annual report samruddhi cement10

Samruddhi Cement

Mr. G. D. Birla and Mr. Aditya Birla, our founding fathers.

We live by their values.

Integrity, Commitment, Passion, Seamlessness and Speed

1

BOARD OF DIRECTORS

Mr. Kumar Mangalam Birla, Chairman

Mr. R. C. Bhargava

Mr. G. M. Dave

Mr. N. J. Jhaveri

Mr. S. B. Mathur

Mr. Adesh Gupta

Mr. O. P. Puranmalka

Mr. Ashok Malu

Executives

Mr. R. K. Shah Group Executive President &

CMO (Mfg. & Projects)

Mr. S. N. Jajoo Chief Marketing Officer

Mr. K.C. Birla Sr. Executive President

(Finance)

Unit Heads

Mr. R. M. Gupta Vikram Cement Works

Mr. D. R. Dhariwal Birla White

Mr. S. K. Gupta Rajashree Cement Works

Mr. S. Natarajan Reddipalayam Cement Works

Mr. M. M. Tiwari Rawan Cement Works

Mr. B. B. Joshi Aditya Cement Works

Mr. V. K. Jain Kotputli Cement Works

Auditors

M/s. G. P. Kapadia & Co., Chartered Accountants,

Mumbai

M/s. Deloitte Haskins & Sells, Chartered Accountants,

Mumbai

Solicitors

M/s. Amarchand & Mangaldas & Suresh A. Shroff & Co.,

Mumbai

Company Secretary

Mr. Kamal Rathi

SAMRUDDHI CEMENT LIMITED

2

REGISTERED OFFICE: Birladham, Kharach, Kosamba 394 120, Dist. Bharuch (Gujarat)

Tel. : (02646) 270001-05 Fax : (02646) 270010

www.adityabirla.com/samruddhicement.htm

REGISTRAR & TRANSFER AGENT: Sharepro Services (India) Private Limited, 13AB, Samhita Warehousing Complex, 2nd

Floor, Sakinaka Telephone Exchange Lane, Off. Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai 400 072

Tel. : (022) 6772 0300 / 6772 0400 Fax : (022) 2859 1568 / 2850 8927

email : [email protected]

Notice ................................................................ 3

Management Discussion and Analysis .................. 11

Report on Corporate Governance ....................... 15

Sustainability Report/Inclusive Growth .................. 22

Environment Report ............................................. 25

Directors’ Report ................................................. 26

Auditors’ Report .................................................. 34

Balance Sheet .................................................... 38

Profit and Loss Account ....................................... 39

Schedules ........................................................... 40

Cash Flow Statement .......................................... 62

Statement Relating to Subsidiary Company ........... 64

Consolidated Financial Statements ....................... 65

Subsidiary Company’s Reports and Accounts ....... 83

CONTENTS

3

NOTICE

NOTICE is hereby given that the First Annual

General Meeting of the shareholders of Samruddhi

Cement Limited will be held at the Registered Office

of the Company at Birladham, Kharach, Kosamba

394 120, Dist. Bharuch (Gujarat) on Saturday, the

24th

day of July, 2010 at 12.30 P.M. to transact,

with or without modifications, as may be permissible,

the following business:

ORDINARY BUSINESS:

1. Adoption of Accounts

To receive, consider and adopt the Audited

Balance Sheet as at 31st

March, 2010 and the

Profit and Loss Account for the period ended

31st

March, 2010 and the Reports of the

Directors and the Auditors thereon.

2. Declaration of Dividend

To declare dividend on Equity Shares for the

period ended 31st

March, 2010.

3. Re-appointment of Mr. Adesh Gupta

To appoint a Director in place of Mr. Adesh

Gupta, who retires from office by rotation, and

being eligible, offers himself for re-appointment.

4. Appointment of Statutory Auditors

To consider and, if thought fit, to pass the

following resolution as an Ordinary Resolution

relating to the appointment of Auditors of the

Company:

“RESOLVED that pursuant to the provisions of

Section 224 and other applicable provisions, if

any, of the Companies Act, 1956, M/s. G.P.

Kapadia & Co., Chartered Accountants,

Mumbai (Registration No. 104768W) and

M/s. Deloitte Haskins & Sells, Chartered

Accountants, Mumbai (Registration No.

117366W), be and are hereby re-appointed

as the Joint Statutory Auditors of the Company

to hold office as such from the conclusion of

this Annual General Meeting until the

conclusion of the next Annual General Meeting

of the Company, at such remuneration to each

of them, plus service tax as applicable and

reimbursement of actual out of pocket expenses

as may be incurred in the performance of their

duties, as the Audit Committee / Board of

Directors may fix in this behalf.”

SPECIAL BUSINESS:

5. Appointment of Mr. O.P. Puranmalka as a

Whole-Time Director for the period 16th

February, 2010 to 31st

March, 2010.

To consider, and if thought fit, to pass the

following Resolution as a Special

Resolution:

“RESOLVED THAT upon effectiveness of the

Scheme of Arrangement between Grasim

Industries Limited (“Grasim”) and the Company

(“the Scheme”), whereby the Cement Business

of Grasim has been transferred to the Company

pursuant to the Scheme under Sections 391 to

394 of the Companies Act, 1956, (“the Act”)

consent of the Company be and is hereby

granted to the appointment of Mr. O.P.

Puranmalka, a Director of the Company, who

is deemed to be treated as Whole Time Director

of the Company with effect from 16th

February,

2010 to 31st

March, 2010 under the provisions

of Sections 198, 269, 309, 310 and 314 read

with Schedule XIII and other applicable

provisions, if any, of the Act (including any

statutory modification or re-enactment thereof,

for the time being in force), the relevant

provisions of the Articles of Association of the

Company and all applicable guidelines issued

by the Central Government from time to time,

on the following terms and conditions including

remuneration, viz.:

A. Period: 16th

February, 2010 to

31st

March, 2010.

B. Remuneration:

1. Basic Salary: Rs.9,41,900/- (Rupees

Nine lacs forty one thousand nine

hundred only) per month.

2. Special Allowance: Rs. 7,50,000/-

(Rupees Seven lacs fifty thousand only)

per month. This allowance however will

not be taken into account for

calculation of retiral benefits such as

Provident Fund, Gratuity,

Superannuation, Leave Encashment,

etc.

3. Variable Pay: Performance Bonus

Linked to the achievement of targets

as may be decided by the Board

subject to a maximum of

Rs.2,25,00,000/- (Rupees Two crores

twenty five lacs only) per annum.

4

4. Long-term Incentive Compensation

(LTIC) / Employee Stock Option: As

per the Plan applicable to the Senior

Executives of the Company/Aditya Birla

Group including that of any parent/

subsidiary company.

C. Perquisites

i. Housing: Free furnished

accommodation or HRA @ 50% of

Basic Salary in lieu of Company

provided accommodation.

ii. Reimbursement of expenses on actual

pertaining to electricity, gas, water,

telephone and other reasonable

expenses for the upkeep and

maintenance in respect of such

accommodation.

iii. Medical Expenses: Reimbursement of

all expenses incurred in India for self

and family at actual (including

domiciliary and medical expenses and

insurance premium for medical and

hospitalisation policy, as applicable).

iv. Leave Travel Expenses: Leave Travel

Expenses for self and family in

accordance with the Rules of the

Company.

v. Club Fees: Fees of one Corporate Club

in India (including admission and

membership fee).

vi. Personal Accident Insurance Premium:

For self and family as per the Rules of

the Company.

vii. (a) Company’s contribution towards

Provident Fund and

Superannuation Fund, on Basic

Salary as per the Rules of the

Company.

(b) Gratuity calculated on Basic Salary

as per the Rules of the Company.

viii. Car: Company maintained two Cars,

as per the Rules of the Company.

ix. Leave and encashment of leave: As

per the Rules of the Company.

x. Reimbursement of entertainment,

travelling and all other expenses

incurred for the business of the

Company as per the Rules of the

Company. Travelling expenses of

spouse accompanying the Whole-time

Director on any official overseas or

inland trip will be governed as per the

Rules of the Company.

xi. Other Allowances / benefits /

perquisites : Any other allowances,

benefits and perquisites as per the Rules

applicable to the Senior Executives of

the Company and / or which may

become applicable in the future and /

or any other allowance, perquisites as

the Board may from time to time

decide.

xii. Any other one time / periodic

retirement allowances / benefits as may

be decided by the Board at the time

of retirement.

xiii. Subject as aforesaid, the Whole-time

Director shall be governed by such

other Rules as are applicable to the

Senior Executives of the Company from

time to time.

The aggregate of the remuneration and

perquisites as aforesaid shall not exceed

the limits prescribed from time to time under

Sections 198, 309, 310 and all other

applicable provisions of the Act, read with

Schedule XIII to the said Act or any statutory

modifications or re-enactment thereof for

the time being be in force, or otherwise as

may be permissible at law.

For the purposes of Gratuity, Provident

Fund, Superannuation and other like

benefits, if any, the service of Mr. O. P.

Puranmalka, Whole-time Director will be

considered as continuous service with the

Company from the date of his joining the

Aditya Birla Group.

So long as Mr. Puranmalka functioned as

the Whole Time Director, he was not paid

any fees for attending the meetings of the

Board of Directors of the Company or any

Committee(s) thereof. Though, considering

the provisions of Section 314(1) of the Act,

Mr. Puranmalka would not be holding any

office or place of profit by his being a

5

mere director of the Company ’s

subsidiary(s)/ Joint Venture(s), approval be

and is hereby also granted by way of

abundant caution for him to accept the

sitting fees / commission payable to other

directors for attending meetings of Board(s)

of Directors/ Committee(s) of subsidiary(s)/

Joint Venture(s) of the Company or

companies promoted by the Aditya Birla

Group.”

“RESOLVED FURTHER THAT the

remuneration payable/paid to Mr.

Puranmalka as aforesaid shall be subject

to the applicable provisions of Schedule

XIII of the Act.”

“RESOLVED FURTHER THAT all actions

taken so far by the Company in or in

relation to the aforesaid matters be and

are hereby ratified and approved.”

“RESOLVED FURTHER THAT the Board

be and is hereby authorized to do all such

acts, deeds, matters and things as may be

deemed necessary to give effect to the

above resolution.”

6. Appointment of Mr. O.P. Puranmalka as a

Director

To appoint Mr. O.P. Puranmalka (who was

appointed as an Additional Director by the

Board of Directors pursuant to the provisions

of Company’s Articles of Association and who

holds office under the provisions of Company’s

Articles of Association and Section 260 of the

Companies Act, 1956 (“the Act”) only up to

the date of this meeting, and in respect of

whom the Company has received a notice in

writing along with a deposit of Rs.500 under

Section 257 of the Act, from a member

signifying his intention to propose Mr. O.P.

Puranmalka as a candidate for the office of

Director) as a Director of the Company and to

consider and, if thought fit, to pass the following

resolution as an Ordinary Resolution:


Section 257 and all other applicable provisions,

if any, of the Companies Act, 1956, Mr. O.P.

Puranmalka be and is hereby appointed as a

Director of the Company liable to retire by

rotation.”

7. Appointment of Mr. Kumar Mangalam Birla

as a Director

To appoint Mr. Kumar Mangalam Birla (who

was appointed as an Additional Director by the








writing along with a deposit of Rs.500 under


signifying his intention to propose Mr. Kumar

Mangalam Birla as a candidate for the office

of Director) as a Director of the Company and

to consider and, if thought fit, to pass the

following resolution as an Ordinary Resolution:



if any, of the Companies Act, 1956, Mr. Kumar

Mangalam Birla be and is hereby appointed

as a Director of the Company liable to retire

by rotation.”

8. Appointment of Mr. R.C. Bhargava as a

Director

To appoint Mr. R.C. Bhargava (who was

appointed as an Additional Director by the



holds office under the provisions of the

Company’s Articles of Association and Section

260 of the Companies Act, 1956 (“the Act”)

only up to the date of this meeting, and in

respect of whom the Company has received a

notice in writing along with a deposit of Rs.

500 under Section 257 of the Act, from a

member signifying his intention to propose Mr.

R.C. Bhargava as a candidate for the office of

Director) as a Director of the Company and to

consider and, if thought fit, to pass the following




if any, of the Companies Act, 1956, Mr. R.C.

Bhargava be and is hereby appointed as a


rotation.”

6

9. Appointment of Mr. G.M. Dave as a

Director

To appoint Mr. G.M. Dave (who was appointed

as an Additional Director by the Board of

Directors pursuant to the provisions of

Company’s Articles of Association and who






writing along with a deposit of Rs. 500 under


signifying his intention to propose Mr. G.M.

Dave as a candidate for the office of Director)

as a Director of the Company and to consider

and, if thought fit, to pass the following




if any, of the Companies Act, 1956,

Mr. G.M. Dave be and is hereby appointed as

a Director of the Company liable to retire by

rotation.”

10. Appointment of Mr. N.J. Jhaveri as a

Director

To appoint Mr. N.J. Jhaveri (who was appointed











signifying his intention to propose Mr. N.J.

Jhaveri as a candidate for the office of Director)






if any, of the Companies Act, 1956, Mr. N.J.

Jhaveri be and is hereby appointed as a Director

of the Company liable to retire by rotation.”

11. Appointment of Mr. S.B. Mathur as a

Director

To appoint Mr. S.B. Mathur (who was appointed











signifying his intention to propose Mr. S.B.

Mathur as a candidate for the office of Director)






if any, of the Companies Act, 1956, Mr. S.B.

Mathur be and is hereby appointed as a


rotation.”

By Order of the Board

Kamal Rathi

Company Secretary

Place: Mumbai

Date: 21st

June, 2010

7

NOTES FOR MEMBERS’ ATTENTION AND

INFORMATION FOR MEMBERS’:

1) A MEMBER ENTITLED TO ATTEND AND VOTE

AT THE MEETING IS ENTITLED TO APPOINT

A PROXY TO ATTEND AND VOTE INSTEAD

OF HIMSELF / HERSELF AND THE PROXY

NEED NOT BE A MEMBER OF THE COMPANY.

THE INSTRUMENT APPOINTING A PROXY

SHOULD, HOWEVER, BE DEPOSITED AT THE

REGISTERED OFFICE OF THE COMPANY NOT

LESS THAN FORTY-EIGHT HOURS BEFORE

THE COMMENCEMENT OF THE MEETING.

2) An Explanatory Statement pursuant to Section

173 (2) of the Companies Act, 1956, in respect

of items 5 to 11 of the Notice as set out above,

is annexed hereto.

3) The Register of Members and Share Transfer

Books of the Company will remain closed from

16th

July, 2010 to 24th

July, 2010 (both days

inclusive) for the purpose of payment of

dividend, if approved by the Members.

4) The dividend, as recommended by the Board,

if approved at the Annual General Meeting,

will be paid on or after 24th

July, 2010 to

those Members or their mandates whose names

are registered on the Company’s Register of

Members:

a) as Beneficial Owners as at the end of

business on 15th

July, 2010 as per the lists

to be furnished by National Securities

Depository Limited (NSDL) and Central

Depository Services (India) Limited (CDSL)

in respect of the shares held in electronic

form, and

b) as Members in the Register of Members of

the Company after giving effect to all valid

share transfers in physical form which are

lodged with the Company or its Registrar

& Transfer Agents (RTA) viz. Sharepro

Services (India) Private Limited having their

address at 13AB, Samhita Warehousing

Complex, 2nd Floor, Sakinaka Telephone

Exchange Lane, Off Andheri Kurla Road,

Sakinaka, Andheri (East),

Mumbai - 400 072 on or before 15th

July,

2010.

5) a) Shareholders are requested to notify any

change of address:

(i) to their Depository Participants (DPs)

in respect of the shares held in demat

form, and

(ii) to the Company’s Registrar & Transfer

Agents at below mentioned address,

in respect of the shares held in physical

form together with a proof of address

viz., Electricity Bill, Telephone Bill,

Ration Card, Voter ID Card, Passport,

etc.:

Share pro Services (India) Private

Limited

Unit: Samruddhi Cement Limited

13 AB, Samhita Warehousing Complex

2nd

Floor, Sakinaka Telephone

Exchange Lane, Off Andheri Kurla

Road, Sakinaka,

Mumbai – 400 072

b) In case the mailing address mentioned on

this Annual Report is without the PINCODE,

shareholders are requested to kindly inform

their PINCODE immediately to their DP or

the Company’s Registrar and Transfer

Agents as the case may be, as mentioned

above.

6) Non-Resident Indian Shareholders are requested

to inform the Registrar and Transfer Agents of

the Company or their concerned DP, as the

case may be, immediately:-

a) the change in the residential status on

return to India for permanent settlement,

b) the particulars of the NRE Account with a

bank in India, if not furnished earlier.

7) Shareholders are requested to correspond in

connection with the shares held by them by

addressing letters directly to the Registrar and

Transfer Agents of the Company and not to the

Company, quoting reference of their folio

numbers or their Client ID number with DP ID

number, as the case may be.

8) Shareholders who are holding shares in identical

order of names in more than one folio are

8

requested to send to the Registrar and Transfer

Agents of the Company the details of such

folios together with the original Share

Certificates for consolidation of their holdings

in one folio. The Share Certificates will be

returned to the Shareholders after making

requisite changes thereon.

9) As per the provisions of the amended

Companies Act, 1956, facility for making

nominations is now available to INDIVIDUALS

holding shares in the Company. Shareholders

holding shares in physical form may obtain the

Nomination Form – 2B prescribed by the

Government from the Registar and Transfer

Agents of the Company. Shareholders holding

shares in demat form are required to approach

their respective DPs for the nomination.

10) a) Shareholders are advised to avail of the

facility for receipt of future dividends

through Electronic Clearing Service (ECS).

Shareholders holding shares in

dematerialised mode are requested to

contact their respective DPs for availing ECS

facility. Shareholders holding shares in

physical form are requested to collect the

ECS form from the Registrar and Transfer

Agents and the same duly filled up and

signed along with a Xerox copy of a

cancelled cheque may be sent to the

Registrar and Transfer Agents of the

Company.

b) To avoid the incidence of fraudulent

encashment of the dividend warrants,

Shareholders are requested to intimate the

Company under the signature of the Sole/

First Joint holder, the following information,

so that the Bank Account Number and

Name and address of the Bank can be

printed on the dividend warrants:-

1) Name of Sole/First Joint holder and

Folio No.

2) Particulars of Bank Account, viz.

i) Name of the Bank

ii) Name of Branch

iii) Complete address of the Bank with

Pin code Number

iv) Account Type, whether Savings (SB)

or Current Account (CA)

v) Bank Account Number allotted by

the Bank

11) Shareholders who hold shares in the

dematerialised form and desire a change /

correction in the bank account details, should

intimate the same to their concerned DP and

not to the Registrar and Transfer Agents of the

Company. Shareholders are also requested to

give the MICR Code of their bank to their DPs.

The Company will not entertain any direct

request from such shareholders for change of

address, transposition of names, deletion of

name of deceased joint holder and change in

the bank account details. The said details will

be considered as will be furnished by the DPs

to the Company.

12) Shareholders desirous of obtaining any

information / clarification on the accounts and

operations of the Company are requested to

send in written queries to the Company, atleast

one week before the date of the meeting.

Replies will be provided in respect of such

written queries received, only at the meeting.

13) Pursuant to the requirement of the Listing

Agreement of the Stock Exchanges on

Corporate Governance, relating to appointment

of the Directors / reappointment of the retiring

Directors, a statement containing the required

details of the concerned Directors forms part

of the Report on Corporate Governance.

14) In terms of circulars issued by Securities and

Exchange Board of India (SEBI), it is now

mandatory to furnish a copy of PAN card to

the Company or its RTA in the following cases

viz. Transfer of shares, Deletion of name,

Transmission of shares and Transposition of

shares. Shareholders are requested to furnish

copy of PAN card for all the abovementioned

transactions.

9

ANNEXURE TO NOTICE

EXPLANATORY STATEMENT UNDER SECTION

173(2) OF THE COMPANIES ACT, 1956

ITEM NOS. 5 and 6

Mr. O. P. Puranmalka was appointed as an

Additional Director of the Company with effect from

16th

February, 2010 by the Board of Directors of

the Company pursuant to the provisions contained

in the Articles of Association of the Company and

Section 260 of the Companies Act, 1956 (“the

Act”).

Upon the effectiveness of the Scheme of

Arrangement between Grasim Industries Limited

(“Grasim”) and the Company (“the Scheme”),

whereby the Cement Business of Grasim has been

transferred to the Company pursuant to the Scheme

under Sections 391 to 394 of the Act, the

appointment of Mr. O. P. Puranmalka, as a Director

of the Company, shall be deemed to be treated as

Whole Time Director of the Company with effect

from 16th


March, 2010 under

the provisions of Sections 198, 269, 309, 310 and

314 read with Schedule XIII and other applicable

provisions, if any, of the Act as he was an employee

of the Company during that period. He ceased to

be the Whole Time Director w.e.f. 1st

April, 2010

and had become the Additional Director of the

Company with effect from the said date. According

to the provisions of the Articles of Association and

Section 260 of the Act, he holds office up to the

date of this Annual General Meeting. As required

under Section 257 of the Act, notice has been

received from a member along with a deposit of

Rs.500 signifying his intention to propose Mr. O. P.

Puranmalka as a candidate for the office of Director.

A Chartered Accountant by qualification, Mr.

Puranmalka has over three decades of rich and

varied experience in various roles. He is an integral

part of the Group’s Cement Leadership team, taking

responsibility for identifying locations for new plants,

limestone reserves and other opportunities for

establishing growth options through mergers and

acquisitions. Highly respected in the Cement

industry, Mr. Puranmalka is also known for his

entrepreneurial capabilities. His presence on the

Board is a great advantage and the Board feels it

is beneficial for the Company to continue to avail

of his services as a Director of the Company.

Your Directors recommend his continuance as a

Director. Mr. O. P. Puranmalka is interested in the

said Resolution.

ITEM NO. 7

Mr. Kumar Mangalam Birla was appointed as an

Additional Director of the Company with effect from

18th

May, 2010 by the Board of Directors of the

Company pursuant to the provisions contained in

the Articles of Association of the Company and

Section 260 of the Companies Act, 1956 (‘the

Act”). According to the provisions of Articles of

Association of the Company and Section 260 of

the Act, he holds office up to the date of this

Annual General Meeting. As required under Section

257 of the Act, notice has been received from a

member along with a deposit of Rs.500 signifying

his intention to propose Mr. Kumar Mangalam Birla

as a candidate for the office of Director.

Mr. Kumar Mangalam Birla is the Chairman of the

Aditya Birla Group, a global conglomerate with

operations spanning 25 countries. An iconic figure,

Mr. Birla holds several key positions on various

regulatory and professional Boards. A Chartered

Accountant, Mr. Birla earned his MBA from the

London Business School, where he is also an

Honorary Fellow. With his vast experience as an

Industrialist, his presence on the Board is a great

advantage and the Board feels it is beneficial for

the Company to continue to avail of his services as

a Director of the Company.


Director. Mr. Kumar Mangalam Birla is interested in

the Resolution.

ITEM NO. 8

Mr. R.C. Bhargava was appointed as an Additional

Director of the Company with effect from 18th

May,

2010 by the Board of Directors of the Company

pursuant to the provisions contained in the Articles

of Association of the Company and Section 260 of

the Companies Act, 1956 (“the Act”). According to

the provisions of the Articles of Association and

Section 260 of the Act, he holds office up to the

date of this Annual General Meeting. As required

under Section 257 of the Act, notice has been

received from a member along with a deposit of

Rs.500 signifying his intention to propose Mr. R.C.

Bhargava as a candidate for the office of Director.

Mr. R.C. Bhargava is the Chairman of Maruti Suzuki

India Ltd. He is on the Board of several reputed

companies. With his vast experience in the corporate

field, his presence on the Board is a great advantage

and the Board feels it is beneficial for the Company

to continue to avail of his services as a Director of

the Company.


Director. Mr. R.C. Bhargava is interested in the

Resolution.

10

ITEM NO. 9

Mr. G.M. Dave was appointed as an Additional


May,





the provisions of the Articles of Association of the

Company and Section 260 of the Act, he holds

office up to the date of this Annual General Meeting.

As required under Section 257 of the Act, notice

has been received from a member along with a

deposit of Rs.500 signifying his intention to propose

Mr. G.M. Dave as a candidate for the office of

Director.

Mr. G.M. Dave is a partner of Messrs. Dave &

Girish & Co., Advocates. He is also a director in

several other companies. Considering his vast

experience, his presence on the Board is a great

advantage and the Board feels it is beneficial for

the Company to continue to avail of his services as

a Director of the Company.


Director. Mr. G.M. Dave is interested in the

Resolution.

ITEM NO. 10

Mr. N.J. Jhaveri was appointed as an Additional


May,










deposit of Rs.500 signifying his intention to propose

Mr. N.J. Jhaveri as a candidate for the office of

Director.

Mr. N.J. Jhaveri is M.Sc. in (Economics) from the

London School of Economics. Mr. Jhaveri joined

ICICI in September 1974 and rose to the position

of Jt. Managing Director and retired as Executive

Chairman of ICICI Securities in August 1995, after

a long and meritorious service and is on the Board

of several reputed companies. With his vast

experience in business and industrial circles, his

presence on the Board is a great advantage and

the Board feels it is beneficial for the Company to

continue to avail of his services as a Director of the

Company.


Director. Mr. N.J. Jhaveri is interested in the

Resolution.

ITEM NO. 11

Mr. S.B. Mathur was appointed as an Additional


May,










deposit of Rs. 500 signifying his intention to propose

Mr. S.B. Mathur as a candidate for the office of

Director.

Mr. S.B. Mathur was Chairman of the Life Insurance

Corporation of India (LIC) from August, 2002 to

October, 2004. Post retirement from LIC, Mr. Mathur

was appointed as Administrator of the Specified

Undertaking of the Unit Trust of India (SUUTI). He

is also on the Board of several reputed companies.

Considering his vast experience, his presence on

the Board is a great advantage and the Board feels

it is beneficial for the Company to continue to avail

of his services as a Director of the Company.


Director. Mr. S.B. Mathur is interested in the

Resolution.

The brief resume in relation to the experience,

functional expertise, memberships on other

companies’ Boards and committees in respect of

appointment of the new directors or re-appointment

of a director, as required under clause 49 of the

Listing Agreement is set out in the Report on

corporate governance forming part of the

Annual Report.

By Order of the Board

Kamal Rathi

Company Secretary

Place: Mumbai

Date: 21st

June, 2010

11

OVERVIEW

This is the first year of operation of your Company.

The Cement business of Grasim Industries Ltd.

(Grasim) was demerged and vested into your

Company effective from 1st

October, 2009.Therefore,

the business operations are only for six month during

the current financial year.

During the year, Cement demand saw a double digit

growth of 11%, one of the highest in the decade,

MANAGEMENT DISCUSSION AND ANALYSIS

recording total despatches of around

200 million tons. The growth was supported by

economic recovery, reduction in excise duty,

Government ’s initiatives viz. National Rural

Employment Guarantee and low cost housing.

The demand upturn has been generally broad based,

with all regions recording double digit growth, except

Southern Region which was impacted due to floods

and political unrest in Andhra Pradesh during part

of the year.

Your Company completed its ongoing cement

expansion. The 3.1 million TPA grinding capacity at

Kotputli, Rajasthan became operational during

quarter ended March, 2010. Cement production was

9.85 million tons during the six months ended March,

2010. The sales volumes were 10.03 million tons.

The bunching of new capacities created a downward

pressure in cement prices across the regions during

the quarter ended December, 2009. The decline

was more pronounced in the Southern Region.

Unavailability of railway wagons in various pockets

of the country resulted in under utilisation of capacity.

There was partial recovery in cement prices in the

last quarter due to renewed construction activity and

increase in taxes and energy prices.

White Cement division registered an impressive

performance and achieved 99% capacity utilisation.

The Ready mix concrete division is emerging out of

the sluggishness, with recovery in the real estate

segment.

On the cost front, the business gained from the

global softness in energy prices in the first three

months. It has petered off in the last quarter.

Outlook

Cement demand is expected to remain buoyant with

increased domestic consumption, both in the

BUSINESS PERFORMANCE REVIEW

2009-10*

Unit (from 1st

October 2009 to

31st

March 2010)

Grey Cement

Capacity ** Mn. TPA 25.65

Production Mn. MT 9.85

Sales Volumes $ Mn. MT 10.03

Average Realisation Rs. / MT 3,390

White Cement

Capacity ** TPA 560,000

Production MT 276,416

Sales Volumes $$ MT 273,172

Average Realisation Rs. / MT 8,499

* This being the first financial year of the Company since incorporation, disclosure of previous year figures

is not applicable

** Production quantity is for six months only, whereas the installed capacity given above is for full year

$ Includes captive consumption for RMC

$$ Includes captive consumption for value added products

12

government as well as the private sector. The

government has reiterated its commitment to

infrastructure spending in the budget. The Planning

Commission in its midterm appraisal of the 11th

year

plan has envisaged an expenditure of Rs.20.5 trillion

on infrastructure during the plan period. Additionally,

the broad based economic growth will continue to

drive cement demand from semi urban and rural India

with their rising prosperity levels. With the economy

having recovered from the slow down, revival in

organised real estate and corporate capex are also

expected to add to the buoyancy in demand. Overall,

cement demand is expected

to grow at a robust 10% + for the next five

years.

The surplus supply scenario, however, is expected to

create short term pressure. New capacities

commissioned during FY10 are in various stages of

ramp up while additional capacities continue to be

set up. This might lead to a surplus scenario after

peak demand in Q1FY11, which may last for 6 to 8

quarters.

On the cost front, higher coal prices are likely to

exert pressure on margins in FY11. The Company’s

focus on higher volume growth, better logistics

support, together with cost efficiency, should help in

partially mitigating the impact.

Your Company continues to focus on achieving

greater than industry growth and building sustainable

competitive advantage through its reach, service and

cost competitiveness. Its distribution network is being

further expanded throughout India particularly in rural

areas to increase the reach. Customer responsiveness

is being further improved with the implementation of

online order booking and tracking system.

Capex Plan

An overall capital outlay of Rs.2,375 Crores has

been earmarked. This will be spent over the next 2

years on logistics infrastructure, waste heat recovery

systems, completion of existing projects and

modernization.

FINANCIAL REVIEW AND ANALYSIS

(Rs. in Crores)

2009-10

(from 4th September

2009* to

31st March 2010)

Net Turnover 4,290.6

Other Operating

Income and Other Income 50.0

Profit Before Interest,

Depreciation and Tax 1,242.2

PBIDT Margin (%) 28.6

Interest 87.1

Depreciation 213.1

Profit before Tax Expenses 942.0

Total Tax Expenses 324.0

Net Profit 618.0

During the current period ended 31st

March 2010,

your Company has recorded a net turnover of

Rs.4,291 Crores and net profit of Rs.618 Crores.

It earned a healthy 28.6% PBIDT margin.

CASH FLOW ANALYSIS

(Rs. in Crores)

2009-10

(from 4th September

2009* to

31st March 2010)

Sources of Cash

Cash from Operations 1,029

Non-operating Cash Flow

(Dividend Income) 10

Proceeds from Equity 85

Increase in Debts 409

Decrease in Working Capital 181

Decrease in Cash and Cash equivalent 28

1,742

Uses of Cash

Net Increase in Investments 1,265

Capital Expenditure (net) 376

Interest 101

1,742

*Date of Incorporation

13

Sources of Cash

Cash from Operations

Cash from operations was Rs.1,029 Crores during

the six months of operation.

Increase in Debts

Term Loans of Rs.450 Crores were raised to fund

capacity expansion. Short term loan of Rs.42 Crores

were repaid.

Proceeds from Equity

17 Crores equity shares of Rs.5 each were issued at

par to Grasim, the Holding Company.

Decrease in Working Capital

Reduction in trade receivables and inventories and

increase in trade payables led to decrease in working

capital.

Uses of Cash

Net Increase in Investments

Your Company invested Rs.1,234 Crores in the debt

scheme of various mutual funds. An investment of

Rs.3.9 Crores was made in equity share capital of

Bhaskarpara Coal Company Ltd., a joint venture of

the Company. Further, a sum of Rs.27 Crores was

advanced to Harish Cement Ltd., a subsidiary of the

Company.

Capital Expenditure (Net)

Your Company have spent Rs.376 Crores towards

the completion of expansion projects and normal

modernisation.

RISKS AND CONCERNS

Upon transfer of Cement business from Grasim

(Holding Company), your Company has adopted its

risk management policy. The risk management policy

inter alia provides for risk identification, assessment,

reporting and mitigation procedure. The risk

management framework actively supports the Board

in its strategic decision making.

An analysis of the Company’s key business risks and

mitigation plans is as follows:

Competitor Risk

The market is highly competitive with no fiscal barriers

and entry of large MNCs into the country with

inorganic growth strategies. Your Company continues

to focus on increasing its market share and taking

marketing initiatives that help create differentiation

and provide optimum service to its customers.

Human Resource Risk

Your Company’s ability to deliver value is shaped by

its ability to attract, train, motivate, empower and

retain the best professional talents. Your Company

continuously benchmarks HR policies and practices

with the best in the industry and carries out the

necessary improvements to attract and retain the

best talent.

Foreign Exchange Risk

Your Company’s policy is to hedge all long-term

foreign exchange risk as well as short-term exposures

within the defined parameters. The long-term foreign

exchange liability is fully hedged and hedges are on

held to maturity basis.

Interest Rate Risk

The Company is exposed to interest rate fluctuations

on its borrowings. It uses a judicious mix of fixed

and floating rate debts within the stipulated

parameters to mitigate the interest rate risk and

whenever required, uses hedging tools to minimise

interest rate risk.

Commodity Price Risk

Your Company is exposed to the risk of price

fluctuation on raw materials, energy sources as well

as finished goods. However, considering the normal

correlation in the prices of raw materials and finished

goods, the risk is reduced. Setting up of captive

power plants helps control the effect of rise in energy

cost, a major cost element for cement manufacturing.

Forward integration in value added products e.g.,

ready mix concrete in cement, wall care putty in

white cement, help reduce the impact of price

fluctuation in finished goods.

Input Availability Risk

Availability of natural resource for current needs and

future growth requirements is a key risk. Indian coal

availability continues to be insufficient to meet the

current and growing demand in the country. To meet

the shortfall, your Company procures coal from

various sources including imports, open market

purchases and pet coke. One coal block has also

been allocated by Government of India to our joint

venture with other corporates. This coal block will,

however, meet only a small part of our requirement

14

on becoming operational. Your Company has

intensified its efforts to increase use of various

alternative fuels. Waste heat recovery systems are

being planned to reduce energy consumption. Your

Company has sufficient limestone reserves at its

existing facilities. Prospecting and acquiring leases

of new limestone mines are being undertaken on a

regular basis to ensure future growth.

INTERNAL CONTROL SYSTEM

The Company has appropriate internal control

systems for business processes, with regards to

efficiency of operations, financial reporting,

compliance with applicable laws and regulations,

etc. Clearly defined roles and responsibilities down

the line for all managerial positions have also been

institutionalised. All operating parameters are

monitored and controlled. Regular internal audits

and checks ensure that responsibilities are executed

effectively. The Audit Committee of the Board of

Directors reviews the adequacy and effectiveness of

internal control systems and suggests improvement

for strengthening them, from time to time.

CONCLUSION

Your Company has decided to amalgamate with

UltraTech Cement Ltd., another subsidiary of Grasim

with effect from 1st

July, 2010 under a scheme of

amalgamation, subject to receipt of requisite

approvals. The merger will create largest Cement

Company in India creating a platform that will help

in pursuing aggressive growth going forward.

CAUTIONARY STATEMENT

Statement in this “Management Discussion and

Analysis” describing the Company’s objectives,

projections, estimates, expectations or predictions may

be “forward looking statements” within the meaning

of applicable securities laws and regulations. Actual

results could differ materially from those expressed

or implied. Important factors that could make a

difference to the Company’s operations include global

and Indian demand supply conditions, finished goods

prices, feedstock availability and prices, cyclical

demand and pricing in the Company’s principal

markets, changes in Government regulations, tax

regimes, economic developments within India and

the countries within which the Company conducts

businesses and other factors such as litigation and

labour negotiations. The Company assumes no

responsibility to publicly amend, modify or revise any

forward looking statements, on the basis of any

subsequent development, information or events or

otherwise.

15

REPORT ON CORPORATE GOVERNANCE

Governance Philosophy

Corporate governance refers to a set of laws,

regulations and good practices that enable an

organization to perform efficiently and ethically

generate long term wealth and create value for all

its stakeholders. There is, however, no single

template to define good governance. Your

Company is committed to the adoption of best

I. BOARD OF DIRECTORS

Compliance with Corporate Governance Guidelines

I. BOARD OF DIRECTORS

(A) Composition of Board

Your Company’s Board comprises of 8 Directors, 4 of whom are Independent Directors and 4 are

Non-Executive Directors, with considerable experience in their respective fields.

Name of Director Executive / Date of No. of No. of Outside No. of Outside No. of Board

Non-Executive/ Appointment Equity Shares Directorships Held1

Committee Meetings

Independent held as on Positions Held2

31st March,

2010

Public Private Chairman Member Held Attended

Mr. Kumar Mangalam Birla Non-Executive 18.05.2010 - 11 13 - - - -

Mr. R.C. Bhargava Independent 18.05.2010 - 10 2 4 5 - -

Mr. G.M. Dave Independent 18.05.2010 - 8 5 2 8 - -

Mr. N.J. Jhaveri Independent 18.05.2010 - 12 2 4 4 - -

Mr. S.B. Mathur Independent 18.05.2010 - 12 3 3 3 - -

Mr. Adesh Gupta Non-Executive 04.09.2009 2* 9 1 - 2 9 9

Mr. O.P. Puranmalka ** Non-Executive 16.02.2010 - 2 - - - 1 1

Mr. Ashok Malu Non-Executive 04.09.2009 2* - - - - 9 9

* As a Nominee of Grasim Industries Ltd., the holding company

** Deemed to be a Whole Time Director from 16th


March, 2010. Appointed as an Additional Director (Non-Executive Director)

w.e.f. 1st

April, 2010.

Notes :

1. Excluding Directorship in foreign companies and companies under Section 25 of the Companies Act, 1956.

2. Only two Committees of the Board viz. the Audit Committee and the Shareholders’ Grievance/Allotment & Transfer Committee are considered.

governance practices and its adherence in the true

spirit, at all times. Our governance practices are

self-driven, reflecting the culture of the trusteeship

that is deeply ingrained in our value system and

reflected in our strategic growth process.

In terms of Clause 49 of the Listing Agreement of

the stock exchanges, the details of compliance as on

the date of this Report i.e. 18th

May, 2010 are as

follows:

(B) Non-Executive Directors’ Compensation

and Disclosures

Apart from sitting fees that are paid to the

Non-Executive and Independent Directors

for attending Board/Committee meetings,

no other fees/commission were paid during

the period under review. No transactions

have been entered into by the Company

with the Non-Executive and Independent

Directors.

(C) Other Provisions as to Board and

Committees

Your Company’s Board of Directors plays

primary role in ensuring good governance

and functioning of the Company. Agenda

and Notes on Agenda are circulated to

the Directors in advance of each meeting

of the Board of Directors. Where it is not

practical to attach or send the relevant

16

information as a part of agenda papers,

the same are tabled at the meeting and

the presentations are made to the Board.

The Members of the Board have complete

freedom to express their opinion and the

decisions are taken after detailed discussions.

The Board meets at least once in a quarter

to review the operations of your Company.

Apart from the above, additional Board

Meetings are convened by giving

appropriate notice to address the specific

needs of the Company.

During the period under review, the Board

met 9 times. The details of Board Meetings

held during the period are as under:

Sr. No. Date of Board Meeting City No. of Directors Present*

1. 9th

September, 2009 Mumbai 3

2. 17th


3. 24th


4. 26th


5. 29th


6. 3rd

October, 2009 Mumbai 3

7. 16th

October, 2009 Mumbai 3

8. 15th

November, 2009 Mumbai 3

9. 16th

February, 2010 Mumbai 3

* Upto 17th

May, 2010, the Board constituted of 3 members

(D) Code of Conduct

The Board of Directors plays an important

role in ensuring good governance and has

laid down the Code of Conduct (“the

Code”) applicable to all Board Members

and Senior Management of the Company.

A declaration by Directors affirming the

compliance of the Code by Board Members

and Senior Management Executives is given

at the end of the report.

II. AUDIT COMMITTEE

(A) Composition of Audit Committee

Your Company has an Audit Committee at

the Board level, with the powers and the

role in accordance with the Clause 49 II

(C) and (D) of the Listing Agreement, which

acts as a link between the management,

the statutory and internal auditors and the

Board of Directors and oversees the

financial reporting process.

The Audit Committee was reconstituted on

18th

May, 2010 and its present composition

is as follows:

1. Mr. G.M. Dave, Chairman

2. Mr. N.J. Jhaveri, Member

3. Mr. S.B. Mathur, Member

All the present members of the Audit

Committee are Independent Directors.

Prior to 18th

May, 2010, the composition

of the Audit Committee was as follows:-

1. Mr. Adesh Gupta

2. Mr. O.P. Puranmalka

3. Mr. Ashok Malu

Mr. Kamal Rathi, Company Secretary, acts

as the Secretary of the Audit Committee.

17

(B) Meetings of Audit Committee

During the period under review, the Audit

Committee met once on 16th

February,

2010 to deliberate on various matters.

III. SUBSIDIARY COMPANIES

Your Company does not have any material non-

listed Indian Subsidiary Company. The Audit

Committee reviews the financial statements and

in particular, the investments made by the unlisted

subsidiary company.

IV. DISCLOSURES

(A) Basis of related party transactions

Your Company places all the relevant

details before the Audit Committee.

A comprehensive list of related party

transactions as required by the Accounting

Standard (AS) 18 issued by the Institute of

Chartered Accountants of India, forms part

of the Note No. 20 of Schedule 21 to the

Accounts in the Annual Report. These

transactions are not likely to have any

conflict with the interests of the Company

at large.

(B) Disclosure of Accounting Treatment

Your Company has followed all relevant

Accounting Standards while preparing the

Financial Statements.

(C) Risk Management

Your Company has a comprehensive risk

management policy and has laid down

procedures to inform Board members

about the risk assessment and minimization

procedures. The same are periodically

reviewed to ensure that execut ive

management controls the risks through

properly defined framework.

The risk management issues are discussed

in the Management Discussion & Analysis

Section which forms part of this Annual

Report.

(D) Proceeds from public issues, right issues,

preferential issues, etc.

During the period under review, the

Company has not raised any proceeds

from public issue or preferential issue. The

Company has allotted 16.99 crores equity

shares of Rs. 5 each on rights basis on 29th

September, 2009.

(E) Remuneration of Directors

During the period under review, no sitting

fee has been paid to the Directors for

attending the meetings of the Board and

its Committees.

W.e.f. 18th

May, 2010, sitting fee payable

to the Members of the Board for attending

the Board meetings has been fixed @ Rs.

20,000/- per meeting.

Similarly, w.e.f. 18th

May, 2010, the sitting

fees payable to the Members of the Audit

Committee, Shareholders’ Grievance /

Allotment & Transfer Committee and ESOS

Compensation Committee for attending the

meetings of the Committees has been fixed

@ Rs. 10,000/- per meeting of the

Committee.

(F) Management

i) The Management Discussion and

Analysis Report forms part of the

Annual Report and is in accordance

with the requirements laid out in

Clause 49 of the Listing Agreement.

ii) No material transaction has been

entered into by the Company with the

Promoters, Directors or the

Management, their subsidiaries or

relatives etc. that may have a potential

conf l ict wi th the interest of the

Company.

(G) Shareholders

i) The Company has provided the details

of the Directors seeking re -

appointment at the end of this Report.

ii) Copies of the Press Release and

Presentations on financial performance

shall be hosted on the website of the

Company, www.adityabir la.com/

samruddhicement.htm.

iii) Shareholders’ Grievance / Allotment

and Transfer Committe

The Board has on 18th

May, 2010

18

const i tuted a “Shareholders’

Grievance / Allotment and Transfer

Committee” at the Board level to look

into various issues relat ing to

shareholders/investors including

transfer and transmission of shares as

well as non-receipt of dividend, Annual

Report, shares after transfers and

delays in transfer of shares. In addition,

the Committee shall also look into

other issues including status of

dematerialization / rematerialization of

shares and debentures as well as

systems and procedures followed to

track investor complaints and suggest

measures for improvement from time

to time.

The Committee comprises of the

following Directors:

1. Mr. G.M. Dave, Chairman

2. Mr. O.P. Puranmalka, Member

3. Mr. Adesh Gupta, Member

iv) ESOS Compensation Committee

(a) Pursuant to the Scheme of

Arrangement between the

Company and Grasim Industries

Limited (“Grasim”) under Sections

391 to 394 of the Companies Act,

1956 for demerger of the Cement

Business of Grasim to the

Company, the eligible employees

of Grasim holding stock options

in Grasim shall be entitled to one

stock option of Rs. 5/- each of

the Company for every stock

option they hold in Grasim in

terms of the Compensatory Stock

Option Scheme of the Company,

ESOS – 2010.

(b) ESOS Compensation Committee

has been constituted on 18th

May,

2010 and the same comprises of

the following Directors, viz. Mr.

Kumar Mangalam Birla, Mr. G.M.

Dave and Mr. N.J. Jhaveri. The

Committee has been formed to

implement, administer and

supervise ESOS – 2010.

v) Compliances by the Company

No strictures/ penalties have been

imposed on the Company by the Stock

Exchanges or the Securit ies and

Exchange Board of India (SEBI) or any

statutory authority on any matters

related to capital markets, since the

incorporation of the Company on 4th

September, 2009.

V. REPORT ON CORPORATE GOVERNANCE

This Corporate Governance Report forms part

of the Annual Report. The Company is

compliant with the provisions of Clause 49 of

the Listing Agreement of the Stock Exchanges

in India.

VI. COMPLIANCE

i) Certificate from the Statutory Auditors

confirming compliance with the conditions

of Corporate Governance as stipulated in

Clause 49 of the Listing Agreement of the

Stock Exchanges in India is annexed to the

Directors’ Report and forms part of the

Annual Report.

ii) Status of compliance of Non mandatory

requirement

a) The Company maintains a separate

office for the Non-Executive Chairman.

Al l necessary infrastructure and

assistance are made available to enable

him to discharge his responsibilities.

b) The Company does not have a

Remuneration Committee. The

remuneration of the Directors is decided

and approved by the Board of

Directors.

VII. GENERAL BODY MEETINGS

During the period ended 31st

March, 2010,

three Extraordinary General Meetings of the

shareholders of the Company were held on

19th

September, 2009, 25th

September, 2009

and 29th

March, 2010 respectively.

VIII.MEANS OF COMMUNICATION

Any website, where displayed :

www.adityabirla.com/samruddhicement.htm

19

CODE OF CONDUCT

DECLARATION

As provided under Clause 49 of the Listing Agreement with the Stock Exchanges, we confirm that the Board

Members and Senior Management of the Company have confirmed compliance with the Code of Conduct

for the period ended 31st

March, 2010.

For Samruddhi Cement Limited

O.P. Puranmalka Adesh Gupta

Director Director

Place : Mumbai

Date : 18th

May, 2010

CEO/ CFO CERTIFICATION

Mr. O.P. Puranmalka and Mr. Adesh Gupta, Directors of the Company have certified to the Board that:

(a) They have reviewed financial statements and the cash flow statement for the period ended

31st

March, 2010 and that to the best of their knowledge and belief:

i) these statements do not contain any materially untrue statement or omit any material fact or

contain statements that might be misleading; and

ii) these statements together present a true and fair view of the Company’s affairs and are in compliance

with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of their knowledge and belief, no transactions entered into by the Company

during the period which are fraudulent, illegal or violative of the Company’s code of conduct.

(c) They accept responsibility for establishing and maintaining internal controls for financial reporting

and that they have evaluated the effectiveness of the internal control systems of the Company

pertaining to financial reporting and they have disclosed to the auditors and the Audit Committee,

deficiencies in the design or operation of internal controls, if any, of which they are aware and the

steps they have taken or propose to take to rectify these deficiencies.

(d) They have indicated to the auditors and the Audit Committee:

i) significant changes in internal control over financial reporting for the period under review;

ii) significant changes in accounting policies for the period under review and that the same have

been disclosed in the notes to the financial statements; and

iii) instances of significant fraud of which they have become aware and the involvement therein, if

any, of the management or an employee having a significant role in the Company’s internal

control system over financial reporting.

For Samruddhi Cement Limited

O.P. Puranmalka Adesh Gupta

Director Director

Place : Mumbai

Date : 18th

May, 2010

20

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22

SUSTAINABILITY REPORT / INCLUSIVE GROWTH

Corporate Social Responsibility Policy

For us in the Aditya Birla Group, reaching out to

underserved communities is part of our DNA. We

believe in the trusteeship concept. This entails

transcending business interests and grappling with

the “quality of life” challenges that underserved

communities face, and working towards making a

meaningful difference to them.

Our vision is - “to actively contribute to the social

and economic development of the communities in

which we operate. In so doing build a better,

sustainable way of life for the weaker sections of

society and raise the country’s human development

index” (Mrs. Rajashree Birla, Chairperson, Aditya

Birla Centre for Community Initiatives and Rural

Development).

Implementation process: Identification of

projects

All projects are identified in a participatory manner,

in consultation with the community, literally sitting

with them and gauging their basic needs. We

recourse to the participatory rural appraisal mapping

process. Subsequently, based on a consensus and

in discussion with the village panchayats, and other

influentials, projects are prioritized.

Arising from this, the focus areas that have emerged

are Education, Health care, Sustainable livelihood,

Infrastructure development, and espousing social

causes. All of our community projects are carried

out under the aegis of The Aditya Birla Centre for

Community Initiatives and Rural Development.

In Education, our endeavour is to spark the desire

for learning and knowledge at every stage through

• Formal schools • Balwadis for elementary

education • Quality primary education • Aditya Bal

Vidya Mandirs • Girl child education • Adult

education programmes.

In Health care, our goal is to render quality health

care facilities to people living in the villages and

elsewhere through our Hospitals.• Primary health

care centres • Mother and Child care projects •

Immunization programmes with a thrust on polio

eradication • Health care for the visually impaired,

and physically challenged • Preventive health through

awareness programmes.

In Sustainable Livelihood, our programmes aim

at providing livelihood in a locally appropriate and

environmentally sustainable manner through •

Formation of Self Help Groups for women

empowerment • Vocational training through Aditya

Birla Rural Technology Parks • Agriculture

development and better farmer focus • Watershed

development • Partnership with Industrial Training

Institutes.

In Infrastructure Development, we endeavour to

set up essential services that form the foundation of

sustainable development through • Basic

infrastructure facilities • Housing facilities • Safe

drinking water • Sanitation & hygiene • Renewable

sources of energy.

To bring about Social Change, we advocate and

support • Dowryless marriage

• Widow remarriage • Awareness programmes on

anti social issues • De-addiction campaigns and

programmes • Espousing basic moral values.

Activities, setting measurable targets with time

frames and performance management.

Prior to the commencement of projects, we carry

out a baseline study of the villages. The study

encompasses various parameters such as – health

indicators, literacy levels, sustainable livelihood

processes, population data - below the poverty line

and above the poverty line, state of infrastructure,

among others. From the data generated, a 1-year

plan and a 5-year rolling plan are developed for

the holistic and integrated development of the

marginalized. These plans are presented at the

Annual Planning and Budgeting meet. All projects

are assessed under the agreed strategy, and are

monitored every quarter, measured against targets

and budgets. Wherever necessary, midcourse

corrections are effected.

Organizational mechanism and responsibilities

The Aditya Birla Centre for Community Initiatives

and Rural Development provides the vision under

the leadership of its Chairperson, Mrs. Rajashree

Birla. This vision underlines all CSR activities. Every

Manufacturing Unit has a CSR Cell. Every Company

has a CSR Head, who reports to the Group Executive

President (Communications & CSR) at the Centre.

At the Company, the Business Director takes on the

role of the mentor, while the onus for the successful

and time bound implementation of the projects is

on the various Unit Presidents and CSR teams. To

measure the impact of the work done, a social

satisfaction survey / audit is carried out by an external

agency.

Partnerships

Collaborative partnerships are formed with the

Government, the District Authorities, the village

23

panchayats, NGOs and other like-minded

stakeholders. This helps widen the Company’s reach

and leverage upon the collective expertise, wisdom

and experience that these partnerships bring to the

table.

In collaboration with FICCI, we have set up Aditya

Birla CSR Centre for Excellence to make CSR an

integral part of corporate culture.

The Company engages with well established and

recognized programmes and national platforms such

as the CII, FICCI, ASSOCHAM to name a few,

given their commitment to inclusive growth.

Budgets

A specific budget is allocated for CSR activities.

This budget is project driven.

Information dissemination

The Company’s engagement in this domain is

disseminated on its website, Annual Reports, its house

journals and through the media.

Management Commitment

Our Board of Directors, our Management and all

of our employees subscribe to the philosophy of

compassionate care. We believe and act on an ethos

of generosity and compassion, characterized by a

willingness to build a society that works for everyone.

This is the cornerstone of our CSR policy.

Our Corporate Social Responsibility policy conforms

to the Corporate Social Responsibility Voluntary

Guidelines spelt out by the Ministry of Corporate

Affairs, Government of India in collaboration with

FICCI (2009).

Towards inclusive growth

A snapshot of your Company’s work

Your Company’s CSR activities extend to 310

villages, in proximity to its plants, across the country.

Health Care

At the rural medical camps organized for general

health check-ups 15,388 villagers were examined.

Over 91,400 patients were treated at our hospitals.

Those afflicted with serious ailments were taken to

the Company’s hospitals for treatment.

Intra Ocular lens surgery benefited 3,662 cataract

patients at Khor (M.P.), Shambhupura (Rajasthan)

and Kharia Khangar (Rajasthan).

More than 35,050 truck drivers, their helpers and

migrant workers were sensitized to the dangers of

HIV/AIDS.

The DOTS centre at Kotputli continues to treat

patients with TB.

596 patients were treated for dental problems.

Over 3,630 villagers benefited from specific disease

camps organized for cardiac checkup, skin diseases,

arthritis and other specific health problems.

A special programme for drug de-addiction

organized at Bhatinda was attended by 550 people.

Mother and Child Care

We administered 1,19,457 polio doses to children

at Birla White, Kharia Khangar and Vikram Cement,

Khor.

Nearly 10,000 children were immunized against

diphtheria, tetanus, measles and hepatitis-B across

the locations mainly in Khor, Shambhupura, Kharia

Khangar and Kotputli.

More than 1,886 couples have opted for planned

families and responsible parenting at Rawan, Kotputli,

Khor, Kharia Khangar, Sawa, Malkhed and

Reddipalayam.

Over 1,500 mothers were provided pre and post

natal care at Reddipalayam, Khor, Shambhupura,

Kotputli, Rawan and Kharia Khangar.

Education

Over 507 students were enlisted this year in our

Balwadis at Khor, Nawalgarh, Shambhupura and

Reddipalayam.

To encourage the spirit of excellence, 361 children

from the adopted rural schools were awarded

scholarships at Rawan and Malkhed.

This year we were able to persuade the parents of

290 girls who had dropped out from their schools

in the villages to get back to their studies at Malkhed

and Kharia Khangar.

To focus on the girl child we support the Kasturba

Gandhi Balika Vidhyalayas (KGBV) - residential

schools for girls at Kharia Khangar.

More than 15 education centres across Rawan and

Kharia Khangar provide bridge education to girls

who had dropped out from the education stream,

mid-way. So far, 290 girls have been successfully

placed in KGBVs and other Government schools.

Over 80 people have joined our adult literacy classes

at Malkhed.

More than 8,100 students at various Government

schools have been provided educational aids such

as school bags, notebooks, stationery and utensils

for mid-day meal support at Kharia Khangar,

Neemuch, Shambhupura, Rawan and Malkhed.

24

At the Kagina Industrial Training Centre, which we

are running at Malkhed, 171 students have been

trained as fitters, welders, electronic, electric and

mechanical repairmen. They have been successfully

placed. This centre is recognized by the Department

of Employment & Training of the Government of

Karnataka.

Free coaching classes for underprivileged students

were conducted at Rawan.

Safe drinking water and sanitation

Water tanks have been set up at Neemuch,

Chittorgarh, Kharia Khangar and Reddipalayam.

Under the Nirmal Gram Yojana, your Company

facilitated the construction of individual toilets in

villages around Khor and Shambhupura plants.

At schools around Shambhupura, 8 roof rain water

harvesting structures were constructed.

Sustainable Livelihood

Towards fostering renewable energy, 50 bio-gas units

have been promoted in villages around our Vikram

Cement Plant near Khor.

Immunized 9,061 animals in animal husbandry and

other veterinary camps at Vikram Cement, Khor,

Grasim Rawan, Birla White Kharia Khangar and

Aditya Cement Shambhupura.

Farm based income generation activities have

benefitted 70 farmers at Kharia Khangar, Khor and

Shambhupura.

Self Help Groups and Income Generation

Our 120 Self Help Groups empower 1,200 rural

households financially and socially at Malkhed,

Kharia Khangar and Reddipalayam. Most of these

groups have been linked with the economic schemes

of NABARD and the District Industries Centre.

Vocational training programmes were conducted for

637 youngsters. Among these were two-wheeler

repairing, driving, domestic electric fitting, motor

rewinding, mobile repairing, training on refrigeration,

computer training and beauty parlour courses in

Khor, Shambhupura, Kharia Khangar, Reddipalayam,

Malkhed and Rawan.

At the various tailoring centres across our Units,

linkages with entrepreneurs have been developed to

close the marketing loop. Over 36 women have

been the beneficiaries.

Infrastructure Development

To augment the ground water storage by minimizing

the excess runoff, two water harvesting structures in

the form of Anicuts were constructed at Kharia

Khangar.

A community hall has been provided for Segwa

village in Neemuch to facilitate informative and

cultural exchanges among communities.

School buildings, boundary walls, anganwadi centres,

panchayat offices, Primary Health Centre and cattle

sheds have been constructed/renovated at the

Company’s Neemuch, Chittorgarh, Kharia Khangar,

Rawan and Kotputli plants.

Your Company has repaired the village approach

roads at Rawan and Shambhupura.

Vikram Cement has set up a 20-bed maternity ward

at the District Hospital.

Public sanitation facilities have been provided at

Neemuch and other units.

At the Navjeevan Gaushala at Kharia Khangar,

3,500 cattle were vaccinated. The vermin compost

pits produce manure which is supplied to farmers.

The Gaushala also serves as a demonstration site

for better bred cattle and farming practices.

Social Welfare

Under the mass marriage programme, 104 couples

have wed.

We helped more than 120 new beneficiaries at

Reddipalayam, Malkhed and Rawan access

Government pension funds for old age widows and

the physically handicapped. Other social security

programmes were facilitated by us.

The drug de-addiction campaign organized at

Bhatinda, was attended by 8,000 people so far, of

which 250 addicts have been cured and successfully

rehabilitated.

At the week long Yoga and Sanskar classes organized

for school children at Malkhed 1,177 children

participated.

Our Board of Directors, our Management and all

of our employees subscribe to the philosophy of

compassionate care and to the upliftment of our

rural societies.

25

ENVIRONMENT REPORT

The challenges that the world faces on environment

conservation, are indeed alarming. Just to highlight

a few – climate change, the severity of droughts

and floods, their impact on rain fed agriculture, the

emission of greenhouse gases and our ability to

pursue sustainable development. We in India are

no exception to these issues. Environment

conservation and sustainable development are

continuously on your Company’s radar. Hence these

are integrated into its business strategies as well as

its efforts towards fostering inclusive growth through

its rural development and community initiatives.

All of your Company’s plants are ISO14001 EMS,

OHSAS 14001 and SA8000 certified.

A rigorous in-depth environment audit of each of

our plants is conducted by external specialists in this

domain. Among the auditors enlisted by us are

KPMG Peat Maverick, Det Norkse Veritas and

Environmental Systems Auditors. Alongside these

experts, the State Pollution Control Board’s certified

auditors also carry out these audits. They reconfirm

our commitment to environment conservation as a

major operating principle.

Your Company has developed and implemented

measures to monitor and reduce green house gas

(GHG) emissions from its manufacturing operations.

The GHG emission details and mitigation plan are

being audited by KPMG as Independent Third Party

Auditors. This is work-in-progress. We expect to

publish their findings in the 3rd

quarter of FY 2010-

11. Whatever course correction or innovative

suggestions emanate from the report, will be

implemented. Their findings will be published by

mid 2010-11.

Your Company is greatly advantaged by its linkages

with its parent Company, Grasim Industries Limited,

which is a voluntary member of the Cement

Sustainability Initiative (CSI). The CSI sets common

measures and is a knowledge networking forum on

environmental impact issues. Your Company’s

sustainable development program is in sync with the

parameters of the CSI.

Your Company is a voluntary member of the Cement

Sustainability Initiative (CSI). The CSI sets common

measures and is a knowledge networking forum on

environmental impact issues. Your Company’s

sustainable development program is in sync with the

parameters of the CSI.

Your Company’s Cement plants continue to validate

its energy efficiency, kiln reliability and productivity

based on data from Global Benchmarking Surveys,

conducted annually by Whitehopleman – an

independent UK based consulting firm.

Your Company’s thrust on use of alternate fuels is

gaining momentum. We have been continuing our

efforts to reduce consumption of fossil fuels by

substituting these with wastes from other industries.

It is difficult for the waste generating industries to

safely dispose these wastes generated and the only

other choice is through incineration.

We have saved using coal by recoursing to alternate

fuels such as processed municipal solid waste, agro

waste, tyre chips and used polythene and plastics.

In 2009-10, we substituted the use of natural

resources with 18,000 tons of waste materials as

fuel, equivalent to 9,000 tons of coal burning. This

has helped our environmental conservation efforts

significantly. We are building competency and

installing machinery at our plants to handle waste

fuels in the most eco-friendly manner.

Rain water harvesting continues to be a priority area.

Water bodies in the catchment areas for rainwater

storage and ground water recharging have been set

up. At the same time in shopping complexes, hospital

roofs, school and mine offices at our plant locations,

rain water harvesting system has been instituted.

This effectively recharges rain water in the bore wells

and helps maintain ground water levels.

The greenbelt at our plants is simply awesome and

is surrounded by trees all around. At some points,

you cannot even see the skyline. Only the leaves

and the flowers and hear the cacophony of the

birds. When you walk through this wooded

ambience, you can never imagine that there would

be a plant in the midst of nature. Our Board, our

Management and all of our colleagues are

committed to living in harmony with nature.

26

DIRECTORS’ REPORT

Dear Shareholders,

Your Company was incorporated on 4th

September,

2009. As such, your Directors present the First Annual

Report of your Company together with the Audited

Accounts for the period ended 31st

March, 2010.

SCHEME OF ARRANGEMENT

As you are aware, the Cement Business of Grasim

Industries Limited (“Grasim”), the holding company,

has been demerged into your Company w.e.f. 1st

October, 2009, being the Appointed Date fixed for

this purpose, pursuant to a Scheme of Arrangement

under Sections 391 to 394 of the Companies Act,

1956 (“the Scheme of Arrangement”). Pursuant to

the Scheme of Arrangement and in consideration

thereof, your Company shall issue 1 (one) equity

share of the face value of Rs. 5/- credited as fully

paid up, to the shareholders of Grasim for every

equity share they hold in Grasim as on 28th

May,

2010, being the Record Date fixed for this purpose.

The Scheme of Arrangement has become effective

on 18th

May, 2010, having received the regulatory

approvals, interalia, the sanction of the Hon’ble High

Court of Madhya Pradesh, Indore and Hon’ble High

Court of Gujarat, Ahmedabad.

MERGER WITH ULTRATECH CEMENT LIMITED

As a separate matter, the Board of Directors of your

Company and that of UltraTech Cement Limited

(UltraTech), another subsidiary of Grasim, have

decided to amalgamate your Company with

UltraTech under a Scheme of Amalgamation under

Sections 391 to 394 of the Companies Act, 1956

(“Scheme of Amalgamation”), subject to necessary

approvals, w.e.f. 1st

July, 2010, being the Appointed

Date fixed for the purpose. In terms of the Scheme,

the shareholders of the Company will receive 4 (four)

equity shares of UltraTech of the face value of Rs.10

each, credited as fully paid up, for every 7 (seven)

equity shares of the Company of the face value of

Rs.5 each held on the record date to be fixed for

the purpose. The Scheme of Amalgamation is

pending for sanction before the Hon’ble High Courts

of Bombay and Gujarat.

The amalgamation of your Company with UltraTech

will result in UltraTech emerging as the largest Cement

Company in India and the 10th

largest in the world.

FINANCIAL PERFORMANCE

The results of your Company on consolidated basis

for the period ended 31st

March, 2010 are as under.

As the Company has been incorporated during the

year under review, the figures of the previous year

are not available.

(Rs. Crores)

Consolidated Stand-alone

2009-10 2009-10

Gross Turnover 4,745.70 4,745.70

Gross Profit (PBDT) 1,155.07 1155.11

Less: Depreciation 213.12 213.12

Profit before Tax 941.95 941.99

Tax Expenses 324.03 324.03

Surplus available for

Appropriation 617.92 617.96

Appropriation:

General Reserve 200.00 200.00

Debenture Redemption

Reserve 12.50 12.50

Proposed Dividend 45.79 45.79

Corporate Tax on Dividend 7.61 7.61

Balance carried to

Balance Sheet 352.02 352.06

617.92 617.96

OPERATIONS

A review of operations of your Company for the

period ended 31st

March, 2010 is provided in the

Management Discussion and Analysis Section, which

forms part of this Annual Report.

DIVIDEND

Your Directors are pleased to recommend a maiden

Dividend @ Rs. 1.75 per fully paid-up equity share

of Rs. 5 each for the period ended on 31st

March,

2010. The total outgo of the dividend to be paid to

the shareholders will be Rs. 53.40 crores (inclusive

of Corporate Tax on Dividend).

EMPLOYEE STOCK OPTION SCHEME (ESOS)

Pursuant to the Scheme of Arrangement between

Grasim Industries Limited (“Grasim”), the Company

and their respective shareholders and creditors under

the provisions of Sections 391 to 394 of the Companies

Act, 1956 (“Scheme of Arrangement”), the Cement

Business of Grasim was transferred to the Company.

Grasim had constituted an employees’ stock option

scheme in 2006 (“ESOS-2006”) under which Grasim

had granted options to its eligible employees. In respect

of the stock options granted by Grasim under ESOS-

2006, the Company is required to offer one (1)

employee stock option for every employee stock option

held by an employee in Grasim, as on the date as

may be determined by Grasim for this purpose, under

27

the Compensatory Stock Option Scheme created by

the Company (“ESOS-2010”), pursuant to the Scheme

of Arrangement.

The details of Employee Stock Options granted pursuant

to ESOS - 2010, as also the disclosures in compliance

with Clause 12 of the Securities and Exchange Board

of India (Employee Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999, are set

out in the Annexure to this Report.

DEBENTURES AND TERM LOANS

Your Company has raised long term loans

aggregating Rs.450 Crores to meet the requirements

of capital expenditure and other approved purposes.

AWARDS & ACCOLADES

Your Company has earned several honours. Some

of the significant accolades received include:

� National Energy Conservation Award 2009 in

Cement Sector : Birla White Division

� CAPEXIL Export Award – “Certificate of Merit”

for Export Recognition : Birla White Division

� IMC - Ramakrishna Bajaj National Quality

Award for Outstanding Achievement Trophy

2009 : Birla White Division

RESEARCH AND DEVELOPMENT

In an increasingly competitive business environment,

your Company recognizes the importance of

Research & Development (R&D) to maintain its

leadership position. To further its competitive edge

through product innovations and quality upgradation

as part of its customer-centric endeavors, your

Company pursues a focused R&D strategy. Its R&D

efforts also aim at ensuring cost optimization and

environment protection.

Your Company’s R&D efforts are focused on

development of new products and processes for

creating greater value for its customers. While

meeting customer needs is at the centre of all R&D

activities, your Company is committed to sustainable

development and looks for new ways to preserve

the environment and manage resources responsibly.

Towards this, your Company aims to maximise use

of industrial waste, alternative sources of fuel and

chemicals and mineral evaluation of captive

limestone reserves.

HUMAN RESOURCES

Your Company continuously strives to foster a culture

of high performance. Your Management has infused

a lot of rigor and intensity in its people development

processes and in honing skill sets. Its HR processes

are absolutely aligned to organizational goals.

The implementation of People Soft HRMS (Human

Resource Management System), the variable pay plan

and job bands have been institutionalized.

Ongoing learning, refreshing HR systems in line with

global benchmarks, aligning rewards and recognition

with performance, have enabled your Company

sustain its reputation of a meritocratic organization.

The Group's Corporate Human Resources function

has played and continues to play an integral role in

your Company's Talent Management Processes.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement of

Stock Exchanges, the report on Corporate Governance

forms part of this Annual Report. The Company’s

Statutory Auditors’ Certificate dated 18th

May, 2010

in terms of Clause 49 of the Listing Agreement is

annexed to and forms part of the Directors’ Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

As stipulated in Section 217(2AA) of the Companies

Act, 1956, your Directors subscribe to the “Directors’

Responsibility Statement” and confirm that:

i) in the preparation of the accounts for the period

ended 31st

March, 2010, the applicable

accounting standards have been followed along

with proper explanation relating to 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 or

loss of the Company for that period;

iii) the Directors have taken proper and sufficient

care of the maintenance of adequate accounting

records in accordance with the provisions of

this Act for safeguarding the assets of the

Company and for preventing and detecting fraud

and other irregularities; and

iv) the Directors have prepared the accounts for

the period ended 31st

March, 2010 on a going

concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

Upon effectiveness of the Scheme of Arrangement,

Harish Cement Limited has become a wholly owned

subsidiary of your Company and Bhaskarpara Coal

Company Limited has become a joint venture of

your Company, with effect from 1st

October, 2009.

The Consolidated Financial Statements have been

prepared by your Company in accordance with the

applicable Accounting Standards (AS-21 and AS-

27) issued by the Institute of Chartered Accountants

of India. Together with the Auditors’ Report, these

form part of the Annual Report.

28

PARTICULARS AS PER SECTION 217 OF THE

COMPANIES ACT, 1956

Information on Conservation of Energy, Technology

Absorption and Foreign Exchange Earnings and Outgo,

stipulated under Section 217(1)(e) of the Companies

Act, 1956 is set out in a separate statement, attached

to this report and forms part of it.

In accordance with the provisions of Section 217(2A)

ot the Companies Act, 1956 read with the

Companies (Particulars of Employees) Rules, 1975,

the names and other particulars of employees are

to be set out in the Directors’ report, as an

addendum thereto. However, in tandem with the

provisions of Section 219(1)(b)(iv) of the Companies

Act, 1956, the Report and Accounts as set out

therein, are being sent to all members of the

Company excluding the aforesaid information about

the employees. Any member, who is interested in

obtaining these particulars about employees, may

write to the Company Secretary at the Registered

Office of the Company.

DIRECTORS

Your Company had initially three directors, viz., Mr.

Adesh Gupta, Mr. Sanjeev Bafna and Mr. Ashok

Malu. Subsequent to the resignation of Mr. Sanjeev

Bafna, Mr. Saurabh Misra was appointed as an

additional director of your Company with effect from

17th

September, 2009. Upon the resignation of Mr.

Saurabh Misra, Mr. O.P. Puranmalka was appointed

as an additional director of your Company with

effect from 16th

February, 2010.

The Directors place on record their appreciation of

the services rendered by Mr. Sanjeev Bafna and Mr.

Saurabh Misra during their tenure as members of

the Board.

Upon effectiveness of the Scheme of Arrangement

between Grasim and the Company, whereby the

Cement Business of Grasim has been transferred to

the Company pursuant to the Scheme, the

appointment of Mr. O.P. Puranmalka as an Additional

Director of the Company was deemed to be treated

as Whole Time Director of the Company with effect

from the date of his appointment, viz. 16th

February,

2010 to 31st

March, 2010 under the provisions of

Section 269 and 314 read with Schedule XIII and

other applicable provisions, if any, of the Companies

Act, 1956.

Mr. Kumar Mangalam Birla, Mr. R.C. Bhargava,

Mr. G.M. Dave, Mr. N.J. Jhaveri and Mr. S.B. Mathur,

who were appointed as the Additional Directors at

the Board Meeting held on 18th

May, 2010, hold

office till the conclusion of the ensuing Annual

General Meeting. The Company has received the

notices in writing from a member proposing their

candidature for the office of Directors, liable to retire

by rotation.

Mr. Adesh Gupta retires from office by rotation at

the ensuing Annual General Meeting and being

eligible, offers himself for re-appointment.

AUDITORS

The observations made in the Auditors’ Report are

self explanatory and therefore do not call for any

further comments under Section 217(3) of the

Companies Act, 1956.

The Board, on the recommendation of the Audit

Committee, has proposed that M/s. G.P. Kapadia &

Co., Chartered Accountants, Mumbai and

M/s. Deloitte Haskins & Sells, Chartered Accountants,

Mumbai, be appointed as the Joint Statutory Auditors

of the Company to hold office from the conclusion

of the ensuing Annual General Meeting till the

conclusion of the next Annual General Meeting of

the Company. M/s. G.P. Kapadia & Co., Chartered

Accountants, Mumbai and M/s. Deloitte Haskins &

Sells, Chartered Accountants, Mumbai have

forwarded their certificates to the Company, stating

that their appointment, if made, will be within the

limit specified in that behalf in Sub-section (1B) of

Section 224 of the Companies Act, 1956.

Resolutions seeking your approval on these items

are included in the Notice of the ensuing Annual

General Meeting.

COST AUDITORS

In pursuance of Section 233-B of the Companies

Act, 1956, your Directors have appointed M/s R.J.

Goel & Co., Delhi, M/s K.G. Goyal & Co., Jaipur

and M/s N.D. Birla & Co., Ahmedabad, as the Cost

Auditors for the year 2010-11, subject to the

approval of the Central Government.

APPRECIATION

Your Directors wish to place on record their

appreciation of the dedication and commitment of

your Company’s employees to the growth of your

Company.

Your Directors express their gratitude to the Central

and State Governments, banks, financial institutions,

shareholders and business associates for their

ongoing co-operation and support.

For and on behalf of the Board

Adesh Gupta O. P. Puranmalka

Directors

Place: Mumbai

Date: 18th

May, 2010

29

Nature of disclosure

a) Options granted

b) The pricing formula

c) Options vested

d) Options exercised

e) The total number of shares arising as a result

of exercise of options

f) Options lapsed

g) Variation of terms of options

h) Money realized by exercise of options

i) Total number of options in force

j) Employee-wise details of options granted:

i) Senior managerial personnel:

ii) Any other employee who receives agrant

in any one year of option amounting to

5% or more of option granted during that

year

iii) Identified employees who were granted

option, during any one year, equal to or

exceeding 1% of the issued capital

(excluding outstanding warrants and

conversions) of the Company at the time

of grant

k) Diluted Earnings Per Share (EPS) pursuant to

issue of shares on exercise of options calculated

in accordance with Accounting Standard (AS)

20 ‘Earning per share’.

In terms of the Scheme of Arrangement for demerger of the Cement Business of Grasim Industries Limited

(“Grasim”) to the Company (“Scheme of Arrangement”), the Company is required to offer one (1) employee

stock option for every employee stock option held by the eligible employees in Grasim, as on the date as

may be determined by Grasim for this purpose, under the Compensatory Stock Option Scheme created by

the Company (“ESOS-2010”), pursuant to the Scheme of Arrangement. The stock options enumerated in the

table below are in accordance with the Scheme of Arrangement.

Particulars

1,85,654

Exercise Price

1st Tranche : Rs. 405 per option

2nd Tranche : Rs. 606 per option

In terms of the Scheme of Arrangement, the Exercise

Price of the stock options granted by Grasim under

its Stock Option Scheme (“ESOS-2006”) has been

divided between its stock options under ESOS-2006

and the stock options of the Company. The Exercise

Price as aforesaid has been determined accordingly.

97,534

Nil

Nil

Nil

None

Nil

1,85,654

Mr. O.P. Puranmalka : 9,430

(Whole-Time Director till 31.03.2010)

None

None

Rs. 55.90

ANNEXURE “A” TO THE DIRECTORS’ REPORT

30

l) Difference between the employee compensation

cost computed using the intrinsic value of the

stock options and the employee compensation

cost that shall have been recognized if the fair

value of the options had been used.

The impact of this difference on profits and on

EPS of the company

m) Weighted-average exercise prices and weighted-

average fair values of options whose exercise

price either equals or exceeds or is less than

the market price of the stock

n) A description of the method and significant

assumptions used to estimate the fair values of

options, including the following weighted-

average information:

(i) risk-free interest rate (%)

(ii) expected life (No. of years)

(iii) expected volatility (%)

(iv) dividend yield (%)

(v) the price of the underlying share in market

at the time of option grant

Rs. 0.13 crore

Particulars Rs. Crores

Net Profit 617.96

Add: Intrinsic value

Compensation Cost 0.17

Less: Fair Value

Compensation Cost 0.30

Adjusted Net Profit 617.83

Earnings Per share (Rs.)

(Basic and diluted) Basic Diluted

As reported : 55.92 55.90

As adjusted : 55.91 55.89

Options granted under 1st Tranche

Weighted average exercise price : (Rs.) 405.00

Weighted average fair value : (Rs.) 276.19

Options granted under 2nd Tranche

Weighted average exercise price : (Rs.) 606.00

Weighted average fair value : (Rs.) 231.87

As the shares of the Company are currently not

listed, the market price thereof is not available.

Hence, the classification is not applicable

7.78

5

33.40

2.38

Not applicable, as the shares of the Company are

currently not listed

31

ANNEXURE “B” TO DIRECTORS’ REPORT

Information under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of

Particulars in the Report of Board of Directors) Rule, 1988 and forming part of the Directors’ Report for the

year ending 31st March, 2010

A CONSERVATION OF ENERGY

a) Energy Conservation measures taken

The Company is continuously engaged in the process of energy conservation through improved

operational and maintenance practices. Following measures have been taken by different units of

the company:

- Use of grinding aids for increasing blended cement production and fly ash absorption in

blended cement.

- Process Optimization in Raw Mill, Coal Mill and Cement Mills.

- Installation of Variable Frequency Drives.

- Modification in Compressed Air System and Cooling Tower.

- Installation of reject recirculation system and increasing filtration area of bag house.

- Modification in Pre-heater cyclones, immersion tube and guide vanes for Kiln.

- Usage of thermal power plant ash as fuel to recover residual heat value from petcoke.

b) Additional investment and proposals, if any, being implemented for reduction of consumption

of energy:

- Installation of waste heat recovery systems in pre heater and cooler.

- Cooler modification for recovery of cooler heat losses.

- Use of Solar Lighting System with LED lights.

- Improve efficiency of process fans.

- Installation of additional Air Heater Module for waste heat recovery at Kiln.

- Modification in Pre-heater cyclones and installation of higher efficiency fan at Dryer and

Decoloriser at Kiln.

c) Impact of Measures at (a) and (b) above for reduction of energy consumption and consequent

impact on the cost of production of goods:

- The above measures have resulted/ will result in reduction in fuel & power consumption,

increase in productivity and reduction in energy cost.

d) Total Energy Consumption and Energy Consumption per Unit of Production:

As per Form “A” attached.

B. TECHNOLOGY ABSORPTION

Efforts made in Technology Absorption in Form “B”.

32

RESEARCH & DEVELOPMENT (R&D)

FORM “B”

1 Specific areas in which R&D carried out by the Company:

- Development of variants of wall care putty.

2 Future Plan of Action

- Development of new variants of value added products

3 Expenditure on R & D

Expenditure Rs. Crs.

a. Capital 0.87

b. Recurring 1.99

2.86

c. Total R & D Expenditure as a percentage of turnover 0.07%

4 Technology Absorption, Adoption and Innovation

The Company continuously strives to adopt latest technology for improving productivity and product

quality and reducing consumption of scarce raw material, energy and other inputs.

Information regarding technology imported during the last five years:

- Installation of Loop Duct and TCS System through M/s Taiheiyo Engineering Corporation, Japan for

both kiln lines.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities related to Exports

Exports on F.O.B. basis during the year were Rs. 10.39 Crores

(b) Total Foreign Exchange used and earned

Foreign Exchange used Rs. 5.21 Crores

Foreign Exchange earned Rs. 10.43 Crores

FORM ‘A’

Total Energy Consumption and Energy Consumption per unit of Production

(A) POWER & FUEL CONSUMPTION

Unit Current Year

1. Electricity

a) Purchased - Unit ‘000 168449

Total amount Rs in lacs 7942

Rate per Unit Rs./Unit 4.72

b) Own Generation

I) Through Diesel Generator - Unit ‘000 52465

Unit per Liter of Diesel Oil Units/Ltr. 3.62

Cost / Unit Rs./Unit 8.06

II) Through Steam Turbine - Units ‘000 644967

Units per Kg. Of Steam Co-generation of Steam & Power

Cost / Unit Rs./Unit 3.28

(Cost of fuel and duties only)

33

2. Coal (Slack, Steam & ROM including

Lignite Coal & other Alternative Fuel)

For Co-generation of Steam & Power Tonne 775841

For Process in Cement Plants Tonne 1039120


Average rate Rs./Tonne 3753.33

3. Furnace Oil (Including LSHS)

Quantity K. Ltrs. 13986


Average rate Rs./K. Ltrs. 25266

4. Light Diesel Oil (LDO)

Quantity K. Ltrs. 0



5. High Speed Diesel Oil (HSD)

Quantity K. Ltrs. 2284



(B) CONSUMPTION PER UNIT OF PRODUCTION

Electricity (units) Coal/Petcoke

Current Current

Unit Year Year

Name of the Product

Cement

Grey Cement :

Electricity

Standard Per Tonne 100 -

Actual Per Tonne 81 -

Coal/Petcoke

Standard K.Cal Per Kg of Clinker - 710-800

Actual K.Cal Per Kg of Clinker - 709

White Cement :

Electricity

Actual Per Tonne 119 -

Coal/Petcoke

Actual Kg Per Tonne - 132

(A) POWER & FUEL CONSUMPTION

Unit Current Year

34

AUDITORS’ REPORT

TO THE MEMBERS OF SAMRUDDHI CEMENT LIMITED

1. We have audited the attached Balance Sheet of SAMRUDDHI CEMENT LIMITED (“the Company”) as

at 31st

March, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the

period 4th

September, 2009 (date of incorporation) to 31st

March 2010, both annexed thereto. These

financial statements are the responsibility of the Company’s Management. Our responsibility is to

express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatements. An audit includes examining, on a test basis,

evidence supporting the amounts and the disclosures in the financial statements. An audit also includes

assessing the accounting principles used and the significant estimates made by the Management, as

well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government

in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on

the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations which to the best of our knowledge and

belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far

as it appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this

report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt

with by this report are in compliance with the Accounting Standards referred to in Section 211(3C)

of the Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the explanations given to us, the

said accounts give the information required by the Companies Act, 1956 in the manner so required

and give a true and fair view in conformity with the accounting principles generally accepted in

India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March, 2010;

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the period from 4th


March 2010 and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period 4th


March 2010.

5. On the basis of the written representations received from the Directors as on 31st

March, 2010 taken on

record by the Board of Directors, we report that none of the Directors is disqualified as on 31st

March,

2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

For DELOITTE HASKINS & SELLS For G. P. KAPADIA & CO.

Chartered Accountants Chartered Accountants

(Registration No. 117364W) (Registration No. 104768W)

B. P. Shroff Atul Desai

Partner Partner

Membership No.: 34382 Membership No.: 30850

MUMBAI

Date : May 18, 2010

35

(Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Company’s business/activities/results clauses (x) regarding cash loss

incurred by the Company, (xiii) regarding chit fund, nidhi / mutual benefit fund / societies and (xiv)

regarding dealing or trading in shares, securities, debentures and other investments of CARO are not

applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details

and situation of the fixed assets.

(b) The fixed assets were physically verified during the period by the Management in accordance with a

programme of verification, which in our opinion, provides for physical verification of all the fixed

assets at reasonable intervals. According to the information and explanations given to us, no

material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part

of the fixed assets of the Company and such disposal has, in our opinion, not affected the going

concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the period by the Management

except stocks lying with third parties for which confirmations have been obtained. In our opinion the

frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of

physical verification of inventories followed by the Management were reasonable and adequate in

relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has

maintained proper records of its inventories and no material discrepancies were noticed on physical

verification.

(iv) The Company has neither granted nor taken any loans, secured or unsecured, to / from companies,

firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, there is an adequate

internal control system commensurate with the size of the Company and the nature of its business with

regard to purchases of inventory and fixed assets and the sale of goods and services. During the course

of our audit, we have not observed any major weakness in such internal control system.

(vi) To the best of our knowledge and belief and according to the information and explanations given to us,

there were no contracts or arrangements that needed to be entered in the Register maintained under

Section 301 of the Companies Act, 1956.

(vii) According to the information and explanations given to us, the Company has not accepted any deposit

from the public in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of

the Companies Act, 1956.

(viii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the

nature of its business.

(ix) We have broadly reviewed the books of account maintained by the Company pursuant to the rules

made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the

Companies Act, 1956 in respect of the Company’s products to which the said rules are applicable and

are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

We have, however, not made a detailed examination of the records with a view to determining whether

ANNEXURE TO THE AUDITORS’ REPORT

36

they are accurate or complete. To the best of our knowledge and according to the information and

explanations given to us, the Central Government has not prescribed the maintenance of cost records

for any other product of the Company.

(x) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has been regular in depositing undisputed dues, including Provident Fund, Investor

Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax,

Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with

the appropriate authorities.

(b) There were no undisputed amounts payable in respect of above mentioned statutory dues in arrears

as at 31st March, 2010 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and

Cess, to the extent applicable, which have not been deposited as on 31st

March, 2010 on account

of disputes and the forum where the dispute is pending are given below:

Sr. Name of the statute Forum where dispute Amount Period

No. (Nature of dues) is pending (Rs in Crores)

1 Sale Tax and Value Added Act (Tax) Supreme Court, High Court 89.21 1994-2010

Tribunal 3.29 1988-2010

Appellate Authorities 28.29 1990-2010

Assessing Authorities 0.04 2000-2010

2 Income Tax Act, 1961 (Tax) Supreme Court, High Court 0.47 2006-2009


3 Central Excise Act, 1944 Supreme Court, High Court 2.47 1995-2010

(Duty/Penalty) Tribunal 36.92 1994-2010


Assessing Authorities 5.20 1991-2010

4 Cess under various Acts Supreme Court, High Court 78.35 2002-2010

(Cess/Interest)

5 Service Tax under the Tribunal 21.47 1997-2010

Finance Act, 1994 (Tax) Appellate Authorities 1.51 2004-2010

(xi) In our opinion and according to the information and explanations given to us, the Company has not

defaulted in the repayment of dues to banks, financial institutions and debenture holders during the

period.

(xii) In our opinion and according to the information and explanation given to us, the Company has not

granted loans and advances on the basis of security by way of pledge of shares, debentures and other

securities.

(xiii) In our opinion and according to the information and explanation given to us, the Company has not

given any guarantees for loans taken by others from banks or financial institutions.

(xiv) In our opinion and according to the information and explanations given to us, the term loans have

been applied for the purposes for which they were obtained other than temporary deployment pending

application.

(xv) In our opinion and according to the information and explanations given to us and on an overall

examination of the Balance Sheet, we report that funds raised on short-term basis have not been used

for long term investment.

37

(xvi) According to the information and explanations given to us, during the period covered by our audit

report, the Company has not made any preferential allotment of shares to parties and companies

covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xvii) According to the information and explanations given to us and the records examined by us, security/

charges in respect of debentures transferred pursuant to the ‘Scheme of Arrangement’ under Sections

391 to 394 of the Companies Act, 1956, demerging the cement business of the parent company,

Grasim Industries Limited into the Company on 1st

October, 2009, which became effective on 18th

May, 2010 are yet to be registered in the name of the Company.

(xviii) According to the information and explanations given to us, the Company has not raised any money by

way of public issue during the period.

(xix) During the course of our examination of the books and records of the company, carried out in

accordance with the generally accepted auditing practices in India, and according to the information

and explanations given to us, we have neither come across any instance of fraud on or by the

Company, noticed or reported during the year nor have we been informed of such case by the

management.





Partner Partner


MUMBAI

Date : May 18, 2010

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF SAMRUDDHI CEMENT LIMITED

We have examined the compliance of conditions of corporate governance procedures implemented by

Samruddhi Cement Limited as on 18th

May, 2010, as stipulated in Clause 49 of the Listing Agreement.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our

responsibility was limited to the review of procedures and implementation thereof, adopted by the Company

for ensuring the compliance of conditions of the Corporate Governance. It is neither an audit nor an

expression of opinion on the financial statements of the Company.

On the basis of our review and according to the information and explanation given to us, and representation

made by the management, the conditions of Corporate Governance as stipulated on Clause 49 of the

Listing Agreement have been complied with by the Company.

We state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the management has conducted the affairs of the Company.

For G.P. KAPADIA & CO.,

Chartered Accountants

ATUL B. DESAI

Place: Mumbai Partner

Date: May 18, 2010 (Membership No. 30850)

38

Rs. in Crores

Schedules

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1A 85.00

Share Capital Suspense [Note 5(b), Sch.21(B)] 1B 45.84

Employee Stock Options Outstanding 1C 2.52

Reserves and Surplus 2 4,452.56

4,585.92

Loan Funds

Secured Loans 3 1,835.31

Unsecured Loans 4 707.51

2,542.82

Deferred Tax Liabilities (Net) [Note 16, Sch. 21(B)] 918.01

TOTAL FUNDS EMPLOYED 8,046.75

APPLICATION OF FUNDS

Fixed Assets

Gross Block 5 9,038.70

Less: Depreciation/Amortisation 2,585.19

Net Block 6,453.51

Capital Work-in-Progress 392.95

6,846.46

Investments 6 1,238.64

Current Assets, Loans and Advances

Inventories 7 772.31

Sundry Debtors 8 241.52

Cash and Bank Balances 9 90.95

Loans and Advances 10 611.25

1,716.03

Less:

Current Liabilities and Provisions

Liabilities 11 1,505.07

Provisions 12 249.31

1,754.38

Net Current Assets (38.35)

TOTAL FUNDS UTILISED 8,046.75

Significant Accounting Policies and Notes on Accounts 21 & 22

Schedules referred to above form an integral part of the Balance Sheet

In terms of our report attached

For DELOITTE HASKINS & SELLS For G. P. KAPADIA & CO. ADESH GUPTA

Chartered Accountants Chartered Accountants O.P. PURANMALKA

ASHOK MALU

B.P. SHROFF ATUL B. DESAI Directors

Partner Partner

Mumbai KAMAL RATHI

Dated: 18th May, 2010 Manager & Company Secretary

BALANCE SHEET AS AT 31ST MARCH, 2010

39

Rs. in Crores

Schedules

INCOME

Gross Sales 4,745.70

Less: Excise Duty 455.07

Net Sales 4,290.63

Interest and Dividend Income 13 10.88

Other Income 14 39.07

Increase in Stocks 15 48.39

4,388.97

EXPENDITURE

Raw Materials Consumed 16 535.61

Manufacturing Expenses 17 1,245.18

Purchases of Finished Goods 53.14

Payments to and Provisions for Employees 18 198.62

Selling, Distribution, Administration and Other Expenses 19 1,120.97

Interest 20 87.06

Depreciation and Amortisation [Note 2, Sch. 5] 213.12

3,453.70

Less: Captive Consumption of Cement (Net of Excise Rs. 6.13 Crores) 6.72

3,446.98


Provision for Current Tax (including Wealth Tax Rs. 0.79 Crores) 179.26

Deferred Tax 144.77

Profit after Tax and available for Appropriation 617.96

Appropriations:

Debenture Redemption Reserve 12.50

Proposed Dividend 45.79

Corporate Dividend Tax 7.61

General Reserve 200.00

Balance carried to Balance Sheet 352.06

617.96

Basic earnings per share (Rs.) 55.92

Diluted earnings per share (Rs.) 55.90

Significant Accounting Policies and Notes on Accounts 21 & 22

Schedules referred to above form an integral part of the Profit and Loss Account

PROFIT & LOSS ACCOUNT FOR THE PERIOD FROM 4TH SEPTEMBER, 2009

(DATE OF INCORPORATION) TO 31ST MARCH, 2010




ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI


40

Rs. in Crores

SCHEDULE 1A

SHARE CAPITAL

Authorised

202,000,000 Equity Shares of Rs. 5 each 101.00

(Effective 18th May, 2010 stands increased to 270,000,000

Equity Shares of Rs. 5 each, Rs. 135.00 Crores pursuant to

Scheme of Arrangement)

Issued, Subscribed and Paid up

170,000,000 Equity Shares of Rs. 5 each fully paid 85.00

All of the above, Equity Shares of Rs. 5 each fully paid up

aggregating 100 % of the Company’s paid up Share Capital

are held by Grasim Industries Ltd., the Holding Company.

SCHEDULE 1 B

SHARE CAPITAL SUSPENSE

Share Capital Suspense 45.84

91,683,571 Equity Shares of Rs. 5 each, fully paid, to be issued

without payment being received in cash pursuant to Scheme

of Arrangement. Refer Note 5(b) of Schedule 21 (B).

(Excluding issue of 14,906 Equity Shares kept in abeyance

against shares of Grasim Industries Limited under Share

Capital Suspense)

45.84

SCHEDULE 1 C

EMPLOYEE STOCK OPTIONS OUTSTANDING

Employee Stock Options Outstanding 2.86

Less : Deferred Employees Compensation Expenses 0.34

2.52

Outstanding Employee Stock Options exercisable into 185,654

Equity Shares of Rs. 5 each fully paid up. [Note 19 of Schedule 21(B)]

SCHEDULE 2

RESERVES AND SURPLUS Rs. in Crores

Reserves transferred Addition Deduction/ Balance as at

from Grasim Industries during the Adjustments 31st March, 2010

Ltd. as per Scheme of period during the

Arrangement * period

1. Capital Reserve

- Capital Subsidy 0.30 - - 0.30

2. Debenture Redemption Reserve 27.50 12.50 - 40.00

3. General Reserve # 3,862.80 200.00 2.60 4,060.20

4. Surplus as per Profit and Loss Account - 352.06 - 352.06

3,890.60 564.56 2.60 4,452.56

* Refer note 5 of Schedule 21(B)

# Opening General Reserve

Excess of assets over liabilites transferred from Grasim Industries Limited as per

Scheme of Arrangement 4,088.26

Less : - Share Capital Suspense (Refer Note 5(b) of Schedule 21 (B)) (45.84)

- Deferred Tax Liability recognised on transferred assets towards

accumulated depreciation. (92.24)

- Provision for costs in relation to transfer of assets pursuant to

Scheme of Arrangement (Net of Tax) (87.38)

3,862.80

# Deduction/Adjustments of Rs. 2.60 Crores from General Reserve represents transfer to Employee Stock Option

Outstanding against the Stock Option to be granted against ESOS 2006 of Grasim Industries Limited in terms of

the Scheme of Arrangement (refer note 19 of Schedule 21B).

SCHEDULES FORMING PART OF ACCOUNTS

41

Rs. in Crores

SCHEDULE 3

SECURED LOANS

Non-Convertible Debentures (Note 2) 500.00

Loans and advances from Banks:

- Working Capital Borrowings (Note 3) 74.10

- Rupee Term Loans (Note 4) 450.00

- Foreign Currency Loans (Note 5) 747.71

- Buyer’s Credit (Note 6) 60.40

Deferred Sales Tax Loan (Note 7) 3.10

1,835.31

Notes:

1 Refer Note 5 (d) (ii) of Schedule 21 (B)

2 Non-Convertible Debentures :

(a) 10.48% - XXXVII Series Non-Convertible Debentures

(redeemable at par on 16th December, 2013); 200.00

(b) 8.80% - XXXVIII Series Non-Convertible Debentures

(redeemable at par on 30th December, 2015, with

Put & Call option on 30th December, 2013); and 100.00

(c) 8.01% - XXXIX Series Non-Convertible Debentures

(redeemable at par on 14th July, 2016, with Put &

Call option on 14th July, 2014) 200.00

are secured by first pari passu charge on the fixed assets,

both present and future, of the units at Rawan;

Reddipalayam; Shambhupura; Jawad; Hotgi; Bathinda; Malkhed;

White Cement Unit at Kharia Khangar;

and Bulk Terminal at Doddaballapur.

500.00

3 Working Capital Borrowings from Banks are secured by hypothecation

of stocks and book debts of the Company. 74.10

4 Rupee Term Loans from Banks are secured by first pari passu charge on

certain fixed assets, both present and future, of Kotputli unit. 450.00

5 Foreign Currency Loans from Banks are secured by first pari passu charge on the

fixed assets, both present and future, of the units as mentioned in Note 2 above. 747.71

6 Buyer’s Credit from Bank is secured by exclusive charge on certain specific fixed

assets of Kotputli unit. 60.40

7 Deferred Sales Tax Loan is secured by bank guarantee backed by hypothecation

of stocks and book debts of the Company. 3.10


42

Rs. in Crores

SCHEDULE 4

UNSECURED LOANS

Short Term Loans and Advances

From Banks:

Buyer’s Import Credit 13.46

Other Loans and Advances:

From Banks:

Foreign Currency Loans 518.76

Buyer’s Import Credit (Due within a year Rs. 82.16 Crores) 82.16

From Others:

Deferred Sales Tax Loan (Due within a year Rs. 67.43 Crores) 93.13

707.51

SCHEDULE 5

FIXED ASSETS Rs. in Crores

PARTICULARS GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK

Transferred Additions Deductions As at Transferred For the Deductions Upto As at

from Grasim 31.03.2010 from Grasim period 31.03.2010 31.03.2010

Industries Ltd Industries Ltd

on 01.10.09 on 01.10.09

as per the as per the

Scheme of Scheme of

Arrangement Arrangement

(Note 1) (Note 1)

1 Freehold Land 379.05 114.51 - 493.56 - - - - 493.56

2 Leasehold Land 90.00 8.33 - 98.33 15.81 2.67 - 18.48 79.85

3 Buildings 486.25 47.55 0.35 533.45 86.87 7.18 0.14 93.91 439.54

4 Railway Sidings 103.03 12.43 - 115.46 43.71 2.43 - 46.14 69.32

5 Plant and Machinery 7,110.16 522.57 7.46 7,625.27 2,122.35 190.32 3.38 2,309.29 5,315.98

6 Furniture, Fittings and

Office Equipment 129.79 6.21 8.36 127.64 94.28 6.07 7.94 92.41 35.23

7 Vehicles 17.42 2.20 0.68 18.94 6.67 1.29 0.50 7.46 11.48

8 Intangible Assets

- Computer Software 25.66 1.12 0.73 26.05 15.03 3.20 0.73 17.50 8.55

TOTAL 8,341.36 714.92 17.58 9,038.70 2,384.72 213.16 12.69 2,585.19 6,453.51

Capital work-in-progress (including Advances and Pre-operative Expenses) 392.95

6,846.46


43

Rs. in Crores

Notes:

1 Refer note 5 (e) of Schedule 21(B)

2 Depreciation and Amortisation for the year 213.16

Less: Transferred to pre-operative expenses (Towards use of assets during pre-operative period) 0.04

213.12

3 Execution of documents in respect of plots of Freehold Land amounting to Rs. 0.39 Crores is pending.

4 Buildings include Rs.16.07 Crores being cost of Debentures of and shares in a Company entitling the right of

exclusive occupancy and use of certain premises.

5 Assets amounting to Rs.14.98 Crores are held on co-ownership with other Companies.

6 Fixed assets include assets of Rs. 37.63 Crores not owned by the Company.

7 Plant and machinery includes assets given on operating lease amounting to Rs. 25.54 Crores

8 Capital work in progress includes advance against capital orders, technical know-how and supervision fees,

machinery under installation/in transit, construction materials purchases, other assets under erection and pre-

operative expenses.

9 Leasehold land includes mining rights.

10 The title deeds of immovable properties pursuant to Scheme of Arrangement are yet to be transferred in the name

of the Company.

11 The above includes Research and Development Assets (Plant and Machinery, Furniture, Fittings and Office

Equipments and Intangible Assets) in Gross Block as on 01.10.2009 of Rs. 11.41 Crores and Net Block as on

01.10.2009 of Rs. 9.23 Crores. Additions for the said Assets during the period is Rs. 0.87 Crores.

12 Pre-operative Expenses incurred during the year :

Salaries, Wages, Bonus, Gratuity, etc. 1.01

Contribution to Provident and Other Funds 0.09

Employees’ Welfare Expenses 0.02

Rent and Hire charges 0.08

Rates and Taxes 0.02

Stationery, Printing, Postage and Telephone Expenses 0.01

Travelling and Conveyance 0.19

Legal and Professional Charges 2.18

Depreciation 0.04

Miscellaneous Expenses (Net) 1.37

Interest on Loans and Debentures 10.51

15.52

Less : Sale of Trial Run Production 1.70

Balance Transferred to Fixed Assets/ Capital Work in Progress 13.82


SCHEDULE 5 (Contd.)

44

Rs. in Crores

SCHEDULE 6

INVESTMENTS

LONG TERM (Trade) (At Cost unless otherwise stated)

Shares In Subsidiary Companies - Unquoted

Fully Paid - Equity Shares of Rs.10 each

50,000 Harish Cement Limited 0.10

Others - Unquoted

Fully Paid - Equity Shares of Rs.10 each

4,429,997 Bhaskarpara Coal Company Limited 4.43

CURRENT (At Cost or Fair Value, whichever is less)

Unquoted

1,168,732,446 Units of Debt Schemes of various Mutual Funds 1,234.11

1,238.64

Aggregate Book Value of Unquoted Investments 1,238.64

Note : No. of Units of Various Mutual Funds - Purchased and Redeemed during the year 3,368,797,614

SCHEDULE 7

INVENTORIES

Stores and Spare parts, Packing Materials and Fuel 421.00

Raw Materials 72.64

Finished Goods 87.60

Process Stock 185.98

Waste/Scrap 5.09

772.31

SCHEDULE 8

SUNDRY DEBTORS *

(Unsecured, considered good unless otherwise stated)

Due for period exceeding six months 10.27

(Net of doubtful, fully provided Rs. 1.07 Crores)

Others 231.25

241.52

* Includes amount in respect of which the Company holds deposits. 52.48

SCHEDULE 9

CASH AND BANK BALANCES

Cash balance on hand 0.57

Bank Balances with Scheduled Banks:

Current Accounts (including cheques under collection) 90.33

Deposit Accounts # 0.05

90.38

90.95

Note :

# (a) Rs. 0.04 Crore lodged as security with Government Department.

(b) Rs. 0.01 Crore as Interest accrued.


45

Rs. in Crores

SCHEDULE 10

LOANS AND ADVANCES

(Unsecured, considered good except otherwise stated)

Deposits and Balances with Government and other Authorities (including accrued interest ) 78.91

Other Deposits (Net of Doubtful, fully provided Rs. 3.32 Crores) 65.61

Advances to Holding Company 0.09

Advances to Subsidiaries 73.84

Advances recoverable in cash or in kind or for value to be received 376.35

Advance Income Tax (Net of Provision for Taxation) 16.45

611.25

SCHEDULE 11

CURRENT LIABILITIES

Sundry Creditors :

a) Micro, Small & Medium Enterprises -

[To the extent identified with available information, Note 10 of Sch.21(B)]

b) Others 859.34

859.34

Security and Other Deposits 240.77

Other Liabilities 354.82

Interest accrued but not due on Debentures and Loans 50.14

1,505.07

SCHEDULE 12

PROVISIONS

Provision for Employee Benefits 64.03

Provision for Mines Restoration Expenditure 0.72

Provision for Assets Transfer Cost on demerger [Refer Note 5(c) of Schedule 21(B)] 131.16



249.31

SCHEDULE 13

INTEREST AND DIVIDEND INCOME

i) On Investments

Dividends on Current Investments 9.99

ii) Others : Interest (Gross) on:

Bank and Other Accounts (Tax deducted at source Rs. 0.35 Crore) 0.89

10.88

SCHEDULE 14

OTHER INCOME

Export Incentives 0.46

Rent Received (Tax deducted at source Rs. 0.02 Crore) 0.36

Lease Rent (Tax deducted at source Rs. 0.17 Crore) 1.63

Insurance Claims 1.91

Profit on Sale of Current Investments (Net) 0.03

Excess Provisions written back (Net) 18.18

Scrap/Waste Sales (Net of Excise Duty) 8.84

Miscellaneous Receipts 7.66

39.07


46

Rs. in Crores

SCHEDULE 15

INCREASE/(DECREASE) IN STOCKS

Closing Stock



Waste/Scrap 5.09

278.67

Stock transferred from Grasim Industries Ltd. as per Scheme of Arrangement.



Waste/Scrap 5.28

228.32

Add: (Increase)/Decrease in Excise Duty on Stocks (0.26)

Stock Transfer from pre-operative expenses (1.70)

48.39

SCHEDULE 16

RAW MATERIALS CONSUMED

Stock transferred from Grasim Industries Ltd. as per Scheme of Arrangement 74.64

Purchases and Incidental Expenses (includes cost of Lime Stone raised) 533.61

608.25

Less : Closing Stock 72.64

535.61

SCHEDULE 17

MANUFACTURING EXPENSES

Consumption of Stores, Spare Parts and Components, Packing Materials and Incidental Expenses 248.03

Power and Fuel 831.57

Processing Charges 8.24

Freight and Handling expense on Clinker transfer 109.37

Repairs to Buildings 8.80

Repairs to Machinery (excluding Spare Parts and Components) 30.74

Repairs to Other Assets 8.43

1,245.18

SCHEDULE 18

PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages and Bonus 176.70


Welfare Expenses 9.70

Employee compensation expenses under Employee Stock Option Scheme 0.17

(Refer Note 19 of Schedule 21(B))

198.62


47


Rs. in Crores

SCHEDULE 19

SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES

Commission to Selling Agents 39.69

Brokerage and Discount 56.43

Freight and Handling Expenses 735.02

Advertisements and Sales Promotion 147.95

Insurance 5.34

Rent (including Lease Rent) 13.92




Legal and Professional charges 20.31

Bad debts written off 0.01

Donations 1.50

Exchange Rate Difference (Net) 6.74

Loss on Sale and/or discard of Fixed Assets (Net) 0.96

Miscellaneous Expenses (includes diminution in value of current investment Rs 0.07 Crores) 33.45

1,120.97

SCHEDULE 20

INTEREST

On Fixed Period Loans and Debentures 86.64

Other Interest 10.93

97.57

Less: Interest Capitalized 10.51

87.06

48

SCHEDULE 21

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

(A) Significant Accounting Policies :

1. Accounting Concepts:

The financial statements are prepared and presented in accordance with the Generally Accepted Accounting

Principles (GAAP) in India and comply in all material aspects with the Accounting Standards (AS) notified under the

Companies (Accounting Standard) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered

Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines issued by Securities and

Exchange Board of India.

2. Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that affect the reported

amount of assets and liabilities on the date of financial statements and reported amount of revenues and expenses

during the reporting period. Difference between the actual results and estimates are recognized in the period in

which the results are known/materialized.

3. Fixed Assets:

Fixed Assets are stated at cost, less accumulated depreciation/ amortisation. Cost comprises the purchase price

and any attributable cost of bringing the asset to its working condition for its intended use.

4. Treatment of expenditure during construction period:

Expenditure during construction period is included under Capital Work in Progress and the same is allocated to

the respective fixed assets on the completion of its construction.

5. Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary

assets and liabilities in foreign currency existing at Balance Sheet date are translated at year-end exchange

rates.Exchange differences, including premium or discount on forward exchange contracts, arising till the

commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the

fixed assets are adjusted to the cost of fixed assets. Other premium or discount on forward exchange contracts is

amortised as expense or income over the life of the contract. All other exchange differences are recognised in

Profit and Loss Account.

6. Financial Derivatives:

Financial Derivative instruments such as Swaps and Options, are used to hedge risks associated with fluctuations

in foreign exchange and interest rates. The derivative contracts are closely linked with the underlying transactions

and are intended to be held to maturity. The underlying transactions are recorded as per terms of the financial

derivative contracts.

7. Investments:

Investments are classified as long term based on management intention at the time of purchase, all other

investments are classified as current investment. Current investments are stated at lower of cost and fair value.

Long term investments are stated at cost after deducting provisions made, if any, for permanent diminution (i.e.

other than temporary diminution) in value.

8. Inventories:

Inventories except scrap/waste are valued at the lower of cost and net realisable value. Waste/scrap is valued at net

realisable value. The cost is computed on weighted average basis.

Cost of Finished goods and process stock include cost of conversion and other costs incurred in bringing the

inventories to their present location and condition.

Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

9. Depreciation/Amortisation:

Depreciation/ Amortisation charge is provided for on the following basis:

(a) On fixed assets - on straight line method applying the rates/useful life specified in Schedule XIV of the

Companies Act, 1956, except as stated hereunder :

Asset Estimated Useful Life

Leasehold Land over the period of lease

Capital expenditure on assets not owned 5 years

Motor Cars 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipments 4 years

Furniture and Fixtures and Electrical Fittings 7 years

Mobile Phone 3 years

Continuous process plants as defined in Schedule XIV have been classified on technical assessment and

depreciation provided accordingly.


49

(b) In respect of fixed assets added/disposed off during the year on pro-rata basis with reference to the month of

addition/deduction except in case of new projects where it is provided on the basis of days of use.

10. Impairment of Assets:

Carrying amount of assets is reviewed at Balance Sheet date, if there is indication of impairment, based on the

internal and external factors. The assets are treated as impaired when the carrying amount of asset exceeds its

recoverable amount. An impairment loss, if any, is charged to Profit and Loss Account in the year in which the

asset is identified as impaired. Reversal of impairment loss recognised in prior years, is recorded when there is an

indication that impairment loss recognised for the asset no longer exists or has decreased.

11. Revenue Recognition:

(a) Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to the

buyer and stated at net of sales tax, VAT, trade discounts and rebates but includes excise duty.

(b) Dividend income on investments is accounted for when the right to receive the payment is established.

(c) Interest income is recognised on time proportion basis.

(d) Certain claims of the Company viz. export incentives, insurance, railway etc. in respect of which quantum of

accruals cannot be ascertained with reasonable certainity, are accounted on acceptance basis.

12. Employee Benefits:

(a) Short term employee benefits and contribution to defined contribution plans are recognised as an expense on

accrual at the undiscounted amount in the Profit and Loss Account.

(b) The contribution as specified under the law are paid to the provident fund set up as irrevocable trust by the

Company or to Regional Provident Fund Commissioner. The Company is generally liable for annual contribution

and any shortfall in the fund assets based on the government specified minimum rates of return and

recognises such contributions and shortfall, if any, as an expense in the year incurred.

(c) Post employment and other long term employee benefits are recognised as an expense, at the present value

of the amounts payable determined using actuarial valuation techniques, in the Profit and Loss Account for

the year. Actuarial gains and losses in respect of post employment and other long term benefits are charged

to the Profit and Loss Account.

(d) Employee Stock Option Scheme: The intrinsic value of options granted under Employee Stock Option Scheme

is recognised as deferred compensation cost and amortised over the vesting period.

13. Government Grants:

Government Grants are recognised when there is reasonable assurance that the same will be received. Capital

grants relating to specific assets are reduced from the gross value of the fixed assets and capital grants for Project

Capital Subsidy are credited to Capital Reserve. Revenue grants are recognised in the Profit and Loss Account or

deducted from related expenses.

14. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the

acquisition/construction of qualifying fixed assets are capitalised upto the date when such fixed assets are ready

for their intended use and all other borrowing costs are charged to Profit and Loss Account.

15. Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period in

accordance with the provisions of Income Tax Act, 1961. Deferred Tax resulting from timing difference between

book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or

substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and carried forward only

to the extent there is a reasonable certainty that the deferred tax assets will be realised in future.

16. Mines Restoration Expenditure:

The Company provides for the expenditure to restore the mines based on technical estimates by internal/external

specialists. The total estimate of restoration expenditure is apportioned over the estimated quantities of total

mineral reserves and provision is made based on the minerals mined during the year.

17. Operating Leases:

Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as

Operating Leases and lease rentals thereon are charged to Profit and Loss Account.

SCHEDULE 21 (Contd.)


50

18. Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event and it is probable that an

outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance

Sheet date.

Contingent Liabilities are not recognised but are disclosed and Contingent Assets are neither recognised nor

disclosed, in the financial statements.

19. Research and Development expenditure:

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such

research. Assets procured for research and development activities are generally capitalised.

(B) NOTES ON ACCOUNTS Rs.in Crores

1 Contingent Liabilities not provided for in respect of:

Claims not acknowledged as debts 373.28

(Includes demands in respect of Royalty on Limestone,

Excise Duty, Entry Tax, Cenvat Credit, etc.)

2 Estimated amount of Contracts remaining to be executed on capital account and not 220.12

provided (Net of advance paid Rs. 34.11 Crores).

3 The Company, incorporated on 4th September, 2009, has the main object of carrying on the business of

manufacture and sale of cement and allied products. Accordingly, the current financial year is for the period from

4th September 2009 to 31st March, 2010. This being the first financial year of the Company since incorporation,

disclosure of previous year figures is not applicable.

4 The Company was incorporated by Samruddhi Swastik Trading and Investments Limited (SSTIL) with an Authorised

Share Capital of Rs. 101 Crores divided into 20,20,00,000 Equity Shares of Face Value Rs. 5 each, Grasim

Industries Limited (GIL) acquired the entire holding from SSTIL at par on 3rd October, 2009 and the Company

became a Subsidiary of GIL.

5 (a) Pursuant to a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, GIL has

demerged its Cement Business comprising inter alia of Grey Cement, White Cement and Ready Mix Concrete

and vested into the Company with effect from 1st October, 2009 on a going concern basis. The Scheme has

been approved inter alia by the Shareholders of GIL and Hon’ble High Courts of Madhya Pradesh, Indore

Bench and Gujarat and has become effective on 18th May, 2010.

(b) In terms of the Scheme, the Company will issue and allot its shares to the shareholders of GIL in the ratio of

one equity share of face value of Rs. 5 each fully paid up in the Company for every one equity share of face

value of Rs. 10 each fully paid held by the shareholders of GIL on 28th May, 2010, the record date fixed for

the purpose. Pending allotment of these shares, the amount of Rs. 45,84,17,855 is disclosed as ‘Share

Capital Suspense’. Upon allotment of equity shares to the shareholders of GIL, the shareholding of GIL in the

Company will reduce to 64.96%.

(c) Transfer and vesting of assets and liabilities of the Cement Business of GIL to the Company has been effected

at the values appearing in the books of accounts of GIL as at 30th September, 2009 and recorded as such

in the book of accounts of the Company. Excess of assets over liabilities (net of Debenture Redemption

Reserve of Rs. 27.50 Crores and Capital Subsidy Reserve of Rs. 0.30 Crores transferred as liabilities

pertaining to Cement Business) so recorded, amounting to Rs. 4,088.26 Crores is recognized in these

financial statements, and as stipulated in the scheme, has been credited to ‘General Reserve’. Assets transfer

cost on demerger will be borne by the Company pursuant to the Scheme of Arrangement.

(d) (i) As the Scheme became effective on 18th May, 2010, though the Assets and the Liabilities as on 31st

March, 2010 arising out of the transferred business are vested in the Company, titles of the same are still

not transferred in the name of the Company and being held in the name of GIL.

(ii) Creation of securities against the secured loans as per Schedule 3 of Secured Loans is not yet effected.



51


(e) The details of the Assets and Liabilities relating to the Cement Business vested with the Company with

effect from 1st October, 2009, the appointed date are as follows:

Particulars Rs. in Crores

ASSETS

Gross Block 8,341.36

Less : Depreciation and Amortisation 2,384.72

Net Block 5,956.64

Capital Work-in-Progress 717.26 6,673.90

Investments 0.66


Inventories 795.62

Sundry Debtors 304.12

Cash and Bank balances 118.67

Loans and Advances 571.87

1,790.28

Less :

Current Liabilities snd Provisions

Liabilities 1,435.70

Provisions 63.81

1,499.51

Net Current Assets 290.77

TOTAL ASSETS 6,965.33

LIABILITIES


Capital Subsidy Reserve 0.30 27.80

Loan Funds

Secured Loans 1,392.24

Unsecured Loans 741.17 2,133.41

Deferred Tax Liabilities (Net) 715.86

TOTAL LIABILITIES 2,877.07

Excess of Assets over Liabilities 4,088.26

Contingent Liabilities not provided for 331.10

(f) In terms of the Scheme, the Company will formulate a Compensatory Employee Stock Option Scheme

(CESOS) under which stock option holders of GIL will be entitled to one employee stock option of the

Company for every employee stock option held in GIL.

6 Pursuant to a separate Scheme of Arrangement/Amalgamation under sections 391 to 394 of the Companies

Act, 1956, the Company is proposed to be amalgamated with Ultratech Cement Limited (Ultratech), a

subsidiary of GIL w.e.f 1st July, 2010. The Scheme has been approved by the Shareholders of the Company

and also by Shareholders of GIL and Ultratech. The Scheme will be effective upon approval of the same by

the Hon’ble High Courts of Bombay and Gujarat and such other actions as may be required to be taken in

terms of the Scheme. Upon effectiveness of the Scheme, the shareholders of the Company will receive 4 (four)

equity shares of Ultratech of the face value of Rs. 10 each, credited as fully paid up, for every 7 (seven) fully

paid up shares of the Company of face value of Rs. 5 each held on the record date to be fixed for the

purpose. No effect of the Scheme is required or possible at this stage.

7 The Ministry of Coal, Government of India, has alloted a Coal block in Jharkhand to the Company together

with one other allottee for captive consumption. The allottees have formed a Joint Venture Company i.e.

Bhaskarpara Coal Co. Limited (BCCL) for the aforesaid purpose. In terms of Joint Venture agreement, the

Company holds 4,429,997 equity shares of Rs. 10 each aggregating 47.37% of the paid up capital of BCCL.


52

8 (a) Loans and Advances in the nature of loans/advances given to Holding and Subsidiary Companies.

Rs. in Crores

Balance as on Maximum Balance

31st March, 2010 outstanding during the period

Harish Cement Limited (Subsidiary Company) 73.84 73.84

Grasim Industries Limited (Holding Company) 0.09 0.09

(b) Advances recoverable in cash or in kind include:

Payments made to employees by way of Loans and Advances in the nature of loan where no interest is

charged or interest is charged at a rate less than the rate prescribed in Section 372A of Companies Act,1956

Rs. in Crores

Outstanding as on 31st March, 2010 8.01

Maximum balance outstanding during the period. 9.31

9 The Ministry of Textiles, vide its orders dated 30th June, 1997 and 1st July, 1999 has deleted cement from the list

of commodities to be packed in Jute bags under the Jute Packaging (Compulsory use in Packing Commodities)

Act, 1987. In view of this, the Company does not expect any liability for non-despatch of cement in Jute bags in

respect of earlier years, carried on by its predecessors.

10 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises

Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest

and accordingly no additional disclosures have been made. The above information regarding Micro, Small and

Medium Enterprises has been determined to the extent such parties have been identified on the basis of information

avaliable with the Company. This has been relied upon by the auditors.

11 The following are included under other heads of expenses in the Profit and Loss Account :

Rs. in Crores

(a) Stores and Spares Consumed 24.70

(b) Power and Fuel 25.75

(c) Repairs to Machinery 9.80

(d) Royalty and Cess 78.13

(e) Rates and Taxes 6.56

(f) Others 3.40

12 Revenue expenditure on Research and Development included in different heads of expenses in the Profit and Loss

Account is Rs. 1.99 crores.

13 Auditors’ Remuneration

Rs in Lakhs

(a) Statutory Auditors:

Audit fee 64.73

Tax audit fee 7.50

For certification and other work 6.56

Reimbursement of expenses 2.86

(b) Cost Auditors:

Audit fee 2.39

For certification and other work —

Reimbursement of expenses 0.23

14 Managerial Remuneration* :

Rs. in Crores

(Paid to Whole-Time Director; Rs. Nil to Manager)

Salary 0.25

Contribution to Provident and other funds 0.04

Perquisite 0.02

0.31

* In the determination of Manager’s remuneration, certain perquisites have been valued in accordance with the

Income Tax Rules, 1962.

Expenses towards gratuity and leave encashment provisions are determined actuarially on an overall company basis at

the end of each year and accordingly have not been considered in the above information. Employee compensation

under Employee Stock Option Scheme has also not been considered in the above information.



53



15 Earnings per share:

Net profit for the period attributable to equity shareholders Rs. in Crores 617.96

Weighted average number of equity shares outstanding Numbers 110,505,024

Weighted average Potential Equity Shares on exercise of option Numbers 35,260

(i) Basic earnings per share (face value of Rs.5 each) Rs. 55.92

(ii) Diluted earnings per share (face value of Rs.5 each) Rs. 55.90

Rs. in Crores

16 Deferred Tax Assets and Liabilities as on 31st March, 2010 are as under:

Deferred Tax Assets:

Accrued Expenses deductible on payment basis 59.32

Expenses allowable in installments in Income Tax 35.58

Others 0.90

95.80

Deferred Tax Liability :

Accumulated Depreciation 1,013.81

Net Deferred Tax Liability 918.01

17 Details of Company’s interest in its Joint Ventures, having Joint Control , as per the requirement of AS-27 on

Financial Reporting of Interest in Joint Ventures is as under :

Rs. in Crores

Bhaskarpara Coal

Particulars Co.Limited

% Share Held 47.37%

(a) Assets 4.39

(b) Liabilities 0.00*

(c) Income 0.00

(d) Expenses 0.04

* Denotes amount below Rs. 0.01 Crores

18 The Company has one business segment “Cement” as its primary segment. The Company has secondary segment

(geographical segment) which being insignificant is not disclosed.

19 In terms of the Scheme of Arrangement, as mentioned in Note 5 of Schedule 21 (B), a Compensatory Employee

Stock Option Scheme (CESOS) will be formulated under which the stock option holders of GIL will be entitiled to

one employee stock option of the Company for every employee stock option held by them in GIL. The CESOS is

an outcome of the Scheme and is in no way a modified or a new ESOS.

The impact on account of CESOS has been accounted for on provisional basis, based on the divided grant price

of the stock options to be issued by the Company under CESOS, as per the division of stock option grant price

under GIL’s Employee Stock Option Scheme 2006 (ESOS 2006) recommended by the Merchant Bankers to GIL’s

ESOS 2006. Adjustments, if any, required on final approval of grant price by the Compensation Committee of the

Board of Directors of GIL in consultation with the Board of Directors of the Company, will be carried out in the

next year.

The provisional grant price considered for options under CESOS is Rs. 405 per stock option granted under the

Tranche I and Rs. 606 per stock option granted under Tranche II of ESOS 2006.

54



Under the ESOS - 2006 of GIL, GIL has granted 218140 Options to its eligible employees in two tranches, the

details of which are given hereunder :

(A) Employee Stock Option Scheme:

Particulars Tranche I Tranche II

No. of Options granted 201530 16610

Method of Accounting Intrinsic Value Intrinsic Value

Vesting Plan Graded Vesting - Graded Vesting -

25% every year 25% every year

Normal Exercise Period 5 Years from the 5 Years from the

date of Vesting date of Vesting

Grant Date 23rd August, 2007 25th January, 2008

Grant Price (Rs. Per share) 1928 2885

Market Price on the Date of Grant of Option (Rs.) 2728 2885

(B) Movement of Options Granted:

Particulars For the Period ended

31st March, 2010

Options Outstanding at the beginning of the period -

Granted pursuant to the Scheme of Arrangement 185654

Exercised during the period -

Lapsed during the period -

Options outstanding at the end of the period 185654

Options unvested at the end of the period 88120

Options exercisable at the end of the period 97534

(C) Fair Valuation:

The fair value of options used to compute proforma net income and earnings per equity share has been done

by an independent firm of Chartered Accountants on the date of grant of original scheme using Black-Scholes

Model.

The Key assumptions in Black-Scholes Model for calculating fair value as on the date of grant are:

(i) Risk Free Rate 7.78%

(ii) Option Life Vesting Period (1 Year) + Average of exercise period

(iii) Expected Volatility Tranche I : 33%, Tranche II : 36%

(iv) Expected Growth in Dividend 2.38%

The weighted average fair value of the option as on the date of grant of ESOS - 2006 by GIL works out to

Rs. 273 per stock option.

55



Had the compensation cost for the stock options to be granted under CESOS been determined, based on fair-value

approach, the Company’s net profit and earnings per share would have been as per the proforma amounts indicated

below:

Rs. in Crores

Particulars For the Period

ended 31st

March, 2010

Net Profit (As Reported) 617.96

Add: Compensation Expenses under CESOS included

in the Net Profit 0.17

Less: Compensation Expenses under CESOS as

per fair value 0.30

Net Profit (Fair value basis) 617.83

Basic Earning per Share (As Reported) - Rs./Share 55.92

Basic Earning per Share (Fair value basis) - Rs./Share 55.91

Diluted Earning per Share (As Reported) - Rs./Share 55.90

Diluted Earning per Share (Fair value basis) - Rs./Share 55.89

20 Related Party Transactions :

(a) Parties where control exists -

Holding Companies:

Grasim Industries Limited (With effect from 3rd October, 2009)

Samruddhi Swastik Trading and Investments Limited (SSTIL) (Upto 2nd October, 2009)

Subsidiary:

Harish Cement Limited (HCL)

(b) Other Related Parties with whom transactions have taken place during the year :

Fellow Subsidiaries:

Samruddhi Swastik Trading and Investments Limited (SSTIL) (With effect from 3rd October, 2009)

UltraTech Cement Limited (UTCL)

Grasim Bhiwani Textiles Limited (GBTL)

Joint Ventures:

Bhaskarpara Coal Co. Limited

Key Management Personnel:

Shri O.P. Puranmalka, Whole Time Director*

Shri Kamal Rathi, Manager

* Shri O.P. Puranmalka has been appointed as a Director of the Company with effect from 16th February,

2010 to 31st March, 2010 while he was an employee of the Cement Business of Grasim Industries Limited,

which has been demerged into the Company under a Scheme of Arrangement under Sections 391 to 394 of

the Companies Act, 1956. Upon the Scheme becoming effective on 18th May, 2010 he is being considered

as Whole-Time Director.

56



(c) Nature of Transaction

Rs. in Crores

Particulars Holding Subsidiary Fellow Joint Key Total

Company Subsidiaries Ventures Manag-

ement

HCL UTCL GBTL SSTIL Personnel

1. Sales and Services 0.53 Nil 125.61 0.03 Nil Nil Nil 126.17

2. Purchases of goods /

Payment for other services 0.25 Nil 38.44 Nil 0.05 Nil 0.31 39.05

3. Finance Provided Nil 27.00 Nil Nil Nil Nil Nil 27.00

4. Finance Obtained 1.25 Nil Nil Nil Nil Nil Nil 1.25

5. Repayment against Finance

Obtained 1.25 Nil Nil Nil Nil Nil Nil 1.25

6. Sale of Fixed Assets 0.03 Nil 0.03 Nil Nil Nil Nil 0.06

7. Purchase of Fixed Assets Nil Nil 0.05 Nil Nil Nil Nil 0.05

8. Equity Contribution in cash Nil Nil Nil Nil Nil 3.87 Nil 3.87

9. Outstanding Balances as on

31st March, 2010 :

Loans and Advances 0.09 73.84 0.18 Nil 0.07 Nil Nil 74.18

Creditors 13.09 Nil 4.29 Nil Nil Nil Nil 17.38

21 Retirement Benefits

A Defined Benefit Plans:

(a) Gratuity: The employees’ gratuity fund scheme is managed by Grasim Industries Limited Employee

Gratuity Fund, Trust of Holding Company, Grasim Industries Ltd. The present value of obligation is

determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each

period of service as giving rise to additional unit of employee benefit entitlement and measure each unit

separately to build up final obligation.

The amount recognised in respect of gratuity (funded by the Company) is as under:

Rs. in Crores

(i) Present value of the funded defined benefit obligation at the end of the period 93.46

Fair value of plan assets 92.21

Net Liability / (Assets) 1.25

(ii) The amounts recognized in salary, wages and employee benefits in the

Profit and Loss Account as follows in respect of gratuity :

Current service cost 4.49

Interest on defined benefit obligations 3.91

Expected return on plan assets (3.33)

Net Actuarial (gain) / loss recognised during the period (2.07)

Charge to Profit and Loss Account 3.00

(iii) Actual return on plan assets

Expected return on plan assets 3.33

Actuarial gain / (loss) on plan assets 0.08

Actual return on plan assets 3.41

57



(iv) Reconciliation of present value of the obligation : Rs. in Crores

Opening defined benefit obligation 88.80


Interest cost 3.91

Actuarial (gain)/loss (2.00)

Benefits paid (1.74)

Closing defined benefit obligation as on 31st March, 2010 93.46

(v) Reconciliation of fair value of the plan assets :

Opening fair value of the plan assets 88.80


Actuarial gain/(loss) 0.08

Contributions by the employer 1.74


Closing fair value of the plan assets 92.21

(vi) Experience Adjustments

Defined benefit obligation 93.46

Plan assets 92.21

Surplus/(Deficit) (1.25)

Experience adjustment on plan liabilities 0.89

Experience adjustment on plan assets 0.08

(vii) Investment details of plan assets

Government of India Securities 25%

Corporate Bonds 16%

Insurer Managed Fund 48%

Others 11%

Total 100%

(viii) (a) The fair value of the Plan Assets includes 8.8% Non-Convertible Debentures

of the Company of the face value of Rs. 1.20 Crores purchased at Rs. 1.19 Crores.

(b) There are no amounts included in the fair value of plan assets for:

- Company’s own financial instrument other than those mentioned above [(viii) (a)]

- Property occupied by or other assets used by the Company

(c) The overall expected rate of return on assets is determined based on the

market prices prevailing on that date, applicable to the period over which the

obligation is to be settled.

(ix) Principal Actuarial Assumptions at the Balance Sheet date

Discount / rate 8.27%

Estimated rate of return on plan assets 7.50%

The estimates of future salary increases are considered

taking into account inflation, seniority promotion and other relevant factors. 8.00%

Mortality Published rates

under LIC (1994-95)

mortality tables

(b) The obligation for compensated absence is recognised in the same manner as gratuity, amounting to

Rs.2.01 Crores for the period ended 31st March, 2010.

B Defined Contribution Plans -

Amount recognized as expense and included in the Schedule 18 - “Contribution to Provident & Other Funds”

- Rs. 11.49 Crores.

58



22 Disclosure of Derivative Instruments

(i) Derivative Instruments as on 31st March, 2010

In Millions

Type of Instrument Type of Currency 31st March, Cross

Exposure 2010 Currency

A. Forward Contracts (for hedging USD 18.62 INR

foreign currency exposures) Import

(Payables) Euro 9.35 USD

CHF 1.07 USD

Euro 2.69 INR

Import Trade USD 3.04 INR

Finance

B. Currency & Interest Rate Swaps (For hedging ECB USD 10.00 INR

of foreign currency and interest rate exposures) JPY 28,642.50 INR

Import Trade JPY 3,905.11 INR

Finance

(ii) Unhedged Foreign Currency Exposure as on 31st March, 2010

In Millions

Type of Exposure Currency 31st March,

2010

Export (Receivables) USD 0.69

Rs. in Crores

23 (a) Provisions made for Mines closure/ restoration :

Balance transferred from Grasim Industries Ltd

as per Scheme of Arrangement 0.53

Add: Provision made during the period 0.19

Less: Utilised during the period —

Closing Balance 0.72

(b) Provision for Cost of Transfer of Assets :

Opening Balance —

Add: Created during the period 131.16

Less: Utilised during the period —


24 Additional information required under Part II of Schedule VI to the Companies Act, 1956 is as per Schedule 22.

59


SCHEDULE 22

ADDITIONAL INFORMATION UNDER PART II OF SCHEDULE VI TO THE COMPANIES ACT, 1956

A. CAPACITY AND PRODUCTION

Products Unit Installed Capacity Production #

(Quantity) (Quantity)

2009-10 2009-10

1 Cement Tonne 25650000 9845527

2 Ready Mix Concrete Cu. Meter 5485708 1190941

3 White Cement Tonne 560000 276416

4 Putty Tonne 260000 129762

Note: Licenced capacity not indicated due to abolition of industrial licenses under The Industries (Development and

Regulation) Act, 1951.

The Installed Capacities are certified by the Management and accepted by the Auditors as correct, being a

technical matter.

# (i) Excludes Clinker not converted into Cement production.

(ii) The installed capacity is transferred from Grasim Industries Limited pursuant to Scheme of

Arrangement. Production Quantity is for 6 months only, hence is not comparable with the installed

capacity.

B. TURNOVER AND STOCKS (Value Rs. in Crores)

Products Unit Turnover Stock

2009-10 2009-10

Quantity Value Quantity Value

1 Cement Tonne 9828080 3,842.27 239733 55.33

315565*

2 Ready Mix Concrete Cu. Meter 1192228 316.17 - -

3 White Cement Tonne 245359 225.33 27999 16.34

27813*

4 Putty Tonne 125173 263.22 15497 14.66

80*

5 Others 98.71 1.27

4,745.70 87.60

* Inter-Divisional transfers/Captive Consumption

60



C. RAW MATERIALS, STORES, SPARE PARTS AND COMPONENTS (Value Rs. in Crores)

Unit 2009-10

Quantity Value

1 Raw Materials Consumed:

Lime Stone Tonne 12239347 138.00

Slag Tonne 306074 21.62

Clinker Tonne 20298 10.52

1422369*

China Clay Tonne 73692 3.90

Chemicals Tonne 3633 53.97

Gypsum Tonne 437820 55.08

Fly Ash Tonne 1748270 68.74

Laterite, Hematite etc. Tonne 480980 40.00

Sand Tonne 984784 39.15

Aggregates Tonne 1299394 56.98

Others 47.65

535.61

* Consumption of own Production

2 Purchase of Finished Goods:

Cement Tonne 199008 52.86

Ready Mix Concrete Tonne 1287 0.28

53.14

3 Imports at CIF Value:

Raw Materials 60.97

Spare Parts, Components and Coal 125.16

Capital Goods 41.40

4 Total Value of Raw Materials, Stores, Spare Parts and Components consumed:

(Value Rs. in Crores)

Raw Materials Stores, Spare parts,

Components etc.

2009-10 2009-10

Value % Value %

Imported 55.63 10% 37.26 14%

Indigenous 479.98 90% 235.47 86%

535.61 100% 272.73 100%

61





ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI



Value Rs. in Crores

D. EXPENDITURE IN FOREIGN CURRENCY 2009-10

i) Technical know-how and Services 3.20

ii) Professional and Consultancy Fees 0.28

iii) Interest and Commitment Charges on Foreign Currency Loans/Debentures 0.19

iv) Others 1.54

E. EARNINGS IN FOREIGN EXCHANGE:

i) Export of Goods - On F.O.B basis 10.39

ii) Others 0.04

62

Rs. in Crores

Current year

A. Cash Flow from Operating Activities

a. Net profit before tax and exceptional item 941.99

Adjustment for :

Depreciation 213.12

Interest expenses 87.06

Bad Debts Written Off 0.01

Dividend Income (9.99)

Excess Provisions written back (Net) (18.18)

Employee Compensation Expenses under Employee Stock Option Scheme 0.17

Provision for Mines Restoration 0.19

(Profit) / Loss on sale of Fixed Assets (Net) 0.96

(Profit) / Loss on sale of Current Investments (Net) (0.03)

b. Operating profit before working capital changes 1,215.30

Adjustments for :

Trade and other receivables 66.63

Inventories 23.31

Trade Payables 91.15

c. Cash generated from Operations 1,396.39

Direct Taxes Paid (Net) (186.76)

Net Cash from / (used in) Operating Activities 1,209.63

B. Cash Flow from Investing Activities

Purchase of Fixed Assets (380.06)

Sale of Fixed Assets 3.93

Purchase of Investments (1,234.08)

Investment in Joint Venture (3.87)

Loans & Advances to Subsidiaries (27.00)

Dividend received 9.99

Net Cash from / (used in) Investing Activities (1,631.09)

C. Cash Flow from Financing Activities

Proceeds from Equity 85.00

Proceeds from Borrowings 453.11

Repayments of Borrowings (43.70)

Interest paid (100.67)

Net Cash from / (used in) Financing Activities 393.74

D. Net Increase/(Decrease) in Cash and Cash equivalent (27.72)

Cash and Cash equivalent as on 04.09.09 —

Add : Transferred from Grasim Industries Ltd. as per Scheme of Arrangement 118.67 118.67

Cash and Cash equivalent at end of the year 90.95

(Cash and cash equivalent represent Cash and Bank balances)

Note: 1 Transactions arising out of demerger as per note 5 of Schedule 21 (B) is a non cash transaction and not

considered in above cash flow workings.

2 This being first financial year of the Company since incorporation disclosure of previous year is not applicable.

3 Cash Flow statement has been prepared under the indirect method as set out in AS-3.

4 Purchase of fixed assets includes movement of capital work in progress during the period.




ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI


CASH FLOW STATEMENT FOR THE PERIOD FROM 4TH SEPTEMBER, 2009

(DATE OF INCORPORATION) TO 31ST MARCH,2010

63

Balance Sheet Abstract and General Business Profile

1. Registration Details

CIN No. U26959GJ2009PLC058011 State Code 0 4

Balance Sheet Date 3 1 - 0 3 - 2 0 1 0

2. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L 8 5 0 0 0 0

Bonus Issue Private Placement

N I L N I L

Share Capital Suspense

4 5 8 4 1 8

3. Position of Mobilisation and Development of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

9 8 0 1 1 2 7 9 9 8 0 1 1 2 7 9

Sources of Funds:

Paid-up Capital Share Capital Suspense

8 5 0 0 0 0 4 5 8 4 1 8

Reserves & Surplus Employee Stock Option

4 4 5 2 5 5 5 2 2 5 1 6 1

Secured Loans Unsecured Loans

1 8 3 5 3 0 9 6 7 0 7 5 1 1 2

Deferred Tax Liability

9 1 8 0 1 0 0

Application of Funds: Net Fixed Assets Investments

6 8 4 6 4 6 2 1 1 2 3 8 6 4 0 1

Net Current Assets Miscellaneous Expenditure

- 3 8 3 5 8 4 N I L

Accumulated Losses

N I L

4. Performance of the Company (Amount in Rs. Thousands)

Turnover Total Expenditure

4 7 4 5 7 0 2 8 3 8 0 3 7 1 6 5

+ - Profit/(Loss) before Tax + - Profit/(Loss) after Tax

9 4 1 9 8 6 3 6 1 7 9 5 6 3

Earnings per Share (Rs.) Dividend Rate (%)

5 5 . 9 2 3 5 %

5. Generic Names of three principal products/services of the Company (As per monetary terms)

a) Item Code No. 2 5 2 3 2 9 - 0 1

Product Description G R E Y P O R T L A N D C E M E N T

b) Item Code No. 2 5 2 3 2 1

Product Description W H I T E C E M E N T

ADESH GUPTA

O.P. PURANMALKA

KAMAL RATHI ASHOK MALU

Manager & Company Secretary Directors

Mumbai

Dated: 18th May, 2010

ADDITIONAL INFORMATION UNDER PART IV OF

SCHEDULE VI TO THE COMPANIES ACT, 1956

64

Name of the Subsidiary Company Harish Cement Limited

1 Financial year of the Subsidiary ended on 31.03.2010

2 Holding Company’s Interest

i) Equity Shares of Rs.10 each

a) Number of Shares Fully paid 50,000

b) % Share held by Samruddhi Cement Limited 100%

Rs. in Lacs

3 Net aggregate amount of Profit/(Losses) of the Subsidiary, so far as they

concern members of Samruddhi Cement Limited

i) For the Financial Year of Subsidiary

a) Dealt with in the accounts of the Holding Company NIL

b) Not dealt with in the accounts of the Holding Company NIL

ii) For the previous Financial years of the Subsidiary since it became

the holding Company’s Subsidiary

a) Dealt with in the accounts of the Holding Company NIL

b) Not dealt with in the accounts of the Holding Company NIL

4 As the Financial Year of the Subsidiary Company coincide with the

Financial Year of the Holding Company, Section 212(5) of the

Companies Act, 1956, is not applicable. NA

Changes in the interest of the Holding Company between the end

of the Subsidiary’s financial year and 31st March, 2010

Number of shares acquired

Material changes between the end of the Subsidiary’s financial

year and 31st March, 2010

a) Fixed assets (net additions)

b) Investments (Net)

c) Moneys lent by the Subsidiary

d) Moneys borrowed by the Subsidiary company other than

for meeting current liabilities

Statement pursuant to Section 212 of the Companies

Act, 1956 relating to Subsidiary Company

65

AU D I TO R S ’ R E P O R T ON THE CONSOLIDATED

FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF SAMRUDDHI CEMENT LIMITED

1. We have audited the attached Consolidated Balance Sheet of SAMRUDDHI CEMENT LIMITED (“the

Company”), its subsidiary and jointly controlled entity (the Company, its subsidiary and jointly controlled

entity constitute “the Group”) as at 31st March, 2010, the Consolidated Profit and Loss Account and the

Consolidated Cash Flow Statement of the Group for the period 4th September, 2009 (date of incorporation)

to 31st March, 2010, both annexed thereto. The Consolidated Financial Statements include jointly

controlled entity accounted in accordance with Accounting Standard 27 (Financial Reporting of Interests in

Joint Ventures) as notified under the Companies (Accounting Standards) Rules, 2006. These financial

statements are the responsibility of the Company’s Management and have been prepared on the basis of

the separate financial statements and other financial information regarding components. Our responsibility

is to express an opinion on these Consolidated Financial Statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatements. An audit includes examining, on a test basis,

evidence supporting the amounts and the disclosures in the financial statements. An audit also includes

assessing the accounting principles used and the significant estimates made by the Management, as

well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. We did not audit the financial statements of the jointly controlled entity, whose financial statements

reflect total assets of Rs. 4.39 Crores as at 31st March, 2010, total revenues of Rs. Nil and net cash

outflows amounting to Rs. 3.58 Crores for the period 1st October, 2009 (date of acquisition of the

jointly controlled entity) to 31st March, 2010, as considered in the Consolidated Financial Statements.

These financial statements have been audited by other auditor whose reports have been furnished to us

and our opinion in so far as it relates to the amounts included in respect of this jointly controlled entity

is based solely on the report of the other auditor.

4. We report that the Consolidated Financial Statements have been prepared by the Company in accordance

with the requirements of Accounting Standard 21 (Consolidated Financial Statements) and Accounting

Standard 27 (Financial Reporting of Interests in Joint Ventures) as notified under the Companies

(Accounting Standards) Rules, 2006.

5. Based on our audit and on consideration of the separate audit reports on individual financial statements

of the Company, its aforesaid subsidiary and jointly controlled entity and to the best of our information

and according to the explanations given to us, in our opinion, the Consolidated Financial Statements

give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at

31st March, 2010;

(ii) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the period

4th September, 2009 (date of incorporation) to 31st March, 2010 and

(iii) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the period

4th September, 2009 (date of incorporation) to 31st March, 2010.





Partner Partner


Mumbai


66

CONSOLIDATED BALANCE SHEET AS AT 31ST

MARCH, 2010

Schedules Rs. in Crores

SOURCES OF FUNDS


Share Capital 1A 85.00

Share Capital Suspense [Note 4(b), Sch.21 (B)] 1B 45.84

Employee Stock Options Outstanding 1C 2.52

Reserves and Surplus 2 4,452.52

4,585.88

Loan Funds

Secured Loans 3 1,835.31

Unsecured Loans 4 707.51

2,542.82

Deferred Tax Liabilities (Net) [Note 11, Sch. 21 (B)] 918.01

TOTAL FUNDS EMPLOYED 8,046.71


Fixed Assets

Gross Block 5 9,086.24

Less: Depreciation/Amortisation 2,585.32

Net Block 6,500.92


6,924.56

Goodwill 0.05

Investments 6 1,234.11


Inventories 7 772.31

Sundry Debtors 8 241.52

Cash and Bank Balances 9 91.32

Loans and Advances 10 541.34

1,646.49

Less:


Liabilities 11 1,509.19

Provisions 12 249.31

1,758.50

Net Current Assets (112.01)

TOTAL FUNDS UTILISED 8,046.71

Significant Accounting Policies and

Notes on Accounts 21

Schedules referred to above form an integral part of the Balance Sheet




ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI


67

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM

4TH SEPTEMBER, 2009 (DATE OF INCORPORATION) TO 31ST MARCH, 2010

Schedules Rs. in Crores

INCOME

Gross Sales 4,745.70

Less: Excise Duty 455.07

Net Sales 4,290.63

Interest and Dividend Income 13 10.88

Other Income 14 39.07

Increase in Stocks 15 48.39

4,388.97

EXPENDITURE

Raw Materials Consumed 16 535.61

Manufacturing Expenses 17 1,245.18

Purchases of Finished Goods 53.14

Payments to and Provisions for Employees 18 198.62

Selling, Distribution, Administration and Other Expenses 19 1,121.01

Interest 20 87.06

Depreciation and Amortisation [Note 1, Sch. 5] 213.12

3,453.74

Less: Captive Consumption of Cement

(Net of Excise Rs. 6.13 Crores) 6.72

3,447.02


Provision for Current Tax

(Including provison for Wealth Tax Rs. 0.79 Crores) 179.26

Deferred Tax 144.77

Profit after Tax and available for Appropriation 617.92

Appropriations:




General Reserve 200.00

Balance carried to Balance Sheet 352.02

617.92

Basic earnings per share (Rs.) 55.92

Diluted earnings per share (Rs.) 55.90

Significant Accounting Policies and

Notes on Accounts 21

Schedules referred to above form an integral part of the Profit and Loss Account




ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI


68

SCHEDULE 1 A Rs. in Crores

SHARE CAPITAL

Authorised

202,000,000 Equity Shares of Rs. 5 each 101.00

(Effective 18th May, 2010 stands increased to 270,000,000 Equity Shares of Rs. 5 each,

Rs. 135.00 Crores pursuant to Scheme of Arrangement)

Issued, Subscribed and Paid up

170,000,000 Equity Shares of Rs. 5 each fully paid 85.00

All of the above, Equity Shares of Rs. 5 each fully paid up aggregating

100% of the Company’s paid up Share Capital are held by

Grasim Industries Ltd., the Holding Company.

SCHEDULE 1 B

SHARE CAPITAL SUSPENSE

Share Capital Suspense 45.84

91,683,571 Equity Shares of Rs. 5 each, fully paid, to be issued without payment being

received in cash pursuant to Scheme of Arrangement. Refer Note 4(b) of Schedule 21(B).

(Excluding issue of 14,906 Equity Shares kept in abeyance against shares of Grasim

Industries Limited under Share Capital Suspense)

45.84

SCHEDULE 1 C

EMPLOYEE STOCK OPTIONS OUTSTANDING

Employee Stock Options Outstanding 2.86

Less : Deferred Employees Compensation Expenses 0.34

2.52

Outstanding Employee Stock Options exercisable into 185,654

Equity Shares of Rs. 5 each fully paid up.

SCHEDULE 2

RESERVES AND SURPLUS

Reserves transferred Addition Deduction/ Balance as at

from Grasim Industries during the Adjustments 31st March, 2010

Ltd. as per Scheme of period during the period

Arrangement *

1. Capital Reserve

- Capital Subsidy 0.30 - - 0.30

2. Debenture Redemption Reserve 27.50 12.50 - 40.00

3. General Reserve # 3,862.80 200.00 2.60 4,060.20

4. Surplus as per Profit and Loss Account - 352.02 - 352.02

3,890.60 564.52 2.60 4,452.52

* Refer note 4 of Schedule 21 (B)

# Opening General Reserve :

Excess of assets over liabilites transferred from Grasim Industries Limited as per Scheme of Arrangement 4,088.26

Less : - Share Capital Suspense (Refer Note 4(b) of Schedule 21 (B)) (45.84)

- Deferred Tax Liability recognised on transferred assets towards accumulated depreciation (92.24)

- Provision for costs in relation to transfer of assets pursuant to Scheme of Arrangement (Net of Tax) (87.38)

3,862.80

# Deduction/Adjustments of Rs. 2.60 Crores from General Reserve represents transfer to Employee Stock Option

Outstanding against the Stock Option to be granted against ESOS 2006 of Grasim Industries Limited in terms of the

Scheme of Arrangement.

SCHEDULES FORMING PART OF CONSOLIDATED


69

Rs. in Crores

SCHEDULE 3

SECURED LOANS

Non-Convertible Debentures 500.00

Loans and advances from Banks:

- Working Capital Borrowings from Banks 74.10

- Rupee Term Loans 450.00

- Foreign Currency Loans 747.71

- Buyer’s Credit 60.40

Deferred Sales Tax Loan 3.10

1,835.31

SCHEDULE 4

UNSECURED LOANS

Short Term Loans and Advances

From Banks:


Other Loans and Advances:

From Banks:

Foreign Currency Loans 518.76


From Others:

Deferred Sales Tax Loan 93.13

707.51

SCHEDULE 5

FIXED ASSETS Rs. in Crores

PARTICULARS GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK

Transferred Additions Deductions As at Transferred For the Deductions Upto As at

from Grasim 31.03.2010 from Grasim period 31.03.2010 31.03.2010

Industries Ltd Industries Ltd

on 01.10.09 on 01.10.09

as per the Scheme as per the Scheme

of Arrangement of Arrangement

1 Freehold Land 379.05 161.72 - 540.77 - - - - 540.77

2 Leasehold Land 90.00 8.33 - 98.33 15.81 2.67 - 18.48 79.85

3 Buildings 486.25 47.55 0.35 533.45 86.87 7.18 0.14 93.91 439.54

4 Railway Sidings 103.03 12.43 - 115.46 43.71 2.43 - 46.14 69.32

5 Plant and Machinery 7,110.16 522.57 7.46 7,625.27 2,122.35 190.32 3.38 2,309.29 5,315.98

6 Furniture, Fittings and 130.08 6.21 8.36 127.93 94.37 6.11 7.94 92.54 35.39

Office Equipment

7 Vehicles 17.43 2.20 0.68 18.95 6.67 1.29 0.50 7.46 11.49

8 Intangible Assets

- Computer Software 25.66 1.15 0.73 26.08 15.03 3.20 0.73 17.50 8.58

TOTAL 8,341.66 762.16 17.58 9,086.24 2,384.81 213.20 12.69 2,585.32 6,500.92

Capital work-in-progress 423.64

(including Advances and

Pre-operative Expenses)

6,924.56

Notes:

Rs. in Crores

Depreciation and Amortisation for the year 213.20

Less: Transferred to pre-operative expenses (Towards use of assets during pre-operative period) 0.08

213.12



70

Rs. in Crores

SCHEDULE 6

INVESTMENTS

CURRENT (At Cost or Fair Value, whichever is less)

Unquoted

1,168,732,446 Units of Debt Schemes of various Mutual Funds 1,234.11

1,234.11

Aggregate Book Value of : Unquoted Investments 1,234.11

Note : No. of Units of Various Mutual Funds - Purchased and Redeemed during the year 3,368,797,614

SCHEDULE 7

INVENTORIES

Stores and Spare parts, Packing Materials and Fuel 421.00

Raw Materials 72.64



Waste/Scrap 5.09

772.31

SCHEDULE 8

SUNDRY DEBTORS *

(Unsecured, considered good unless otherwise stated)

Due for period Exceeding Six Months 10.27

(Net of doubtful, fully provided Rs. 1.07 Crores)

Others 231.25

241.52

* Includes amount in respect of which the Company holds deposits. 52.48

SCHEDULE 9


Cash balance on hand 0.57

Bank Balances with Scheduled Banks:

Current Accounts (including cheques under collection) 90.48

Deposit Accounts # 0.27

90.75

91.32

Note :

# (a) Rs. 0.04 Crore lodged as security with Government Department.

(b) Rs. 0.01 Crore as Interest accrued.



71

Rs. in Crores

SCHEDULE 10

LOANS AND ADVANCES

(Unsecured, considered good except otherwise stated)

Deposits and Balances with Government and other Authorities (including accrued interest) 82.23

Other Deposits (Net of Doubtful, fully provided Rs. 3.32 Crores) 65.61

Advances to Holding Company 0.09

Advances recoverable in cash or in kind or for value to be received 376.96

Advance Income Tax (Net of Provision for Taxation) 16.45

541.34

SCHEDULE 11

CURRENT LIABILITIES

Sundry Creditors :

(a) Micro, Small & Medium Enterprises -

(b) Others 860.87

860.87

Security and Other Deposits 240.77

Other Liabilities 354.85

Bank Overdraft 2.56

Interest accrued but not due on Debentures and Loans 50.14

1,509.19

SCHEDULE 12

PROVISIONS

Provision for Employee benfits 64.03

Provision for Mines Restoration Expenditure 0.72

Provison for Assets Transfer Cost on demerger [Refer Note 4(c) of Schedule 21(B)] 131.16



249.31

SCHEDULE 13

INTEREST AND DIVIDEND INCOME

i) On Investments

Dividends on Current Investments 9.99

ii) Others: Interest (Gross) on:

Bank and Other Accounts (Tax deducted at source Rs. 0.35 Crore) 0.89

10.88

SCHEDULE 14

OTHER INCOME

Export Incentives 0.46

Rent Received (Tax deducted at source Rs. 0.02 Crore) 0.36

Lease Rent (Tax deducted at source Rs. 0.17 Crore) 1.63

Insurance Claims 1.91

Profit on Sale of Current Investments (Net) 0.03

Excess Provisions written back (Net) 18.18

Scrap/Waste Sales (Net of Excise Duty) 8.84

Miscellaneous Receipts 7.66

39.07



72

Rs. in Crores

SCHEDULE 15

INCREASE / (DECREASE) IN STOCKS

Closing Stock



Waste/Scrap 5.09

278.67

Stock transferred from Grasim Industries Ltd. as per Scheme of Arrangement :



Waste/Scrap 5.28

228.32

Add: (Increase) / Decrease in Excise Duty on Stocks (0.26)

Stock Transfer from pre-operative expenses (1.70)

48.39

SCHEDULE 16

RAW MATERIALS CONSUMED

Stock transferred from Grasim Industries Ltd. as per Scheme of Arrangement 74.64

Purchases and Incidental Expenses (includes cost of Lime Stone raised) 533.61

608.25

Less : Closing Stock 72.64

535.61

SCHEDULE 17

MANUFACTURING EXPENSES

Consumption of Stores, Spare Parts and Components, Packing Materials and Incidental Expenses 248.03

Power and Fuel 831.57

Processing Charges 8.24

Freight and handling expense on Clinker transfer 109.37

Repairs to Buildings 8.80

Repairs to Machinery (excluding Spare Parts and Components) 30.74

Repairs to Other Assets 8.43

1,245.18



73

Rs. in Crores

SCHEDULE 18

PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

Salaries, Wages and Bonus 176.70


Welfare Expenses 9.70

Employee compensation expenses under Employee Stock Option Scheme 0.17

(Refer Note 19 of Schedule 21 (B))

198.62

SCHEDULE 19

SELLING, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES

Commission to Selling Agents 39.69

Brokerage and Discount 56.43

Freight and Handling Expenses 735.02

Advertisements and Sales Promotion 147.95

Insurance 5.34

Rent (including Lease Rent) 13.92




Legal and Professional charges 20.31

Bad debts written off 0.01

Donations 1.50

Exchange Rate Difference (Net) 6.74

Loss on Sale and/or discard of Fixed Assets (Net) 0.96

Miscellaneous Expenses (includes diminution in value of current investment Rs. 0.07 Crores) 33.49

1,121.01

SCHEDULE 20

INTEREST

On Fixed Period Loans and Debentures 86.64

Other Interest 10.93

97.57

Less: Interest Capitalized 10.51

87.06



74

SCHEDULE 21

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

(A) Significant Accounting Policies:

1. Accounting Concepts:

The financial statements are prepared and presented in accordance with the Generally Accepted Accounting

Principles (GAAP) in India and comply in all material aspects with the Accounting Standards (AS) notified

under the Companies (Accounting Standard) Rules, 2006 (as amended), other pronouncements of the

Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 1956 and guidelines

issued by Securities and Exchange Board of India.

2. Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that affect the reported

amount of assets and liabilities on the date of financial statements and reported amount of revenues and

expenses during the reporting period. Difference between the actual results and estimates are recognized in

the period in which the results are known/materialized.

3. Fixed Assets:

Fixed Assets are stated at cost, less accumulated depreciation/amortisation. Cost comprises the purchase

price and any attributable cost of bringing the asset to its working condition for its intended use.

4. Treatment of expenditure during construction period:

Expenditure during construction period is included under Capital Work-in-Progress and the same is allocated

to the respective fixed assets on the completion of its construction.

5. Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction.

Monetary assets and liabilities in foreign currency existing at Balance Sheet date are translated at year-end

exchange rates. Exchange differences, including premium or discount on forward exchange contracts, arising

till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for

acquisition of the fixed assets are adjusted to the cost of fixed assets. Other premium or discount on forward

exchange contracts is amortised as expense or income over the life of the contract. All other exchange

differences are recognised in Profit and Loss Account.

6. Financial Derivatives:

Financial Derivative instruments such as Swaps and Options, are used to hedge risks associated with

fluctuations in foreign exchange and interest rates. The derivative contracts are closely linked with the

underlying transactions and are intended to be held to maturity. The underlying transactions are recorded as

per terms of the financial derivative contracts.

7. Investments:

Investments are classified as long term based on management intention at the time of purchase, all other

investments are classified as current investment. Current investments are stated at lower of cost and fair value.

Long term investments are stated at cost after deducting provisions made, if any, for permanent diminution

(i.e. other than temporary diminution) in value.

8. Inventories:

Inventories except scrap/waste are valued at the lower of cost and net realisable value. Waste/scrap is valued

at net realisable value. The cost is computed on weighted average basis.

Cost of Finished goods and process stock include cost of conversion and other costs incurred in bringing the

inventories to their present location and condition.

Obsolete, defective, slow moving and unserviceable inventories are duly provided for.

9. Depreciation/Amortisation:

Depreciation/Amortisation charge is provided for on the following basis:

(a) On fixed assets - on straight line method applying the rates/useful life specified in Schedule XIV of the

Companies Act, 1956, except as stated hereunder :

Asset Estimated useful life

Leasehold Land over the period of lease

Capital expenditure on assets not owned 5 years

Motor Cars 5 years

Computer Software 3 years

Computer and Other Electronic Office Equipments 4 years

Furniture and Fixtures and Electrical Fittings 7 years

Mobile Phone 3 years



75

Continuous process plants as defined in Schedule XIV have been classified on technical assessment and

depreciation provided accordingly.

(b) In respect of fixed assets added/disposed off during the year on pro-rata basis with reference to the

month of addition/deduction except in case of new projects where it is provided on the basis of days of

use.

10. Impairment of Assets:

Carrying amount of assets is reviewed at Balance Sheet date, if there is indication of impairment, based on

the internal and external factors. The assets are treated as impaired when the carrying amount of asset

exceeds its recoverable amount. An impairment loss, if any, is charged to Profit and Loss Account in the year

in which the asset is identified as impaired. Reversal of impairment loss recognised in prior years, is recorded

when there is an indication that impairment loss recognised for the asset no longer exists or has decreased.

11. Revenue Recognition:

(a) Sales revenue is recognised on transfer of the significant risks and rewards of ownership of the goods to

the buyer and stated at net of sales tax, VAT, trade discounts and rebates but includes excise duty.

(b) Dividend income on investments is accounted for when the right to receive the payment is established.

(c) Interest income is recognised on time proportion basis.

(d) Certain claims of the Company viz. export incentives, insurance, railway etc. in respect of which quantum

of accruals cannot be ascertained with reasonable certainity, are accounted on acceptance basis.

12. Employee Benefits:

(a) Short term employee benefits and contribution to defined contribution plans are recognised as an

expense on accrual at the undiscounted amount in the Profit and Loss Account.

(b) The contribution as specified under the law are paid to the provident fund set up as irrevocable trust by

the Company or to Regional Provident Fund Commissioner. The Company is generally liable for annual

contribution and any shortfall in the fund assets based on the government specified minimum rates of

return and recognises such contributions and shortfall, if any, as an expense in the year incurred.

(c) Post employment and other long term employee benefits are recognised as an expense, at the present

value of the amounts payable determined using actuarial valuation techniques, in the Profit and Loss

account for the year. Actuarial gains and losses in respect of post employment and other long term

benefits are charged to the Profit and Loss Account.

(d) Employee Stock Option Scheme: The intrinsic value of options granted under Employee Stock Option

Scheme is recognised as deferred compensation cost and amortised over the vesting period.

13. Government Grants:

Government Grants are recognised when there is reasonable assurance that the same will be received.

Capital grants relating to specific assets are reduced from the gross value of the fixed assets and capital

grants for Project Capital Subsidy are credited to Capital Reserve. Revenue grants are recognised in the Profit

and Loss Account or deducted from related expenses.

14. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the

acquisition/construction of qualifying fixed assets are capitalised upto the date when such fixed assets are

ready for their intended use and all other borrowing costs are charged to Profit and Loss Account.

15. Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period

in accordance with the provisions of Income Tax Act, 1961. Deferred Tax resulting from timing difference

between book and taxable profit for the year is accounted for using the tax rates and laws that have been

enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognised and

carried forward only to the extent there is a reasonable certainty that the deferred tax assets will be realised in

future.

16. Mines Restoration Expenditure:

The Company provides for the expenditure to restore the mines based on technical estimates by internal/

external specialists. The total estimate of restoration expenditure is apportioned over the estimated quantities

of total mineral reserves and provision is made based on the minerals mined during the year.

17. Operating Leases:

Leases where significant portion of risk and reward of ownership are retained by the Lessor are classified as

Operating Leases and lease rentals thereon are charged to Profit and Loss Account.




76

18. Provisions/Contingencies:

A provision is recognised when there is a present obligation as a result of past event and it is probable that

an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be

made. Provisions are determined based on best estimate of the amount required to settle the obligation at the

Balance Sheet date.

Contingent Liabilities are not recognised but are disclosed and Contingent Assets are neither recognised nor

disclosed, in the financial statements.

19. Research and Development expenditure:

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such

research. Assets procured for research and development activities are generally capitalised.

(B) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 Principles of Consolidation:

(a) The Consolidated Financial Statements (CFS) are prepared in accordance with Accounting Standard on

“Consolidated Financial Statements” (AS - 21) and “Financial Reporting of Interests in Joint Ventures” (AS

- 27) issued by the Institute of Chartered Accountants of India.

The CFS are prepared using uniform significant accounting policies, in accordance with the generally

accepted accounting policies.

(b) The CFS comprise the financial statements of Samruddhi Cement Limited, its subsidiary and its interest in

Joint Venture as on 31st March, 2010, which are as under:

(I) Subsidiary:

Name of the Company Country of % Shareholding &

Incorporation Voting Power

Harish Cement Ltd. (HCL) India 100.00

(II) Joint Venture (JV):

Name of the Company Status Country of Ownership Financial

Incorporation Interest % Statements as on

Bhaskarpara Coal Company Ltd. Audited India 47.37 31st March, 2010

(c) The effect of intra group transactions between Samruddhi Cement Limited, subsidiary and joint venture

are eliminated in consolidation.

2 The Company, incorporated on 4th September, 2009, has the main object of carrying on the business of

manufacture and sale of cement and allied products. Accordingly, the current financial year is for the period

from 4th September, 2009 to 31st March 2010. This being the first financial year of the Company since

incorporation, disclosure of previous year figures is not applicable.

3 The Company was incorporated by Samruddhi Swastik Trading and Investments Limited (SSTIL) with an

Authorised Share Capital of Rs. 101 Crores divided into 20,20,00,000 Equity Shares of Face value Rs. 5

each. Grasim Industries Limited (GIL) acquired the entire holding from SSTIL at par on 3rd October, 2009

and the Company became a Subsidiary of GIL.

4 (a) Pursuant to a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, GIL has

demerged its Cement Business comprising inter alia of Grey Cement, White Cement and Ready Mix

Concrete and vested into the Company with effect from 1st October, 2009 on a going concern basis.

The Scheme has been approved inter alia by the Shareholders of GIL and Hon’ble High Courts of

Madhya Pradesh, Indore Bench and Gujarat and has become effective on 18th May, 2010.

(b) In terms of the Scheme, the Company will issue and allot its shares to the shareholders of GIL in the ratio

of one equity share of face value of Rs. 5 each fully paid up in the Company for every one equity share

of face value of Rs. 10 each fully paid held by the shareholders of GIL on 28th May, 2010, the record

date fixed for the purpose. Pending allotment of these shares, the amount of Rs. 45,84,17,855 is

disclosed as ‘Share Capital Suspense’. Upon allotment of equity shares to the shareholders of GIL, the

shareholding of GIL in the Company will reduce to 64.96%.




77

(c) Transfer and vesting of assets and liabilities of the Cement Business of GIL to the Company has been

effected at the values appearing in the books of accounts of GIL as at 30th September, 2009 and recorded

as such in the book of accounts of the Company. Excess of assets over liabilities (net of Debenture

Redemption Reserve of Rs. 27.50 Crores and Capital Subsidy Reserve of Rs. 0.30 Crores transferred as

liabilities pertaining to Cement Business) so recorded, amounting to Rs. 4,088.26 Crores is recognized in

these financial statements, and as stipulated in the scheme, has been credited to ‘General Reserve’. Assets

transfer cost on demerger will be borne by the Company pursuant to Scheme of Arrangement.

(d) (i) As the Scheme became effective on 18th May, 2010, though the Assets and the Liabilities as on 31st

March, 2010 arising out of the transferred business are vested in the Company, titles of the same

are still not transferred in the name of the Company and being held in the name of GIL.

(ii) Creation of securities against the secured loans as per Schedule 3 of Secured Loans is not yet

effected.

(e) In terms of the Scheme, the Company will formulate a Compensatory Employee Stock Option Scheme

(CESOS) under which stock option holders of GIL will be entitled to one employee stock option of the

Company for every employee stock option held in GIL.

5 Pursuant to a separate Scheme of Arrangement/Amalgamation under sections 391 to 394 of the Companies

Act, 1956, the Company is proposed to be amalgamated with Ultratech Cement Limited (Ultratech), a

subsidiary of GIL w.e.f 1st July, 2010. The Scheme has been approved by the Shareholders of the Company

and also by Shareholders of GIL and Ultratech. The Scheme will be effective upon approval of the same by

the Hon’ble High Courts of Bombay and Gujarat and such other actions as may be required to be taken in

terms of the Scheme. Upon effectiveness of the Scheme, the shareholders of the Company will receive 4 (four)

equity shares of Ultratech of the face value of Rs. 10 each, credited as fully paid up, for every 7 (seven) fully

paid up shares of the Company of face value of Rs. 5 each held on the record date to be fixed for the

purpose. No effect of the Scheme is required or possible at this stage.

6 Goodwill arising out of consolidation of financial statements of Subsidiaries and Joint Ventures is not

amortised. However, the same is tested for impairment at each Balance Sheet Date.

7 The Company’s proportionate share in assets, liabilities, income and expenses of its Joint Venture Company

included in these consolidated financial statements are given below :

Rs. in Crores

(a) BALANCE SHEET Current Year

SOURCES OF FUNDS

Equity Share Capital 4.43

Loan Funds -

Deferred Tax Liabilities -

TOTAL 4.43



Cash and Bank Balances 0.34

Profit and Loss Debit Balance 0.04

TOTAL 4.43

(b) PROFIT AND LOSS ACCOUNT

Income -

Expenditure 0.04

Profit before Tax (0.04)

Tax Expenses -

Profit after Tax (0.04)




78

8 The Ministry of Textiles, vide its orders dated 30th June, 1997 and 1st July, 1999 has deleted cement from the

list of commodities to be packed in Jute bags under the Jute Packaging (Compulsory Use in Packing

Commodities) Act, 1987. In view of this, the Company does not expect any liability for non-dispatch of

cement in Jute bags in respect of earlier years, carried on by its predecessors.

9 (a) Contingent Liabilities not provided for in respect of : Rs. in Crores

Claims not acknowledged as debts 373.28

(Includes demands in respect of Royalty on Limestone,

Excise Duty, Entry Tax, Cenvat Credit, etc.)

(b) Estimated amount of Contracts remaining to be executed on

capital account and not provided (Net of advance paid Rs. 84.18 Crores) 310.32

10 Earnings per share:

Net profit for the period attributable to equity shareholders Rs. in Crores 617.92

(i) Weighted average number of equity shares outstanding Numbers 110,505,024

(ii) Weighted average Potential Equity Shares on exercise of option Numbers 35,260

(i) Basic earnings per share (face value of Rs. 5 each) Rs. 55.92

(ii) Diluted earnings per share (face value of Rs. 5 each) Rs. 55.90

11 Deferred Tax Assets and Liabilities as on 31st March, 2010 are as under:

Rs. in Crores

Deferred Tax Assets:

Accrued Expenses deductible on payment basis 59.32

Expenses allowable in installments in Income Tax 35.58

Others 0.90

95.80

Deferred Tax Liability :

Accumulated Depreciation 1,013.81

Net Deferred Tax Liability 918.01

12 The Company has one business segment “Cement” as its primary segment. The Company has secondary

segment (geographical segment) which being insignificant is not disclosed.

13 Related Party Transactions :

(a) Parties where control exists -

Holding Companies:

Grasim Industries Limited (With effect from 3rd October, 2009)

Samruddhi Swastik Trading and Investments Limited (SSTIL) (Upto 2nd October, 2009)

(b) Other Related Parties with whom transactions have taken place during the year :

Fellow Subsidiaries:

Samruddhi Swastik Trading and Investments Limited (With effect from 3rd October, 2009)

UltraTech Cement Limited (UTCL)

Grasim Bhiwani Textiles Limited (GBTL)

Joint Ventures:

Bhaskarpara Coal Co. Limited

Key Management Personnel:

Shri O.P. Puranmalka, Whole Time Director*

Shri Kamal Rathi, Manager




79

* Shri O.P.Puranmalka has been appointed as a Director of the Company with effect from 16th February,

2010 to 31st March, 2010 while he was an employee of the Cement Business of Grasim Industries

Limited, which has been demerged into the Company under a Scheme of Arrangement under Sections

391 to 394 of the Companies Act, 1956. Upon the Scheme becoming effective on 18th May, 2010 he

is being considered as Whole-Time Director.

(c) Nature of Transaction

Rs. in Crores

Particulars Holding Fellow Subsidiaries Joint Key Total

Company Ventures Manage-

ment

UTCL GBTL SSTIL # Personnel

1. Sales and Services 0.53 125.61 0.03 Nil Nil Nil 126.17

2. Purchases of goods /

Payment for other services 0.25 38.44 Nil 0.05 Nil 0.31 39.05

3. Finance Obtained 1.25 Nil Nil Nil Nil Nil 1.25

4. Repayment against

Finance Obtained 1.25 Nil Nil Nil Nil Nil 1.25

5. Sale of Fixed Assets 0.03 0.03 Nil Nil Nil Nil 0.06

6. Purchase of Fixed Assets Nil 0.05 Nil Nil Nil Nil 0.05

7. Equity Contribution in cash Nil Nil Nil Nil 3.87 Nil 3.87

8. Outstanding Balances

as on 31st March :

Loans and Advances 0.09 0.18 Nil 0.07 Nil Nil 0.34

Creditors 13.09 4.29 Nil Nil Nil Nil 17.38

# Transaction with Joint Venture has been disclosed at full value.

14 Retirement Benefits

A Defined Benefit Plans:

(a) Gratuity: The employees’ gratuity fund scheme is managed by Grasim Industries Limited Employee

Gratuity Fund, Trust of Holding Company, Grasim Industried Ltd. The present value of obligation is

determined based on actuarial valuation using the Projected Unit Credit Method, which recognises

each period of service as giving rise to additional unit of employee benefit entitlement and measure

each unit separately to build up final obligation.

The amount recognised in respect of gratuity (funded by the Company) is as under:

Rs. in Crores

(i) Present value of the funded defined benefit obligation at the end of the period 93.46

Fair value of plan assets 92.21

Net Liability/(Assets) 1.25

(ii) The amounts recognized in salary, wages and employee benefits

in the Profit and Loss Account as follows in respect of gratuity :


Interest on defined benefit obligations 3.91

Expected return on plan assets (3.33)

Net Actuarial (gain)/loss recognised during the period (2.07)

Charge to Profit and Loss Account 3.00

(iii) Actual return on plan assets


Actuarial gain/(loss) on plan assets 0.08

Actual return on plan assets 3.41




80

(iv) Reconciliation of present value of the obligation:

Opening defined benefit obligation 88.80


Interest cost 3.91

Actuarial (gain)/loss (2.00)


Closing defined benefit obligation as on 31st March, 2010 93.46

(v) Reconciliation of fair value of the plan assets:

Opening fair value of the plan assets 88.80


Actuarial gain/(loss) 0.08

Contributions by the employer 1.74


Closing fair value of the plan assets 92.21

(vi) Experience Adjustments

Defined benefit obligation 93.46

Plan assets 92.21

Surplus/(Deficit) (1.25)

Experience adjustment on plan liabilities 0.89

Experience adjustment on plan assets 0.08

(vii) Investment details of plan assets

Government of India Securities 25%

Corporate Bonds 16%

Insurer Managed Fund 48%

Others 11%

Total 100%

(viii) (a) The fair value of the Plan Assets includes 8.8% Non-Convertible Debentures

of the Company of the face value of Rs. 1.20 Crores purchased at Rs. 1.19

Crores.

(b) There are no amounts included in the fair value of plan assets for:

(i) Company’s own financial instrument other than those mentioned above

[(viii) (a)]

(ii) Property occupied by or other assets used by the Company

(c) The overall expected rate of return on assets is determined based on the

market prices prevailing on that date, applicable to the period over which

the obligation is to be settled.

(ix) Principal Actuarial Assumptions at the Balance Sheet date

Discount / rate 8.27%

Estimated rate of return on plan assets 7.50%

The estimates of future salary increases are considered taking into

account inflation, seniority promotion and other relevant factors. 8.00%

Mortality Published rates

under LIC (1994-95)

mortality tables


Rs. in Crores



81

(b) The obligation for compensated absence is recognised in the same manner as gratuity, amounting

to Rs. 2.01 Crores for the period ended 31st March, 2010.

B Defined Contribution Plans -

Amount recognized as expense and included in the Schedule 18 - “Contribution to Provident & Other

Funds” - Rs. 11.49 Crores

15 Disclosure of Derivative Instruments

(i) Derivative Instruments as on 31st March, 2010

(In Millions)

Type of Instrument Type of Exposure Currency 31st March, 2010 Cross Currency

A. Forward Contracts USD 18.62 INR

(For hedging of foreign

currency exposures)

Import (Payables) Euro 9.35 USD

CHF 1.07 USD

Euro 2.69 INR

Import Trade

Finance USD 3.04 INR

B. Currency & Interest

Rate Swaps

(For hedging of foreign

currency and interest ECB USD 10.00 INR

rate exposures) JPY 28,642.50 INR

Import Trade

Finance JPY 3,905.11 INR

(ii) Unhedged Foreign Currency Exposure as on 31st March, 2010

(In Millions)

Type of Exposure Currency 31st March, 2010

Export (Receivables) USD 0.69

Rs. in Crores

16 (a) Provisions made for Mines closure/ restoration:

Balance transferred from Grasim Industries Ltd as per Scheme of Arrangement 0.53

Add: Provision made during the period 0.19

Less: Utilised during the period -


(b) Provision for Cost of Transfer of Assets:

Opening Balance -

Add: Created during the period 131.16

Less: Utilised during the period -


17 Revenue expenditure on Research and Development included in different heads of expenses in the Profit and

Loss Account is Rs. 1.99 Crores.

ADESH GUPTA

O.P. PURANMALKA

KAMAL RATHI ASHOK MALU

Manager & Company Secretary Directors

Mumbai





82

Rs. in Crores

Current year


a. Net profit before tax and exceptional item 941.95

Adjustment for :

Prior Period adjustment written off 0.04

Depreciation 213.12

Interest expenses 87.06

Bad Debts Written Off 0.01

Dividend Income (9.99)

Excess Provisions written back (Net) (18.18)

Employee Compensation Expenses under Employee Stock Option Scheme 0.17

Provision for Mines Restoration 0.19

(Profit)/Loss on sale of Fixed Assets (Net) 0.96

(Profit)/Loss on sale of Current Investments (Net) (0.03)

b. Operating profit before working capital changes 1,215.30

Adjustments for :

Trade and other receivables 66.45

Inventories 23.31

Trade Payables 94.86

c. Cash generated from Operations 1,399.92

Direct Taxes Paid (Net) (186.76)

Net Cash from/(used in) Operating Activities 1,213.16


Purchase of fixed assets (414.75)

Sale of fixed assets 3.93

Purchase of Investments (1,234.08)

Dividend received 9.99

Net Cash from/(used in) Investing Activities (1,634.91)

C. Cash Flow from Financing Activities

Proceeds from Equity 85.00

Proceeds from borrowings 453.11

Repayments of borrowings (43.70)

Interest paid (100.67)

Net Cash from/(used in) Financing Activities 393.74

D. Net Increase/(Decrease) in Cash and Cash equivalent (28.01)

Cash and Cash equivalent as on 04.09.09 -

Add : Transferred as per Scheme of Arrangement 119.33 119.33

Cash and Cash equivalent at end of the year 91.32

(Cash and cash equivalent represent Cash and Bank balances)

Note: 1 Transactions arising out of demerger as per note 4 of Schedule 21 (B) is a non cash transaction and not

considered in above cash flow workings.

2 This being first financial year of the Company since incorporation disclosure of previous year is not applicable.

3 Cash Flow statement has been prepared under the indirect method as set out in AS-3.

4 Purchase of fixed assets includes movement of capital work in progress during the period.




ASHOK MALU


Partner Partner

Mumbai KAMAL RATHI


CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM

4TH SEPTEMBER, 2009 (DATE OF INCORPORATION) TO 31ST MARCH, 2010

83

Subsidiary Company’s Reports and Accounts

84

HARISH CEMENT LIMITED

DIRECTORS’ REPORT

TO THE MEMBERS

The Directors have pleasure in presenting the Thirteenth Annual Report of your Company together with the

Audited Accounts for the year ended 31st March, 2010.

OPERATIONS

During the year under review, Company incurred Rs.4,721.28 lacs for puchases of private land of Plant &

Mining Site area & also incurred preoperative expenses of Rs.221.65 lacs as compared to last year

Rs. 108.09 lacs.

Your company have entered in to land purchase agreements for 1,702 bighas of private land upto

31st March, 2010 falling in plant site and mining lease area.

The Govt. of HP has approved and notified the Rehabilitation and Resettlement Plan,2009 for resettlement

& rehabilitation of families affected by Cement Plants to be established in Himachal Pradesh.

Your company has received Technical Offers from technology suppliers for Main Plant and machineries and

these offers have been evaluated by the consultant for placing the order.

DIRECTORS

Shri. Arun Daga retires from office by rotation and being eligible offer himself for re-appointment.

DIRECTORS’ RESPONSIBILITY STATEMENT

As stipulated in Section 217(2AA) of the Companies Act, 1956, your Directors subscribe to the “Directors

Responsibility Statement” and confirm as under that :

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

along with proper explanation relating to material departures;

ii) accounting policies have been selected and applied consistently and the judgments and estimates made

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 or loss of the company for that period;

iii) proper and sufficient care has been taken for the maintenance of adequate records in accordance with

the provisions of this Act for safeguarding the Assets of the company and for preventing and detecting

fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

AUDITORS

The observations made in the Auditors’ Report are self explanatory and therefore do not call for any further

comments under Secion 217(3) of the Companies Act,1956.

The Board has proposed that M/s. G.P. Kapadia & Co. Chartered Accountants, Mumbai, be re-appointed as

the Statutory Auditor of the Company and to hold office till the conclusion of the next Annual General

Meeting of the Company. M/s G.P. Kapadia & Co. Chartered Accountants, Mumbai have forwarded their

certificate to the Company , stating that their re-appointment, if made, will be within the limit specited in that

behalf in Sub-section (1B) of Section 224 of the Companies Act,1956.

PARTICULARS OF EMPLOYEES

The Company had no employee in the Category specified Under Section 217 (2A) of the Companies Act,

1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO

In view of the nature of operations, we have nothing to report on these matters.

On behalf of the Board

R.M.GUPTA

P. K.JAIN

Mumbai ARUN DAGA

Date: 18th May, 2010 Directors

85


AUDITORS’ REPORT

To the Shareholder’s of Harish Cement Limited

We have audited the attached Balance Sheet of Harish Cement Limited as at 31st

March, 2010. No Profit

and Loss Account has been prepared as the Company has not carried out any activities. These financial

statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In accordance with the provisions of Section 227 of the Companies Act, 1956, we report that:

1. As the Company has carried out no activities during the year, the requirement by the Companies

(Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A)

of the Companies Act, 1956, is not applicable.

2. Further to our comments in paragraph 1 above, we report that :

(a) we have obtained all the information and explanations, which to the best of our knowledge and

belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far

as appears from our examination of those books;

(c) the balance sheet dealt with by this report is in agreement with the books of account;

(d) in our opinion, the balance sheet dealt with by this report, complies with the accounting standards

referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31st March, 2010, and

taken on record by the Board of Directors, we report that none of the directors is disqualified as on

31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the

Companies Act, 1956; and

(f) in our opinion and to the best of our information and according to the explanations given to us, the

said balance sheet read together with the significant accounting policies and other notes appearing

in Schedule 5, gives the information required by the Companies Act, 1956, in the manner so

required and give a true and fair view in conformity with the accounting principles generally

accepted in India, of the state of Company’s affairs as at 31st March, 2010.

G. P Kapadia & Co

Chartered Accountants

(Firm No 104768W)

ATUL B. DESAI

Partner

(Membership No 30850)

Mumbai


86


BALANCE SHEET AS AT 31ST MARCH, 2010

(Amount in Rs.)

Schedules Previous

Year

31st March, 2010

SOURCES OF FUNDS


Share Capital 1 500,000 500,000

Reserves and Surplus 2 - -

Loan Funds

Secured Loans 3 - -

Unsecured Loans 4 73,83,52,754 25,71,68,655

TOTAL 73,88,52,754 25,76,68,655


Fixed Assets 5

Gross Block 47,54,67,551 22,92,606

Less : Depreciation 12,27,468 735,181

Net Block 47,42,40,083 15,57,425

Capital Work-in-Progress 26,63,61,251 22,80,14,463

74,06,01,334 22,95,71,888

Investments 6 - -


Inventories 7 - -

Sundry Debtors 8 - -

Cash and Bank Balances 9 2,76,086 45,77,114

Loans and Advances 10 3,90,39,723 2,40,12,241

3,93,15,809 2,85,89,355

Less :


Liabilities 11 4,10,64,389 4,33,000

Provisions 12 - 59588

4,10,64,389 4,92,588

Net Current Assets (17,48,580) 2,80,96,767

Balance as per attached Profit and Loss Account

TOTAL 73,88,52,754 25,76,68,655

Accounting Policies and Notes on Accounts 13

As the Company has not started operation, so Profit and Loss Statement is not prepared.

As per our report of even date

For G. P. Kapadia & Co. R.M.GUPTA

Chartered Accountants P. K.JAIN

ARUN DAGA

Directors

ATUL B. DESAI

Partner

Mumbai


87


SCHEDULES FORMING PART OF ACCOUNTS (Amount in Rs.)

Previous

Year

SCHEDULE - 1

SHARE CAPITAL

Authorised

50,00,000 Equity Shares of Rs.10/- each 5,00,00,000 5,00,00,000

Issued, Subscribed & Paid-up *

50,000 Equity Shares of Rs.10/- each 5,00,000 5,00,000

TOTAL 5,00,000 5,00,000

* Full Share capital is held by the Holding company.

SCHEDULE - 2

RESERVES AND SURPLUS - -

TOTAL - -

SCHEDULE - 3

SECURED LOANS - -

TOTAL - -

SCHEDULE - 4

UNSECURED LOANS

From Holding Company 73,83,52,754 25,71,68,655

TOTAL 73,83,52,754 25,71,68,655

SCHEDULE - 5

FIXED ASSETS

(Amount in Rs.)

Sr.No. PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Adjustments As at Upto For the Adjustments / Up to As at

01/04/2009 / Deductions 31/03/2010 31/03/2009 Year Deductions 31/03/2010 31/03/2010 31/03/2009

1 FREEHOLD LAND - 47,21,28,473 - 47,21,28,473 - - - - 47,21,28,473 -

2 BUILDINGS - - - - - - - - - -

3 RAILWAY SIDINGS - - - - - - - - - -

4 PLANT AND MACHINERY - - - - - - - - - -

5 SHIPS - - - - - - - - - -

6 ROLLING STOCKS AND LOCOMOTIVES - - - - - - - - - -

7 FURNITURE, FIXTURES & OFFICE

EQUIPMENT 22,00,949 7,65,481 - 29,66,430 7,21,905 4,67,153 - 11,89,058 17,77,372 14,79,045

8 VEHICLES ETC. 91,657 - - 91,657 13,276 8,707 - 21,983 69,674 78,380

9 INTANGIBLE - ASSETS - 2,80,991 - 2,80,991 - 16,427 - 16,427 2,64,564 -

TOTAL 22,92,606 47,31,74,945 - 47,54,67,551 7,35,181 4,92,287 - 12,27,468 47,42,40,083 15,57,425

Previous Year 14,13,600 9,22,863 43,857 22,92,606 2,92,633 4,71,454 28,906 7,35,181

Capital Work-in-Progress (including

advances and Project Dev. Exp.) * 26,63,61,251 22,80,14,463

74,06,01,334 22,95,71,888

Notes:

Capital work in progress includes the followings:

* Details To date Amount(Rs)

1 Project Development Exp 8,63,85,795(For detail refer Note No.1 of Sch. No. 13B)

2 Cost of Mining Rights (Acquired from HCIL) 7,55,00,000

3 Stamp fees of Mining lease deed 42,13,000

4 Advance against land purchase-Mines 6,19,72,150

5 Advance against land purchase-Plant 2,48,20,690

6 Rehabilitation & Resettlement exps 1,17,82,826

7 Advance for Stamp Duty 16,86,790

Total 26,63,61,251

88


(Amount in Rs.)

Previous

Year

SCHEDULE - 6

INVESTMENT - -

TOTAL - -

SCHEDULE - 7

INVENTORIES - -

TOTAL - -

SCHEDULE - 8

SUNDRY DEBTORS

- -

TOTAL - -

SCHEDULE - 9


Cash balance on hand 60,989 57,163

Cheques on hand - -

Bank Balances :

With Scheduled Banks :

In Current accounts (including cheque under collection) 2,15,097 45,19,951

In Fixed deposit accounts - -

TOTAL 2,76,086 45,77,114

SCHEDULE - 10

LOANS AND ADVANCES

(Unsecured, considered good except stated otherwise)

Deposits and Balances with Government and other Authorities 3,32,35,030 2,12,35,030

Other Deposits 50,000 42,340

Advance recoverable in cash or kind or for value to be received.

Considered Good 57,54,693 27,34,871

TOTAL 3,90,39,723 2,40,12,241

89


SCHEDULE - 11

CURRENT LIABILITIES

Sundry creditors :

a) Small scale industrial undertakings* - -

(To the extent identified with available information)

b) Others 1,52,78,311 2,96,264

Bank Overdraft(SBI) 2,55,90,450 -

Interest Accrued on Bank OD 8,996 -

Security and Other Deposits - -

Provision for expenses 36,182 36,500

TDS Payable 1,50,450 1,00,236

TOTAL 4,10,64,389 4,33,000

SCHEDULE - 12

PROVISIONS

Provision for Gratuity - 40,588

Provision for Leave Encashment - 19,000

TOTAL - 59,588

SCHEDULE - 13

ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. Significant Accounting Policies:

1 Accounting Concepts:

The financial statements are prepared under the historical cost convention on an accrual basis and in in

accordance with the applicable mandatory Accounting Standards.

2 Use of Estimates:

The preparation of financial statements are in conformity with the generally accepted accounting principles which

requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the

date of financial statements and the reported amounts of revenues and expenses during the reported period.

Difference between the actual results and estimates are recognised in the period in which the results are known

or materialise.

3 Fixed Assets:

Fixed assets are stated at cost (including other expenses related to acquisition and installation)

4 Treatment of expenditure during construction period:

Expenditure during construction period is included under Capital Work in Progress and the same to be allocated

to the respective Fixed Assets on the completion of its construction.

5 Depreciation:

Depreciation is charged on a straight-line basis over the estimated useful lives of the assets.

(Amount in Rs.)

Previous

Year

90


The estimated useful lives are as follows.

Assets No of Years

Office Equipment 4

Computers 4

Furniture & Fittings 7

Motor cycles 10

Intangible-Assets(Software) 3

Mobile sets 3

Depreciation on additions/deductions is calculated pro-rata from/ to the month of addition/deduction.

B NOTES ON ACCOUNTS

1. The Company is setting up a Greenfield Cement Plant in Sundernagar, Himachal Pradesh, India. No profit

and Loss Account has been prepared since the company has not commenced revenue operations. The

expenditure incurred during the construction period are classified as “Project Development Expenditure”

pending capitalisation and will be apportioned to the Assets on the completion of the project. Necessary

details as per part II of schedule VI of the Companies Act,1956 have been disclosed below :

(Amount in Rs.)

Project Development Expenditures For the year For the year

Account (Included under Capital 2009-2010 2008-2009

work-in-progress)

Opening Balance 6,42,20,588 5,34,13,000

Add :

Advertisement Expenses 6,57,614 4,03,433

Architectural Services (Office Interior) - 12,000

Audit Fees 5,000 5,000

Bank Charges 9,767 8,898

Books & Periodicals 7,604 4,210

Casual Salary & Wages 9,13,921 8,44,647

Computer Maintenance Exp. 4,310 10,605

Consultancy Charges 30,03,750 7,86,000

Contribution to HimShree Ladies Club 8,430 9,870

Conveyance Expenses 8,03,213 3,84,212

Depreciation 4,92,287 4,71,455

Drilling / Exploration Exp. 1,800 -

Electricity Charges 76,483 77,107

EIA/EMP/SIA Exp 56,439 3,43,561

Environment & Pollution Control Exp - 6,580

Festival Celebrations 33,859 33,255

General Expenses 80,383 1,68,310

General Insurance premium 28,440 2,975

Gift Expenses 3,38,867 4,30,464

Guest Entertainment Exp. 59,020 1,05,948

Guest House Expenses 1,33,358 1,28,487

91


HRMS Services Charges 24,750 -

Interst on Bank OD 8,996 -

I.T.Services Expenses 2,400 -

Lab Consumable Expenses 1,16,857 42,273

L.A.O- Office Exp 8,09,962 4,53,867

Land Development Expenses 57,47,172 -

Loss on sale of Fixed Assets - 6,950

Legal & Professional Charges 18,55,092 16,73,400

Postage & Telegram Expenses 32,482 50,185

Printing & Stationery Expenses 4,78,534 3,72,337

Prospecting / Exploration Exp. 10,12,500 -

Rates & Taxes 7,15,685 2,83,585

Recruitment Exp. - 15,990

Rent(Office & Guest House) 7,59,500 6,05,000

Repair & Maintenance Exp. 54,901 36,339

Sample Testing 2,60,077 2,57,211

Social Welfare Activities Expenses 21,88,032 11,17,249

Soil Testing Exp 1,23,700 -

Staff Welfare Expenses 1,38,718 1,34,138

Subscription for Membership 1,500 1,500

Telephone Expenses 1,93,126 2,95,152

Topographic Survey 1,22,400 67,320

Training Exp. 9,530 8,950

Travelling Expenses 7,80,006 9,77,258

Vehicle Repair / Running Expenses 13,940 19,612

Water Exp (Office-Sundernagar) 802 718

Total 2,21,65,207 1,06,56,051

Provision For Taxation

Fringe Benefit Tax - 1,51,537

Closing Balance 2,21,65,207 8,63,85,795 1,08,07,588 6,42,20,588

2 Contingent liabilities -Estimated amount of Contracts remaining to be executed on capital account and not

provided( advance paid Rs.5,006.72 lacs) Rs. 9,020.31 Lacs

3 Previous year figures have been regrouped wherever necessary.

4 Prusuant to a Scheme of Arrangement u/s 391 to 394 of the Companies Act, 1956, Shares of the Company

held by Grasim Industries Ltd. (holding Company of the Company) have been transferred to Samruddhi Cement

Ltd. w.e.f. 1st October, 2009. Accordingly the Company is a subsidiary of Samruddhi Cement Ltd. (subsidiary of

Grasim Industries Ltd.) w.e.f. 1st October, 2009.

(Amount in Rs.)

Project Development Expenditures For the year For the year

Account (Included under Capital 2009-2010 2008-2009

work-in-progress)

92


5 Disclosure of related parties/related party transactions:

A. List of related parties

Name of the Related Party Nature of Relationship

Samruddhi Cement Ltd Holding Company

Grasim Industries Ltd.(Grasim) Ultimate Holding Company

UltraTech Cement Ltd. Fellow Subsidiary

B. Disclosure of related party transactions:

Sr. No. Nature of Transaction Holding Company Amount in Rs.

1 Loans & Borrowings Grasim Industries Ltd. 21,11,84,099

2 Loans & Borrowings Samruddhi Cement Ltd 27,00,00,000

Outstanding Balance as on March,2010

Sr. No. Nature of Transaction Holding Company Amount in Rs.

1 Unsecured loans Samruddhi Cement Ltd 73,83,52,754

93


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010

Amt in Rs.

Current Year Pervious Year


Adjustments for:

Advances and Receivables (15,027,482) (229,006)

Trade Payables 25,589,754 384,998

Net Cash from/(used in)Operating activities 10,562,272 155,992


Purchases of Fixed Assets (473,174,945) (922,863)

CWIP(Advances & Projet Dev. Expes) (22,872,454) (94,445,915)

Sale of fixed assets - 43,857

Net Cash from/(used in) investing activities (496,047,399) (95,324,921)

C Cash Flow from Financing Activities

Proceeds from borrowings 481,184,099 99,118,686

Net Cash from/(used in) Financing activities 481,184,099 99,118,686

D Net increase/(Decrease) in Cash and Cash equivalent (4,301,028) 3,949,757

Cash and Cash equivalent at beginning of the year 4,577,114 627,357

Cash and Cash equivalent at end of the year 276,086 4,577,114

(Cash and cash equivalent represent cash and bank balances)

As per our report of even date

For G. P. Kapadia & Co. R.M.GUPTA

Chartered Accountants P. K.JAIN

ARUN DAGA

Directors

ATUL B. DESAI

Partner

Mumbai


94


Balance Sheet abstract and Company’s General Business Profile

I. Registration Details

Registration No. 0 6 - 1 9 1 7 3 State Code 0 6

Balance Sheet Date 3 1 - 0 3 - 1 0

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

7 7 9 9 1 7 7 7 9 9 1 7

Sources of Funds :

Paid up Capital Reserves & Surplus

5 0 0 N I L

Secured Loans Unsecured Loans

N I L 7 3 8 3 5 3

Application of Funds :

Net Fixed Assets Investments

7 4 0 6 0 1 N I L

Net Current Assets Miscellaneous Expenditure

( 1 7 4 8 ) N I L

Accumulated Losses

N I L

IV. Performance of Company (Amount in Rs. Thousands)

Turnover (including other income) Total Expenditure

N I L N I L

+ / - Profit / (Loss) Before Tax + / - Profit / (Loss) After Tax

N I L N I L

Please Tick Appropriate box + for Profit, - for loss

Earnings Per Share in Rs. Dividend Rate %

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V. Generic Names of Three Principal Products / Services of the Company (as per monetary terms)

No Production activities during the year

R.M.GUPTA

P. K.JAIN

ARUN DAGA

Directors

Mumbai


95

HARISH CEMENT LIMITEDPLANT LOCATIONS

Aditya Cement Works

Adityapuram

Sawa – Shambhupura Road

Dist. Chittorgarh

Rajasthan 312 613

Tel : (01472) 2220192-197

Fax : (01472) 2220289

Rawan Cement Works

Grasim Vihar, Village P.O.

Rawan Tehsil: Sigma

Dist. Raipur (C.G.)

Tel : (07726) 288217-20

Fax : (07726) 288215, 288209

Kotputli Cement Works

V & P.O. Mohanpura

Tehsil: Kotputli

Dist. Jaipur, Rajasthan 303 108

TTel: (01421) 215719

Fax: (01421) 288665

Rajashree Cement Works

Aditya Nagar, Malkhed Road

Gulbarga 585 292, Karnataka

Tel : (08441) 288888

Fax : (08441) 288624 / 288365

Reddipalayam Cement Works

Reddipalayam P.O.

Dist. Ariyalur 621 704, T.N.

Tel : (04329) 249240

Fax : (04329) 249253

Vikram Cement Works

Dist. Neemuch, Khor 458 470 (M.P.)

Tel : (07420) 230830, 235557

Fax : (07420) 235524

Birla White

Rajashree Nagar, P.O. Kharia Khangar

Tehsil: Bhopalgarh

Dist. Jodhpur 342 606 (Rajasthan)

Tel : (02920) 264040–47

Fax : (02920) 264244 / 264222

96

HARISH CEMENT LIMITEDNOTES

INFO

MED

IA 1

8 LI

MIT

ED

annual report samruddhi cement10

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