Directors Report of Sagar Cements Ltd.

Mar 31, 2022

Your Directors are pleased to present their Forty First Report together with the audited Stand-alone and Consolidated financial statements of the Company for the year ended 31^st March 2022.

Financial Results

This discussion on the financial condition and results of operations of your Company for the year ended 31^st March 2022, which are summarised below, should be read in conjunction with its audited stand-alone and the consolidated financial statements containing financials and notes thereto of Sagar Cements Limited and its subsidiaries, namely Sagar Cements (M) Private Limited and Jajpur Cements Private Limited.

(? in Lakhs)
	Standalone		Consolidated
Description	2021-22	2020-21	2021-22	2020-21
Revenue from operations	1,56,786	1,37,488	1,59,687	1,37,132
Other Income	2,691	854	1,342	778
Total income	1,59,477	1,38,342	1,61,029	1,37,910
Total expenses	1,28,177	97,273	1,32,110	97,088
Operating Profit before Interest, Depreciation and Tax	28,609	40,215	27,577	40,044
Less: Finance Cost	6,934	4,607	9,248	4,656
Depreciation	8,035	8,057	9,271	8,103
Profit before tax	16,331	28,405	10,400	28,063
Total Tax	5,953	9,479	4,485	9,451
Profit after Tax	10,378	18,926	5,915	18,612
Other Comprehensive Income	127	7	131	7
Total Comprehensive Income	10,505	18,933	6,046	18,619
Basic & Diluted Earnings per share of '' 2 each	8.83	16.36	5.03	16.09

Performance

Despite increase in the input cost, particularly power and fuel, your Company could achieve a reasonable performance, resulting in an operational profit of '' 275.77 crores. To avoid repetition in the Directors’ Report, further details about other aspects of the performance of the Company during the year 2021-22 have been furnished in the Management Discussion and Analysis Report as annexure to this report.

Dividend

Dividend is recommended by your Board taking into consideration the factors like overall profitability, cash flow, capital requirements and other business consideration as well as the applicable regulatory requirements read with the dividend distribution policy adopted by your Company, which is available on your Company’s website. In this background, your Board of Directors is pleased to recommend a dividend at '' 0.70 per equity share (35%) on the 13,07,07,548 equity shares of '' 2/- each of your Company. This would result in a total outflow of '' 914.95 lakhs.

The Dividend Distribution Policy of the Company is available on the Company’s website and can be accessed at: https://sagarcements. in/wp-content/uploads/2020/08/Scl Dividend-Distribution-Policy.pdf

Transfer to Reserves

No transfer to any reserve is proposed and accordingly, the entire balance available in the Statement of Profit and Loss is retained in it.

Authorised Share Capital

During the year 2021-22, face value of equity shares of your Company was split from '' 10/- each into '' 2/- each, as a result of which, the total number of equity shares went up from 2,35,00,000 equity shares of '' 10/- each to 11,75,00,000 equity shares of '' 2/-each and accordingly the paid-up share capital as on 31^st March, 2022 was '' 23,50,00,000/- divided into 11,75,00,000 equity shares of '' 2/- each.

The Hon’ble National Company Law Tribunal, Hyderabad Bench-I vide its order dated 15^th March 2022 approved the Scheme of Amalgamation of Sagar Cements (R) Limited (“Transferor Company"), a Wholly-owned Subsidiary with the Company. By virtue of said Scheme, the authorised share capital of the Transferor Company (i.e. Equity Share Capital of '' 116,00,00,000/- and Preference Share Capital of '' 43,00,00,000/-) was merged with the authorised share capital of the Company w.e.f. the effect date i.e.,15^th March 2022.

Accordingly, the authorised share capital of the Company is '' 182,50,00,000/- comprising of 69,75,00,000 Equity Shares of '' 2/- each and 4,30,00,000 Preference Shares of '' 10/- each as on 31^st March 2022.

Paid-up Share Capital

As on 31^st March 2022, the paid-up share capital of the Company was '' 23,50,00,000/-. With the split of face value of equity shares from '' 10/- into '' 2/- each, the total number of fully paid-up equity shares increased from 2,35,00,000 to 11,75,00,000.

Pursuant to the approval accorded by the shareholders, at their Extra-ordinary General Meeting held on 23^rd April 2022, the Securities Allotment Committee of the Board at their meeting held on 7^th May, 2022 has since allotted 1,32,07,548 equity shares of '' 2/- each at a premium of '' 263/- per share on a preferential basis aggregating to '' 350 crores to M/s. PI Opportunities Fund-I, Scheme II, an Alternative Investment Fund registered with SEBI under SEBI (Alternative Investment Fund) Regulations, 2012. This amount is proposed to be utilised by your Company for expanding its operations through organic and inorganic means, apart from meeting its incremental working capital requirements and for other general corporate purposes. With this allotment, the paid-up share capital of your Company is '' 26,14,15,096/- divided into 13,07,07,548 equity shares of '' 2/- each.

Utilisation of Funds Raised through Issue of Non Convertible Debentures

During the financial year 2021-22, your Company issued and allotted on a private placement basis 25,000 Secured Redeemable Non-Convertible Debentures (NCDs) of face value of '' 1,00,000/-(Rupees One Lakh only) each, aggregating to '' 250,00,00,000/-(Rupees Two Hundred and Fifty Crores only). The funds raised through NCDs have been utilised to meet general business requirements, addressing working capital needs as well as expansion of business activities.

Subsidiaries, Joint Ventures and Associate Companies

In the year 2015 your Company acquired the entire equity stake in BMM Cements Limited, which has since been re-named as Sagar Cements (R) Limited. This wholly-owned subsidiary has a cement plant of 1.25 Million MTs per annum capacity along with a coal based captive power plant of 25 MW capacity in Gudipadu Village in Ananthapur District, A.P. With a view to achieving more synergy in the operations of your group as a whole, this subsidiary has since been merged with the holding company, Sagar Cements Limited.

As you may be aware, your Company had acquired majority stake in Satguru Cement Private Limited, which has since been renamed as Sagar Cements (M) Private Limited (SCMPL), to set-up a green field integrated cement plant of 1 MTPA capacity with a waste heat recovery plant in the State of Madhya Pradesh. This plant as well as the another wholly-owned subsidiary, Jajpur Cements Private Limited earlier acquired to set-up a 1.5 MTPA capacity grinding station at Jajpur in Odisha, have since commenced their commercial operations during the year 2021-22.

Salient features of the financials of the above mentioned two subsidiaries have been given in Form AOC-1 as Annexure-1 to this report.

Your Company does not have any Joint Ventures or Associate Companies.

The Board of Directors in their meeting held on 28^th January, 2022, subject to necessary approvals, accorded their consent for the merger/amalgamation of M/s.Jajpur Cements Private Limited, a wholly-owned subsidiary company with the Company.

Grinding Unit in Bayyavaram

This grinding unit of your Company, located at Bayyavaram in Vizag District, with a capacity of 1.5 MTPA utilises the surplus clinker available at your plant in Mattampally, for grinding into slag cement to cater to the markets in South Odisha and North Coastal districts of Andhra Pradesh where, with the identification of Vishakhapatnam

and Kakinada in Andhra Pradesh and Bhubaneswar in Odisha, which are being developed as ‘smart cities’ under the Prime Minister’s ‘Smart Cities Mission’.

Future Outlook

The cement produced from your Company’s plants is presently catering to the markets in Telangana, Andhra Pradesh, Karnataka, Maharashtra, Chhattisgarh, Odisha, Jharkhand, Madhya Pradesh, Tamil Nadu and Gujarat.

The cement demand during the financial year 2022 was around 350 million tonnes. The expected demand growth during the financial year 2023 is around 7 to 8%. This growth is expected to be driven by the Government’s infrastructure and continued growth in rural housing and steady revival in urban demand.

While the financial year 2023 is likely to witness one of the highest capacity additions, most of it are grinding units, set-up to optimise costs more than adding supplies. Capacity utilisations is therefore expected to remain at around 65%.

However, we believe that the Central Government initiatives on the infrastructure, including proposal to allocate funds in the form of interest free loans to fund the PM Gati Shakti Scheme and other infrastructure projects and issue green bonds for projects would all help to drive cement demand.

Cement demand from the housing segment continues to have support from Central and State Governments under the affordable housing PMAY Scheme. This will be in addition to the regular demand from construction of new houses (due to population growth and increasing urbanisation and nuclearisation) and replacement / renovation of existing houses. Demand from urban housing, which was hit hard by the pandemic during the last couple of years, witnessed a mild recovery during FY22.

However, with the on-going Russia-Ukraine conflict, impacting input costs and constrained supply position as weather and environmental concerns in key producing countries such as South Africa, Indonesia and China, pose a serious challenge for the sector. Power and fuel costs, which were earlier expected to peak during second half of FY22, will now witness a sharp increase in FY23, as coal and pet coke prices hit new high in March 2022.

Thus, taking an overall view of the above, your Board is cautiously optimistic about the future outlook for your Company.

Risk Management System

While your Company is subject to normal external business risks that are associated with similar companies operating within the cement industry, your Company attaches utmost importance to the assessment of internal risks and the management thereof in all its dealings. Like any other dynamic business organisations, your Company is constantly on the lookout for identifying new opportunities to enhance its enterprise value. Keeping in view the need to minimise the risks associated with such efforts, every proposal of significant nature is screened and evaluated for the risks involved in it and then approved at different levels in the organisation before implementation.

With a view to overcoming the risk of dependence exclusively upon any particular marketing segment or region, your Company is trying to reach out to a wider section of its ultimate consumers and, as mentioned earlier, is looking for growth opportunities in other States, where infrastructure spending is set to get a boost.

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

To focus on the risk management being followed by your Company, a committee has been formed exclusively for the purpose, in which, two members are independent directors.

Further details on this are available in the Management Discussion and Analysis Report.

Internal Control System and its Adequacy

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

Human Resource Development and Industrial Relations

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

Your Company is organising training programmes wherever required for the employees concerned to improve their skill. They are also encouraged to participate in the seminars organised by the external agencies related to the areas of their operations.

Your Company continues to focus on attracting and retaining competent personnel and providing a holistic environment where they get opportunities to grow and realise their full potential. Your Company is committed to providing all its employees with a healthy and safe work environment.

Sexual Harassment

Regarding the Sexual Harassment of Women at the work place (Prevention, Prohibition & Redressal) Act, 2013, your Company has an Internal Complaints Committee. No complaints were received or disposed off during the year under the above Act and no complaints were pending either at the beginning or at the end of the year.

Your Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC). ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. ICC has its presence at corporate office as well as at site locations.

Awards and Recognitions

Your Company has already achieved ISO Certification ISO 9001:2015 for Quality Management System Standard, ISO 14001:2015 for Environmental Management System Standard, ISO 45001:2018 for Occupational Health and Safety Management System Standard and ISO 50001:2018 for Energy Management.

Your Company was awarded with “Best Management Award” in appreciation of providing local employment and providing

skill development training for local newly qualified graduates at Mattampally unit by Ministry of Labour, Government of Telangana.

Your Company’s Gudipadu Unit was awarded with “State level and Zonal level overall 2^nd price for Mines Safety-2022” in appreciation of the Safety and other working parameters in Mines by Mines Safety Association, Karnataka under the aegis of Directorate General of Mines Safety, Government of India.

As the shareholders are aware your Company’s Laboratory at its Plant in Mattampally is the recipient of the Accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL), which is the sole accreditation body for testing and calibration laboratories under the aegis of Department of Science and Technology, Government of India.

Directors Responsibility Statement

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

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

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

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

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

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

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

Directors and Key Managerial Personnel

On recommendation of the Audit Committee and Nomination and Remuneration Committee, the Board of Directors in their meeting held on 1^st July, 2021, re-appointed Dr.S.Anand Reddy as Managing Director and Shri S.Sreekanth Reddy as Joint Managing Director respectively for a further period of 3 years with effect from 31^st October, 2021 and subsequently approval of shareholders was taken in the 40^th AGM held on 28^th July, 2021.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Dr. S. Anand Reddy and Shri John-Eric Bertrand will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Necessary resolutions seeking the approval of the members for the re-appointments have been incorporated in the notice of the annual general meeting of the Company.

In accordance with Clause 3.1 (a) of the Shareholders Agreement dated 25^th March 2022 entered into between M/s.PI Opportunities Fund-I, Scheme II (Investor), the Company and the promoters read with Article 84 and 97 of the Articles of Association of the Company and in accordance with the Communication received from the said

Investor, Shri Madhavan Ganesan (DIN: 01674529) was appointed as an additional director on 11^th May 2022 under Section 161 of the Companies Act, 2013 to act as Nominee Director of M/s.PI Opportunities Fund-I, Scheme II and that the said Shri Madhavan Ganesan will not be liable to retire by rotation. A suitable resolution has been included in the Notice of the Annual General Meeting seeking approval of the shareholders for the said appointment.

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

Independent Directors Declaration

The Company has received necessary declarations from all the Independent Directors of the Company in accordance with Section 149 (7) of the Companies Act 2013, that they meet the criteria of independence as laid out in Section 149(6) of the said Act and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”). There has been no change in the circumstances affecting their status as an Independent Director during the year.

The Independent Directors have also confirmed that they have complied with Schedule IV of the Companies Act, 2013 and the Company’s Code of Conduct.

The Board of Directors is of the opinion that all the Independent Directors possess requisite qualifications, experience and expertise in industry knowledge and corporate governance and they hold highest standards of integrity.

Number of Meetings of the Board

During the year 2021-22, eight meetings of the board were held and the details of these meetings of the Board as well as its Committees have been given in the corporate governance report, which forms part of the Integrated Report.

Credit Rating

Details of Credit Ratings obtained by the Company have been given in the corporate governance report, which forms part of the Integrated Report.

Policy on Directors’ Appointment and Remuneration and Other Details

The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178 (3) of the Companies Act, 2013 have been disclosed in the corporate governance report.

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

Board Evaluation

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

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants (FR No. 008072S), who were re-appointed as Statutory Auditors of the Company by the Shareholders at their 39^th Annual General Meeting held on 9^th September 2020 for a second consecutive term of 5 years will be holding their said office from the conclusion of the said Annual General Meeting till the conclusion of the 44^th Annual General Meeting to be held in the year 2025, at such remuneration as may be mutually agreed between the Board of Directors of the Company and the said Auditors.

Auditors’ Report and Secretarial Auditors’ Report

Auditors’ Report

The auditors’ report does not contain any qualifications, reservations or adverse remarks and it is an unmodified one.

Secretarial Auditors’ Report

In accordance with Section 204 (1) of the Companies Act, 2013, the report furnished by the Secretarial Auditors, who carried out the secretarial audit of the Company under the said Section is given in the Annexure-2, which forms part of this report. There are no adverse remarks in the said report. Your Company has complied with the Secretarial Standards applicable for holding Board and General Meetings.

Secretarial Standards

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time and that such systems are found to be adequate and operating effectively.

Maintenance of Cost Records

Cost records are required to be maintained by the Company under Section 148 (1) of the Companies Act, 2013. Accordingly, such accounts and records made and maintained.

Cost Auditors

M/s.Narasimha Murthy & Co., Cost Auditors (FR No.000042) have been appointed as Cost Auditors of the Company for the year ending 31^st March 2023. A resolution seeking shareholders’ approval for ratification of the remuneration payable to the said Cost Auditors has been included in the notice of the AGM. The reports submitted by the Cost Auditors are duly filed with the appropriate authorities under Section 148 of the Companies Act, 2013.

Details in respect of frauds reported by Auditors under Section 143 (12) other than those which are reportable to the Central Government.

No frauds were reported by the Auditors under Sub-Section 12 of Section 143 of the Companies Act, 2013 read with the Rules made there under.

Particulars of Loans, Guarantees and Investments

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

Transactions with Related Parties

Information on transactions with related parties pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with rule 8 (2) of the Companies (Accounts) Rules, 2014 are given in Annexure-3 in Form AOC-2 as part of this report.

All related party transactions entered into during the financial year were on an arm’s length basis and in the ordinary course of business. There were no materially significant related party transactions entered into by the Company with the promoters, key management personnel or other designated persons that may have potential conflict with the interests of the Company at large. All related party transactions had prior approval of the Audit Committee and were later ratified wherever required.

During the year 2021-22 your Company had not entered into transactions with any person or entity belonging to its promoter / promoter group, which holds 10% or more shareholding in the Company.

Policy on transaction with related parties

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

Corporate Social Responsibility

A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company along with the initiative taken by your Company are set out in Annexure-4 to this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. This policy is also available on the website of the Company, www. sagarcements.in.

Annual Return

Annual Return in Form MGT-7 is available on the Company’s web site and the link for the same is www.sagarcements.in

Particulars of Employees

The information required under Section 197 of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been given in the Annexure-5, which forms part of this report.

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

Particulars Ratio to Median Remuneration
Non-Executive Directors Non-Executive Directors are not paid any remuneration, other than sitting fee
Executive Directors:-
Dr. S. Anand Reddy	146.55
Shri S. Sreekanth Reddy	141.52
b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:
Director, Chief Financial Officer and Company Secretary	% Increase in remuneration in the financial year
Shri K. Thanu Pillai, Non-Executive Director	These non-
Shri V.H. Ramakrishnan, Non-Executive Director	executive directors,
Mrs. O. Rekha, Non-Executive Director	were not paid any remuneration, other
Mrs. Sudha Rani Naga (APIDC Nominee Director)	than the sitting fee.
Shri John-Eric Bertrand, Non-Executive Director
Shri Jens Van Nieuwenborgh, alternate director to Shri John-Eric Bertrand, Non-Executive Director
Mrs. S. Rachana, Non-Executive Director

Director, Chief Financial Officer and Company Secretary	% Increase in remuneration in the financial year
Dr. S. Anand Reddy, Managing Director	4.24
Shri S. Sreekanth Reddy, Joint Managing Director	3.73
Shri R. Soundararajan, Company Secretary	3.83
Shri K. Prasad, Chief Financial Officer	10.93

c. The percentage increase in the median remuneration of employees in the financial year: 0.72

d. The number of permanent employees on the rolls of Company: 751

e. Percentage increase or decrease in the market quotations of the shares of the Company, compared to its price at which the Company came out with its last public offer:

Particulars	On March 31st 2022 (?) *	On June 22nd 1992 ('') **	% Change
Market Price in NSE	246.35	Not listed	-
Market Price in BSE	246.90	45.00	2643.33%
* Face value of '' 2/- each
** Face value of '' 10/- each

f. The average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year is around 9%. The managerial remuneration is as per the approval accorded by the Nomination and Remuneration Committee of the Board and Shareholders.

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

The Company affirms that remuneration is as per its remuneration policy.

Whistle Blower Policy

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees of the Company to enable them to report their genuine concerns, if any. The provisions of this policy are in line with the provisions of the Section 177 (9) of the Act and the SEBI Listing Regulations and the said policy is available on the Company’s website www.sagarcements.in.

Deposits from Public

The Company does not accept any deposits from public during the year.

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

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

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

Your Company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has, inter-alia, adequate number of bag filters in the plant.

Sub Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee, Investment Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship Committee, Securities

Allotment Committee and Risk Management Committee. The composition and other details of these committees, have been given in the Report on the Corporate Governance, which forms part of the Integrated Report.

Compliance Certificate

A certificate as stipulated under Schedule V (E) of the SEBI Listing Regulations from a Practicing Company Secretary regarding compliance with the conditions of Corporate Governance is attached to this Report along with our report on Corporate Governance.

Material Changes and Commitments since the end of the Financial Year

The shareholders at their Extra-ordinary General Meeting held on 23^rd April 2022 approved a proposal to issue and allot 1,32,07,548 equity shares of '' 2/- each at an issue price of '' 265/- per share through preferential allotment. The Securities Allotment Committee in its meeting held on 7^th May, 2022 allotted the said 1,32,07,548 equity shares to M/s.PI Opportunities Fund-I Scheme II. The process of getting them listed on the Stock Exchanges are currently in progress. Other than this, there were no other material changes or commitments between the end of the financial year and the date of this report.

Significant and material orders passed by the Regulators

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

Cautionary Statement

Statements in this report and its annexures describing company’s projections, expectations and hopes are forward looking. Though, these are based on reasonable assumption, their actual results may differ.

Acknowledgement

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

For and on behalf of the Board of Directors

Dr. S. Anand Reddy S. Sreekanth Reddy

Hyderabad Managing Director Joint Managing Director

11^th May 2022 DIN: 00123870 DIN: 00123889

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Mar 31, 2018

DIRECTORS'' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Dear Members

The Directors are pleased to present their Thirty Seventh Annual Report together with the audited Stand-alone and Consolidated financial statements of the Company for the year ended 31^st March, 2018.

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

Financial Results

This discussion on the financial condition and results of operations of the Company should be read in conjunction with the Company''s audited stand-alone and consolidated financial statements and notes thereto for the year ended 31^st March 2018, which are summarized below:

Rs, in Lakhs

	Stand-alone		Consolidated I
Particulars	2017-18	2016-17	2017-18	2016-17 1
Total income	79,461	64,312	1,08,502	94,511
Total expenses	71,852	61,908	1,03,935	94,089
Profit before tax	7,609	2,404	4,567	422
Total Tax	2,670	1,155	1,941	814
Profit after Tax	4,939	1,249	2,626	(392)
Other Comprehensive Income	(20)	(4)	(12)	(23)
Total Comprehensive Income	4,919	1,245	2,614	(415)
Basic & Diluted Earnings per share of Rs, 10 each	24.21	6.98	12.87	(2.19)

Higher capacity utilisation and growth in demand for cement in 2017-18 enabled your company to achieve its highest ever revenue from its stand-alone operations registering a growth of 23% over the previous year. On a consolidated basis, the total revenue crossed Rs, 1,000 crores during the year under report.

Dividend

Dividend is recommended by your Board in the context of the Company''s overall profitability, free cash flow, capital requirements and other business needs as well as the applicable regulatory requirements.

In this background, an interim dividend of Rs, 2.50 (25%) per share on the 2,04,00,000 equity shares of Rs, 10/- was announced for the year 2017-18 on 26^th October, 2017 and the same was paid on 16^th November, 2017. Your Board has recommended a further dividend of Rs, 1.50 (15%) per share for the year 2017-18. The total dividend for the year 2017-18 would accordingly work out to Rs, 4/- (40%) per share, involving a sum of Rs, 9,82,11,840, which includes a sum of Rs, 1,66,11,840 towards dividend tax.

The above said further dividend of Rs, 1.50 per share, if approved by the shareholders at the ensuing Annual General Meeting, will be paid within 30 days of the said approval.

Transfer to reserves

As no transfer to any reserve is proposed, the entire balance available in the Profit and Loss Account is retained in it. Share Capital

The paid up share capital of the company is Rs, 20,40,00,000/- consisting of 2,04,00,000 equity shares of Rs, 10/- each and there was no change in share capital during the year under report.

Pursuant to the approval accorded by the Shareholders at their Extraordinary General Meeting held on 23.11.2016, your board in the year 2016-17 had raised a sum of Rs, 48.96 crores by preferential allotment of 6,11,986 equity shares of Rs, 10/- each at a premium of Rs, 790/- per share and by allotment of 24,00,000 equity shares of Rs, 10/- each at a premium of Rs, 710/- per share through Qualified Institutional Placement, to fund the expansion of grinding capacity of your unit at Bayyavaram from 0.3 million tons to 1.5 million tons, for setting up of a coal based power plant of 18 MW capacity at your Mattampally Unit and for meeting its other general corporate purposes from time to time. Your directors are happy to inform you of the successful completion of the expansion of the said grinding unit well ahead of the schedule. The setting up of the power plant, which is progressing well, is also expected to be completed by the end of March, 2019.

Industry Structure and Development

Cement being a basic building material used widely in housing and industrial sectors and in developing infrastructure, its per capita consumption is an important index for measuring the economic growth of a country. India being the world''s second largest producer of cement and because of its strong connection with other sectors such as construction, transportation, coal and power, cement industry occupies an important place in the economy, providing employment directly and indirectly to more than a million people.

One of the main features of the Indian cement industry is that the location of limestone reserves in some of its states has resulted in the formation of what is popularly known as cement clusters and Nalgonda in Telangana, where your company''s Mattampally unit is located, is one of such clusters . The proximity to coal deposits is also an important factor in setting up of a cement plant. Cement being a high bulk and low value commodity, competition also tends to be localized, since the cost of transportation of cement to distant markets often results in the product being uncompetitive in those distant markets.

Further, though the structure of Indian cement industry is considered to be a highly fragmented one, still 70 % of the total cement production is from its top 20 cement companies.

Apart from the ready availability of raw materials such as limestone and coal, the other factor contributing to the growth of this industry is increasing demand for cement emanating from the development in the infrastructure and construction sectors. In this connection, some of the recent major initiatives such as development of ''smart cities'' which are giving a push to the demand for cement, providing further boost to this sector, augur well for the industry.

Whether it is affordable housing, roads, highways or ''smart cities'', the entire industry has high hopes from the Government as far as infrastructure spending is concerned and on such hopes materializing, the industry will look up and hopefully grow by 8% in the current year.

Company''s stand-alone performance with reference to its operational performance:

Demand for cement is a derived demand, as it depends on growth of Infrastructure, construction and realty sectors, which were on the path of recovery after a slow-down witnessed in the later part of the year 2016-17 due to disruption caused by demonitisation. Further, revival of demand for cement in Telangana and Andhra Pradesh that was expected following the bifurcation of the erstwhile State of Andhra Pradesh is also now gaining momentum, easing the pressure on the pricing front, though only marginally. However, even as the infrastructure sector is slowly looking up, the housing segment, which is the biggest demand driver for cement is yet to resume its potential growth.

Viewed in the above background, the overall performance of your company on a stand-alone basis during the year 201718 in terms of production, sale, revenue and average net sales realization per ton of cement is satisfactory.

In terms of volume, your company achieved an increase of 28% and 30% in the cement production and sales respectively over the previous year which, aided by a marginal increase in average sales realization per tonne of cement by 4.5%, resulted in an increase of 23% in revenue and a 68% increase in the EBITA over the previous year.

1 Particulars	2017-18	2016-17
Cement Production in MTs	19,41,145	15,21,565
Cement Sales in MTs	20,04,808	15,37,237
Average Net Sales Realization per MT ('' )	3,214	3,077
Total Revenue ( '' in lakhs)	79,461	64,312

Subsidiaries, Joint Ventures and Associate Companies

In the year 2015, your company acquired the entire equity stake in BMM Cements Limited, which has now been renamed as Sagar Cements (R) Limited. This wholly-owned subsidiary has its cement plant of 1.00 Million MTs per annum capacity along with a coal based captive power plant of 25 MW capacity in Gudipadu Village in Ananthapur District, A.P.

After overcoming the initial constraint of operating at a very low capacity due to outsourcing lime stone at a higher cost for its cement production on account of lack of permission to extract the limestone available in its captive mines, this unit is now making use of the lime-stone available in the said captive mines after obtaining necessary permission therefor and is currently operating at around 70% capacity. Its power unit is operating at 87% capacity.

As you are aware, the cement produced by this subsidiary is sold under the brand name "SAGAR CEMENT”. With this subsidiary further consolidating itself and improving upon its operations, the investments made by your company in this subsidiary will prove to be beneficial to your company in the long run.

Statement containing salient features of the financial statement of the above mentioned subsidiary has been given in Form AOC-1 in the Annexure 1 to this report.

Your Company does not have any Joint Ventures or Associate Companies.

Grinding Unit in Bayyavaram

We had earlier informed you of the acquisition of a grinding unit of 1,81,500 MT capacity at Bayyavaram in Visakhapatnam District in Andhra Pradesh and of the company''s plan to expand its capacity to 1.5 million tons. Your Directors are happy to inform you that the said expansion as earlier mentioned in this report has since been completed.

The acquisition of the above said grinding unit and the subsequent expansion of its capacity, enable your company to transport the surplus clinker available at its plant in Mattampally to the said unit, for grinding into slag cement to meet the demand in markets in Odisha, West Bengal and in the Vizag region of Andhra Pradesh where, with the identification of Vishakhapatnam and Kakinada in Andhra Pradesh and Bhubaneswar in Odisha for development as ''smart cities'' under the Prime Minister''s ''Smart Cities Mission'', the focus is currently more on the investments in their infrastructure sector.

Opportunities and threats:

Constraints on inputs:

The cement industry is a highly energy intensive sector. Energy, along with other raw materials mainly comprising coal and lime stone, forms a most critical component in the manufacture of cement. While your company does not face any problems with respect to the availability of limestone, it attaches high priority to keep its energy cost, which forms a significant portion of the input costs, to the minimum. This is sought to be achieved, among other means, by ensuring an optimum combination in the consumption of indigenous coal along with imported coal, which is relatively cheaper.

After successfully commissioning the Waste Heat Recovery Plant with an initial capacity of 6 MW capacity, which is presently operating at 8.50 MW capacity at its Mattampally plant, your company is now setting up a coal based plant of 18MW capacity at the said unit. Further, as your company is also keen on meeting its power requirement from renewable energy sources, apart from setting up of a solar power plant of 1 MW capacity at the said plant, it has recently acquired 2 mini hydel power units, one with a capacity of 4.3 MW on the Guntur Branch Canal and the other with a capacity of 4 MW in Lock-in-Sula in Kurnool District, both in Andhra Pradesh.

Your directors hope that the above measures would contribute to your company''s efforts in further optimizing its energy cost.

Freight cost

Cement being a freight-intensive industry, transportation of cement over long distances can be uneconomical and this has made it largely a regional play. As the logistics and the optimizing the freight cost continue to be the main area of concern with the distribution cost remaining a significant component in the cost structure notwithstanding the availability of a railway siding at your plant, your company is also weighing various other options available to it like setting up of grinding stations/full-fledged cement plants in distant areas where opportunities exist, to cater to the local market and this is sought to be achieved through routes like mergers, acquisitions, joint ventures, strategic marketing tie-ups and setting up of green field projects. As part of optimizing the freight cost, demand in the Eastern markets, which until recently was served by your company from its plant at Mattampally in Nalgonda District of Telangana is now being serviced from its plant at Bayyavaram in Visakhapatnam in A.P.

Lower demand

Housing sector which accounts for a major portion of cement demand is yet to pick-up in a big way both in Telangana and Andhra Pradesh, which are significant markets for your company. While the initiatives by the governments, like ''Smart Cities Mission'', ''affordable housing'' will help the construction, real estate, infrastructure and cement sectors in due course, the cement industry may have to wait for some more time to see any significant revival in demand in these states.

In the above circumstance, your company which has its major markets in Telangana, Andhra Pradesh and in the border areas of the other neighboring States, needs to look into expanding its Markets beyond these areas. However, the freight cost involved in moving the material from its plants at Mattampally and Bayyavaram to these areas, discourages it to do so, as the price of the locally produced cement in such areas would tend to be much cheaper.

As the company cannot afford any more to ignore the growing demand for cement in its neighboring states just because of the transportation cost involved in catering to these markets, apart from serving these markets from its own production, it buys cement in bulk from other sources located in these states and sell the same in the retail markets in those areas under the brand name ''Sagar Cement'', wherever there is cost advantage in doing so. It is hoped that this, apart from increasing the sales turnover of the company without incurring any additional capital expenditure and in turn improving its bottom line, would help it in popularizing its brand in new areas as well as in firmly establishing it in the areas where it might only have a token presence at present.

Impact of new entrants:

The Indian cement industry with its huge potential continues to attract the entry of global cement majors and encourages the strengthening of production bases by existing companies. This may lead to a substantial part of the cement capacity being controlled by a few players. Sagar Cements proposes to meet some of the challenges posed by this development, by focusing on cost reduction and by further improving its brand image, greater expenditure on advertising, strengthening its distribution networks as well as by other customer-focused initiatives. Apart from these, Sagar Cements is looking for opportunities to expand its market through strategic alliance and setting up of grinding stations, wherever viable.

Segment-wise /product-wise performance:

As your company operates in only one segment, namely manufacture and sale of cement, there is no other reportable segment or product.

Future outlook

The per capita consumption of cement is still very low in India and therefore there is a vast scope for growth in its demand on the long term. However, for such a real growth to happen, there should be an overall growth in investments in the real estate and infrastructure sectors. Since India is emerging as one of the fastest growing economies in the world, the future outlook for cement looks to be bright, provided government formulates growth oriented policies, so that our per capita cement consumption matches at least with some of the developing economies. Notwithstanding the plans to expand its market in other states, Telangana and Andhra Pradesh will continue to be the major markets for your Company. With the respective Governments in these states rightly focusing on the development of infrastructure along with the importance given by the Union Government for the development of National Highways, Rural and Urban Roads, Affordable Housing, Port Connectivity, Development of smart cities, etc., coupled with private agencies coming up with a slew of their own infrastructure development projects, demand for cement in these and their neighbouring states is expected to see a significant growth, which augurs well for your company, which, with its aggressive and innovative marketing duly supported by its well-motivated marketing personnel, is poised to grab the opportunity available in this scenario.

However, till such time that the above scenario becomes a reality, your company may have to continue to face the problems like rising input and distribution costs, despite the efforts being made by your company as mentioned above to mitigate the same.

The impact of the Goods and Services Tax rate has since been absorbed by the cement industry. The Company, on its part, will optimize the distribution/warehouse network under GST regime to further improve its operational efficiency.

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

Risk Management System:

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

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

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

Internal Control System and its adequacy:

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

Human resource development and Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel working at its Plants, Offices and on the field.

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

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

Sexual Harassment

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

Awards and Recognitions

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

As you are aware, your company''s Laboratory at its Plant in Mattampally is the recipient of the Accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL), which is the sole accreditation body for testing and calibration of laboratories under the aegis of Department of Science and Technology, Government of India.

Directors Responsibility Statement

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

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

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

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

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

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

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

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013, Dr.S.Anand Reddy and Shri John-Eric Fernand Pascal Cesar Bertrand will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Accordingly, the resolutions seeking the approval of the members for the said reappointments have been incorporated in the notice of the annual general meeting of the company.

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

Independent Directors Declaration

The company has received the necessary declaration from each Independent Director in accordance with Section 149 (7) of the Companies Act 2013, that he meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act 2013.

Number of meetings of the board

Six (6) meetings of the board were held during the year 2017-18. Details of these meetings have been given in the corporate governance report, which forms part of the Annual Report.

Policy on directors'' appointment and remuneration and other details

The company''s policy on directors'' appointment and remuneration and other matters provided in Section 178 (3) of the Act have been disclosed in the corporate governance report.

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

Board evaluation

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

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants (FR No.008072S) were appointed as Statutory Auditors of the company by the company at the 34^th Annual General Meeting held on 23^rd September, 2015, to hold office from the conclusion of the said Annual General Meeting till the conclusion of the 39^th Annual General Meeting. Though the said appointment was required to be ratified at every annual general meeting under Section 139, in accordance with the Companies Amendment Act 2017, enforced from 7^th May, 2018 by Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every annual general meeting anymore.

Auditors'' Report and Secretarial Auditors'' Report

Auditors'' Report

The auditors'' report on the financial statements of the company is part of this report and it does not contain any qualifications, reservations or adverse remarks.

Secretarial Auditors'' Report

In accordance with Section 204 (1) of the Companies Act, 2013, the report furnished by the Secretarial Auditors, who carried out the secretarial audit of the company under the said Section, is given in the Annexure 2, which forms part of this report. There are no adverse remarks in the said report. Your company has complied with the Secretarial Standards applicable for holding Board and General Meetings.

Cost Auditors

M/s.Narasimha Murthy & Co., (FR No.000042) Cost Auditors of the company have been appointed as Cost Auditors of the company for the year ending 31^st March, 2019. A resolution seeking shareholders'' ratification of the remuneration payable to the Cost Auditors has been included in the notice of the AGM. The reports submitted by the Cost Auditors are filed with the appropriate authorities.

Particulars of loans, guarantees

and investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements at appropriate places. Transactions with related parties

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

All related party transactions entered into during the financial year were on arms length basis and in the ordinary course of business. There were no materially significant related party transactions entered into by the company with the promoters, key management personnel or other designated persons that may have potential conflict with the interests of the company at large. All related party transactions had prior approval of the Audit Committee and were later ratified by the Board.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of your company along with the initiative taken by it are set out in Annexure-4 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the company, http://www.sagarcements.in/csr.html.

Extract of Annual Return

As provided under Section 92 (3) of the Act, an extract of annual return is given in Annexure-5 in the prescribed Form MGT-9, which forms part of this report, a copy of the same is also available on the company''s website www.sagarcements.in.

Particulars of Employees

The information required under Section 197 of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules are given in the Annexure-6, which forms part of this report.

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

Particulars	Ratio to Median Remuneration
Non-Executive Directors *
Executive Directors
Shri S.Veera Reddy	63.14
Dr.S.Anand Reddy	53.25
Shri S.Sreekanth Reddy	48.30

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

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

Director, Chief Executive Officer, Chief Financial Officer and Company Secretary	% increase in remuneration in the financial year
Shri O.Swaminatha Reddy	During the financial year, these directors were
Shri K.Thanu Pillai	not paid any remuneration, other than sitting
Shri T.Nagesh Reddy (APIDC Nominee)	fee, in which there was no increase
Shri John-Eric Fernand Pascal Cesar Bertrand
Shri V.H.Ramakrishnan
Mrs.S.Rachana
Shri S.Veera Reddy	112.46
Dr.S.Anand Reddy	79.12
Shri S.Sreekanth Reddy	115.61
Shri R.Soundararajan	9.56
Shri K.Prasad	12.47

c. The percentage increase in the median remuneration of employees in the financial year: 5.62%

d. The number of permanent employees on the rolls of Company: 507

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

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

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

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

Aggregate remuneration of key managerial personnel (KMP) in FY 2017-18 ('' crores)	3.24
Revenue ('' crores)	794.61
Remuneration of KMPs (as % of revenue)	0.41
Profit before Tax (PBT) ('' crores)	76.09
Remuneration of KMP (as % of PBT)	4.26

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

Particulars	March 31, 2018	March 31, 2017	% Change
Market capitalization (in Crores)	1,886.02	1,622.72	16.23
Price Earnings Ratio	38.19	113.96	66.49

h. Percentage increase or decrease in the market quotations of the shares of the company in comparison to the issue price at which the company came out with its last public offer:

Particulars	March 31, 2018	June 22, 1992	% Change
Market Price in NSE	923.00	Not listed	-
Market Price in BSE	924.55	45.00	1954.56

i. Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof.

The average annual increase was around 15.42% for personnel other than managerial personnel.

Increase in the managerial remuneration (Whole-time Directors) for the year was 101.21% (including commission). j. Comparison of remuneration of the each key managerial personnel against the performance of the Company:

Description	MD	CS	CFO
Remuneration in FY2017-18 (lakhs)	268.00	27.52	34.65
Revenue (lakhs)	79,461
Remuneration as % of revenue	0.337	0.035	0.044
Profit before Tax (PBT) (lakhs)	7,609
Remuneration (as % of PBT)	3.522	0.362	0.455

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

Commission is the only variable component which depends on profit earned by the comapny during the relevant year and the same is subject to approval of the shareholder/remuneration committee / Board and to other applicable regulatory approvals.

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

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

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

Other Disclosure requirements

A report on corporate governance together with auditors'' certificate thereon has been furnished as part of the Annual Report.

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

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

Deposits from public

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

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

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 have been provided in the Annexure 7, which forms part of the Report.

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

Your company is committed to keep the pollution at its plants within the acceptable norms and as part of this commitment, it has inter-alia, adequate number of bag filters in the plant.

Sub Committees of the Board

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

Compliance Certificate

A certificate as stipulated under Schedule V (E) of the Listing Regulations from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance is attached to this Report along with a report on Corporate Governance.

Material changes and Commitments since the end of the Financial Year

There were no material changes or commitments between the end of the financial year and the date of this report. Cautionary Statement

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

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy

19^th July, 2018 Chairman

---

Mar 31, 2017

Dear Members

The Directors are pleased to present their Thirty Sixth Annual Report together with the audited Stand-alone and Consolidated financial statements of the Company for the year ended 31^st March, 2017.

Financial Results (Rs, in Lakhs)

	Stand	alone	Consol	dated
Particulars	As 31-03-2017	on 31-03-2016	As 31-03-2017	on 31-03-2016
Revenue from Operations (Net)	62,000	70,811	94,159	86,242
Other Income	2,312	2,828	352	408
Total Revenue	64,312	73,639	94,511	86,650
Earnings before Interest, tax, Depreciation and Amortization (EBITDA),	8,249	12,368	11,389	12,720
Finance costs	3,045	2,915	6,208	4,186
Depreciation	2,800	2,346	4,759	3,472
Profit before Tax	2,404	7,107	422	5,062
Total of tax expenses	1,155	2,189	814	635
Profit after Tax	1,249	4,918	-392	4,427
Add : Profit brought forward from the previous year	39,522	36,856	39,032	36,856
Profit available for appropriation	40,771	41,774	38,640	41,283
Appropriations:
Less: Dividend	-	1,304	-	1,304
Less: Tax on Proposed Dividend on Equity Shares	-	266	-	266
Other Comprehensive Income	-4	53	-23	53
Less: Additional Depreciation on account of adjustment as per Companies Act, 2013	-	735	0	735
Add: Other Adjustments	-	-	-1	1
Total Appropriations	-4	2251	-23	2,251
Balance carried to Balance Sheet	40767	39,522	38,616	39,032
Earnings Per Share (Basic and Diluted) (Rs,)	6.98	28.28	-2.19	25.46

Dividend

Your Board has recommended a dividend of Rs, 1.50 (15%) per share on the 20,400,000 equity shares of Rs,10/- each. Transfer to reserves

The entire balance available in the Profit and Loss Account is retained in it as no transfer from it to reserves is contemplated. Share Capital

Pursuant to the approvals accorded by the Shareholders at their Extraordinary General Meeting held on 23.11.2016, your board has allotted 6,11,986 equity shares of Rs, 10/- each at a premium of Rs, 790/- per shares through preferential allotment and 24,00,000 equity shares of Rs,10/- each at a premium of Rs, 710/- per share to the Qualified Institutional Buyers through Qualified Institutional Placement. Your Board is thankful to the investors for their confidence reposed in the company and making the above allotments a success. The funds raised through the above issues are being utilized for their intended purposes namely, expansion of your grinding unit at Bayyavaram, setting up of a coal based power plant at your Mattampally unit and for general corporate purposes.

After the above said allotments, the paid-up share capital of the company now stands at Rs, 20,40,00,000/- divided into 2,04,00,000 equity shares of Rs, 10/- each.

Directors Responsibility Statement

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

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

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

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

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

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

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

Directors and Key Managerial Personnel

The Andhra Pradesh Industrial Development Corporation has appointed Shri P. Nagesh Reddy as a nominee director on your Board in the place of its earlier nominee, Shri K.Rajendra Prasad.

Shri Jens Van Nieuwenborgh has been appointed as an alternate director to Shri John-Eric Fernand Pascal Cesar Bertrand

In accordance with the provisions of Section 152 of the Companies Act, 2013, Shri.S.Sreekanth Reddy and Smt.S.Rachana will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Accordingly, the resolutions seeking the approval of the members for the said re-appointments have been incorporated in the notice of the annual general meeting of the company.

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

Independent Directors Declaration

The company has received the necessary declaration from each Independent Director in accordance with Section 149 (7) of the Companies Act 2013, that he meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act 2013.

Number of meetings of the board

Nine (9) meetings of the board were held during the year 2016-17. Details of these meetings have been given in the corporate governance report, which forms part of the Annual Report.

Policy on directors'' appointment and remuneration and other details

The company''s policy on directors'' appointment and remuneration and other matters provided in Section 178 (3) of the Act have been disclosed in the Corporate Governance Report.

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

Board evaluation

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

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants (FR No.008072S) were appointed as Statutory Auditors of the company by the Shareholders at their 34^th Annual General Meeting held on 23^rd September 2015, to hold office from the conclusion of the said Annual General Meeting till the conclusion of the 39^th Annual General Meeting, subject to ratification of the said appointment by the shareholders at every Annual General Meeting. Accordingly, an appropriate proposal is being placed before the shareholders as part of the Notice of the ensuing Annual General Meeting seeking their required ratification.

Auditors'' Report and Secretarial Auditors'' Report Auditors'' Report

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

Secretarial Auditors'' Report

In accordance with Section 204 (1) of the Companies Act, 2013, the report furnished by the Secretarial Auditors, who carried out the secretarial audit of the company under the said Section is given in the Annexure 2, which forms part of this report. There are no adverse remarks in the said report.

Cost Auditors

M/s.Narasimha Murthy & Co., Cost Auditors of the company have been appointed as Cost Auditors of the company for the year ending 31^st March 2018. A resolution seeking member''s ratification of the remuneration payable to the Cost Auditors has been included in the notice of the AGM. The reports submitted by the Cost Auditors will be filed with the appropriate authorities within the prescribed time.

Particulars of loans, guarantees and investments

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

Transactions with related parties

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

All related party transactions entered into during the financial year were on arms length basis and in the ordinary course of business. There were no materially significant related party transactions entered into by the company with the promoters, key management personnel or other designated persons that may have potential conflict with the interests of the company at large. All related party transactions had prior approval of the Audit Committee and were later ratified by the Board.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the company along with the initiative taken by your company are set out in Annexure-4 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the company, http://www.sagarcements.in/csr.html.

Extract of Annual Return

As provided under Section 92 (3) of the Act, an extract of annual return is given in Annexure-5 in the prescribed Form MGT-

9, which forms part of this report.

Particulars of Employees

The information required under Section 197 of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules are given in the Annexure-6, which forms part of this report.

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year: (Rs, in Lakhs)

Particulars	Ratio to Median Remuneration
Non-Executive Directors *
Executive Directors
Shri S.Veera Reddy	31.49
Dr.S.Anand Reddy	31.49
Shri S.Sreekanth Reddy	23.74

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

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

Director, Chief Executive Officer, Chief Financial Officer and Company Secretary	% increase in remuneration in the financial year
Shri O.Swaminatha Reddy	These directors were not paid any remuneration, other than sitting fee, in which there was no increase during the financial year
Shri K.Thanu Pillai
Shri K.Rajendra Prasad (APIDC Nominee)
Shri John-Eric Fernand Pascal Cesar Bertrand
Shri V.H.Ramakrishnan
Mrs.S.Rachana
Shri S.Veera Reddy	-53.28
Dr.S.Anand Reddy	-44.66
Shri S.Sreekanth Reddy	-54.07
Shri R.Soundararajan	15.45
Shri K.Prasad	22.95

c. The percentage increase in the median remuneration of employees in the financial year: 4.08%

d. The number of permanent employees on the rolls of Company: 479

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

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

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

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

Aggregate remuneration of key managerial personnel (KMP) in FY17 (Rs, crores)	1.82
Revenue (Rs, crores)	643.12
Remuneration of KMPs (as % of revenue)	0.28
Profit before Tax (PBT) (Rs, crores)	24.04
Remuneration of KMP (as % of PBT)	7.57

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

Particulars	March 31, 2017	March 31, 2016	% Change
Market capitalization (Rs, in Crores)	1,622.72	689.43	135.37
Price Earning Ratio	115.79	13.85	735.56

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

Particulars	March 31, 2017	June 22, 1992	% Change
Market Price in NSE	795.45	Not listed	-
Market Price in BSE	795.05	45.00	1,666.78

i. Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof.

The average annual increase was around 12% for personnel other than managerial personnel.

Increase in the managerial remuneration for the year was -50.72 %.

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

Description	MD	CS	CFO
Remuneration in FY17 (lakhs)	126.15	25.12	30.81
Revenue (lakhs)	64,312
Remuneration as % of revenue	0.196	0.039	0.048
Profit before Tax (PBT) (lakhs)	2,404
Remuneration (as % of PBT)	5.248	1.045	1.281

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

Commission is the only variable component which depends on profit earned during the relevant year and is subject to approval of the remuneration committee / Board.

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

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

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

Disclosure requirements

A report on corporate governance together with auditors'' certificate thereon has been furnished as part of the Annual Report.

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

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

Deposits from public

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

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

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 have been provided in the Annexure 7, which forms part of the Report.

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has inter-alia, adequate number of bag filters in the plant.

Sub Committees of the Board

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

Compliance Certificate

A certificate as stipulated under Schedule V(E) of the Listing Regulations from the Auditors of the Company regarding compliance with the conditions of Corporate Governance is attached to this Report along with a report on Corporate Governance.

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy

27^th July 2017 Chairman

---

Mar 31, 2015

Dear Members

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

Financial Results Rs. in Lakhs

As-on

Partlculars 31-03-2015 31-03-2014

Revenue from Operations (Net) 57557.47 48893.83

Other Income 36626.48 1781.62

Total Revenue 94183.95 50675.45

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

Finance costs 2308.23 2954.74

Depreciation 2150.47 2693.40

Profit before Tax 37829.98 -3735.20

Total of tax expenses 8141.70 1177.09

Less: Expenditure towards Corporate Social Responsibility 23.11 0.00

Profit after Tax 29665.17 - 2558.11

Add : Profit brought forward from the previous year 8211.30 10769.40

Profit available for appropriation 37876.47 8211.29

Appropriations:

Less: Dividend 1304.10 0.00

Less: Tax on Proposed Dividend on Equity Shares 262.37 0.00

Less: Transfer to General Reserves 0.00 0.00

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

Total Appropriations 1618.44 0.00

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

Dividend

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

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

Transfer to reserves

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

Management Discussion Analysis

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

Company's performance

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

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

Particulars 2014-15 2013-14

Cement Production in MTs 1551598 1419943

Cement Sales in MTs 1550076 1419857

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

Total Revenue - Rs. In lakhs 94184 50675

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

Future outlook

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

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

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

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

Opportunities and threats:

Constrains on inputs:

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

Stagnant demand

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

Impact of entry of global players:

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

Outlook

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

Risk Management System:

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

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

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

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

Internal Control System and its adequacy:

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

Joint Venture Company

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

Human resource development and Industrial Relations

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

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

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

Sexual Harassment

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

Awards and Recognitions

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

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

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

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

Subsidiaries, Joint Ventures or Associate Companies

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

Directors Responsibility Statement

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

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

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

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

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

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

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

Directors and Key Managerial Personnel

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

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

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

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

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

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

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

Number of meetings of the board

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

Policy on directors' appointment and remuneration and other details

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

Board evaluation

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

Auditors

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

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

Auditors' Report and Secretarial Auditors' Report

Auditors' Report

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

Secretarial Auditors' Report

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

Particulars of loans, guarantees and investments

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

Transactions with related parties

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

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

Corporate Social Responsibility

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

Extract of Annual Return

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

Particulars of Employees

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

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

Particulars Ratio to Median Remuneration

Non-Executive Directors *

Executive Directors

Shri S.Veera Reddy 33.95

Dr.S.Anand Reddy 23.77

Shri S.Sreekanth Reddy 17.83

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

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

Shri O.Swaminatha Reddy These directors were not paid any

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

Shri John-Eric Fernand Pascal Cesar Bertrand

Shri V.H.Ramakrishnan

Mrs.S.Rachana

Shri S.Veera Reddy

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

Shri S.Sreekanth Reddy

Shri R.Soundararajan 12.47

Shri K.Prasad 20.82

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

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

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

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

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

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



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

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

Remuneration of KMPs (as % of revenue) 0.17

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

Remuneration of KMP (as % of PBT) 0.43

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

Particulars March 31, March 31, 2015 2014 % Change

Market capitalization (in Crores) 534.94 286.90 88.74

Price Earning Ratio 1.80 -11.02 -

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

Particulars March 31, June 22, 2015 1992 % Change

Market Price in NSE 307.65 Not listed Not listed

Market Price in BSE 295.50 45.00 556%

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

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

Increase in the managerial remuneration for the year was Nil.

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

MD CS CFO

Remuneration in FY2014-15 (lakhs) 120.00 20.33 23.34

Revenue (lakhs) 94183.95

Remuneration as % of revenue 0.127 0.022 0.025

Profit before Tax (PBT) (lakhs) 37829.98

Remuneration 0.317 0.054 0.062 (as % of PBT)

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

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

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

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

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

Disclosure requirements

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

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

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

Deposits from public

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

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

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

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

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

Sub Committees of the Board

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

Compliance Certificate

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

Cautionary Statement

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

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy 29th July 2015 Chairman

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Mar 31, 2014

Dear Members

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

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

Revenue from Operations (Net) 48893.83 55851.55

Other Income 1781.62 2602.95

Total Revenue 50675.45 58454.50

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

Finance costs 2954.74 3055.38

Depreciation 2693.40 2674.39

Profit before Tax -3735.20 1092.38

Total of tax expenses 1177.09 214.40

Profit after Tax -2558.11 877.98

Add : Profit brought forward from the previous year 10769.40 10094.85

Profit available for appropriation 8211.29 10972.83 Appropriations:

General Reserves 0.00 0.00

Proposed Dividend on Equity Shares 0.00 173.88

Tax on Dividend proposed 0.00 29.55

Total Appropriations 0.00 203.43

Balance carried to Balance Sheet 8211.29 10769.40

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

Dividend

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

Transfer to reserves

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

Company’s performance

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

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

Particulars 2013-14 2012-13

Cement Production in MTs 1419943 1587419

Cement Sales in MTs 1419857 1585003

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

Total Revenue - Rs. In lakhs 50675 58454

Future outlook

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

Joint Venture Company

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

Corporate Governance Report and Management Discussion and Analysis Report

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

Internal Control Systems

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

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

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

Industrial Relations

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

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

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

Pollution Control

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

Directors

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

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

Sub Committees of the Board

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

Auditors

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

Directors’ Responsibility Statement

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

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

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

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

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

Public Deposits

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

Compliance Certificate

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

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy 13th August 2014 Chairman

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Mar 31, 2012

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

Financial Results

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

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

Rs. in Millions

Discribtion 2011-12 2010-11

Net Sales 6061 4250

Other Income 7 89

Total Income 6068 4339

Profit before Depreciation, Financial Charges and Tax 1247 814

Less: Depreciation 259 276

Financial Charges 342 601 311 587

Profit before Tax 646 227

Less: Net Provision for Tax 205 53

Profit After Tax 441 174

Add : Profit brought forward 829 711

Profit available for appropriation 1270 885 Appropriations proposed

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

Dividend Tax 9 4

Transfer to General Reserve 200 17

Carried to Balance Sheet 1009 829

Basic Earnings Per Share 25.37 11.61

Diluted Earnings Per Share 25.37 10.01

Dividend

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

Transfer to reserves

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

Company's performance

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

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

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

Clinker 1348080 1510135

Cement 1625336 1490662

Sales (MT) Clinker 0 30840

Cement 1631392 1470049

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

Corporate Governance

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

Internal Control Systems

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

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

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

Industrial Relations

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

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

Pollution Control

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

Directors

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

Sub Committees of the Board

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

Auditors

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

Directors' Responsibility Statement

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

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

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

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

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

Public Deposits

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

Compliance Certificate

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

Management Discussion and Analysis Report

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

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O. Swaminatha Reddy

18th July 2012 Chairman

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Mar 31, 2011

Dear Members

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

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

Financial Results

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

Rs. In lakhs

Description 2010-11 2009-10

Net Sales 47685 47957

Other Income 1930 679

Total Income 49615 48636

Profit before Depreciation, Financial Charges and Tax 8139 8646

Less: Depreciation 2760 2769

Financial Charges 3114 5874 2895 5664

Profit before Tax 2265 2982

Less: Net Provision for Tax 524 1070

Profit After Tax 1741 1912

Add: Profit brought forward 7115 6127

Profit available for appropriation 8856 8039

Appropriations proposed

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

Dividend Tax 45 49

Transfer to General Reserves 174 500

Carried to Balance Sheet 8289 7115

Total 8856 8039

Basic Earning Per Share 11.61 12.75

Diluted Earning Per Share 10.01 12.75

Dividend

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

Operations review

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

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

Description 2010-11 2009-10

Production ( in MT)

Clinker 1510135 1430000

Cement 1490662 1120350

Sales (MT)

Clinker 30840 350133

Cement 1469172 1127739

Cement - Second sales 0 204191

Self consumption 877 2897

Total Cement Sales 1470049 1334827

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

Share Capital

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

Future Outlook

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

Subsidiary Company

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

Vicat Sagar Cement

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

Corporate Governance

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

Internal Control Systems

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

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

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

Industrial Relations

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

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

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

Pollution Control

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

Directors

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

Audit Committee

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

Shri CSwaminatha Reddy Chairman

Shri K.Thanu Pillai Member

Shri C. Suneel Babu Member

Shri P.Rajewara Rao Member

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

Remuneration Committee

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

Shri K.Thanu Pillai Chairman

Shri CSwaminatha Reddy Member

Shri P.Rajeswara Rao Member

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

Investment Committee

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

Shri CSwaminatha Reddy Chairman

Shri S.Veera Reddy Member

Shri K.Thanu Pillai Member

Auditors

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

Directors' Responsibility Statement

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

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

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

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

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

Public Deposits

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

Compliance Certificate

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

Listing

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

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

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

Management Discussion and Analysis Report

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

Acknowledgement

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

For and on behalf of the Board of Directors

Hyderabad O.Swaminatha Reddy

12th July 2011 Chairman

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Mar 31, 2010

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

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

Financial Results

Rs. in lakhs

Description 2009-10 2008-09

Net Sales 479S7 306S4

Other income 679 84

Total Income 48636 30738

Profit before Depreciation,

Financial Charges and Tax 8646 5986

Less : Depreciation 2769 1872

Financial Charges 2895 5664 1590 3462

Profit before Tax 2982 2524

Less : Net Provision for Tax 1070 878

Profit After Tax 1912 1646

Add : Profit brought forward 6127 5327

Profit available for

appropriation 8039 6973

Appropriations proposed

Dividend @ 25 % (Rs.2.50 per

equity share) 375 385

Dividend Tax 49 61

Transfer to General Reserve 500 400

Balance carried to Balance Sheet 7115 6127

Total 8039 6973

Basic and Diluted Earning Per Share 12.75 11.48

Dividend

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

Operations review

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

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

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

Particulars Cliker (MTs) Cement (MTs)

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

Production 1430000 737710 1120351 431250

Sales 350133 307152 1130636 415835

Sale of Traded Cement - - 204191 225650

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

Share Capital

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

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

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

Subsidiary Company

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

Joint Venture

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

Corporate Governance

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

Internal Control Systems

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

Insurance

All the properties of the Company have been adequately insured.

Particulars of Employees

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

Industrial Relations

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

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

Pollution Control

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

Directors

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

Sub Committees of the Board

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

Auditors

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

Directors Responsibility Statement

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

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

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

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

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

Public Deposits

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

Management Discussion and Analysis Report

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

Acknowledgement

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

For and on behalf of

the Board of Directors



O.Swaminatha Reddy

Chairman

Hyderabad

31 st July, 2010