 crores.

COST

There has been steep escalations in input costs. The cost of imported and indigenous coal has increased, thereby increasing the cost of energy. The cost of flyash has also increased.

Road transportation cost has increased due to upward revision in the administered fuel cost. The Rail transportation cost has also increased, as the Railways have increased the basic freight structure, terminal charges and demurrage and wharfage penal charges, in addition to imposing various restrictions on movement of material through wagons.

The increase in the transportation cost and the general inflationary trends has led to overall increase in the cost of raw materials.

The depreciation cost has gone up due to the capacity additions implemented by the Company in the past years.

The increase in various statutory levies has also contributed to the increase in the cost.

READY MIX CONCRETE DIVISION

The Division has produced 59,589 cu.m. of concrete during the year accounting for a revenue of Rs.18.08 crores as against 44,501 cu.m. of concrete accounting for a revenue of Rs.12.73 crores during the previous year.

DRY MORTAR DIVISION

The Division has produced 27,156 tonnes of Dry Mortar during the year as against 23,508 tonnes produced during the previous year. The Division has sold 27,089 tonnes of Dry Mortar accounting for a revenue of Rs.15.51 crores during the year as against 23,520 tonnes of Dry Mortar accounting for a revenue of Rs.13.06 crores during the previous year.

WIND FARM DIVISION

The Division has generated 3572 lac KWH as compared to 4115 lac KWH of the previous year. The income during the year from the Division was Rs.122.28 crores as against Rs.133.89 crores of the previous year.

During the year, the Company has sold 33 Nos. of Wind Electric Generators aggregating to a capacity of 26.40 MW. After this, the installed capacity of the Wind Farm Division of the Company stands at 159.19 MW comprising of 229 Wind Electric Generators.

TURNOVER AND PROFITABILITY

Due to reduction in production and sale quantity and lower realisation and reduced contribution from wind farm division, the total revenue for the year, net of Central Excise and Sales Tax was Rs.2,645 crores as against Rs.2,821 crores of the previous year. The all round increase in the cost of production has resulted in lower profit compared to the previous year. The operating profit and net profit for the year were Rs.657.24 crores and Rs.210.98 crores as against Rs.877.29 crores and Rs.353.68 crores respectively for the previous year.

CHANGES IN STATUTORY LEVIES

The following are the changes that have taken place in the Statutory Levies.

DIRECT TAX

i) The Minimum Alternate Tax (MAT) rate which was increased from 15% to 18% for the year 2010 - 2011, had again been increased to 18.5% for the year 2011 - 2012.

ii) Surcharge on Income Tax has been reduced from 7.5% to 5% for the year 2011 - 2012.

INDIRECT TAX

The following are the changes that have been implemented with effect from 1-3-2011.

EXCISE DUTY

I. For Cement

A) For Mini Cement Plants Previous Revised

1. Cleared in packaged form-

(i) of Retail Sale Price (RSP) not exceeding Rs.190/- per 50 kg Rs.185/- PMT 10% ad valorem bag or of per tonne equivalent RSP not exceeding Rs.3800/-

(ii) of RSP exceeding Rs.190/- per 50 kg bag or of per tonne 10% ad valorem equivalent RSP exceeding Rs.315/- PMT + Rs.30/- PMT Rs. 3800/-

2. Cleared other than in packaged form Rs.215/- PMT 10% ad valorem

B) For Cement Plants other than mini cement plants

1. Cleared in packaged form-

(i) of RSP not exceeding Rs.190/- per 50 kg bag or of per tonne 10% ad valorem equivalent RSP not exceeding Rs.290/- PMT + Rs.80/- PMT Rs. 3800/-

(ii) of RSP exceeding Rs.190/- per 50 kg bag or of per tonne 10% ad valorem equivalent RSP exceeding 10% of RSP Rs.3800/- + Rs.160/- PMT

10% or Rs.290/- PMT, 2. Cleared other than in packaged 10% ad valorem for whichever is higher

II) For Clinker, Excise Duty has been increased from Rs.375/- per tonne to 10% ad valorem + Rs.200/- per tonne.

III) For Ready Mix Concrete, Excise Duty has been introduced at the rate of 5% with CENVAT facility or 1% without CENVAT facility.

IV) For Fly Ash, Excise Duty has been introduced at the rate of 1% without CENVAT facility.

V) For Coal, Pet Coke and Lignite, Excise Duty has been introduced at the rate of 5% with CENVAT facility or 1% without CENVAT facility.

CUSTOMS DUTY

For Pet Coke and Gypsum, Customs Duty has been reduced from 5% to 2.5%.

CENTRAL SALES TAX (CST)

For Iron and Steel items, Coal and Crude Oil, CST has been increased from 4% to 5%.

VALUE ADDED TAX (VAT)

i) In West Bengal, VAT has been increased from 12.5% to 13.5% with effect from 15-11-2010.

ii) In Orissa, VAT has been increased from 12.5% to 13.5% with effect from 1-4-2011.

iii) In Karnataka, the VAT which had been increased from 12.5% to 13.5% with effect from 1-4-2010 has further been increased to 14% with effect from 1-4-2011.

iv) In Jharkhand, VAT has been increased from 12.5% to 14% with effect from 7-5-2011.

Above taxes were levied, when cost of production itself has gone up. This will affect the profit margins.

NEW PROJECTS

At R R Nagar, the Company is installing a Roll Press for increasing the cement grinding capacity from the present level of 210 TPH to 260 TPH at a cost of Rs.60 crores. The project is expected to be commissioned in March 2012.

At Ariyalur, as informed in the Annual Report for the year 2009 - 2010, to further augment the production capacity the Company is in the process of establishing a second unit with a capacity of 2 MTPA. The project is slated to be commissioned in the month of August 2011. Consequently, the cement production capacity of the Company will go up from 10.49 MTPA to 12.49 MTPA.

At Salem Grinding Unit, the cement grinding capacity is proposed to be increased from the present level of 90 TPH to 230 TPH by installation of a Roll Press, at a cost of Rs.60 crores. The project is expected to be commissioned in December 2011.

POWER PLANTS

The Company continues to lay emphasis on captive source of energy, to cater to the electrical energy requirements of its production facilities.

- In the Annual Report for the year 2009 - 2010, it was informed about the Companys proposal to install a thermal power plant of 60 MW capacity, consisting of 3 x 20 MW at Ariyalur. Accordingly, 2 Nos. of 20 MW capacity thermal power plant have been commissioned in the months of November 2010 and February 2011. The balance 20 MW is expected to be commissioned in the month of December 2011.

- At R R Nagar, the Company is in the process of installing a thermal power plant of 25 MW capacity at a cost of Rs.110 crores. The project is expected to be commissioned in the month of August 2011.

- At Salem Grinding Unit, the Company is in the process of installing a Heavy Fuel Oil based power generator of 5 MW capacity, at a cost of Rs.23 crores. The project is expected to be commissioned in the month of June 2011.

PROSPECTS FOR 2011-2012

Though, demand for cement is expected to grow at 8% in the coming year, the Southern Region will continue to bear the impact of the surplus capacity. With the capacity growth outstripping demand in the Southern Region, the prices would continue to be under pressure. The Cement industry would continue to experience lower capacity utilisation levels. The inflation would also affect the costs of various inputs of production and distribution, thereby affecting the realisation.

The expected increase in per capita consumption of cement to reach the global average and the infrastructure push being given by the Government would indicate the growth potential for the cement industry in medium and long term. The Companys enhanced capacity would enable it to participate in the growth and to increase its market share.

The Company continues its endeavour for the sale of Blended Cement, which would help in improving its capacity utilisation and achieving economies in production. By concentrating on operational efficiencies and cost reduction measures in all areas of production and distribution, the Company will strive to protect and improve its profitability.

CONSERVATION OF ENERGY, ETC.

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1)(e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are set out in Annexure I to this report.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 2593 employees as on 31-3-2011. Industrial relations in all the Units continue to be cordial and healthy. Employees at all levels are extending their full support and are actively participating in the various programmes for energy conservation and cost reduction. There is a special thrust on Human Resources Development with a view to promoting creative and Group effort.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company Secretary.

AWARDS

The Companys Units secured many Awards during the year in Mines Safety, Mines Environment & Mineral Conservation and Quality Circles.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Shri.R.S.Agarwal retires by rotation and is eligible for re-election.

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March 2011 were Rs.3.07 crores including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. This also includes 31 deposits aggregating to Rs.5.89 lacs which had fallen due on or before 31-3-2011 but not claimed by the depositors. Reminders have been sent to these depositors for disposal instructions. On the date of this report, Rs.1.35 lacs thereof have been claimed and refunded/renewed in respect of 5 depositors.

SHARES

The Companys shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

AUDITORS

M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates, Chartered Accountants, Auditors of the Company retire at the end of the 53rd Annual General Meeting and are eligible for reappointment.

COST AUDITOR

The Government has approved the Companys proposal to appoint M/s.Geeyes & Co., Cost Accountants, Chennai for audit of Companys cost accounts relating to the cement manufacturing activities for the year ended 31-3-2011 on a remuneration of Rs.1,00,000/- exclusive of out-of-pocket expenses. As per Central Governments direction, cost audit will be done every year.

The Government of India has made Cost Audit compulsory for the Companies activities relating to generation of electricity as well from the year 2011 - 2012.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that -

- In the preparation of the annual accounts for the year ended 31st March 2011, the applicable accounting standards had been followed;

- The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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;

- Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Annual Accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.



On behalf of the Board of Directors, For MADRAS CEMENTS LTD.,

P.R.RAMASUBRAHMANEYA RAJHA Chairman & Managing Director

Chennai 25-5-2011


Mar 31, 2010

The Directors have pleasure in presenting their 52nd Annual Report and the Audited Accounts of the Company for the year ended 31st March 2010.

FINANCIAL RESULTS

Year ended Year ended 31-3-2010 31-3-2009 (Rs. in lacs) (Rs. in lacs)

Operating Profit: Profit before Interest, Depreciation and Tax (PBIDT) 87729 79350

Less: Interest 15088 11001

Profit before Depreciation and Tax (PBDT) 72641 68349

Less: Depreciation 19608 13772

53033 54577

Add: Extraordinary items 11 (-)35

Net Profit before Tax 53044 54542

Less: Provision for Tax

Current Tax 8155 5320

Deferred Tax 9521 12729

Fringe Benefit Tax -- 141

Net Profit After Tax 35368 36352

Add: Balance Profit from last year 2974 2178

38342 38530

Add: Debenture Redemption Reserve written back -- 1020

Proposed dividend written back -- 1

Surplus for Appropriation 38342 39551

Appropriations:

1. Transfer to General Reserve 27500 31000

2. Interim Dividend 3575 2383

3. Final Dividend 1191 2383

4. Tax on Dividends 806 811 Balance carried over to Balance Sheet 5270 2974

TOTAL 38342 39551

SHARE CAPITAL

The paid up capital of the Company is Rs.23,79,69,380/- consisting of 23,79,69,380 shares of Rs.1/- each.

DIVIDEND

Your Directors have pleasure in recommending a final dividend of Rs.0.50 per share (PY:Rs.1.00 per share) on the equity capital of the Company. Together with the Interim dividend of Rs.1.50 per share (PY:Rs.1.00 per share) paid during the year, the total dividend for the year is Rs.2.00 per share as against Rs.2.00 per share for the previous year. The total dividend for the year amounts to Rs.47.66 crores as against Rs.47.66 crores for the previous year.

TAXATION

An amount of Rs.81.55 Crores towards Current Tax (MAT), Rs.95.21 Crores towards Deferred Tax and Rs.8.06 Crores towards Dividend Tax has been provided for the year under review. The Company is entitled for MAT credit of Rs.8.42 crores, which would be carried forward and adjusted against the tax liability in the subsequent years..

DIRECTORS

At the Board Meeting held on 5th August 2009, Shri.M.B.N.Rao has been co-opted as an Additional Director and will hold office till the date of the forthcoming AGM. A Notice has been received from a Member signifying his intention to propose the appointment of Shri.M.B.N.Rao as Director of the Company at the AGM.

The Government of Tamil Nadu appointed Shri.G.Sundaramurthi, I.A.S., Industries Commissioner and Director of Industries and Commerce, as their Nominee Director on the Company’s Board with effect from 21.12.2009 in the place of Shri.G.Santhanam, I.A.S.

The Directors place on record the valuable guidance and services rendered by Shri.G.Santhanam, I.A.S., during the tenure of his office as Nominee Director on the Company’s Board.

In accordance with the provisions of the Companies Act, 1956 and the Company’s Articles of Association, Dr.A.Ramakrishna retires by rotation and is eligible for re-election.

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March 2010 were Rs.3.22 Crores including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. This also includes 49 deposits aggregating to Rs.18.82 lacs which had fallen due on or before 31.3.2010 but not claimed by the depositors. Reminders have been sent to these depositors for disposal instructions. On the date of this report, Rs.2.67 lacs thereof have been claimed and refunded/renewed in respect of 15 depositors.

SHARES

The Company’s shares are listed in Madras Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

AUDITORS

M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and M/s.CNGSN & Associates, Chartered Accountants, Auditors of the Company retire at the end of the 52nd Annual General Meeting and are eligible for reappointment.

COST AUDITOR

The Government has approved the Company’s proposal to appoint M/s.Geeyes & Co., Cost Accountants, Chennai for audit of Company’s cost accounts for the year ended 31.3.2010 on a remuneration of Rs.90,000/- exclusive of out-of-pocket expenses. As per Central Government’s direction, cost audit will be done every year.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors confirm that –

* In the preparation of the annual accounts for the year ended 31st March 2010, the applicable accounting standards had been followed;

* The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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;

* Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

* The Annual Accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors, for MADRAS CEMENTS LTD.,

Chennai P.R.RAMASUBRAHMANEYA RAJHA

24-5-2010 Chairman & Managing Director

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