ambu ar08 full

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AMBUJA CEMENTS LTD. 2

CONTENTS

Chairman’s Letter 4

Five Year Performance 7

I Can – Some Highlights 8

Directors’ Report and Management Discussions & Analysis 16

Annexures to Directors’ Report :

i. Conservation of Energy & Technology Absorption 37

ii. Employees’ Particulars 41

Corporate Governance Report 45

Auditors’ Report 61

Financial Statements 64

Balance Sheet Abstract 94

Consolidated Accounts with Auditors’ Report 95

Information with regard to Subsidiary Companies 120

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BOARD OF DIRECTORS

Mr. Suresh Neotia, Chairman

Mr. N. S. Sekhsaria, Vice Chairman

Mr. Markus Akermann

Mr. Paul Hugentobler

Mr. M. L. Bhakta

Mr. Nasser Munjee

Mr. Rajendra P. Chitale

Mr. Shailesh Haribhakti

Mr. Nirmalya Kumar, (upto 31/12/2008)

Mr. Onne van der Weijde, (w.e.f. 9/1/2009)

Mr. Omkar Goswami

Mr. Naresh Chandra, (w.e.f. 26/7/2008)

Mr. A. L. Kapur, Managing Director

Mr. P. B. Kulkarni, Whole-time Director (upto 31/1/2009)

Mr. N. P. Ghuwalewala, Whole-time Director

Mr. B. L. Taparia, Whole-time Director & Company Secretary

Corporate Office :

106, Maker Chambers III,

Nariman Point,

Mumbai 400 021.

Elegant Business Park,

MIDC Cross Road ‘B’,

Off Andheri-Kurla Road,

Andheri (East),

Mumbai - 400 059.

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CHAIRMAN'S LETTER

Dear Shareholders,

It is a matter of great privilege to place before you the Company's performance for 2008 - a year

of severe vicissitudes, great volatilities and uncertainties, bringing in its wake a set-back to our four year

long term economic growth story.

While India's economic growth, despite high commodity prices, continued with full vigour during the

initial few months, the rate of growth slowed considerably thereafter, as a sequel to worldwide financial

turmoil.

Faced with tough economic challenges, our Government responded, initially, with measures to curb

the run-away inflation. Later, RBI responded vigorously to the global financial crisis by boosting liquidity

to the tune of Rs 3 lac crore and easing monetary policy. The main pillar of the stimulus package is an

increase in public expenditure worth US $4bn equivalent to 0.7% of GDP.

The risks to India's economic growth due to the impact of the global melt down far outweigh the

damage posed earlier by run away inflation.

It now appears that our GDP growth in 2008 may be around 7% in contrast to earlier estimates of

9% plus, followed by estimated growth of about 6% to 6.5% in 2009. Against our own aspirations and

expectations, this may look bleak but, we are not so bad in the global context - being No. 2, next to

China.

I welcome measures introduced by the Government to promote housing and infrastructure and to

inject liquidity in the system. Excise duty reduction on cement and rationalization on clinker, withdrawing

the exemption of CVD and SAD on imports and removing the ban on exports are landmark decisions.

Coupled with sagging economic confidence, uncertainty in the job market, high inflation and constrained

availability of housing finance due to high interest rates, the housing sector turned sluggish as house

builders adopted a wait-and-watch attitude. This has had an adverse impact on demand for cement. In

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this backdrop, a substantial number of projects announced by cement and non-cement companies have

been put on the back burner.

I am happy to mention that, your company, backed by a comfortable liquidity position is continuing

to build additional clinker and cement capacities with an investment of Rs. 3500 crore. This will enable

us to maintain leadership in the industry. It is heartening that despatches in December, '08, are 12%

higher compared to last year. It indicates a healthy demand scenario in future.

In 2008, the company sold 17.7 Mn. tonnes which is more than that of 2007 by 8%. Our net sales

realization was Rs. 6235 crore up by 11% over Rs. 5631 crore of last year. This is a commendable

achievement considering extreme headwinds which the industry faced.

In view of spiraling input prices leading to increased cost of production and moderate opportunity

to increase selling prices due to a host of adverse factors, margins, all across the Industry, were under

pressure. Notwithstanding the handicaps, I am pleased to inform you that your Company has earned

an EBITDA of Rs. 1833 crore, and net profit of Rs. 1402 crore.

Consistent efforts in promoting clean environment and community development have continued

through out and have become a way of life for us. Ambuja Cement Foundation (ACF) continued to

provide invaluable visibility and sustainable initiatives at all our locations. We are committed to drive this

initiative with enhanced focus and in a more inclusive way in the future.

ACF has been working intensely on integrated rural development which includes water management,

rural roads, self help groups, micro enterprises, skills development and income generation schemes

among others. This is in addition to many other activities which are undertaken by this foundation around

our plant locations. Looking at the vast network and the successful implementation of the project, ICAR

has granted us Krishi Vigyan Kendra (KVK). It is being set up in Kodinar. KVK will enable us to play a

major part in improving agriculture in Kodinar and adjoining areas. Under the Central Govt. scheme, the

Punjab Govt has handed over the ITI at Anandpur Sahib with a substantial grant to upgrade the infrastructure.

Through ITI we expect to provide skills development to at least 500 young people every year.

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Various initiatives aimed at promoting value addition and alignment with Holcim have been taken

and I am happy to mention that projects such as SAP, AFR, OH&S to ensure "zero harm" to all, 'People

Power' to promote "Healthy People, Healthy Plants", piloted at Ambujanagar are implemented and have

already started showing commendable results.

I have always maintained that people are our greatest strength. We continue to train and nurture

them to be the best in the industry. I am proud of their commitment and their significant contribution at

all times.

Your Board and Management have always practised the highest principles of corporate governance

in an endeavour to create value for stakeholders. I would like to reiterate that your company would

continue to uphold these traditions and act in the best interests of all stakeholders.

Our management team is visionary and proactive. It has continually provided a clear vision and

strong leadership and has been the backbone of the company's leadership profile. I thank them.

In your company, the management always believes in looking after the interest of our shareholders.

I express my gratitude to you, dear shareholders for your continued trust and faith in the company's

destiny. I assure you on behalf of the management that we will continue striving to give you the best

performance in the industry.

With best regards,

Suresh Neotia

February 6, 2009

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Rs. in Crore

2004 2005 2006 2007 2008

(18 Months)

Sales 1968 2606 6268 5705 6235

Operating Profit 587 799 2247 2239 1954

Cash Profit 509 714 2168 2163 1922

Profit before Tax 384 519 1842 *** 2712 *** 1970 ***

Profit after Tax 337 468 1503 1769 1402

Gross Block 3782 3827 5177 5928 7654

Net Worth 2013 2172 3484 4655 5669

Debt 1270 1127 865 330 289

Cash EPS (Rs.) 28 5.28 14.29 14.26 12.62

EPS (Rs.) 19 3.46 * 10.09 * 11.61 * 9.21 *

Dividend (%) 80 90 ** 165 175 110

Capacity - Million Tons 12.86 13.30 16.30 18.50 22.00

Production - Million Tons 10.37 12.80 22.63 16.86 17.75

Note:

* On Face Value of Rs. 2 per share.

** Includes 30% on enlarged capital after issue of Bonus shares in the ratio of 1:2

*** Includes exceptional items of :

Rs. 308.33 crore for the current year 2008

Rs. 785.89 crore previous year 2007

Rs. 47.52 crore previous period 2006 (18 months)

FIVE YEAR PERFORMANCE

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Dear Members,

2008 - A CHALLENGING YEAR

The economic landscape looks significantly

different compared to the situation twelve months

ago. At that time GDP growth was at record levels

of 9% plus, and it was expected that 10% was within

reach. In the meantime the sub-prime issue in the

US evolved into a full scale global financial crisis

and India, although having a relatively robust

financial system, could not remain insulated from

the ensuing fall-out.

This had an increasingly severe impact on the

Indian economy in the second half of 2008. The

rapid outflow of institutional funds caused a sudden

liquidity crisis, a slump in stock markets, and a

precipitous fall in the value of the rupee. Reserve

Bank of India (RBI) policy bias shifted markedly

from controlling inflation to stimulating growth and

boosting liquidity, and a number of monetary

measures have been implemented in order to shore

up financial markets and try to limit the spillover

effect on the real economy. Some further easing of

monetary policy seems likely, but may be limited

by the continuing threat of inflationary pressures.

The government has also announced various

fiscal stimulus measures, including an across the

board cut in cenvat rates, increased investment in

DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

infrastructure projects, and targeted support for key

sectors like construction.

While it is not possible to fully escape the impact

of the global financial meltdown, the Indian economy

is better placed than many to withstand the shock,

given that it is driven more by domestic consumption,

has a sound banking system, a young population,

and a strong savings culture. Therefore, although

growth may be relatively muted in the range of 6%

to 6.5% for the next couple of years, the future

prospects for sustained growth remain very bright.

The cement industry experienced a turbulent

year in 2008. The year began on a positive note,

with the economy booming and year on year cement

demand growth in double digits, though spiraling

input costs were already starting to pose a threat.

In the June quarter, prices of oil, coal, and other

inputs, were at all time highs and the inflation rate

moved into double digits, prompting the imposition

of informal price controls on certain key commodities,

including cement. A ban on cement exports was

also implemented, and these measures had an

immediate impact on demand, with growth in the

quarter reducing to around 8%.

In the September quarter the combined impact

of a number of external factors caused a further

deterioration in the position of the cement industry.

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There were some local or regional issues, such as

civil disturbances and unusual weather patterns,

but the principal factor was the sudden financial

crisis, which erupted with the Lehmans downfall.

Construction activity had already slowed in most

regions, as interest rate hikes earlier in the year

dampened demand, and with the liquidity crunch,

real estate development companies faced sudden

difficulties in accessing funds for their projects.

Although the RBI has injected significant amounts

of cash into the financial system, there is increasing

pressure on developers to lower property prices,

in order to stimulate demand and help ease their

cash flows.

In the final quarter, the government and RBI

measures, together with a sharp decline in global

commodity prices, had restored some confidence,

and there was an immediate positive impact on

cement demand, which registered double digit year

on year growth in November and December, as

work resumed on many construction projects.

However, this was largely due to the release of pent-

up demand from the previous quarter, and may

not be sustainable.

All-India cement demand growth for the full year

was consequently 8%, compared to more than 9%

in 2007. Despite the pick-up in dispatches towards

the end of the year, and likely further interest rate

cuts, the real estate sector is only expected to make

a gradual recovery, and cement demand growth is

unlikely to exceed 7% in 2009.

The industry demand-supply balance began

to shift in 2008. Following three years of minimal

capacity additions, nearly 30 million tonnes of new

cement capacity were added during the year,

whereas the 8% demand increase translated into

only 14 million tonnes of additional demand. As

the new capacity becomes fully effective, this could

result in increased pricing pressures in 2009, though

the impact will vary across the quarters, and regions.

OVERVIEW OF THE YEAR 2008 RESULTS

As a consequence of the lower overall cement

demand growth, spiraling input costs, especially

for imported coal and freight, and restricted ability

to pass on higher costs into the market, the

company's financial results from operations for the

year 2008 were impacted. Nevertheless, many

initiatives have been taken in order to partially

mitigate external factors, by focusing on sustainable

improvements in operating efficiency and business

processes. These will stand the company in good

stead for the next upturn.

The real strength of a company lies in its ability

to generate cash, therefore it was also felt important

to maintain a strong balance sheet. This is reflected

in the fact that the company did not resort to any

new borrowings in 2008, and finished the year with

a healthy cash balance.

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FINANCIAL RESULTS

Rs. in Crore

Stand Alone Consolidated

Current Year Previous Year Current Year Previous Year

31.12.2008 31.12.2007 31.12.2008 31.12.2007

Sales (net of excise duty) 6234.65 5631.36 6261.79 5718.60

Profit before Interest and Depreciation 2261.66 3024.54 2250.34 3103.63

Less: Interest 32.06 75.85 32.60 77.09

Gross Profit 2229.60 2948.69 2217.74 3026.54

Less: Depreciation 259.76 236.34 260.10 237.18

Profit before Tax 1969.84 2712.35 1957.64 2789.36

Provision for Tax 567.57 943.25 567.93 943.25

Profit after Tax 1402.27 1769.10 1389.71 1846.11

Add: Balance brought forward from previous year 348.20 272.06 683.74 530.59

Add: Credit Balance of Profit & Loss Account

as on 01.07.2005 of erstwhile INSCL – 0.21 – 0.21

Profit available for appropriation 1750.47 2041.37 2073.45 2376.91

Appropriations:

Debenture Redemption Reserve (Net) – (30.00) – (30.00)

Transfer from Exchange Fluctuation

Reserve on cessation of subsidiary – – 5.72 –

General Reserve 1000.00 1100.00 1000.00 1100.00

Dividend on Equity Shares (including interim) 334.97 532.65 334.97 532.65

Corporate Dividend Tax 56.92 90.52 56.92 90.52

391.89 623.17 391.89 623.17

Balance carried forward 358.58 348.20 675.84 683.74

1750.47 2041.37 2073.45 2376.91

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DIVIDEND

Your company has paid an interim dividend of

60% (Rs.1.20 per share) during the year. We are

pleased to recommend a final dividend of 50%

(Re.1.00 per share). Thus the aggregate dividend

for the year 2008 works out to 110% (Rs.2.20 per

share), and the total payout including corporate

tax thereon will be Rs. 392 crore.

KEY NUMBERS (STANDALONE)

l Cement production up 5%, at 17.8 million

tonnes.

l Domestic cement sales up 9%, at 16.8 million

tonnes.

l Average Net Sales Realisation up 5%, at

Rs. 3,544 per tonne.

l Net Sales up 11%, at Rs. 6,235 crore.

l EBITDA down 12%, at Rs. 1,833 crore.

l Profit before Tax down 27%, at Rs. 1,970 crore.

l Net Profit down 21%, at Rs. 1,402 crore.

l Exceptional Income Rs. 308 crore compared

to Rs. 786 crore in 2007.

l Cash Position Rs. 852 crore at 31 December

2008.

PRODUCTION

Total cement production increased by 5%, from

16.9 to 17.8 million tonnes. The increase was mainly

as a result of a full years production at Farakka

and Roorkee facilities which started in mid 2007,

and commencement of grinding at Surat terminal

in early 2008.

Clinker production was 1% lower than in 2007,

at 11.5 million tonnes. Higher production at

Rabriyawas following the 2007 up-gradation was

offset by lower production as a result of unplanned

stoppages at the Maratha and Darlaghat plants.

MARKETING

While in the first half of 2008, the government

introduced a ban on exports and encouraged

imports from Pakistan, in the second half the realty

boom suddenly turned to bust. With the global

economy coming to a crunching halt, funds for major

housing, commercial and infrastructure projects

practically dried up.

To revive demand in the real estate sector, the

government introduced a slew of monetary and fiscal

measures. In December, the excise duty on cement

was reduced by 4%, and on clinker by Rs.150 per

tonne, and countervailing duties were re-imposed

on imported cement. The export ban was also fully

lifted. Interest rates were lowered in a bid to boost

residential housing demand.

Against this backdrop of financial market

turbulence, domestic cement demand grew by about

8%. But, at the end of the year, the pendulum has

swung, from the large residential and commercial

projects in metros, mini metros and big towns,

towards the more informal housing sector in smaller

towns and rural areas. Ambuja Cement has built a

strong position in this segment over the last two

decades. An FMCG approach was adopted, to

create a wide retail network of small "mom and pop"

shops, right down to the taluka / village level. A

large sales force works alongside these small dealers

to help them promote and sell the brand to the

right consumer at the right price. Meanwhile, a team

of expert civil engineers works closely with small

contractors and masons, who undertake

construction of single unit houses in small residential

centres.

Building a brand on the dusty rural map has

its own excitements. Our people have worked with

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local communit ies to demonstrate better

construction practices and materials, to build

economical and durable structures - not only housing

but also rural infrastructure, like check dams, schools

and roads. They have also undertaken training of

local people in masonry skills. For example, Gujarat

state government has launched an initiative to train

tribals in rural areas, and has teamed up with Ambuja

Cement to start a formal mason training school in

Dahod, near Baroda. Also in Rajasthan, our

Customer Support Group has provided mason

training as part of a Skill and Entrepreneurship

Development Institute initiative, in collaboration with

the Ambuja Cement Foundation.

Creating an active distribution and customer

service network down to this level is certainly a big

challenge, but a worthwhile investment, as it has

enabled the company to reap handsome rewards

in terms of premium brand recognition and loyalty

of the end consumer.

Keeping abreast of the changing needs of our

customers, we have also developed some special

products for key accounts in Mumbai and Kolkata,

for which we achieve improved realisations for added

customer value.

Al l this has resulted in the company

consolidating its position in the 13 states / Union

territories which form its core markets. We have

built a strong position by creating a hub and spoke

network of clinkerisation plants and grinding units,

a strong distribution network, and innovative logistics

solutions like bulk cement movement by sea. In

these core markets, Ambuja sold 15.4 million tonnes,

amounting to 91% of our total domestic sales, and

our volumes went up 9% as against demand growth

of 7%. We continue to maintain a healthy 18% share

in these markets.

All India

Demand analysis for all India is given below:

Fig. in mil. tonnes

2007 2008 %

Domestic 159.7 173.9 9

Export 4.2 2.9 -31

Total - India 163.9 176.8 8

Domestic cement demand is growing at 7%

CAGR (5 years). Total demand (including exports)

has grown by 8% as compared to last year, while

domestic demand has increased 9%. There was a

sharp fall of 31% in exports, partly as a result of

the export ban imposed in the April / May period.

We managed to hold on to a 30% share of the

cement export market.

Northern Region

Demand analysis for the Northern region is given

below:

Fig. in mil. tonnes

North 2007 2008 %

Demand 32.3 34.4 7

Ambuja Volume 6.1 6.2 3

Share (%) 18.8 18.1

* Above figs. exclusive of UP

Demand grew by 7% as compared to last year.

Ambuja Cement has a substantial presence in

Punjab, Himachal Pradesh and Jammu & Kashmir,

and we maintained our shares in these core markets.

During the year, heavy imports from Pakistan

at substantially reduced prices disturbed the market,

particularly in Punjab. At the same time, the two-

month long Amarnath agitation in J&K affected

supplies there, and the state saw negative growth

of 7% in demand for 2008. To take advantage of

the time-bound incentives introduced by the

Himachal Pradesh government, a large number of

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industrial projects came up in the state, boosting

demand for cement till last year. These projects

have now been completed and as a result cement

demand dipped 9% in 2008.

In spite of these developments in the core

markets, Ambuja managed to increase volume by

3% and more or less hold its market share for the

region as a whole.

Eastern Region

Demand analysis for Eastern region is given below:

Fig. in mil. tonnes

East 2007 2008 %

Demand 19.2 21.1 10


Share (%) 11.5 12.4

* Above figs. exclusive of North East, (except

Assam) & Bihar

Industry has grown by 10% in 2008 on year on

year basis. Our volume has grown by 19% and we

have therefore increased our market share.

Our recently established plant in Farakka, in

northern West Bengal, has given us a wider reach

in our core market and we could strengthen our

footprint in this part of the state. Meanwhile in Kolkata

we focused on the key customers. A detailed study

of their consumption revealed scope for a special

cement which will give higher strength and durability.

By introducing this cement in Kolkata, we have been

able to add value for our key customers and increase

our volumes significantly.

Western Region

Demand analysis for Western region is given below:

Fig. in mil. tonnes

West 2007 2008 %

Demand 31.3 33.8 8


Share (%) 19.9 20.3

Industry has grown by 8% compared to last

year in western region. Ambuja volume growth stood

at 11% and consequently we could slightly increase

our market share.

Mumbai is the largest cement consuming centre

in the country and perhaps, one of the most

prestigious with the presence of some of the most

reputed global names in the realty sector. It also

became one of the worst affected due to the global

slowdown. However, we could increase our sales

in this market by 13% with some strategic steps,

like introducing high strength cement and increasing

our service offering to key accounts.

Market share in Mumbai was maintained at 24%

in 2008. This is despite the slowdown in real estate,

which is a major contributor to cement consumption.

Imports from Pakistan also reached parts of Mumbai

and caused some market disruption.

In the South we have a token presence in

Telengana region and, though the region has grown

at 11%, we have strategically maintained our share

at 2-3%.

Major Costs

Major input costs displayed considerable

volatility during 2008. The global oil price reached

nearly USD 150 per barrel in midyear, only to crash

at the end of the year back to below USD 50. Other

commodities followed a similar trend, nevertheless

for the full year there was a substantial increase in

our cost base compared to 2007, which could be

only partially compensated by price increases or

efficiency improvements.

Coal

The cost of imported coal, representing

approximately 30% of the total requirement, further

increased in the first half of 2008, having already

gone up substantially in the second half of 2007.

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The average landed cost in 2008 (for both kiln and

captive power) was consequently around Rs. 5,700

per tonne, 50% higher than in 2007.

The cost of domestic coal also increased, as

linkage supplies became unreliable, necessitating

higher procurement of market / e-auction coal at

a substantial premium to the linkage prices.

Deterioration in the quality of domestic coal supplied

continues to be an issue, and this has impacted

the fuel consumption figures at certain plants. A

number of unplanned stoppages also had an impact,

and for the company as a whole, the consumption

increased slightly compared to 2007, from 742 to

744 kcal per kg of clinker.

Power

The company already sources around 80% of

its power requirements from captive power

generation, and during 2008 one new 18.7 MW

power plant was commissioned at the Rabriyawas

plant. As a result of the increase in coal cost during

the year, the cost of captive generation increased

by about 20%.

Power consumption was slightly higher in 2008,

at 86.4 kwh per tonne of cement, compared to 84.6

kwh in 2007. Requirements were higher mainly at

the Bhatapara and Ambujanagar plants, due to

certain inefficiencies in the grinding processes.

Purchased Clinker

Pending complet ion of the Bhatapara

expansion, continued clinker purchases were

required for the grinding units at Farakka and

Sankrail. In addition, clinker purchases were

necessary for Maratha in the second half, as the

kiln speed had to remain restricted following a

breakdown in mid-year. In total, 725 thousand tonnes

were procured, compared to 500 thousand tonnes

in 2007. The impact on EBITDA margin of using

purchased rather than own produced clinker is

approximately 200 basis points.

Freight

Freight and Forwarding costs increased by 12%

in absolute terms, and 7% on a per tonne sold basis.

The major reasons were: a shift from export to

domestic sales partly due to the export ban in mid

year, and a hike in fuel prices earlier in the year

when global oil prices were dramatically increasing.

These increases were rolled back towards the end

of the year, but too late to have any real impact in

2008.

PEOPLE POWER

Ambuja Cement has always prided itself on

its world beating performance. In order that we

continue to deliver and improve upon performance

on a sustainable basis, a project aptly titled "People

Power" was launched at the Ambujanagar plant,

with the aim of ensuring "healthy people and

healthy plants".

To achieve "healthy people", an organisational

transformation was carried out in the plant. The

new organisation created a large number of

leadership positions at different levels, unlocking

leadership potential and unleashing creative

energies among talented individuals.

To achieve "healthy plants", an Engineering

Support Group was created, incorporating an

Academy and a Development Cell. To boost

operational efficiency, standards were developed

for improving productivity using tools and processes

developed at both Ambuja and Holcim, based on

global best practices. A detailed health check was

carried out to ensure long term health of the plant,

based on which an action plan was developed for

implementation.

The resulting transformation has propelled the

plant performance to achieving the near impossible

aspiration of 400 thousand tonnes of clinker during

December 2008, one of the highest ever in its history.

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The principles and tools developed during this

pilot implementation are in the process of being

rolled out to the other Ambuja plants, and further

initiatives are underway to achieve continuous

improvement in cost efficiencies in operations, and

sustained health of the plants.

HUMAN RESOURCES

A process-driven approach to induction of fresh

talent ensures a continuous and consistent talent

pipeline for future business growth.

Apart from enhancements in productivity, the

"People Power" project has resulted in enhancing

the managerial and innovation skills of our people.

Projects like SAP implementation have encouraged

an inter-discipl inary approach to business

challenges. People working on these projects have

been gainfully redeployed in new roles requiring

multi-functional competencies.

KRA (Key Result Area) based performance

management provides an objective basis for

managing performance and rewards. Individual

goals are derived from organizational objectives,

hence ensuring complete al ignment and

commitment of the people.

Management Development is a well structured

approach designed around development of

leadership competencies required for different levels.

Integrated Talent Management processes with global

practices are aimed at creating future leaders for

succession. These are supported by advanced HR

Management Systems and are well integrated with

other business processes.

EXPANSION PROJECTS

A new 1 million tonne grinding facility was

commissioned at the beginning of 2008 at Surat,

where the company already operates a bulk cement

terminal. OPC is transported from Ambujanagar to

Surat, where it is blended with locally sourced fly

ash.

The company has the long term objective of

at least maintaining market share and, to this end,

the two major clinkerisation expansion projects, at

Bhatapara in Chattisgarh, and Rauri in Himachal

Pradesh, remain on track for completion in mid 2009

and end of 2009 respectively. Each comprises a

7000 tonne per day kiln line, therefore together they

will add approximately 4.4 million tonnes of clinker

capacity. The total investment in these projects has

escalated by around 10%, mainly due to the steep

cost increases for steel and civil contracting during

the year.

In alignment with the new clinker capacity,

grinding capacity will also be further increased, by

5.5 million tonnes, to be commissioned over the

next 12-18 months. Grinding units at Dadri and

Nalagarh in the North will come on stream in mid

2009 and first half of 2010 respectively. The grinding

unit project at Barh has been suspended, owing

to delays in setting up the NTPC power plant from

which fly ash would be sourced, and will be replaced

by further augmenting the grinding capacity at

Bhatapara. And it has been decided to proceed

more slowly with the project at Sanand

(Ahmedabad), which will now be deferred till 2010.

Additional captive power projects are in

progress at Ambujanagar, Bhatapara, and Maratha.

These will add approximately another 90 MW, most

of it being commissioned in 2009 and taking total

capacity to more than 400 MW.

The bulk cement terminal at Kochi is on course

for commissioning in the first quarter 2009. This

will give the company access to the fast growing

southern market via cost effective sea transportation.

Furthermore the fleet of ships which plies the

Ambujanagar - Mumbai - Surat routes is in process

24


of being expanded to cope with anticipated future

demand growth. Three new vessels are in the

pipeline, for delivery in 2009-2010.

HOLCIM ALIGNMENT

The process of aligning with Holcim systems,

methodologies and tools, is making good progress.

A major milestone was the implementation of

Holcim's SAP template, which went live in August

2008. We are now on-line with nearly 200 locations,

including dumps / yards, and are able to explore

the full potential of IT in continuously improving

customer service, with real time data. This not only

brings the benefits of a fully integrated real time

ERP system, but helps facilitate benchmarking

between Holcim group companies and sharing of

good practices.

Occupational Health and Safety is another area

where the adoption of Holcim guidelines and

methodologies has assisted in dramatically

increasing awareness of the need for safe working

practices, in order to achieve a "zero harm"

environment.

Our Talent Management efforts are also

supported through access to the Holcim Leadership

Development programs, and possibilities for

transfers between group companies in order to gain

experience of different business and cultural

environments.

There is a strong alignment on Corporate Social

Responsibility issues. These have been an integral

part of the Ambuja mission since the beginning,

through the Ambuja Cement Foundation and are

also at the heart of Holcim's Sustainable

Development initiatives.

RISKS AND AREAS OF CONCERN

Energy Costs

Coal remains the single most important input

factor, both for the kilns and captive power plants,

and the volatility of prices in 2008 demonstrated

its impact on the company's profitability. At the end

of the year, international coal prices (as well as

freight) have dropped even more sharply than they

had risen, and this degree of volatility creates

uncertainty in our business planning process. The

company therefore focuses continuously on the coal

procurement process in order to manage this risk.

Quality and reliability of supply of domestic coal

also continue to be a source of concern.

Materialisation of linkages has been unpredictable,

and quality has deteriorated, affecting plant

productivity. The company continues to work on

mitigation measures, such as acquisition of coal

blocks for captive mining, and increased usage of

AFR (Alternative Fuels and Raw materials) to reduce

dependence on coal.

Surplus Capacity

Despite likely delays, or even cancellations, of

some cement expansion projects, as financing has

become very expensive and returns less attractive

in the short term, there will nevertheless be a period

of surplus capacity. This may be in the range of

40-50 million tonnes for All-India by the end of 2010,

which could have some impact on cement pricing

in affected markets.

Freight

Transportation is another key input, and

continued volatility of global oil prices may also

impact diesel prices and hence freight cost. Fuel

prices are state-controlled, and changes may be

driven by non-market considerations.

Taxation

Taxes on cement, although slightly reduced

towards the end of 2008, continue to be higher in

India than in most other countries, and the duty

structure is too complex. This has a significant impact

on pricing of cement for the end user.

25


Internal Control System

The company has instituted a robust internal

control system to support smooth and efficient

business operations and effective statutory

compliance. In order to improve the reliability and

efficiency of business processes having an impact

on financial reporting, the company has established

an internal control systems project by standardizing

and documenting major processes and associated

key controls. Responsibilities have been assigned

to specific individuals to correctly and timely perform

the controls.

The formalized systems of control help

discharge the obligations as per Clause 49 of the

SEBI Listing Agreement, and article 728 (a) of the

Swiss Code of Obligations applicable to the Holcim

Group from 2008.

The company's Internal Audit department is

responsible to independently test the design and

operating effectiveness of the internal control system

across the company. This facilitates an objective

assurance to the Board and Audit Committee

regarding the adequacy and effectiveness of the

system.

The Internal Audit function, established since

company's inception, not only monitors the

effectiveness of controls but also provides an

independent and objective assessment of the overall

governance processes in the company, including

the application of a systematic risk management

framework.

The scope and authority of the function are

governed by the Internal Audit Charter, approved

by the Audit committee. Internal Audit plays a key

role by providing an assurance to the Board of

Directors, and value adding consultation service

to the business operations.

OUTLOOK

Cautious Optimism

Though market conditions are likely to remain

challenging for the next 1-2 years, depending on

the depth of the global economic recession, the

longer term outlook for the Indian economy, and

specifically the cement industry, is very positive.

Growth will be bolstered by the country's sound

macroeconomic fundamentals, and the pressing

need for extensive development of infrastructure

and mass residential housing. Cement demand may

however remain relatively weak for some time, and

the addition of significant new capacity over the

next two years will inevitably alter the pricing

dynamics in certain markets.

Ambuja Cement fully intends to remain at the

forefront of these developments, maintaining its

market leadership and premium brand status, by

adapting to the changing conditions and positioning

itself to emerge an even stronger player from this

period of weaker growth.

SUSTAINABILITY INITIATIVES

One of the founding pillars of your Company

is its steadfast commitment to Sustainability. The

Company operations, from manufacturing to

logistics to community development, all these

incorporate the basic tenets of sustainability. Ambuja

Cements Ltd. has always maintained that its financial

performance would be in tandem with i ts

environmental and social performance. Last year,

the Company produced its f irst Corporate

Sustainable Development Report (CSDR) and also

issued a Summary Report along with the Annual

Report of 2007. It also translated the Summary

Report in various local Indian languages to spread

the message of its efforts to different stakeholders.

Based on the deliberations of the Board, a

Sustainable Development Steering Committee

26


(SDSC) was set up chaired by the Whole time

Director & Company Secretary with members from

across various functions like accounts, marketing,

human resources, corporate communications and

community relations, was formed. The steering

committee held three meetings during the year to

discuss the issues of sustainability along with the

Company's Vision, Mission, Goals and Values.

The issue of materiality of concern to the local

communities has been dealt with routinely by the

Ambuja Cement Foundation (ACF) at various

manufacturing locations. It was encouraging to learn

that there existed a 100% match between the

Company's concerns and community's needs on

social development at all locations. ACL is in process

of initiating similar consultations with its customers

and employees.

Environment Management

We are committed to pollution control at our

plants and mines and earn Awards for the same

The Company has adopted the state of the art

technology from glass bag house (GBH) to surface

miner, rock breaker to bulk cement terminals and

from CDM to GHG emission control. We plan to

carry out conversion of ESP at one of our acquired

Units into GBH for efficient particulate control.

The proactive practice 'of beyond compliance'

for sewage water through the mechanism of "sewage

water recirculation plant" (SWRP) is practiced at

all our Unitseven in Ropar (Punjab) Unit which is

flush with water from the Sutlej canal.

Manufacturing of cement is a process that

generates lot of noise. The Company places great

emphasis on noise control both in its cement plants

and mines and looks towards newer avenues of

performing better in this area. The excellent

performance on environmental parameters at the

Maratha Cement Works has earned ACL the

Greentech Award.

Along with ACF, water bodies have been created

out of the mined out pits at Ambujanagar. These

act as large water reservoirs and have improved

the water table in the near by areas and have

benefited the farmers. The salinity mitigation projects

undertaken in Ambujanagar by ACF have shown

encouraging results and have earned ACL an Award

for Excellence in Water Management by CII- GBC

under 'beyond the fence' category.

Fly ash - a waste product that has helped the

Company produce larger volumes of cement and

also reduce the GHG contribution

To tide over the power shortage in the country,

large coal based thermal plants are being set up

by power companies, leading to generation of

thousands of tonnes of fly ash. The disposal of

this fly ash, which is a hazardous waste from power

plants, is a major national concern.

Over the years, we researched on how we could

use this waste in manufacturing cement without

compromising on its quality and strength. Today,

we use as much as 4444290 tonnes of fly ash at

our various cement plants. This has helped us to

reduce the clinker factor and thereby reduce GHG

generation at our plants.

Use of alternate fuels and raw materials to help

reduce emissions

The very process of manufacturing cement the

world over leads to generation of CO2. As a

responsible corporate citizen, the Company makes

conscious efforts to reduce these CO2 emissions

wherever possible. The use of alternate fuels and

raw materials (AFR) is one such significant initiative

which not only reduces over all CO2 emissions, but

is also a need to conserve precious natural resources

for the forthcoming generations.

27


There is a nationwide consensus that the

co-processing of hazardous/ non-hazardous wastes

in cement kilns provides an effective solution for

disposal of these wastes.

We have used hazardous waste products such

as plastic waste, industrial waste and sludge in the

cement plant with no adverse impact on environment

or our cement quality.

Our captive power plant at Ropar runs on

biomass/agro waste of different varieties and animal

waste. This has not only resulted in saving in costs

but has also helped us conserve on the usage of

precious coal.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Our CSR activities are being carried out through

Ambuja Cement Foundation (ACF) which has a long

tradition of proactively contributing to sustainable

and sound solutions on socio-economic and

environmental issues in the neighbouring

communities wherever the Company operates. ACF

has been set up to specifically engage with

community stakeholders and it works on two fronts -

stakeholder engagement and community

development.

Stakeholder Engagement: The Foundation

believes it is critical to identify individuals and groups

in the local communities directly or indirectly affected

by the Company operations and to engage with

them in a continuous dialogue. ACF have

commissioned a reputed external agency ERM to

conduct Social Impact Assessments (SIAs) at all

new Company sites. The findings of this agency

have enabled ACF to be sensitive to the possible

social impacts created by the Company operations

by addressing effectively the concerns and views

of those affected in the draft rehabilitation plans.

This extensive exercise has already been

completed at two locations- Marwar- Mundwa in

Rajasthan and Nalagarh in Himachal Pradesh during

2008. As a follow up of the SIA at Marwar-Mundwa,

a detailed database of primary stakeholders i.e.

the project affected people has been generated.

Going ahead, this database will prove helpful in

developing measures to mitigate impact and restore

livelihoods of the affected communities. An exercise

of risk scoping has been completed at Sanand in

Gujarat.

Since the Foundation has been engaging with

community stakeholders ever since its inception,

a need was felt to conduct a formal review of the

work carried out so far. Using a unique tool called

the Social Engagement Scorecard, developed by

Holcim for its Group Companies, ACF involved the

communities in the process of gauging the

effect iveness of i ts social interventions

simultaneously determining the location specific

course of action for the future. During 2008, ACF

completed the review in Kodinar, Chandrapur,

Darlaghat, Ropar, Rabariyavas, Sankrail and

Bhatapara. At all the locations ACF engagement

was found to be in line with the needs of the area

and the aspirations of the communities.

Community Development: ACL is committed

to the development of the communities where it

operates. Through i ts varied community

development initiatives, the ACF reaches out to

SES being conducted

28


approximately 607 villages catering to a population

of over 11 lakhs. The community development

activities include health care, improvements in quality

of education, infrastructure development, livelihood

generation, women's development, formation of

self-help groups for women and the like.

In education, Basti schools- informal schools

for out of school children in Bhatinda, have arisen

to prominence due to their commendable work in

the last year. The schools try to provide bridge

education to out of school children and attempt to

bring them into the mainstream formal education

system. These initiatives have found appreciation

by the local communities as well as the Key Opinion

Leaders. Educational activities conducted in the

government schools of Darlaghat and Chandrapur

have also expanded and diversified in the past year.

The Foundation has organised women

Self- Help Groups with the objectives of helping

them cultivate the habit of making small monthly

savings, giving them a platform to meet and interact

with one another and to determine the means of

improving their lives. As the groups have matured,

these have gradually began engaging in varied

micro-enterprises. It is hoped that these become

alternate sources of income for the families. At

present the Foundation has initiated 571 SHGs.

These have made a col lect ive saving of

approximately Rs.87 lakhs.

In the health sector, the creation of an HIV

Positive People's group has been an achievement

of the Ropar unit of the Foundation. This is the first

of its kind in the state and has been providing all

the members' support and strength to come to terms

with their HIV positive status, to take charge of their

lives and to engage in gainful and productive

activities. With the help of the Foundation, 6

members of the group have established a paper

recycling unit. The used paper from ACL is taken

for recycling and sold back to the Company. Other

agencies in the area like the PCACS have shown

an interest in purchasing the recycled paper.

ACF aims at developing societies by building

skilled communities that are capable of sustaining

themselves. To achieve this goal, ACF helps

communities capitalize on its expertise, knowledge

and competencies, rather than merely providing

them financial assistance. Since the Indian

construction industry has been growing at 8-10%

for the past few years, ACF identified in it an

opportunity to develop skilled labourers who could

find employment in this particular sector. Most of

the masons working in the construction sector are

unqualified and semi-skilled. They are often required

to assume the role of an architect, a structural

engineer as well as a purchaser of building materials.

Keeping these spaces for improvement in the sector,

mason training programs were devised and

Refresher training of VHFs

SHG meeting in progress

29


organised by ACF in collaboration with ACL at

various locations. The customer support unit of the

Company provided the necessary training. In all,

over a hundred masons were trained by the

programs.

Efficient vocational training is one of the means

of restoring livelihoods of those affected by

industrialisation and unemployed rural youth that

can no longer be absorbed in agriculture because

of its dwindling growth. ACF thought that the

manufacturing and services sectors would provide

with prospects of absorbing such skilled persons.

With this thought, Skill Training Institutes were

established at Darlaghat, Himachal Pradesh;

Chandrapur, Maharashtra and Jaitaran, Rajasthan

by the Foundation to conduct continuous training

programs on employable trades. The training

institutes established have had an encouraging

placement rate of 75% for their trainees. The training

on operating heavy motor vehicles to land losers

in Darlaghat solicits a special mention here. These

persons have been trained in operating heavy

vehicles such as cranes and dumpers by the

Foundation and are undergoing field apprenticeship

at the Company's Darlaghat plant.

While enhancing the lives of rural communities,

sustainability can best be achieved with proper

management and conservation of natural resources

such as water and land. In this front the Foundation

undertook scores of interventions in accordance

with local conditions and needs. In Gujarat we

continued addressing the need for responding to

increasing water shortage and salinity in groundwater

that was showing a direct and adverse effect on

agriculture and potable water. ACF extended its

project on interlinking pond and water harvesting

structures to 60 villages.

The cumulative effect of ACF interventions has

harvested 1067FT of surface storage water

benefitting 7895 farmers and 23255 Ha. of land. In

the last year the average increase in the water level

in wells arose by 15 feet. With sweet water recharge,

the salinity in groundwater has reduced considerably.

This has resulted in a reduced requirement of seeds

for sowing and better yields due to timely availability

of water for irrigation. In Rajasthan, efforts were

directed towards conserving maximum quantities

of water and providing drinking water along with

improved cultivation. In Chhattisgarh, a large check

dam was constructed on Khosri Nala stream with

a water holding capacity of 80 TCM benefiting 125

hectares of arable land and benefiting four villages.

Besides continuing to work on roof rainwater

harvesting structures, ACF partnered with the State

Government on the Jalswarajya Project to make

potable water available to the villages of Chandrapur.

SEDI, Darlaghat, theory class in progress

Lush green farms

30


To improve the quality of water in Fluoride affected

villages of Rajasthan the Rajasthan Integrated

Fluorosis Mitigation Programme was implemented.

Under the programme awareness was generated

on the impact of excess fluoride and the methods

to mitigate its effects and domestic de-fluoridation

units were distributed. In the last year, the Foundation

constructed a total of 393 RRWHS, renovated 54

drinking water wells and repaired/installed 52 hand

pumps in the program areas.

Due to the close relationship between water

and agriculture, besides making interventions to

improve quality and availability of water, the

Foundation made efforts to incorporate requisite

changes in agricultural and irrigation practices. For

each of the changes propagated by the Foundation,

training programs were held to generate awareness

amongst the people, project demos were organised

at the village level and individual meetings. A total

of 195 trainings for farmers were organised that

benefitted 1759 farmers along with 30 exposure

visits. Micro-irrigation methods like drip and sprinkler

irrigation were explained, as was organic farming.

ACF has made conscious effort to explain and

promote advantageous agricultural practices such

as multi cropping, vegetable cultivation and

horticulture across locations. The benefits of these

have been seen in terms of increased agricultural

yields, higher profitability and incomes and resultant

better living standard. ACF believes that if agro-

based livelihoods are made profitable, over a period

of time, it would help in avoiding large scale

migrations besides making the communities prosper

in the own lands.

Appreciation for the Foundation's water

management efforts, specifically on salinity

mitigation came in the form of The Excellent Water

Management Initiative Award - Beyond the Fence

which was conferred by the CII - Godrej Green

Business Centre in December 2008.

In the coming year, the Foundation will continue

to direct its efforts towards productive stakeholder

engagements with the community members and

will continue to work with renewed vigor towards

social and economic development through

community participation.

OCCUPATIONAL HEALTH & SAFETY

Change in mindsets

OH&S is one of our core values. We have allocated

significant resources to strengthen the Occupational

Health and Safety Management system. We have

set up Corporate Occupational Health and Safety

function to lead these efforts to facilitate design,

and implementation of OH&S management system.

The efforts are to implement OH&S pyramid

elements and Fatality Prevention Elements to ensure

that the "zero harm" objective is achieved. We are

using procedures and programs to ensure safe

working environment, and develop positive safety

culture through leadership.

We also have initiated implantation of Contractor

Safety Management Directive, which help to ensure

processes are in place to ensure safety of third

party employees. We have also embarked on the

journey of changing behaviors across all functions

through Safety Leadership training. We continue

to lead our efforts on enforcement of OH&S norms

at all our Project sites. We are committed to

continually improve our OH&S performance through

implementation of formal OH&S management

system.

A check dam in Chandrapur

31


EMPLOYEE STOCK OPTION SCHEME

The company has granted Stock Options to the

Managing Director, Whole-time Directors and

employees, for the ninth year in succession. The

particulars required to be disclosed pursuant to

Clause 12 of SEBI (Employees Stock Option

Scheme) Guidelines 1999, are given in subsequent

paragraphs.

a) ESOS 2008

During the year 2008, the company granted

73,84,300 stock options on 1st July, 2008 (each

option carrying entitlement for one share of the face

value of Rs.2/- each) to the Managing Director,

Whole-time Directors and the employees, at an

exercise price of Rs.82.00 per share. The market

price of the shares on the date of grant was Rs.73/-

per share. These stock options shall vest on expiry

of one year from the date of grant and can be

exercised during a period of four years from the

date of vesting. The exercise price was determined

by averaging the daily closing price of the company's

equity shares during 7 days on the National Stock

Exchange, immediately preceding the grant.

The company has adopted intrinsic value

method for the valuation and accounting of the stock

options as per SEBI guidelines. Since the market

price per share on the previous day of the date of

grant was less than the exercise price, no employee

compensation cost has been accounted for the year

ended 31st December, 2008. The fair value of the

options as per the "Black Scholes" model comes

to Rs.16.95 per option. Had the company valued

and accounted the options as per the "Black Scholes"

model, the net profit for the year would have been

lower by Rs.15.10 crore and the diluted earning

per share (with face value of Rs. 2 each) would

have been Rs. 9.11 instead of Rs. 9.21 per share.

The "Black Scholes" model captures all the

variables with their respective appropriateness,

which influences the fair value of stock options.

The significant assumptions to estimate the fair value

of options as per "Black Scholes" model are:

1. Risk-free interest rate - 7.02%.

2. Expected life of the option - 3 years.

3. Expected volatility - 35.94%.

4. Expected dividend yield - 2.58%.

None of the options granted during the year

have vested till date. No employee or Director has

been granted options in excess of 1% of the issued

equity share capital of the company. None of the

Directors has been granted options of more than

5% of the total options granted during the year.

The options granted to the Managing Director,

Whole-time Directors and other senior management

personnel are as follows:

Mr. A. L. Kapur 325000

Mr. P. B. Kulkarni 200000

Mr. N. P. Ghuwalewala 125000

Mr. B. L. Taparia 100000

Mr. David Atkinson 100000

Mr. J. C. Toshniwal 70000

Mr. S. N. Toshniwal 50000

Mr. R. R. Darak 41500

Mr. Anil Kaul 24900

Mr. H. S. Patel 41500

1077900

Other employees have been granted 63,06,400

options. The details of options granted to other

employees are:

Total number of employees 2922

Total number of options granted 6306400

Max. number of options granted 29000

Min. number of options granted 300

Avg. number of options granted 2158

1,15,700 stock options have been reserved to be

granted to the SAP core team later.

32


The exercise price was determined byaveraging the daily closing price of thecompany's equity shares during 7 (seven) dayson the National Stock Exchange immediatelypreceding the grant.

The exercise price was determined byaveraging the daily closing price of thecompany's equity shares during 15 (fifteen)days on the National Stock Exchangeimmediately preceding the grant.

The exercise price was determined byaveraging two weeks' High and Low price ofthe company's equity shares on the NationalStock Exchange immediately preceding thegrant.

The exercise price was the average of thedaily closing price of equity shares of thecompany on the Stock Exchange, Mumbaiduring the period of 30 (thirty) days immediatelypreceding the date on which the options weregranted.

b) Cumulative disclosure

The particulars with regard to the stock options as on 31st December, 2008 as required to be disclosed

under the SEBI's guidelines are as follows:

Cumulative position as on 31st December, 2008 :

Nature of disclosure Particulars

a. Options granted 20164450

b. The pricing formula 2008,SAP 2007&2007

2004-05 &2005-06

2003-2004

1999-2000to 2002-2003

c. Options vested 11769175

d. Options exercised 4515475

e. The total number of shares arising as a result Total number of shares arising as a result of exercise ofof exercise of options options shall be 3,22,76,170 shares of Rs. 2 each.

f. Options lapsed / surrendered 645700

g. Variation of terms of option –

h. Money realised by exercise of options. Rs.113.51 crore

i. Total number of options in force 14358425

j. Details of options granted/ exercised by the No. of options granted No. of options exercisedManaging Director and Whole-time Directors

1. Mr. A. L. Kapur 855000 240250

2. Mr. P. B. Kulkarni 745000 295000

3. Mr. N. P. Ghuwalewala 375000 75000

4. Mr. B. L. Taparia 410000 135000

Any other employee who received a grant in anyone year of option amounting to 5% or more ofoptions granted during that year Nil Nil

k. Employees who were granted options during anyone year, equal to or exceeding 1% of the issuedcapital of the company at the time of grant. NIL

l. Diluted earning per share (EPS) pursuant to issueof shares on exercise of options calculated inaccordance with Accounting Standard AS-20.

2003-04 2004-05 2005-06 2007 2007 2008

m. Weighted average exercise price of options 310* 443* 69.60** 113** 82** 82**

Weighted average fair value of options 67.44* 96.73* 19.23** 29.28** 16.95** 16.95**

* Options related to Equity Shares of the face value of Rs.10/-.** Options related to equity shares of the face value of Rs. 2/-.The information disclosed in respect of item No. (m) is for grants made after June 30, 2003.

33


CORPORATE GOVERNANCE

The company has complied with the Corporate

Governance as stipulated under the listing

agreement with the stock exchanges. A separate

section on corporate governance, along with a

certificate from the auditors confirming the

compliance is annexed and forms part of the Annual

Report.

DIRECTORS

Appointment

Mr. Naresh Chandra was appointed by the

Board as Additional Non-Executive (Independent)

Director with effect from 26th July, 2008.

Mr. Naresh Chandra is a post graduate in

mathematics from Allahabad University. He was a

distinguished member of the Indian Administrative

Service (IAS) & former Cabinet Secretary to the

Government of India. He has held various important

positions including that of Governor of the State of

Gujarat and India's Ambassador to the United States

of America. He was also the Chairman of Corporate

Governance Committee inst i tuted by the

Government of India. In the year 2007, he was

honoured with Padma Vibhushan by the Government

of India. He is a Director on the Board of ACC Ltd.

and several other reputed companies.

In accordance with the provisions of Section

260 of the Companies Act, 1956, Mr. Naresh

Chandra shall hold office upto the date of ensuing

Annual General Meeting and have filed his consent

to act as Director of the Company, if appointed.

Board at its meeting held on 6th February, 2009

recommended for the approval of the members,

the appointment of Mr. Naresh Chandra as a

Non-Executive Director liable to retire by rotation

Mr. Onne van der Weijde was appointed by

the Board as Non-Executive Director and as a Holcim

nominee with effect from 9th January, 2009 to fill

the causal vacancy caused by the resignation of

Mr. Nirmalya Kumar.

Mr. Onne van der Weijde holds a Bachelor`s

degree in Economics, Accounting from Rotterdam,

Netherlands and a Masters degree in Business

Administration from the University of Bradford, UK.

He joined Holcim in the year 1996. After holding

various positions in the Company, he was appointed

Director and General Manager for Holcim (India)

Pvt. Ltd. in March 2005. He was appointed as the

Chief Financial Officer of ACC Ltd. in May 2006

and inducted on its Board in January 2009. He is

also a Director in Bulk Cement Corporation (India)

Ltd., ACC Ltd. and ACC Concrete Ltd.

In accordance with the provisions of Section

262 of the Companies Act, 1956, Mr. Onne van der

Weijde shall hold office upto the date of ensuing

Annual General Meeting and have filed his consent

to act as Director of the Company, if appointed.

Board at its meeting held on 6th February, 2009

recommended for the approval of the members the

appointment of Mr. Onne van der Weijde as a

Non-Executive Director not liable to retire by rotation.

Notices have been received from Members of

the Company under Section 257 of the Companies

Act, 1956 proposing the candidature of Mr. Naresh

Chandra and Mr. Onne van der Weijde for

appointment as Directors. Appropriate resolutions

seeking your approval to their appointment are

proposed in the Notice conveying the 26th Annual

General Meeting of the Company.

Cessation

Mr. Nirmalya Kumar, Non Executive Director

and a Holcim nominee who joined the Board on

03rd May, 2006 resigned w.e.f. 1st January, 2009.

34


Mr. P. B. Kulkarni who was associated with the

company for more than 25 years and who joined

the Board in the year 1999, ceased to be the

Whole-time Director and a Director on the Board

of the Company upon expiry of his term on 31st

January, 2009.

During his long endearing association with the

Company, he has been one of the key architects

in building this Company from initial capacity of

0.7 million tones to the present capacity of around

22 million tones. With his continued dedication &

direction, the Company has been able to achieve

high level of productivity & efficiency in its operations,

which made Ambuja as one of the most enviable

Company to work for in the cement industry.

The Board placed on record its appreciation

for the valuable services rendered by Mr. Nirmalya

Kumar and Mr. P. B. Kulkarni.

Retirement by rotation

In accordance with the provisions of Article 147

of the Articles of Association of the Company,

(i) Mr. Suresh Neotia, (ii) Mr. Narotam Sekhsaria,

(iii) Mr. M. L. Bhakta and (iv) Mr. A. L. Kapur Directors

of the company retire by rotation at the ensuing

Annual General Meeting of your Company and, being

eligible, offer themselves for re-appointment. The

Board of Directors recommends their

re-appointment.

Further details about Directors are given in the

Corporate Governance Report as well as in the

Notice of the ensuing Annual General Meeting being

sent to the shareholders along with Annual Report.

DIRECTORS' RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies

Act, 1956 as amended, the Directors confirm that:

i) In the preparation of the annual accounts, the

applicable accounting standards have been

followed along with proper explanations relating

to material departures.

ii) Appropriate accounting policies have been

selected and applied consistently, and

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 as on

31st December, 2008, and of the profit and

cash flow of the company for the period ended

31st December, 2008.

iii) Proper and sufficient care has been taken for

the maintenance of adequate accounting

records in accordance with the provisions of

the Companies Act, 1956 for safeguarding the

assets of the company and for preventing and

detecting fraud and other irregularities.

iv) The annual accounts have been prepared on

a going concern basis.

AUDITORS

M/s. S. R. Batliboi & Associates, auditors of

the company will retire at the ensuing Annual General

Meeting and are eligible for re-appointment.

M/s. S. R. Batliboi & Associates have confirmed

that their re-appointment, if made, shall be within

the limits of Section 224 (1B) of the Companies

Act, 1956.

The Board recommends their re-appointment

as Auditors and to fix their remuneration.

M/s. P. M. Nanabhoy & Co., Cost Accountants,

have been appointed Cost Auditors of the company

for the year 2009.

TRANSFER TO INVESTOR EDUCATION AND

PROTECTION FUND

The company has transferred a sum of Rs. 0.60

crore during the financial year 2008 to the Investor

35


Education and Protection Fund established by the

Central Government, in compliance with Section

205C of the Companies Act, 1956. The said amount

represents unclaimed dividend and unclaimed

interest on debentures and bonds which have been

with the company for a period exceeding 7 years

from their respective due dates of payment.

ENERGY, TECHNOLOGY AND FOREIGN

EXCHANGE

Information on conservation of energy,

technology absorption, foreign exchange earnings

and outgo is required to be given pursuant to Section

217 (1) (e) of the Companies Act, 1956 read with

the Companies (Disclosure of Particulars in the

Report of the Board of Directors) Rules, 1988 is

annexed hereto marked Annexure - I and forms part

of this report.

PARTICULARS OF EMPLOYEES

Information required to be given pursuant to

the provisions of Section 217 (2A) of the Companies

Act, 1956 read with Companies (Particulars of

Employees) Rules, 1975 is annexed hereto marked

Annexure - II and forms part of this report.

SUBSIDIARY COMPANIES

(a) Cessations

Ceylon Ambuja Cements Pvt. Ltd. and

Midigama Cements Pvt. Ltd. have ceased to be

the subsidiary companies upon divestment of

company's entire holding in favour of Holcim during

the year.

(b) Annual Reports

Ministry of Corporate Affairs, Government of

India, vide its letter dated 4th December, 2008 has

exempted the company from attaching the Annual

Reports and other particulars of its subsidiary

companies along with the Annual Report of the

company required u/s 212 of the Companies Act,

1956. Therefore, the said Reports of the subsidiary

companies viz. (1) Kakinada Cements Ltd.,

(2) Chemical Limes Mundwa Pvt. Ltd., and (3) M.G.T.

Cements Pvt. Ltd. are not attached herewith.

However, a statement giving certain information as

required vide aforesaid exemption letter dated 4th

December, 2008 is placed along with the

Consolidated Accounts.

The company shall provide the copy of Annual

Report and other documents of its subsidiary

companies as required u/s 212 of the Companies

Act to the shareholders upon their request, free of

cost.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Clause 32 of the listing

agreement with the stock exchanges, the

consolidated financial statements have been

prepared by the company in accordance with the

applicable accounting standards issued by The

Institute of Chartered Accountants of India. The

audited consolidated financial statements together

with Auditors' Report form part of the Annual Report.

The consolidated net profit of the company,

its subsidiaries and associates amounted to

Rs. 1389.7 crore for the corporate financial year

ended on 31st December, 2008 as compared to

Rs. 1402.3 crore for the company on a standalone

basis.

EQUAL OPPORTUNITY EMPLOYER

The company has always provided a congenial

atmosphere for work to all sections of the society.

It has provided equal opportunities of employment

to all without regard to their caste, religion, colour,

marital status and sex.

AWARDS AND RECOGNITION

l Company received the prestigious 'Business

Superbrands' status in August, 2008.

36


l Ambuja received "Greentech Environment

Excellence Gold Award 2008" at Goa on 5th

September, 2008. This award was given to

"Maratha Cement Works" for overall Best

Environment management practices &

performance.

l CII and Godrej Green Business Centre awarded

National Award for Excellence in Water

Management 2008 - "Excel lent Water

management Initiative - Beyond the Fence"

l The Indian Bureau of Mines presented the

following Awards to our MCW Mines after

carrying out detailed survey of the Mines located

in Vidarbha region and our company was given

following prizes :

First Prize – Afforestation

Second Prize – a) Top Soil

Management

b) Air Quality

Management

Third Prize – a) Management of

Minerals

and Sub-Grade

Minerals

b) Water Quality

Management

c) Overall

Performance.

l The Directorate of Mines Safety during their

overall assessment of entire Mines of Vidarbha

adjudged all the Mines and our Mines were

presented following prizes:

First Prize – a) Mine Lighting

Second Prize – a) Injury Rate

Performance

b) Explosives

l Director General mines safety (Ministry of Labour

& Mines, Govt. of India) Awarded the first prize

to our Rabriyawas Mine (Ras Lime Stone Mine)

in the 22nd Mine Safety Week, Ajmer Region

for its over all performances.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express

their deep sense of gratitude to the banks, central

and state governments and their departments and

the local authorities for their continued guidance

and support.

We would also like to place on record our sincere

appreciation for the total commitment, dedication

and hard work put in by every member of the Ambuja

family.

To them goes the credit for the company's

achievements.

And to you our shareholders, we are deeply

grateful for the confidence and faith that you have

always reposed in us.

For and on behalf of the Board,

Suresh Neotia

Chairman

Mumbai, 6th February, 2009

BLACK 37 BLUE


ANNEXURE - I

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN

EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN REPORT OF

BOARD OF DIRECTORS) RULES, 1988.

A) CONSERVATION OF ENERGY(a) Energy Conservation measures taken :

1. Optimized Air requirement for Boiler Operation, Instead of two blowers, made a single blower operating for two

Boilers (Ambujanagar).

2. In CPP, for steam condensing air cooled condenser is installed. Modified profile blade was replaced in one out of

six fans (Ambujanagar).

3. Optimized Compressor outlet air pressure from 8.0 kg/cm2 to 5.5 kg/cm2 as per the requirement of instrument

(Ambujanagar).

4. Cooling tower fan blade angle was reduced from 10º to 6º based on relative humidity and change in water temperature

(Ambujanagar).

5. Optimization of Plant Lighting and installation of Energy efficient devices for plant & colony lighting (Ambujanagar,

Ropar, Sankrail, Bhatinda).

6. Optimized the grinding chamber length of the cement mills (MCW, Rabriyawas)

7. Trimming of coal mill fan impeller by approx. 140 mm (Suli)

8. Optimization of grinding media charge in Cement Mills (Suli, Ropar)

9. Optimization of Raw mill No. 2 (Rabriyawas).

10. Bag house fan inlet box modification (Rabriyawas).

11. Reduced Inline Calciner Tertiary Air duct diameter from 2650 to 1700 mm (Rabriyawas).

12. Installations of water spray system in Preheater Fan ducts (Rabriyawas).

13. Installation of GRR in place of Liquid resistance control in motor of cooler Electro static precipitator (ESP) fan

(Rabriyawas).

14. Reduced water recirculation pump size requirement to 3 X 75 KW from earlier 2 X 160 KW for cooling tower (Rabriyawas).

15. Installation of Energy management system in utility compressors (Rabriyawas).

16. Installation of speed control for Cement Mill-2 ESP fan (Bhatapara).

17. Installation of Solar water heating system in Guest house (Bhatapara).

18. Reduced Cement Mills ventilation fan power by optimizing the mill outlet temperature (Ropar).

19. Replacement of screw conveyors by air slides (Ropar).

20. Increased usage of Biomass in power generation by improving covering facilities to make them available in rainy

season also (Ropar).

(b) Additional Investments and proposals, if any, being implemented for reduction of Consumption of Energy :

1. Replacement of Gypsum Pre-grinder for Cement Mills (Ambujanagar).

2. Replacement of cooler fan with more efficient fans (Ambujanagar).

3. Modification / Installation of improved Fine coal feeding system (Ambujanagar and Rabriyawas).

4. In CPP, following energy conservation measures are planned (Ambujanagar);

(a) Further optimization of compressed air.

(b) Installation of a steam turbine as replacement of 825 kw HT motor. Spare Low Pressure steam is available.

(c) Installation of vapour absorption machine as a replacement of air condition package unit.

(d) Modified profile blade to be replaced in remaining fans.

5. Optimization of kiln & cooler by fuzzy control & various optimization measures (MCW).

6. Replacement of triple gate with Rotary Air lock, and installation of rubber seals of improved design in Raw Mills

(Suli).

7. Conversion of low pressure compressors with high pressure compressors in flyash dense phase system (Suli).

8. Pre-heater fan inlet duct modification to reduce gas velocity and thus power consumption (Suli).

9. Installation of dip tubes in the ILC cyclones 4th, 5th of each string (Rabriyawas).

10. Re-orientation of PH cyclones feed chute, flap & feed pipe (Rabriyawas).

BLACK 38 BLUE


11. Installation of improved speed control devices in Preheater Fans in both ILC PH fans (Rabriyawas).

12. Installation of AFR feeding system to reduce fuel cost & Co2 emission (Rabriyawas).

13. Installation of automatic control system for improving cement mill operation (Rabriyawas).

14. Installation of Belt Bucket Elevator for kiln feed system (Bhatapara).

15. Optimization of Compressed air (Bhatapara).

16. Installation of graphite sealing arrangement for kiln inlet & outlet (Bhatapara).

17. Installation of improved speed control device in Raw Mill & Coal mill exhaust fans (Bhatapara).

18. Installation of Solar water heating system in New Executive hostel (Bhatapara).

19. Installation of Pressurization and ventilation system in Compressor House which will help in stopping of one Air

Compressor (Ropar).

20. Installation of Better quality Mill Sound Level Sensor and fine tuning of Mill Optimizer (Ropar).

21. Replacement of separator fans with high efficiency fans (Ropar).

22. Installation of speed control drive for a screw compressor (Sankrail).

23. Replacement of Aluminium make cooling tower Fan with FRP make Fan (Bhatinda).

24. Installation of Speed control devices and replacement of few overrated motors in bag filters (Bhatinda)

Total Investment and Savings (in Rs. Crore)

Year Investment Savings

2008 3.17 11.47

2009 18.60 (Proposed) 12.67 (Expected)

(c) Impact of the measures at (a) and (b) above for reduction of Energy Consumption and consequent impact

on the cost of production of goods :

Measures referred in (a) is expected to result in energy saving of Rs. 11.47 crores per annum. Measures referred in

(b) is expected to result in energy saving of Rs. 12.67 crores per annum.

(d) Total Energy Consumption and Energy Consumption per unit of production :

Information is given in the prescribed Form - A annexed.

B) TECHNOLOGY ABSORPTIONEfforts made in Technology Absorption are given in prescribed Form - B annexed.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO(a) Activities relating to exports; initiatives taken to increase exports; development of new export markets for

products and services; and export plans :

In view of good growth in domestic demand, the company has reduced its focus on exports. This year the company

has exported 8.32 lac tonnes of cement (12 months) as against 13.22 lac tonnes in the previous year (12 months). In

terms of value, the exports during this year amounted to Rs. 232.09 crores (12 months)(FOB) as against 275.44 crores

(12 months)(FOB) in the previous year.

(b) Total Foreign Exchange used and earned :

Current Year Previous Year

(12 months) (12 months)

(Rs. in crores) (Rs. in crores)

Used* 976.86 596.65

Earned** 229.80 265.65

* Excluding repayment of borrowings Rs. 117.09; Previous year Rs. Nil.

** Excluding receipt on Sale of investment in foreign subsidiary Rs. 0.42 crore; Previous year Rs. Nil.

ANNEXURE - I (Contd.)

BLACK 39 BLUE


A. POWER & FUEL CONSUMPTIONCurrent Year Previous Year

31.12.2008 31.12.2007

1. Electricity :

(a) Purchased

Units (Crores kwh) 35.80 30.91

Total amount (Rs. in Crores)* 138.14 111.77

Rate / Unit-kwh (Rs.) 3.86 3.62

(b) Own Generation

(i) Through Liquid Fuel Generator

Net Units (Crore kwh) 21.19 40.33

Unit (kwh) / Ltr. of LDO / Furnace oil 4.06 4.21

LDO / Furnace oil-Cost / Unit Generated (Rs. / kwh) 5.83 3.86

(ii) Through Steam Turbine / Generator

Units (Crore kwh) # 97.35 76.03

Unit (kwh) / Tonne of Fuel (Coal / Rice Husk) 979 881

Oil / Gas / Coal - Cost / Unit ( Rs. / kwh) 2.60 2.06

2. Coal & Other Fuels :

Quantity (Million K. Cal) 8560182 8618902

Total Cost (Rs. in Crores) 701 518

Average Rate (Rs. / Million K.Cal) 818.64 601.42

3. Light Diesel Oil / High Speed Diesel / Furnace Oil :

Quantity (K.Ltrs.) 1703.09 1480.21

Total Cost (Rs. in Crores) 5.99 4.31

Average Rate (Rs. / K.Ltr.) 35152 29138

4. Others / Internal Generation :

Quantity NIL NIL

Total Cost NIL NIL

Rate / Unit NIL NIL

B. CONSUMPTION PER UNIT OF PRODUCTIONIndustry Current Year Previous Year

Norms 31.12.2008 31.12.2007

Electricity (KWH / T. of Cement) ** 100 86.3 84.6

LDO / HSD (Ltr. / T. of Clinker) N.A. 0.15 0.13

Coal & Other Fuels (K.Cal / Kg. of Clinker) 800 744 742

* Minimum demand charges paid to Gujarat Urja Vikas Nigam Limited for Ambujanagar Plant of Rs. 0.56 Crore have been

included in above cost

** Does not include Electricity consumed in residential colony which is 0.57 kwh / tonne of cement. (previous year 0.62 kwh /

tonne of cement)

# Includes 400.86 lac units of TG-power sold from Ropar to PSEB (previous year 425.68 lac units)

FORM – A(See Rule 2)

Form for Disclosure of Particulars with respect to Conservation of Energy

BLACK 40 BLUE


FORM – B(See Rule 2)

Form for disclosure of particulars with respect to Absorption

A. RESEARCH & DEVELOPMENT (R & D)1. Specific areas in which R & D carried out by the Company :

(a) Promote usage of alternate fuels like industrial wastes in cement manufacture to reduce the manufacturing cost,

fuel consumption and reduce Co2 emissions.

(b) Conservation of lube and industrial oil by regular quality monitoring and extending the drain interval.

(c) Improving clinker quality and kiln burning condition by raw mix optimization, adding mineralizers and optimizing

raw meal and solid fuel fineness.

(d) Using various chemical additives for improving Cement quality.

2. Benefits derived as a result of above R & D :

a) Conservation of energy from traditional sources.

b) Capacity enhancement and conservation of Resources.

c) Improved Clinker & Cement quality and reduction in cost of production.

3. Future Plan of action:

a) Evaluation and application of special Refractory suitable to use with alternate fuel.

b) Beneficiation of phospho gypsum from fertilizer plant to make it usable for cement manufacturing.

c) Evaluation of various alternate fuels for their suitability to clinker manufacturing and power generation process.

Installation of handling and preparation systems for such fuels.

d) Installation of various process and quality monitoring instruments are planned to optimize processes and improve

product quality.

4. Expenditure on R & D :

Current Year Previous Year

31.12.2008 31.12.2007

(Rs. in lacs) (Rs. in lacs)

A. Capital expenditure 53.74 2.00

B. Recurring expenditure 24.49 64.00

C. Total expenditure 78.23 66.00

D. Total R & D expenditure as a percentage of total turnover 0.01% 0.01%

B. TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION1. Efforts, in brief, made towards Technology Absorption, Adaption and Innovation :

a) Installation of Dalog system for Raw Mill gear box monitoring in plants.

b) Installation of online balancer for Preheater fan for productivity improvement.

The Company has always been remained as one of the industry leaders for implementation of state of the art

equipments and for absorption of new technologies. Company's personnel from operations, maintenance and

developmental activities were deputed worldwide for training through seminars and visits.

2. Benefits derived as a result of the above efforts :

Improved quality, productivity, operational efficiencies and cost reduction primarily due to conservation of energy, improved

equipment safety and implementation of better operation and maintenance practices.

3. Information regarding Technology Imported during last 5 years :

a) The Dalog system for Raw Mill gear box monitoring imported in 2008.

b) The online balancer for PH fan in 2008.

BLACK 41 BLUE


PARTICULARS OF EMPLOYEES AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES

(PARTICULARS OF EMPLOYEES) RULES,1975 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE CORPORATE

FINANCIAL YEAR ENDED 31st DECEMBER, 2008

Name & Age (Years) Designation/ Remuneration Qualifications Exper- Date of Last Employment

Nature of Duties (Rupees) ience Commence- Last Designation

(years) ment of

Employment

A) EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING RS. 24,00,000/-OR MORE PER ANNUM

1. Agarwal M. (38) GM (Treasury & 3,252,274 B.Com., C.A., I.C.W.A. 14 19/02/1996 Parag Parikh FinancialCorp. Strategies) Advisory Services Ltd.,

Asst. Manager

2. Anjaria R.P. (47) General Manager (Accounts) 3,119,487 B.Com., C.A., C.S. 25 11/09/2000 De-Nocil Crop ProtectionLtd., Controller of Accounts

3. Atkinson D.* (51) Chief Financial Officer 20,002,942 B.A.(Hons.), F.C.M.A. 28 01/09/2007 Holcim Ltd., RegionalController

4. Darak R.R. (52) President (Accounts & IT) 7,365,743 B.Com., F.C.A., A.C.S., 29 16/10/1985 W. H. Brady & Co. Ltd.,C.M.A., DISA (ICA) Chief Accountant-cum-

Asst. Secretary

5. Desai A.R. (47) Marketing Head (East) 5,902,063 B.E. (Chem.), 26 18/06/1987 Torrent Lab Pvt. Ltd.,M.B.A. (Marketing) Marketing Officer

6. Deshpande A.V. (43) Asst. Vice President 3,324,951 B.Com., A.C.A. 21 18/07/2006 Indokem Ltd.,Vice President (Finance)

7. Deshpande V. V. (51) Sr. Vice President 4,804,375 B.Com., D.A. & P.R., 31 21/09/1987 Raymond Woollen Mills,(Brand & Promotion) Dip. in Journalism Assistant

8. Dordi C.M.* (61) Cust. Support Group 2,540,000 B.Tech., M.Tech. 32 14/05/1994 Tata Electric Co. Ltd.,Head-West & Export Manager (Civil)

9. Duggal S. (46) Jt. President 4,268,520 B.E. (Electrical) 24 07/09/1992 Modi Cement, GeneralManager

10. Gangal G. (43) Vice President 5,169,085 B.Com., LL.B., F.C.A., 21 03/07/2000 Real Value Appliances Ltd.,(Harp & Taxation) Dy. General Manager

(Taxation)

11. Ghosh A. (55) Asst. Vice President 2,874,053 B. Com. (Hons.) 31 22/10/1999 Tata Iron & Steel Co. Ltd.(Marketing) (Cement Division),

Asst. Manager (Marketing)

12. Ghuwalewala N. P.* (64) Whole-time Director 19,994,303 B.Chem., M.Phil. 39 28/06/2004 Birla Corporation Ltd.,Whole-time Director

13. Gupta A. (58) Sr. Vice President 3,533,151 B.Sc. (Engg.), Mech. 36 16/11/2000 Vasavadatta Cement,(Power Projects) Sr. General Manager (PP)

14. Gupta S.K. (48) Jt. President 6,982,597 Master Mariner 30 08/02/1993 Century Shipping, Century(Ports & Shipping) (Foreign Going) Textile & Industries Ltd.,

Marine Manager

15. Hariharan G. (55) Jt. President (Legal) 4,572,622 B.Com., LL.M., F.C.S. 36 15/01/2001 Amforge Group, VicePresident & Co. Secretary

16. Hirpara M.M. (57) Sr. Vice President (Projects) 4,050,635 B.E. (Production) 33 04/12/1993 Gujarat Ambuja CementsLtd., General Manager(Tech.)

17. Jagetiya B.K. (55) Vice President 4,337,188 M.Sc. (Chem.) 35 01/12/1988 Birla Cement Works,(Sanand G.Unit) Chief Chemist

18. Jain J. (42) Asst. Vice President (Comm) 3,482,076 M.Com, A.C.A. 20 15/10/1988 –

19. Jalpota S.R. (56) Sr. Vice President (Comm) 4,199,947 M.Sc. (Hons.), M.B.A. 35 09/09/2003 Vam Organic Chemicals Ltd.,Vice President (Commercial)

20. Joshi S. (47) Head of Corporate Controlling 5,009,729 B.Com., A.C.A. 24 01/06/2004 Ambuja Cement Eastern Ltd.,Vice President (Finance)

21. Kampani R. J.* (68) Advisor (Commercial) 6,883,333 B.Com., F.C.A. 47 01/7/2006 Hindustan Lever Ltd.,Marketing & Dist. Manager

22. Kapur A. (43) Head - Marketing & 5,222,148 B.A., M.M.S. 19 01/02/1993 Citi Bank, Assistant ManagerCommercial Services

23. Kapur A.L.* (74) Managing Director 30,960,456 B.A., F.C.A., F.I.C.W.A. 50 20/02/1999 Birla Corporation Ltd.,Executive Director & CEO

24. Kaul A. (58) Marketing Head (North) 5,475,940 M.A. 36 01/09/1994 Floatglass India Ltd., DeputyDirector (Sales & Marketing)

25. Khajanchi S.K. (37) Regional Controller, 3,302,969 B.Com. (Hons.), 15 29/08/2001 Reliance Industries Ltd.,West Region A.I.C.W.A., A.C.A.,

A.C.S., C.F.A.

26. Khandelwal M.K. (51) Dy. General Manager 2,535,628 B.Com., C.A. 27 01/10/1985 Shah & Taparia,(Accounts) (Intermediate - Group I) Chartered Accountants

ANNEXURE - II

BLACK 42 BLUE


ANNEXURE - II (Contd.)

27. Kolagada P. (51) General Manager (Energy) 2,450,222 B.Tech., ME (Chem Engg.) 24 02/12/2002 Business

28. Kothari R.C. (52) Sr. Vice President 2,684,309 B.E. (Mech.) 30 25/05/2000 Saurashtra Chemicals Ltd.,General Manager (Production& Maints.- Dry Sect.)

29. Kulkarni P. B.* (66) Whole-time Director 25,877,403 B.E. (Mech.) 42 08/02/1983 Lakshmi Cement, J.K.Cement Ltd., Chief Engineer

30. Kumar A. (44) Asst. Vice President 3,176,377 Master (FG) 11 24/10/2000 Ocean Research Education(Shipping) Centre, Faculty Member

31. Kumar C. (55) Sr. Vice President 5,043,038 Diploma in Electronics, 32 04/03/1985 Larsen & Toubro Ltd.,MBA Engineer

32. Lalaji B. (55) Vice President 4,562,998 B.Tech. (Chem), 31 01/06/1996 Merind (I) Ltd. Bombay,(Special Projects) M.Tech. (Indl. Engg.) Manager (Information

Technology)

33. Malgonde B. (48) Asst. Vice President 3,958,487 B.E. (Mech.), DMET, 21 16/07/1996 Nomadic Ship Managem,(Shipping) Class I (MOT) Chief Engineer

34. Mantri S.K. (47) Regional Controller, 4,115,009 B.Com. (Hons), F.C.A. 22 04/10/2000 Xpro India Ltd.,Northern Region General Manager

35. Murthy A.S.N. (53) General Manager 2,893,470 B. Tech. 27 04/04/1996 Lloyds Steel India Ltd.,(Power Projects) Sr. Manager

36. Narain M. (47) Vice President (HR) 3,625,617 B.Sc., MMS 24 01/08/2006 VVF Ltd., GeneralManager (HR)

37. Nety R.M. (50) Vice President (Shipping) 4,792,098 First Class Engineer 27 22/01/1996 ABS Marine Services,(Motor) Staff CH. Engr.

38. Pal S.C. (55) General Manager (TSS) 2,793,619 B.Tech., M. Tech. 29 25/01/2005 Gupta Coalfields,Director (Process)

39. Pandharpurkar A.K. (46) General Manager 2,479,400 B. Sc. (Hons), DCM 26 21/10/2001 Recursion Software Ltd.,(Business Projects) General Manager

40. Pandya A.J. (55) Chief Internal Auditor 4,552,500 B. Com., FCA, 31 12/05/1986 Deepak Nitrite Ltd.,DISA (ICAI), CIA Head (Internal Audit)

41. Patel H.S. (59) President 5,868,604 M.Tech. (Chemical Engg.) 33 01/08/2001 Larsen & Toubro Ltd.,Cement Division, ChiefExecutive (Works)

42. Rao A.V.* (77) Chief - Projects 8,100,000 B.E. (Civil) 55 01/09/2004 Straw Products Ltd., ChiefEngineer (Construction)

43. Rao R.P.R. (54) Vice President (Process) 2,838,188 B.Tech. (Chem. Engg.) 31 31/12/2001 Cemmanage PrincipalConsultant

44. Sadhu S.K. (61) Sr. Vice President 3,713,908 B.Sc. (Engg.), PGDM, 39 23/03/1996 Hindustan Copper Ltd.,FIE, MIMA, MIIM DGM (Engg. Services)

45. Saran P. (48) Sr. Vice President 2,958,460 B.Com. 18 01/06/2007 Ambuja Realty Development(Corporate Relation) Ltd., Sr. Vice President

(Business Development)

46. Sarkar A.K. (53) General Manager (Costing) 3,297,778 M.Sc., I.C.W.A. 34 06/04/1993 Tata Chemicals Ltd.,Cost Accountant

47. Sekhsaria K.R. (58) Head Commodity Group 3,234,289 B.Sc. (Hons.), DMS 38 12/12/1985 Indian Tools Manufacturing,Purchase Manager

48. Setty C.N.J.* (66) President 6,346,128 B.E. (Mechanical), M.I.E. 33 24/5/2007 Ambuja Cements Limited,Sr. Vice President(Operations)

49. Sharma K. (58) Sr. Vice President 4,179,209 B.A.,D.M.M. 38 30/09/1994 ACC Ltd.,(Corporate Affairs) Resident Executive

50. Sharma R. (46) Sr. Vice President 3,768,220 B.Sc., LL.B., DPM & IA 23 17/01/1986 M/s. Pushpinder Sharma,Medical Representative

51. Sharma R.P. (50) Vice President (Operations) 3,043,487 B.Tech. (Chem) 27 01/09/1988 Satna Cement WorksSr. Chemical Engineer

52. Sharma S. (51) Sr. Vice President (Projects) 4,052,628 B.E. (Mech.) 30 08/04/1983 Lakshmi Cement,J.K. Cement Ltd.,Mechanical Engineer

53. Sharma V.K. (55) Vice President (Civil) 2,716,026 B.E. (Civil) 32 29/08/2006 Binani Cement Ltd.,AVP (Civil)

54. Singal A.K. (50) Vice President 3,702,294 B.E. (Mech.), GDMM, 30 16/05/1983 Straw Products Ltd.,(Procurement) DFM, Dip. in Mechanical Engineer

Central Excise

55. Srivastava K.S. (55) Sr. Vice President (Elec.) 4,174,663 B.E. (Elec.) 31 03/01/1985 The UP State Cement Co.,Electrical Engineer

56. Srivastava R.K. (55) Sr. Vice President (A & C) 4,195,354 B.E. (Electro & Telecom), 31 07/10/1985 Orient Cement,M.Tech. Sr. Instrumentation Engineer



(years) ment of

Employment

BLACK 43 BLUE



57. Tank V.V. (51) Vice President (Engg.) 3,005,190 B.E. (Mech.), PGDBA, 28 15/11/1988 Saurashtra Cement &MIE,CE Chemical Industires Ltd.,

Sr. Engineer

58. Taparia B.L.* (58) Whole-time Director & 15,342,450 B.Com., LL.B., F.C.S. 38 28/11/1983 Jain Spinners Ltd.,Company Secretary Secretary & Finance

Manager

59. Thakur S.K. (54) Vice President (Technical) 3,102,785 B.Sc. Engg. (Chemical) 29 26/3/1987 Cement Corporation of India,Sr. Chemical Engineer

60. Tiwari P. (45) Vice President (CSR) 2,409,470 M. A. (Social Work) 20 11/09/2000 Meljol, Director

61. Toshniwal J.C. (55) Business Head 10,578,347 B.E.(Hons.)(Mech.) 33 03/09/2007 Heidelberg Cement (India)(Northern Region) Pvt. Limited, Director -

Technical

62. Toshniwal S.N. (55) Business Head (East) 7,537,417 B.Com., C.A., 30 29/06/2001 Usha Beltron Ltd.,I.C.W.A., C.S. Sr. Vice-President (Materials)

63. Vaishnav L.P. (58) Vice President (AFR) 2,583,739 B.E. (Chem.) 36 01/07/1997 Mardia Chemical Ltd.,VP (New Projects)

B) EMPLOYED FOR A PART OF THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING RS. 2,00,000/-OR MORE PER MONTH.

Name & Age (Years) Designation/ Remuneration Qualifications Exper- Date of Date of end Last Employment

Nature of Duties (Rupees) ience Commence- of the Term Last Designation

(years) ment of

Employment

1. Bains G.S.# (50) Chief Engineer 2,028,480 Class I (MOT) 25 05/09/2007 15/05/2008 Barber Shipping22/05/2008 05/07/2008 Management, Chief Engineer11/09/2008 08/11/2008

2. Bakshi T.P.S.# (63) Master 988,766 Master (FG) 40 02/09/2008 06/11/200805/12/2008 25/12/2008

3. Bazaz S.C.# (53) Master 636,311 Master (FG) 32 17/05/2008 10/07/2008 Vamsee Shipping, Master

4. Bhasin R.# (54) Chief Engineer 650,600 Class I (MOT) 33 03/02/2008 01/04/2008

5. Chawla A.L.# (62) Chief Engineer 2,792,993 Class I (MOT) 38 31/10/2007 11/01/200807/03/2008 22/05/200821/06/2008 11/07/200805/08/2008 15/10/200805/11/2008 31/12/2008

6. Choudhary F.K.# (41) Chief Engineer 2,099,133 Class III (NCV) 13 04/12/2007 05/03/200802/06/2008 03/08/200803/10/2008 31/12/2008

7. Dave D.R. (47) Vice President (Marketing) 2,554,221 B.Com., Executive 23 28/02/1989 P C I Group of PharmaDip. in Marketing Industries, Medical

Representative

8. De Sales D.I.# (50) Master 1,062,417 Master (FG) 28 08/05/1997 23/04/2008 Damania Shipping,Chief Officer

9. Deshmukh V. (50) Sr. Vice President 1,975,475 B.E. (Mech), MBA 26 23/06/2008 K. Raheja Corporate Services(Business Development) Pvt. Ltd., General Manager

10. Gopalkrishnan V.P.# (62) Chief Engineer 1,987,495 Class I (MOT) 41 09/11/2007 07/01/200805/03/2008 07/05/200811/07/2008 11/09/200817/11/2008 31/12/2008

11. Hapani N.K. (58) President (Technical) 3,855,477 B.E. (Mechanical), 35 29/10/1985 Walchandnagar IndustriesM.I.E. Ltd., Mechanical Erection

Engineer

12. Iyengar G. R.# (61) Master 1,956,122 Master (FG) 38 27/01/2008 06/03/200825/04/2008 13/06/200816/08/2008 05/10/200804/12/2008 31/12/2008

13. Jhanb A.# (52) Master 885,508 Master (FG) 33 30/01/2008 19/04/2008 Dole Fresh Fruit Ind. Ltd,Master

14. Joshi S.K.# (44) Chief Engineer 751,151 Class I (MOT) 16 28/08/2008 05/11/2008 Euresia, Chief Engineer

15. Kalyanasundaram A.# (40) Chief Engineer 662,370 Class III (NCV) 15 11/01/2008 05/04/2008

16. Karnawat M. (45) VP (Commercial) 1,311,891 B.Com., F.C.A. 20 28/06/2008 Calchem Industries (India)Ltd., GM (Operation)



(years) ment of

Employment

BLACK 44 BLUE


17. Khullar J.R.# (52) Chief Engineer 641,588 Class I (MOT) 27 22/04/2008 21/06/2008

18. Kundargi A.B.# (60) Master 3,238,695 Master (FG) 40 29/01/1995 24/10/2008 Century Shipping, Master13/11/2008 31/12/2008

19. Machado T.M.# (58) Chief Engineer 2,157,392 Class I (MOT) 37 06/04/2008 06/08/2008 Varun Shipping,14/10/2008 21/12/2008 Chief Engineer

20. Malik S.S.# (48) 2nd Engineer 1,208,577 Class IV (MOT) 16 01/01/2008 05/02/200821/05/2008 17/10/2008

21. Mehta R. (53) General Manager 3,340,359 B.Com. 39 02/01/1988 Mitco Management Services(Commercial) Limited, Sr. Sales Officer

22. Menon S.# (53) Master 1,354,361 Master (FG) 21 06/12/2007 04/02/200813/06/2008 22/06/200806/10/2008 21/12/2008

23. Mohanan C.P.# (57) Chief Officer 1,058,446 Mate (HT) 35 29/11/2007 05/03/2008 Essar Shipping, Chief Officer05/07/2008 15/07/200806/10/2008 31/12/2008

24. Nihalani A.T.# (64) Chief Engineer 512,586 Class I (MOT) 35 19/12/2007 21/02/2008

25. Pandey A.K.R.# (35) Master 2,078,044 Master (FG) 10 15/02/2008 14/04/2008 Geepee Shipping, Master10/05/2008 08/07/200823/09/2008 04/12/2008

26. Pandey M.K.# (44) Chief Engineer 3,374,700 Class I (MOT) 07/07/1997 15/06/2008 Great Eastern Shipping,Chief Engineer

27. Pandya V.K. (50) Customer Support Group 2,675,580 B.E. (Civil), DCE, 29 26/11/1986 Orient ConstructionHead (North & East) PDDC (Civil) Company, Site Engineer

28. Raju U.R. (56) Jt. President 2,842,010 M.Sc. (Tech.) 32 22/07/1992 N.C.C.B.M.,(Mineral Resources) Programme Leader

29. Rout G.P.# (58) Chief Engineer 2,507,525 Class I (MOT) 36 14/02/2008 15/03/200801/04/2008 06/06/200824/07/2008 01/10/200808/11/2008 31/12/2008

30. Sanglikar N.Y. (53) Head (Corporate 1,235,102 B.A., MMM 21 13/08/2008 Dow Chemicals InternationalCommunication) Pvt. Ltd., Director (Public

Affairs)

31. Sastry P.N.* (60) Advisor - Training & 2,475,000 B.Com., 34 03/11/2000 Khimji Ramdas,Development M.B.A. (Pers) 08/11/2006 Group HR Head

32. Saxena Y.K. (53) Sr. Vice President (Envt) 3,222,077 B.Tech. (Chem.), 31 08/09/1990 Chem Projects Design &M.Sc. (Tech.), Engg. Pvt. Ltd.,PGDBM, Ph.D Manager Env. Engg.

33. Sethi V.K.# (53) Master 2,231,687 Master (FG) 31 27/10/2007 15/04/200816/04/2008 14/07/200805/11/2008 31/12/2008

34. Sharma V.P. (55) President 2,045,660 B.Sc., M.Sc. 32 25/01/1996 Gujarat Siddhi CementsLtd., Sr. Vice President

35. Singh K.# (62) Chief Engineer 2,280,490 Class I (MOT) 41 05/11/2007 14/02/200819/04/2008 17/05/200805/07/2008 06/11/2008

36. Surve A.P.# (31) Chief Engineer 1,549,272 Class III (NCV) 9 07/05/2008 24/07/200815/10/2008 31/12/2008

37. Taleyarkhan E.P.# (53) Master 1,769,822 Master (FG) 35 07/02/2008 28/02/2008 Molmi Mosm, Master04/03/2008 16/04/200827/06/2008 03/09/2008

38. Tanwar D.# (33) Chief Officer 323,734 Mate (FG) 15 20/05/2008 05/07/2008 I.T.M., 1st Officer

39. Tejwani S.K. (50) Sr. Vice President 3,991,954 BE (Mechanical) 28 29/12/2000 Prism Cement,(Technical) Project Head Jt. GM (Mechanical)

40. Verma H.# (37) Master 2,165,426 Master (FG) 8 07/02/2008 06/04/200806/06/2008 03/08/200803/10/2008 31/12/2008

1) Remuneration includes Salary, Commission, contribution to Provident and other Funds and Perquisites (including medical, leave travel and leave encashment on payment

basis and monetary value of taxable Perquisites), etc.

2) All the abovesaid appointments are non-contractual except marked * and are terminable by notice on either side.

3) None of the employee is related to any Director of the Company except Mr. Kapur A. A. and Mr. Kapur A. L. who are related to each other.

4) The persons (marked #) work on contractual basis with Shipping Department of the Company. They render services as and when required by the Company and such

instances are more than one during the year. Therefore in their case there are multiple dates of commencement of employment and end of the term.

Name & Age (Years) Designation/ Remuneration Qualifications Exper- Date of Date of end Last Employment

Nature of Duties (Rupees) ience Commence- of the Term Last Designation

(years) ment of

Employment


BLACK 45 BLUE


CORPORATE GOVERNANCE

The Directors' Report on the compliance of the Corporate Governance Code is given below.

1. CORPORATE GOVERNANCE

1.1 Company's Philosophy on Corporate Governance :

At Ambuja Cements we believe that good Corporate Governance emerges from the application of the best and

sound management practices and compliance with the law coupled with total adherence to highest norms of

business ethics. These two main drivers, together with the company's ongoing contributions to the local communities

it operates in through meaningful and relevant Corporate Social Responsibility initiatives add to enhance the

stakeholders value.

The Company places great emphasis on values such as empowerment and integrity of its employees, safety of

the employees & communities surrounding our plant and facilities, transparency in decision making process and

fair & ethical dealings with all, pollution free clean environment and last but not the least, accountability to all the

stakeholders. These practices are being followed since the inception and have contributed to the company's sustained

growth. The Company also believes that its operations should ensure that the precious natural resources are utilized

in a manner that contributes to the "Triple Bottom Line".

1.2 The Governance Structure :

Ambuja's governance structure is based on the principles of freedom to the executive management for the sustained

growth and effective supervision & accountability of the executive management within a given framework. In line

with these principles, the company has formed three tiers of Corporate Governance structure, viz.:

(i) The Board of Directors - which conducts overall strategic supervision and control by mandating the goals and

targets, policies, reporting mechanism and decision making process to be followed.

(ii) Committees of Directors - such as audit committee, management committee, compliance committee etc. are

focused on financial reporting, audit & internal controls and compliance issues.

(iii) Executive Committee (EXCO) - this is comprised of the working directors and some other senior executives

of the company. At present EXCO comprises of the Managing Director, the Whole-time Directors, the Business

Heads, the CFO, Head (Marketing & Commercial Services), Head (IT & Accounts) and Head (HR).

2. BOARD OF DIRECTORS

2.1 Composition :

The Company has a very balanced structure of the Board of Directors. As at the end of corporate financial year

2008, the Board consisted of 15 members, 5 promoter directors (non-executive), 6 independent directors, a managing

director, 3 executive directors. Out of 5 non-executive directors, 3 Directors were appointed as nominees of Holcim

and balance two are Indian promoter directors viz. Mr. Suresh Neotia (non-executive Chairman) and Mr. Narotam

Sekhsaria (non-executive Vice-Chairman). With cessation of Mr. P. B. Kulkarni as a whole-time director upon expiry

of his term with effect from 1st February, 2009, the total strength of the board and that of executive directors reduced

to 14 and 2 respectively.

In line with the amended clause 49 of the listing agreement on composition of the Board of Directors, the Company

has taken effective steps for its due compliance. None of the director is a director in more than 15 public companies

and member of more than 10 committees or act as Chairman of more than five committees across all companies

in which they are directors. The non-executive directors are appointed or re-appointed with the approval of the

shareholders. All non-executive directors are liable to retire by rotation unless otherwise specifically approved by

the shareholders.

The Independent Directors on the Board are experienced, competent and highly renowned persons from their

respective fields. The Independent Directors take active part at the Board and Committee Meetings which add value

in the decision making process of the Board of Directors.

BLACK 46 BLUE


2.2 Meetings, attendance and agenda of the Board Meeting :

The Board generally meets 5 times during the year. The yearly calendar of the meetings is finalized at the beginning

of the year. Additional meetings are held when necessary. All the agenda items are backed by necessary supporting

information and documents to enable the Board to take informed decisions. Senior management personnel are

called to provide additional inputs for the items being discussed by the Board as and when necessary.

During the year ended on 31st December, 2008 the Board of Directors had 6 meetings. These were held on 1stFebruary, 2008, 25th April, 2008, 25th July, 2008, 25th September, 2008, 24th October, 2008 and 5th December,

2008.

The last Annual General Meeting (AGM) was held on 22nd April, 2008.

The attendance record of the Directors at the Board Meetings during the year ended on 31st December, 2008, and

at the last AGM is as under :-

Sr. Name of Director Category No. of Board Attendance at

No. Meetings attended last AGM

1. Mr. Suresh Neotia Chairman 5 No

Non Independent

2. Mr. N. S. Sekhsaria Vice Chairman 6 No

Non Independent

3. Mr. Markus Akermann Non Executive 3 No

Non Independent

4. Mr. Paul Hugentobler Non Executive 5 YesNon Independent

5. Mr. Nirmalya Kumar Non Executive 6 No(resigned w.e.f. 01.01.2009) Non Independent

6. Mr. Onne van der Weijde Non Executive N.A. N.A.

(appointed w.e.f. 09.01.2009) Non Independent

7. Mr. M. L. Bhakta* Non Executive 6 No

Independent

8. Mr. Nasser Munjee Non Executive 2 No

Independent

9. Mr. Rajendra Chitale Non Executive 5 NoIndependent

10. Mr. Shailesh Haribhakti Non Executive 6 Yes

Independent

11. Dr. Omkar Goswami Non Executive 4 No

Independent

12. Mr. Naresh Chandra Non Executive 3 N.A.

(appointed w.e.f. 26.07.2008) Independent

13. Mr. A. L. Kapur Managing Director 6 YesNon Independent

14. Mr. P. B. Kulkarni Whole-time Director 6 No

(ceased to be a director Non Independent

w.e.f. 01.02.2009)

15. Mr. N. P. Ghuwalewala Whole-time Director 6 Yes

Non Independent

16. Mr. B. L. Taparia Whole-time Director 6 Yes

Non Independent

* Mr. M. L. Bhakta, the Chairman of the Audit Committee could not attend the last AGM due to unavoidable reasons.

On his behalf, Mr. Shailesh Haribhakti, independent director and the Audit Committee member attended the AGM

to reply to the shareholder's queries.

BLACK 47 BLUE


2.3 Other Directorships etc. :

The details of the Directorships, Chairmanships and the Committee memberships in other Companies (excluding

Private Limited Companies, Foreign Companies and section 25 Companies) held by the Directors as on 31st

December, 2008, are given below:-

Sr. Name of the Directors No. of other Chairman Committee Chairman

No. Directorships of the Member of the

Board Committee

Mandatory Non- (Mandatory)

Mandatory

1. Mr. Suresh Neotia 5 – 1 1 –

2. Mr. N. S. Sekhsaria 2 – – 1 1

3. Mr. Markus Akermann 1 – – – –

4. Mr. Paul Hugentobler 2 – 2 1 1

5. Mr. M. L. Bhakta 4 – 4 2 1

6. Mr. Nasser Munjee 13 1 9 9 4

7. Mr. Rajendra P. Chitale 8 – 6 4 2

8. Mr. Shailesh V. Haribhakti 14 – 9 – 5

9. Dr. Omkar Goswami 8 – 9 11 2

10. Mr. Nirmalya Kumar – – – – –

(resigned w.e.f. 01.01.2009)

11. Mr. Naresh Chandra 10 – 9 7 1

(appointed w.e.f. 26.07.2008)

12. Mr. A. L. Kapur – – – – –

13. Mr. P. B. Kulkarni (ceased to be – – – – –

a director w.e.f. 01.02.2009)

14. Mr. N. P. Ghuwalewala – – – – –

15. Mr. B. L. Taparia 1 – – – -

2.4 Compensation and Remuneration :

(i) Compensation and Remuneration Policy:

The compensation and remuneration policy aims at attracting, retaining and motivating employees to excel in

their performance and to recognize their contribution towards achieving the company's goal. Remuneration of

employees consists of salary, perquisites and performance incentives and vary for different grades based on

qualification, experience, job responsibilities, their respective performance and the industry practice.

(ii) Remuneration to Directors:

(a) The Managing Director and the Whole-time Directors are paid remuneration as per their respective

agreements entered into with the company. They are also paid performance bonus which is decided on

annual basis by the Compensation and Remuneration Committee. The performance bonus provided for

the year 2008 is of Rs.161 lacs. The amount payable to each individual was decided on the basis of their

respective assignments and performance during the year.

(b) The Non-Executive Directors are paid sitting fees for attending the Board and Committee meetings. In

addition, the company has provided for payment of commission to all Non-Executive Directors at the rate

of Rs. 6 lacs for each of the Directors for the financial year 2008, which is payable pro-rata to those who

were in office for part of the year.

BLACK 48 BLUE


The company has provided additional commission of Rs. 6 lacs for each of the members of the Audit

Committee (all being Non-Executive Directors) for the financial year 2008, payable pro-rata to those who

occupied the office for part of the year.

(iii) Employee Stock Options:

The Managing Director, the Whole-time Directors and the eligible employees were granted 73,84,300 stock

options on 1st July, 2008. They are entitled to subscribe for one equity share for each option at an exercise

price of Rs. 82/- per share. This exercise price has been computed by averaging the daily closing price of

equity shares of the company during the 7 days immediately preceding the date on which the options were

granted. The 1,15,700 stock options (ESOS 2008 ) are reserved for being granted to the SAP core team.

In addition to the above 1,11,150 stock options (ESOS 2007) are granted to the SAP core team on 1st July,

2008. They are entitled to subscribe for one equity share for each option at an exercise price of Rs. 82/- per

share.

These stock options would vest on 1st July, 2009 i.e. on the expiry of one year from the date of grant and can

be exercised within a period of 4 years from the date of vesting.

Non-Executive Directors do not hold any convertible instruments.

The details of remuneration, sitting fees, performance bonus, commission paid and stock options granted to

each of the Directors during the year ended on 31st December, 2008 are given below:-

Sr. Name of the Directors Salary Sitting Commi- Stock Option Service Notice No. of

No (see note fees ssion (see note contract period shares

below) below) held

1. Mr. Suresh Neotia Nil 1,00,000 6,00,000 Nil N.A. N.A. 39000

2. Mr. N. S. Sekhsaria Nil 1,50,000 6,00,000 Nil N.A. N.A. 1000

3. Mr. Markus Akermann Nil 60,000 6,00,000 Nil N.A. N.A. Nil

4. Mr. Paul Hugentobler Nil 2,50,000 12,00,000 Nil N.A. N.A. Nil

5. Mr. Nirmalya Kumar Nil 1,20,000 6,00,000 Nil N.A. N.A. Nil

6. Mr. M. L. Bhakta Nil 3,40,000 12,00,000 Nil N.A. N.A. 225000

7. Mr. Nasser Munjee Nil 60,000 6,00,000 Nil N.A. N.A. Nil

8. Mr. Rajendra P. Chitale Nil 2,00,000 12,00,000 Nil N.A. N.A. Nil

9. Mr. Shailesh Haribhakti Nil 2,90,000 12,00,000 Nil N.A. N.A. Nil

10. Dr. Omkar Goswami Nil 1,00,000 6,00,000 Nil N.A. N.A. Nil

11. Mr. Naresh Chandra Nil 60,000 2,60,656 Nil N.A. N.A. 48

12. Mr. A. L. Kapur 3,09,60,456 Nil Nil 325000 5 years 6 months 1159920

As Managing Director

13. Mr. P. B. Kulkarni 2,58,77,403 Nil Nil 200000 5 years 6 months 803833

Whole-time Director

14. Mr. N. P. Ghuwalewala 1,99,94,303 Nil Nil 125000 5 years 6 months 400000

Whole-time Director

15. Mr. B. L. Taparia 1,53,42,450 Nil Nil 100000 5 years 6 months 660250

Whole-time Director and

Company Secretary

TOTAL 9,21,74,612 17,30,000 86,60,656 750000

Note:

Salary includes basic salary, performance bonus, allowances, contribution to provident, superannuation and gratuity funds

and perquisites (including monetary value of taxable perquisites) etc.

BLACK 49 BLUE


2.5 Code of Conduct :

The Board of Directors has laid down a Code of Conduct for all the Board members and all the employees in the

management grade of the company. The code covers amongst other things the company's commitment to honest

& ethical personal conduct, fair competition, corporate social responsibility, sustainable environmental performance,

health & safety, transparency and legal compliance etc. The Code of Conduct is posted on the website of the

company.

All the Board members and senior management personnel have confirmed compliance with the code. A declaration

signed by the Managing Director is attached and forms part of the Annual Report of the company.

2.6 Prevention of Insider Trading Code :

As per SEBI (Prevention of Insider Trading) Regulation, 1992, the company has adopted a Code of conduct for

Prevention of Insider Trading. All the directors, employees at senior management level and other employees who

could have access to the unpublished price sensitive information of the company are governed by this code. The

company has appointed Mr. B. L. Taparia as compliance officer who is responsible for setting forth procedures and

implementation of the code of conduct for trading in company's securities and during the year under review there

has been due compliance with the said code.

3. AUDIT COMMITTEE3.1 The Audit committee is headed by Mr. M. L. Bhakta and comprises of the following members:-

1. Mr. M. L. Bhakta, Chairman

2. Mr. Paul Hugentobler

3. Mr. Rajendra P. Chitale

4. Mr Shailesh Haribhakti

All the members of the Audit Committee are Non-Executive Directors and except Mr. Paul Hugentobler, all are

Independent Directors. They possess sound knowledge of accounts, audit, finance, internal controls etc.

Mr. A. L. Kapur, the Managing Director is the permanent invitee and Mr. B. L. Taparia, Whole-time Director & Company

Secretary acts as secretary to the committee.

3.2 The terms of reference of the Audit Committee are as per the guidelines set out in the listing agreement with the

stock exchanges read with section 292A of the Companies Act. These broadly include approval of annual internal

audit plan, review of financial reporting systems, internal control systems, discussions on quarterly, half yearly and

annual financial results, interaction with statutory, internal & cost auditors, recommendation for appointment of

statutory & cost auditors and their remuneration and the risk management framework concerning the critical operations

of the company.

In addition to the above, the audit committee also reviews the following:

(a) Management's Discussions and Analysis of company's operations,

(b) Periodical Internal Audit Reports,

(c) Letters of Statutory Auditors to management on internal control weakness, if any,

(d) Appointment, removal and terms of remuneration of Chief Internal Auditor,

(e) Significant related party transactions,

(f) Quarterly and annual financial statements including investments made by the subsidiary companies,

BLACK 50 BLUE


In view of vast number of applicable laws & regulations to the company's business, the task of monitoring and

review of legal & regulatory compliance has been assigned to a separate committee of directors called as the

compliance committee under the chairmanship of Mr. Shailesh Haribhakti, independent director.

3.3 The company has framed the Audit Committee Charter for the purpose of effective compliance of clause 49 of the

listing agreement.

3.4 The Audit Committee during the year ended on 31st December, 2008 had 6 meetings. The attendance of each

Committee member was as under:-

Sr. No. Name of the Directors Category No. of Meetings attended

1. Mr. M. L. Bhakta, Chairman Non-Executive, 6

Independent

2. Mr. Paul Hugentobler Non-Executive 5

3. Mr. Rajendra P. Chitale Non-Executive, 5

Independent

4. Mr. Shailesh Haribhakti Non- Executive, 6

Independent

Head of Internal Audit department attends all the Audit Committee Meetings as far as possible and briefs the

Committee on all the points covered in the Report as well as the other issues which come up during discussions.

The representatives of the Statutory Auditors have attended all the 6 Audit Committee meetings held during the year.

The representatives of the Cost Auditors have attended 1 out of 6 Audit Committee Meetings held during the year.

The representatives of Holcim group's internal audit department also attend to few audit committee meetings upon

invitation from the audit committee chairman and provide their valuable support and guidance on the international

best practices in internal audit and strengthening of internal controls.

4. COMPENSATION AND REMUNERATION COMMITTEEThe Compensation & Remuneration Committee comprises of the members as stated below. The Committee during the

year ended on 31st December, 2008 had 3 meetings. The attendance of the members was as under:-

Sr. No. Name of the Directors Category No. of Meetings attended

1. Mr. M. L. Bhakta, Chairman Non-Executive, 3

Independent

2. Mr. N. S. Sekhsaria Non-Executive 3

3. Mr. Paul Hugentobler Non-Executive 2

4. Mr. Nasser Munjee Non-Executive, 2

Independent

5. Mr. Shailesh Haribhakti Non-Executive, 2

(w.e.f. 25.04.2008) Independent

Mr. A. L. Kapur, Managing Director is the permanent invitee for all the Committee meetings.

The Committee is empowered -

(a) to recommend to the Board on the remuneration including payment of performance bonus to the Managing Director

and the Whole-time Directors within the limits sanctioned by the shareholders;

(b) to finalise the basic structure of the Employees' Stock Option Scheme and recommend the same to the Board for

its approval as well as for the approval of the shareholders. After these approvals, the Committee decides the

eligibility of each category of employees, grant the options to them and supervise the implementation of the Scheme.

BLACK 51 BLUE


The remuneration to the Whole-time Directors and grant of stock options to them are decided on the basis of following

broad criteria:-

a) industry trend

b) remuneration package in other comparable corporates

c) job responsibilities

d) company's performance and individual's key performance areas

5. SHARE ALLOTMENT AND INVESTORS' GRIEVANCES COMMITTEEThe Committee looks into allotment of shares kept in abeyance, allotment of privately placed preference shares,

debentures, bonds etc. allotment of shares on exercise of the stock options by the employees and is responsible for

the redressal of investors' complaints.

The Committee is headed by Mr. M. L. Bhakta, independent director and consists of the members as stated below.

During the year ended on 31st December, 2008, this Committee had 6 meetings which were attended by the members

as under:-

S. No. Name of the Member Category No. of Meetings attended

1. Mr. M. L. Bhakta, Chairman Independent Director 5

2. Mr. A. L. Kapur Managing Director 5

3. Mr. N. P. Ghuwalewala Whole-time Director 5

4. Mr. B. L. Taparia Whole-time Director 6

Mr. B. L. Taparia, Whole-time Director & Company Secretary is designated as the Compliance Officer who is overseeing

the investors' grievances. The company has received 46 complaints during the year ended on 31st December, 2008.

All the complaints have been processed on time. None of the complaints are pending for a period exceeding 30 days.

All the requests for transfer of shares have been processed on time and there are no transfers pending for more than

30 days.

6. OTHER COMMITTEES OF DIRECTORSIn addition to the above referred Committees which are mandatory under the Corporate Governance Code and under

the SEBI's guidelines on Stock Options, the Board of Directors has constituted the following more Committees of Directors

to look into various business matters :-

Name of the Committee Business Members as on

31st December, 2008

Committee of Directors Approval for various facilities granted by Mr. M. L. Bhakta, Chairman

(Bank Matters) the Banks, execution of documents, opening Mr. A. L. Kapur

and closing of Accounts, changes in Mr. N. P. Ghuwalewala

authorised signatories, giving operating Mr. B. L. Taparia

instructions and all other banking matters.

Management Committee To authorise and grant Power of Attorney Mr. A. L. Kapur, Chairman

to various executives of the company for Mr. P. B. Kulkarni (upto 31.01.09)

attending and executing company's work Mr. N. P. Ghuwalewala

as may be considered necessary. Mr. B. L. Taparia

Compliance Committee To review periodically, the legal and Mr. Shailesh Haribhakti, Chairman

regulatory compliance, the effectiveness of Mr. Paul Hugentobler

legal compliance mechanism and review Dr. Omkar Goswami

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and monitoring the compliance of Code of Mr. A. L. Kapur

Business Conduct & Ethics and Code of

Conduct for Prevention of Insider Trading

Share Transfer Committee To approve transfer of shares / Mr. B. L. Taparia, Chairman

debentures / bonds, issue of duplicate / Mr. P. B. Kulkarni (upto 31.01.09)

re-materialised shares, transmission of Mr. N. P. Ghuwalewala

shares / debentures / bonds, consolidation Mr. A. L. Kapur

and splitting of certificates etc.

7. GENERAL BODY MEETINGS(i) Annual General Meeting (AGM) :

The company convenes Annual General Meeting generally within four months of the close of the Corporate Financial

Year. The details of Annual General Meetings held in last 3 years are as under:-

Year Day, Date and Time Venue Whether Special

Resolution passed

2004-2005 23rd AGM held on Monday, 10th October, 2005 Registered Office Yes

at 9.00 a.m.

2005-2006 24th AGM held on Monday, 26th March, 2007 Registered Office Yes

at 10.00 a.m.

2007 25th AGM held on Tuesday, 22nd April, 2008 Registered Office Yes

at 10.00 a.m.

(ii) Extra Ordinary General Meetings :

In addition to Annual General Meeting, the company holds General Meetings of the shareholders as and when need

arises. There was no such meeting held during the year.

(iii) Postal Ballot :

Companies (Amendment) Act, 2000 incorporated a section 192A relating to passing of resolution by Postal Ballot.

The said section as amended to date has made the Postal Ballot mandatory in respect of certain resolutions. For

any such resolutions, the company shall comply with all the requirements of Postal Ballot. No such resolutions

requiring Postal Ballot was passed during the year.

8. DISCLOSURES(i) There are no materially significant transactions with the related parties viz. Promoters, Directors or the Management,

their Subsidiaries or relatives conflicting with the company's interest. Suitable disclosure as required by the Accounting

Standard (AS 18) has been made in the Annual Report.

(ii) There are no pecuniary relationships or transactions of Non-Executive Directors vis-à-vis the company which has

potential conflict with the interests of the company at large.

(iii) No penalties or strictures have been imposed on the company by Stock Exchange or SEBI or any statutory authority

on any matter related to capital markets during the last three years.

(iv) The company has in place a mechanism to inform the Board members about the Risk assessment and minimization

procedures and periodical reviews to ensure that the critical risks are controlled by the executive management.

Name of the Committee Business Members as on

31st December, 2008

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9. CEO / CFO CERTIFICATIONChief Executive Officer (CEO) and Chief Financial Officer (CFO) have issued necessary certificate pursuant to the

provisions of Clause 49 of the listing agreement and the same is annexed and forms part of the Annual Report.

10. NON MANDATORY REQUIREMENTSAmong non-mandatory requirements - (i) the company maintains a separate office for Non-Executive Chairman and

(ii) the Board has set up a Compensation & Remuneration Committee. The other non mandatory requirements not yet

adopted by the company are as under:

i) Fixing tenure for Independent directors viz. 9 years.

ii) The half yearly financial performance to be sent to each household of shareholders.

iii) Audit qualification - Zero qualification regime.

iv) Training of Board members.

v) Mechanism for evaluating non-executive Board members.

vi) Whistle blower policy. However, the company under the supervision of audit committee has formed a Fraud Risk

Assessment committee to review and assess the fraud risk associated with various business operations and put

in place the mechanism for prevention of fraud, its detection and resultant action in case of any instance of fraud.

11. MEANS OF COMMUNICATIONThe quarterly, half-yearly and yearly financial results of the company are sent to the Stock Exchanges immediately after

these are approved by the Board. These are widely published in The Economic Times, The Financial Express and

Jaihind.

These results are simultaneously posted on the website of the company at www.gujaratambuja.com and on the Corporate

Filing and Dissemination System (CFDS) viz www.corpfiling.co.in website maintained by SEBI in association with the

National Informatics Centre (NIC).

The official press releases and presentation made to Institutional Investors / Analysts are also available on the company's

website.

12. GENERAL SHAREHOLDERS' INFORMATION

12.1 Registered Office :

P. O. Ambujanagar, Taluka Kodinar, District Junagadh, Gujarat - 362 715

12.2 Address for Correspondence :

Elegant Business Park, D-Block, MIDC Cross Road 'B', Off Andheri-Kurla Road, Andheri East, Mumbai-400 059.

Exclusive email id for Investor Grievances

Pursuant to Clause 47(f) of the Listing Agreement, the following e-mail ID has been designated for communicating

investors' grievances:-

[email protected]

12.3 Plant Locations :

Cement Plants

1. P. O. Ambujanagar, Taluka Kodinar, District Junagadh, Gujarat - 362 715.

2. Village Suli, P. O. Darlaghat, District Solan, Himachal Pradesh - 171 102.

3. Maratha Cement Works, At Post - Upperwahi, Dist. Chandrapur, Maharashtra - 442 908.

4. Village Rabriyawas, Tehsil Jaitaran, Dist. Pali, Rajasthan - 306 709.

5. Village Rawan, Tehsil Baloda Bazar, Dist. Raipur, Chhattisgarh - 493 331.

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Grinding Stations

1. Village Daburji, District Roopnagar, Punjab - 140 001.

2. P. O. & District Bathinda, Punjab - 150 001.

3. P. O. & Village Dhulagori, P. S. Sankrail, Dist. Howrah, West Bengal - 711 302.

4. Survey No. 39/40, Magdalla Port Road, Village Gavier, Taluka Choryasi, District Surat, Gujarat - 395 010.

5. Village Lakeshwari, Pargana - Bhagwanpur, Tehsil - Roorkee, Dist. Haridwar, Uttaranchal.

6. Village Kendua, P. O. Shrimantapur, PS Farakka, Dist. Murshidabad 742 236 West Bengal.

Bulk Cement Terminals

1. Muldwarka, Taluka Kodinar, District Junagadh, Gujarat - 362 715.

2. Survey No. 39/40, Magdalla Port Road, Village Gavier, Taluka Choryasi, District Surat, Gujarat - 395 010.

3. Village Moha, Near Ulwa Reti Bunder, Post Ulwe, District Raigad, Maharashtra - 410 306.

12.4 Share Transfer Agents :

Sharepro Services India Pvt. Ltd.,

Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal Gracious Road, Chakala,

Andheri (East), Mumbai 400 099.

Tel. No.: (022) 67720300

Email - [email protected]

12.5 Annual General Meeting :

Day & Date : Monday, 6th April, 2009

Time : 10.00 a.m.

Venue : Registered Office - P. O. Ambujanagar, Taluka Kodinar,

District Junagadh, Gujarat - 362 715.

12.6 Book Closure :

The Register of Members and the Share Transfer Books of the company shall remain closed from 21st February,

2009 to 2nd March, 2009 (both days inclusive) for payment of final dividend.

12.7 Dividend Payment Date :

Within seven working days from the date of Annual General Meeting.

12.8 Listing of Shares & Other Securities :

A. Equity Shares

The equity shares are at present listed at the following Stock Exchanges :

Name of the Stock Exchanges Stock Code / Symbol

(i) Bombay Stock Exchange Ltd. 500425

Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 023.

(ii) National Stock Exchange of India Ltd. AMBUJACEM

Exchange Plaza, 5th Floor, Plot No. C/1, G Block,

Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051.

B. Debentures

There are no debentures listed at the wholesale debt segment of the National Stock Exchange of India Ltd.

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C. GDRs

The GDRs are listed under the EURO MTF Platform of Luxembourg Stock Exchange, Societe de la Bourse de

Luxembourg, Avenue de la Porte Neuve L-2011 Luxembourg, B.P.165.

D. ISIN Code for the company's equity share

INE079A01024

E. Corporate Identity Number (CIN)

L26942GJ1981PLC004717

12.9 Listing Fees :

The company has paid listing fees upto 31st March, 2009 to the Bombay Stock Exchange (BSE) and National Stock

Exchange of India Ltd. (NSE) where company's shares are listed.

12.10 Market Price Data :

The high / low market price of the shares during the year 2008 at the Stock Exchange, Mumbai and at National

Stock Exchange of India Ltd. were as under:-

Month Bombay Stock Exchange National Stock Exchange

High Low High Low

January-08 149.85 109.00 149.00 109.00

February-08 125.90 111.10 126.80 111.05

March-08 128.50 114.00 129.40 96.00

April-08 124.60 112.00 124.50 112.00

May-08 114.95 94.75 115.50 93.60

June-08 97.00 73.50 96.75 73.70

July-08 86.20 68.70 87.40 69.00

August-08 91.70 77.25 91.90 77.00

September-08 90.00 75.00 86.95 74.25

October-08 80.50 43.00 83.00 43.00

November-08 66.00 50.15 66.10 50.05

December-08 76.00 50.20 76.80 50.05

12.11Performance in comparison to broad based indices :

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12.12 Distribution of Shareholding :

The shareholding distribution of the equity shares as on 31st December, 2008 is given below:-

No. of Equity No. of No. of Percentage of

Shares Shareholders Shares Shareholding

Less than 50 123935 3193903 0.21

51 to 100 45511 4091175 0.27

101 to 500 47254 12307272 0.81

501 to 1000 12089 9508777 0.62

1001 to 5000 21042 55575902 3.65

5001 to 10000 4097 29566372 1.94

10001 to 50000 2367 43579081 2.86

50001 to 100000 129 9268117 0.61

100001 to 500000 131 28571348 1.88

500001 & above 104 1326937477 87.15

TOTAL 256659 1522599424 100.00

12.13 Shareholding Pattern :

The shareholding of different categories of the shareholders as on 31st December, 2008 is given below:-

Category No. of Shares Percentage %

Indian Promoters 12081909 0.79

Foreign Promoters 695393717 45.67

Foreign Investors (including FIIs) 334881485 21.99

Mutual Funds, Banks & Institution 242310100 15.92

OCB NRIs 21255644 1.40

Body Corporates 21177182 1.39

GDR Holders 48545194 3.19

Others 146954193 9.65

TOTAL 1522599424 100.00

12.14 Foreign Promoters Group Disclosure :

Foreign Promoters shareholding in the Company is being held by Holderind Investments Ltd. and its Indian subsidiary

Ambuja Cements India Private Ltd.

Holderind Investments Ltd., Mauritius has informed the Company that it, Holcim Limited, Holderfin B. V., Holcim

(India) Pvt. Ltd. and Ambuja Cements India Pvt. Ltd. are companies belonging to the same group (hereinafter

referred as “Holcim Group”) as defined under the Monopolies and Restrictive Trade Practices Act, 1969.

12.15 Dematerialisation of Shares :

About 97.61% of total equity share capital is held in dematerialised form with NSDL and CDSL as on 31st December, 2008.

12.16 Secretarial Audit :

As stipulated by Securities and Exchange Board of India (SEBI), a qualified practicing Company Secretary carries

out the Secretarial Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL)

and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. This audit is carried

out every quarter and the report thereon is submitted to stock exchanges, NSDL and CDSL and is also placed

before the Board of Directors.

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12.17 Outstanding GDRs or Warrants or any Convertible Instrument, conversion Dates and likely impact on

Equity :

(i) The company had issued Foreign Currency Convertible Bonds (FCCB) in the year 1993 and 2001. Out of the

total conversion of these bonds into GDRs, 48545194 GDRs are outstanding as on 31st December, 2008 which

are listed on the Luxembourg Stock Exchange, Luxembourg. The underlying shares representing the outstanding

GDRs have already been included in equity share capital. Therefore, there will be no further impact on the

equity capital of the company.

(ii) The company has issued warrants and has granted stock options from time to time in the past. The outstanding

position of these convertible instruments as on 31st December, 2008 and their likely impact on the equity share

capital is as under:-

Sr. Issue Particulars *Conversion rate Likely impact on full conversion

No. (as adjusted) Share Share

Capital Premium

(Rs. per share) (Rs. in crores) (Rs. in crores)

A. Employee Stock Options

(i) 35425 Outstanding options granted under 18.40 0.05 0.44

ESOS 2000-2001, one stock option convertible

into 7.5 equity shares upto 12th November, 2009.

(ii) 32550 Outstanding options granted under 41.33 0.05 0.96


into 7.5 equity shares upto 20th January, 2010.

(iii) 105450 Outstanding options granted under 59.06 0.16 4.51


into 7.5 equity shares upto 9th March, 2010.

(iv) 193350 Outstanding options granted under 69.60 0.19 6.54


into 5 equity shares upto 6th November, 2010.

(v) 6862500 Outstanding options granted under 113.00 1.37 76.17

ESOS 2007, one stock option convertible

into 1 equity share upto 6th June, 2012

(vi) 92950 outstanding options granted under 82.00 0.02 1.03

ESOS 2007 (SAP CORE TEAM) one stock option

convertible into 1 equity share upto 30th June, 2013

(vii) 7036200 Outstanding options granted under 82.00 1.41 78.10

ESOS 2008, one stock option convertible

into 1 equity share upto 30th June, 2013

SUB-TOTAL (A) 3.25 167.75

B. Rights entitlement kept in abeyance out of the Rights

Issue of equity shares and warrants to equity

shareholders made in the year 1992

(i) 142080 Right shares 6.66 0.03 0.06

(ii) 188940 warrants 7.50 0.04 0.10

SUB-TOTAL (B) 0.07 0.16

GRAND TOTAL (A+B) 3.32 167.91

(*) conversion price has been arrived after appropriate adjustment of split and bonus issues except in respect

of ESOS 2007 & 2008.

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(iii) The diluted equity share capital of the company upon conversion of all the outstanding convertible instruments

will become Rs. 307.84 crores.

12.18 Share Transfer System :

Shares sent for transfer in physical form are registered and returned by our Registrars and Share Transfer Agents

in about 15 to 20 days of receipt of the documents, provided the documents are found in order. Shares under

objection are returned within two weeks. The Share Transfer Committee considers the transfer proposals generally

on a weekly basis.

12.19 Financial Calendar 2009 :

First quarterly results : April, 2009

Second quarterly / Half yearly results : July, 2009

Third quarterly results : October, 2009

Annual results for the year ending on 31st December, 2009 : February, 2010

Annual General Meeting for the year ending on 31st December, 2009 : April, 2010

12.20 Dividend Policy :

The first issue of shares was made by the company in the year 1985-86 at Rs.10/- per share. Company is paying

dividend from its very first full year of operation. From a modest dividend of 11% in 1987-88, company has been

increasing dividend almost every year. This year, the Board has recommended a dividend of 110% including 60%

paid as interim dividend. As a future policy for payment of dividend, company shall endeavour to follow a pay-out

ratio of about 35% in the ordinary circumstances.

12.21 Dividend History for the last 5 years is as under :

Dividend year Dividend Dividend Rate (%) Dividend Amt. (Rs. in Crores)

2002-03 Interim 30 46.58

Final 40 62.13

2003-04 Interim 50 88.25

Final 30 53.82

2004-05 Interim 60 108.05

Final 30 81.11

2005-06 1st Interim 50 135.80

2nd Interim 75 204.08

Final 40 121.34

2007 Interim 125 380.40

Final 50 152.24

13. SUBISIDIARY COMPANIESThere is no material non listed Indian subsidiary company requiring appointment of Independent director of the company

on the Board of Directors of the subsidiary company. The requirements of the code with regard to subsidiary companies

have been complied with.

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AUDITOR'S CERTIFICATEON CORPORATE GOVERNANCE

To

The Members of Ambuja Cements Limited

1. We have examined the compliance of conditions of Corporate Governance by Ambuja Cements Limited (the

‘Company’), for the year ended on December 31, 2008 as stipulated in clause 49 of the Listing Agreement

of the said Company with stock exchanges.

2. The compliance of conditions of corporate governance is the responsibility of the management. Our examination

was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance

of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial

statements of the Company.

3. In our opinion and to the best of our information and according to the explanations given to us, we certify

that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned

Listing Agreement.

4. We further 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 S. R. BATLIBOI & ASSOCIATES

Chartered Accountants

per Sudhir Soni

Partner

Membership No.: 41870

Mumbai,

February 6, 2009

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DECLARATION REGARDING CODE OF CONDUCTI hereby declare that all the Directors and Senior Management Personnel have confirmed compliance with the Code of Conduct

as adopted by the company.

A. L. Kapur

Mumbai, February 3, 2009 Managing Director

CEO / CFO CERTIFICATIONThe Board of Directors

Ambuja Cements Ltd.

We have reviewed the financial statements, read with the cash flow statement of Ambuja Cements Ltd. for the year ended

31st December, 2008 and that to the best of our knowledge and belief, we state that;

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

may be misleading;

(ii) these statements present a true and fair view of the company's affairs and are in compliance with current Accounting

Standards, applicable laws and regulations.

(b) there are, to the best of our knowledge and belief, no transactions entered into by the company during the year which

are fraudulent, illegal or in violation of the company's code of conduct.

(c) we accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the

effectiveness of internal control systems of the company pertaining to financial reporting and have disclosed to the

Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we

are aware and steps taken or proposed to be taken for rectifying these deficiencies.

(d) we have indicated to the Auditors and the Audit Committee:

(i) significant changes, if any, in the internal control over financial reporting during the year.

(ii) significant changes, if any, in accounting policies made during the year and that the same have been disclosed in

the notes to the financial statements; and

(iii) instances of significant fraud of which we 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.

Yours sincerely,

David Atkinson A. L. Kapur

Chief Financial Officer Managing Director

Mumbai, February 5, 2009

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AUDITORS’ REPORT

To

The Members of Ambuja Cements Limited

1. We have audited the attached Balance Sheet of Ambuja Cements Limited ('the Company') as at December

31, 2008 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date

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 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.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government

of India in terms of sub-section (4A) of Section 227 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 above, we report that:

i. 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;

ii. 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;

iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account;

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies

Act, 1956.

v. On the basis of the written representations received from the directors, as on December 31, 2008, and

taken on record by the Board of Directors, we report that none of the directors is disqualified as on December

31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of

the Companies Act, 1956.

vi. 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;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2008;

b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.



per Sudhir Soni

Partner


Mumbai

February 6, 2009

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

fixed assets.

(b) The Company has a programme for physical verification on a rotational basis, which, in our opinion, is reasonable

having regard to the size of the Company and the nature of its business. Accordingly, certain fixed assets have been

physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) During the year, there was no substantial disposal of fixed assets.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals, other than materials lying

with third parties, which have been substantially confirmed by them.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in

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

(c) The Company has maintained proper records of inventory and no material discrepancies were noticed on physical

verification as compared to book records.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the

register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the

register maintained under section 301 of the Companies Act, 1956.

(iv) 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, for the purchase of inventory and fixed assets

and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal

control system in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars

of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained

under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance

of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial

year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India

and the provisions of sections 58A, 58AA or any other relevant provisions of the Act and the rules framed there under apply.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) 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, 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 determine that they are accurate.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund,

investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax,

customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident

fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-

tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a

period of more than six months from the date they became payable.

(c) According to the records of the Company, the disputed statutory dues on account of provident fund, investor education

and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise

duty, cess dues outstanding on account of any dispute, are as follows:

Name of the Nature of dues Amount** Period to which Forum where disputestatute (Rs. in crores) the amount is pending

relates

Central Excise Demand of Excise Duty on 0.13 1999-2008 CESTAT*Act, 1944 Clearance of Cement & Others 0.68 CESTAT

0.11 Commissioner (A)

Denial of MODVAT credit on 0.02 1994-1997 Supreme Court*Inputs and Capital Goods 0.75 1993-1996 High Court*

3.18 2002-2007 CESTAT*2.32 2002-2007 CESTAT0.45 1995-2008 Commissioner (A)*1.28 1995-2008 Commissioner (A)

Denial of Service Tax Credit 0.56 2005-2006 High Court3.06 2005-2007 CESTAT0.90 2005-2008 Commissioner (A)

ANNEXUREReferred to in paragraph 3 of our report of even date

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Central Sales Demand of Sales Tax / 3.30 1999-2006 Supreme CourtTax Act, 1956 Additional Tax / Purchase Tax 7.18 2000-2008 High Courtand Various State 0.89 1991-2002 TribunalSales Tax Act 9.62 1991-2005 Commissioner (A)

Custom Act, 1962 Demand of Custom Duty 0.93 2001-2007 CESTAT*0.06 2000-2007 Commissioner (A)*0.44 2000-2007 Commissioner (A)

State Land Demand of Land Tax 14.57 2006-2009 High CourtTax Act 0.60 2006-2008 Tax Board

Environmental Cess 1.18 2008 High Court

Chhattisgarh Energy Development Cess 4.26 2006 onwards High CourtUpkar(SanshodhanAdhiniyam) 2004

* In respect of these cases the Department is in appeal

** Net of amount deposited

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current

and immediately preceding financial year.

(xi) Based on the information and explanations given by the management, we are of the opinion that the Company has not

defaulted in repayment of dues to debenture holders. The Company has no outstanding dues in respect of the financial

institution or bank.

(xii) According to the information and explanations given to us and based on the documents and records produced 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, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause

4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading

in shares, securities, debentures and other investments. The Company has invested surplus funds in marketable securities

and mutual funds. According to the information and explanations given to us proper records have been maintained of the

transactions and contracts and timely entries have been made therein. The marketable securities and mutual funds have

been held by the Company, in its own name.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by

others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the

Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained

under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has created security on the debentures issued.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements

and as per the information and explanations given by the management, we report that no fraud on or by the Company

has been noticed or reported during the course of our audit.



per Sudhir Soni

Partner


Mumbai

February 6, 2009

Name of the Nature of dues Amount** Period to which Forum where disputestatute (Rs. in crores) the amount is pending

relates

BLACK 64 BLUE


As at As at31.12.2008 31.12.2007

Schedule Rs. in Crores Rs. in Crores Rs. in Crores

SOURCES OF FUNDS

Shareholders' Funds

Share Capital ................................................................... A 304.52 304.48

Employee Stock Option Outstanding (Refer Note 10) .......... 0.34 0.38

Reserves and Surplus ........................................................ B 5,368.01 4,356.39

5,672.87 4,661.25

Loan Funds

Secured Loans .................................................................. C 100.00 100.00

Unsecured Loans .............................................................. D 188.67 230.42

288.67 330.42

Deferred Tax Liability, net (Refer Note 7) ................................. 380.75 378.38

TOTAL ........................................ 6,342.29 5,370.05

APPLICATION OF FUNDSFixed Assets ............................................................................ E

Gross Block ...................................................................... 5,706.94 5,231.05

Less: Depreciation ............................................................. 2,514.19 2,271.19

Net Block .......................................................................... 3,192.75 2,959.86

Capital Work-in-Progress (Refer Note 27) ........................... 1,560.75 510.03

4,753.50 3,469.89

Advances against capital expenditure ................................. 386.47 186.76

5,139.97 3,656.65Investments F 332.39 1,288.94

Current Assets, Loans and Advances

Inventories ........................................................................ G 939.75 581.60

Sundry Debtors ................................................................. H 224.60 145.68

Cash and Bank Balances ................................................... I 851.84 642.58

Other Current Assets ......................................................... J 23.39 12.12

Loans and Advances ......................................................... K 299.87 205.35

2,339.45 1,587.33

Less: Current Liabilities and Provisions .................................. L

Current Liabilities .............................................................. 1,003.24 675.54

Provisions ......................................................................... 470.56 493.55

1,473.80 1,169.09

Net Current Assets ................................................................. 865.65 418.24

6,338.01 5,363.83

Miscellaneous Expenditure

(to the extent not written off or adjusted) ..................................... M 4.28 6.22

TOTAL ........................................ 6,342.29 5,370.05

Notes forming part of the Accounts .................................................... R

BALANCE SHEETas at 31st December, 2008

For and on behalf of the Board

N. S. SekhsariaVice Chairman

Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti

Rajendra P. Chitale Directors

Omkar GoswamiNasser MunjeeNaresh Chandra

N. P. Ghuwalewala Whole-time Director

}Suresh NeotiaChairman

M. L. BhaktaChairman –Audit Committee

A. L. KapurManaging Director

As per our report of even date

For S. R. BATLIBOI & ASSOCIATESChartered Accountants

per Sudhir SoniPartnerMembership No. 41870


B. L. TapariaWhole-time Director &Company Secretary

David AtkinsonChief Financial Officer

BLACK 65 BLUE


2008 2007Schedule Rs. in Crores Rs. in Crores Rs. in Crores

INCOMESales (Refer Note 13 (e)) ............................................................ 7,089.89 6,396.20

Less : Excise duty ....................................................................... 855.24 764.84

6,234.65 5,631.36

Other Income ........................................................................... N 175.39 193.53

6,410.04 5,824.89EXPENDITURE

Manufacturing and other expenses ............................................ O 4,477.90 3,595.71

Interest and Finance Charges .................................................... P 32.06 75.85

Depreciation and Amortisation .................................................. 259.76 236.34

4,769.72 3,907.90Less : Self consumption of clinker, cement and limestone(net of excise duty Rs. 2.88 crores;31.12.2007 Rs. 2.23 crores) ..................................................... (21.19) (9.47)

4,748.53 3,898.43

Profit before tax and exceptional items ....................................... 1,661.51 1,926.46

Exceptional items ...................................................................... Q 308.33 785.89

Profit before tax ........................................................................ 1,969.84 2,712.35

Provision for Taxation :

– Current tax ....................................................................... 560.00 737.00

– Income tax in respect of earlier years ................................. – 202.00

– Deferred tax ..................................................................... 2.37 (0.90)

– Fringe benefit tax .............................................................. 5.20 5.15

567.57 943.25

Net Profit ................................................................................. 1,402.27 1,769.10

Balance as per last Account ....................................................... 348.20 272.06

Credit balance of Profit and Loss Account of erstwhile Indo

Nippon Special Cements Limited (INSCL) ................................... – 0.21

Transferred from Debenture Redemption Reserve ........................ – 30.00

Transferred to General Reserve .................................................. 1,000.00 1,100.00

750.47 971.37

Interim Dividends On Equity Shares ........................................... 182.71 380.41

Dividend Distribution Tax on above ............................................ 31.05 64.65

213.76 445.06

Proposed Final Dividend On Equity Shares ................................. 152.26 152.24


178.13 178.11

Balance carried to Balance Sheet ....................................................... 358.58 348.20

Rs. Rs.Earnings Per Equity Share of Rs. 2 each (Refer Note 5) ........................

Basic ............................................................................... 9.21 11.64Diluted ............................................................................... 9.21 11.61


PROFIT AND LOSS ACCOUNTfor the year ended 31st December, 2008



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













BLACK 66 BLUE


A) CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX ........................................................................................ 1,969.84 2,712.35

Adjustment for :

Depreciation and Amortisation ................................................................. 259.76 236.34

Surplus on sale of assets (excluding exceptional items) ............................... (0.70) (2.10)

Exceptional items ..................................................................................... (308.33) (785.89)

Loss on assets discarded / sold ................................................................. 4.26 6.30

Capital Projects written off ........................................................................ 8.11 2.54

Part of deferred revenue expenditure, written off ........................................ 1.72 0.47

Provision for diminution in value of Investment .......................................... – 1.00

Profit on sale of investments ...................................................................... (14.46) (23.54)

Interest and Finance Charges ................................................................... 32.06 75.85

Interest income ........................................................................................ (93.93) (76.08)

Exchange rate difference .......................................................................... 9.46 (33.56)

Dividend income ...................................................................................... (41.11) (22.80)

Bad Debts, Sundry Debit Balances and Claims written off ........................... 1.39 1.89

Provision for doubtful debts and advances (net) ......................................... (0.43) 2.41

Provision for wealth tax ............................................................................. 0.22 0.24

(141.98) (616.93)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ............................ 1,827.86 2,095.42

Adjustment for :

Trade and other receivables ...................................................................... (175.61) (109.33)

Inventories ............................................................................................... (358.15) (172.78)

Trade Payables ......................................................................................... 272.61 164.24

(261.15) (117.87)

CASH GENERATED FROM OPERATIONS .......................................................... 1,566.71 1,977.55

Direct Taxes paid ...................................................................................... (592.42) (448.90)

Miscellaneous Expenditure ........................................................................ (0.27) (0.76)

Exchange rate difference .......................................................................... (7.80) 23.87

(600.49) (425.79)

NET CASH GENERATED FROM OPERATING ACTIVITIES .................................... 966.22 1,551.76

B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets ........................................................................... (1,661.44) (793.34)

Sale of Fixed Assets (net of tax of Rs. 1.67 crores;31.12.07 - Rs. 69.97 crores) .................................................................... 19.91 271.83

Investments (net) ...................................................................................... 652.33 (729.64)

Disposal of Subsidiary / Associate

(net of tax of Rs. 26.69 crores; 31.12.07 - Rs. 62.24 crores) ...................... 589.33 994.35

Loans and advances (net) ......................................................................... – 2.09

Interest received ....................................................................................... 83.86 69.01

Dividend received .................................................................................... 41.11 22.80

NET CASH USED IN INVESTING ACTIVITIES ..................................................... (274.90) (162.90)

2008 2007Rs. in Crores Rs. in Crores Rs. in Crores

CASH FLOW STATEMENTfor the year ended 31st December, 2008

Carried forward .................................. 691.32 1,388.86

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CASH FLOW STATEMENT (Contd.)


C) CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital including Securities premium .................... 1.24 32.29

Proceeds from borrowings ................................................................................ 42.22 50.00

Repayment of borrowings ................................................................................. (85.63) (575.32)

Interest and Finance Charges paid ................................................................... (49.18) (33.01)

Swap interest (net) ........................................................................................... (0.55) (15.24)

Unclaimed sale proceeds of the odd lot sharesof erstwhile ACEL and ACRL ............................................................................. (0.07) (0.08)

Unclaimed Application Money on Securities ...................................................... 0.14 –

Dividend paid (including dividend distribution tax) ............................................. (390.23) (583.08)

NET CASH USED IN FINANCING ACTIVITIES .................................................... (482.06) (1,124.44)

NET INCREASE IN CASH AND CASH EQUIVALENTS ......................................... 209.26 264.42

CASH AND CASH EQUIVALENTS as at 01.01.2008 (Schedule I) :

Earmarked for specific purposes ............................................................... 13.83 13.55

Other Balances ........................................................................................ 628.75 364.55

642.58 378.10

Add : Cash and Bank Balances taken over on amalgamationof erstwhile INSCL .................................................................................... – 0.06

CASH AND CASH EQUIVALENTS as at 31.12.2008 (Schedule I) :

Earmarked for specific purposes ............................................................... 15.40 13.83

Other Balances ........................................................................................ 836.44 628.75

851.84 642.58

Brought forward .................................. 691.32 1,388.86



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













BLACK 68 BLUE


SCHEDULE ‘A’ – SHARE CAPITALAuthorised :

250,00,00,000 (31.12.2007 - 250,00,00,000) Equity Shares of Rs. 2 each ............ 500.00 500.00

15,00,00,000 (31.12.2007 - 15,00,00,000) Preference Shares of Rs. 10 each ...... 150.00 150.00

650.00 650.00

Issued :

152,29,30,444 (31.12.2007 - 152,27,10,942) Equity Shares ofRs. 2 each fully paid-up ................................................................. 304.59 304.54

Subscribed :

152,25,99,424 (31.12.2007 - 152,23,75,422) Equity Shares ofRs. 2 each fully paid-up ................................................................. 304.52 304.48

Notes:

1) Out of above Equity Shares :

a) 97,31,57,405 (31.12.2007 - 97,31,57,405) Equity Shares of Rs. 2 each havebeen issued as fully paid-up Bonus Shares by way of capitalisation of SecuritiesPremium and Capital Redemption Reserve.

b) 2,47,17,240 (31.12.2007 - 2,47,14,990) Equity Shares of Rs. 2 each fullypaid-up have been issued against exercise of Tradable Warrants attached to18.5% Secured Redeemable Non-Convertible Debentures.

c) 1,33,12,370 (31.12.2007 - 1,33,12,370) Equity Shares of Rs. 2 each fullypaid-up have been allotted to the Shareholders of the amalgamating companyAmbuja Cements Rajasthan Limited (ACRL) pursuant to the scheme ofamalgamation as approved by the Board of Industrial and FinancialReconstruction (BIFR) without payment being received in cash.

d) 15,39,61,356 (31.12.2007 - 15,39,61,356) Equity Shares of Rs. 2 each fullypaid-up issued to the Shareholders of the amalgamating company AmbujaCement Eastern Limited (ACEL) without payment being received in cash.

2) Outstanding Employee stock options exercisable into 1,62,59,086(31.12.2007 - 96,92,013) Equity Shares of Rs. 2 each fully paid-up (Refer Note 10)

SCHEDULE 'B' - RESERVES AND SURPLUS

Subsidies :

(a) Cash Subsidies from Government and other authorities ..................................... 1.60 1.60

(b) Grant-in-aid Subsidy from DANIDA .................................................................. 0.12 0.12

1.72 1.72

Capital Reserve .................................................................................................... 130.71 130.71

Capital Redemption Reserve ................................................................................ 9.93 9.93

Securities Premium :

As per last Account ............................................................................................. 1,186.35 1,154.41

Additions on exercise of employee stock options and others ................................. 1.24 31.94

1,187.59 1,186.35

Debenture Redemption Reserve :

As per last Account ............................................................................................. 25.00 55.00

Less: Transferred to Profit and Loss Account ......................................................... – 30.00

25.00 25.00

As at As at31.12.2008 31.12.2007

Rs. in Crores Rs. in Crores Rs. in Crores

SCHEDULES ‘A’ TO ‘R’ annexed to and forming part of the Balance Sheet as at and

Profit and Loss Account for the year ended 31st December, 2008

Carried forward .................................. 1,354.95 1,353.71

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SCHEDULE ‘B’ – RESERVES AND SURPLUS (Contd.)

Brought forward .................................. 1,354.95 1,353.71

As at As at31.12.2008 31.12.2007


General Reserve :

As per last Account ............................................................................................. 2,654.48 1,563.38

Add : Set aside this year ..................................................................................... 1,000.00 1,100.00

3,654.48 2,663.38

Less : Adjustment for employee benefits net of deferred tax .................................. – 8.90

3,654.48 2,654.48

Surplus as per Profit and Loss Account ................................................................ 358.58 348.20

TOTAL ................................................................. 5,368.01 4,356.39

SCHEDULE ‘C’ – SECURED LOANSDebentures :

100 6.85% Secured Redeemable Non-Convertible Debentures ofRs. 1,00,00,000 each - Series '30' (Redeemable at par on 31.03.2010) ............... 100.00 100.00

TOTAL ................................................................. 100.00 100.00

Above Debentures are secured by way of first pari passu charge by mortgage ofimmovable properties of the three cement plants of the Company situated atAmbujanagar, in the state of Gujarat, as covered under respective Trust Deeds.

SCHEDULE 'D' - UNSECURED LOANSForeign Currency Term Loan from Banks (Due within one year Rs. Nil;31.12.2007- Rs. 78.84 crores) ........................................................................... – 78.84

Sales Tax Deferment Loan under Sales Tax Incentive Scheme of various stateGovernments (Due within one year Rs. 6.23 crores;31.12.2007- Rs. 6.80 crores) ............................................................................. 188.67 151.58

TOTAL ................................................................. 188.67 230.42

SCHEDULE ‘E’ – FIXED ASSETSRs. in Crores

DESCRIPTION GROSS BLOCK (at Cost) DEPRECIATION / AMORTISATION NET BLOCK

As at Additions Deductions/ As at Upto For the Deductions/ Upto As at As at

01.01.2008 (h) Transfers 31.12.2008 01.01.2008 year (g)&(h) Transfers 31.12.2008 31.12.2008 01.01.2008

Tangible Assets :Freehold Land ........................................ 221.12 18.10 – 239.22 – – – – 239.22 221.12Leasehold Land ...................................... 43.12 15.07 5.11 53.08 6.01 1.17 1.08 6.10 46.98 37.11Buildings, Roads and Water Works (a) ..... 640.31 72.24 1.01 711.54 104.90 16.84 0.17 121.57 589.97 535.41Marine Structures (b) ............................... 95.58 – – 95.58 40.63 3.82 – 44.45 51.13 54.95Plant and Machinery (c) ........................... 3,574.54 289.96 20.27 3,844.23 1,824.69 188.86 12.42 2,001.13 1,843.10 1,749.85Electrical Installations .............................. 326.16 14.08 0.04 340.20 133.25 15.95 0.07 149.13 191.07 192.91Railway Sidings and Locomotives (d) ........ 55.82 5.22 – 61.04 25.97 2.18 – 28.15 32.89 29.85Railway wagons given on lease (e) ........... 6.43 – – 6.43 3.31 0.31 – 3.62 2.81 3.12Furniture, Fixtures and Office Equipments 85.08 27.38 1.67 110.79 42.82 8.22 1.25 49.79 61.00 42.26Ships ...................................................... 115.65 – – 115.65 56.93 5.78 – 62.71 52.94 58.72Vehicles .................................................. 28.32 8.48 3.62 33.18 15.30 4.53 2.58 17.25 15.93 13.02Power Lines (f) ......................................... 19.89 14.03 – 33.92 6.57 0.97 – 7.54 26.38 13.32

Sub Total ....................................................... 5,212.02 464.56 31.72 5,644.86 2,260.38 248.63 17.57 2,491.44 3,153.42 2,951.64

Intangible Assets :Water Drawing Rights .............................. 6.15 0.01 – 6.16 3.51 0.52 – 4.03 2.13 2.64Computer Software ................................. 12.88 43.04 – 55.92 7.30 11.42 – 18.72 37.20 5.58

Sub Total ....................................................... 19.03 43.05 – 62.08 10.81 11.94 – 22.75 39.33 8.22

TOTAL .................................................... 5,231.05 507.61 31.72 5,706.94 2,271.19 260.57 17.57 2,514.19 3,192.75 2,959.86

Previous year's Total ....................................... 4,542.50 728.09 39.54 5,231.05 2,053.32 236.77 18.90 2,271.19 2,959.86

Notes:

(a) Includes :i) Premises on ownership basis of Rs. 72.97 crores (31.12.2007- Rs. 61.02 crores) and cost of shares in Co-operative Societies Rs. 13,130/- (31.12.2007- Rs. 13,130/-).ii) Rs. 6.85 crores (31.12.2007- Rs. 6.85 crores) being cost of roads constructed by the Company, ownership of which vests with the Government / Local Authorities and Rs. 0.82

crore (31.12.2007- Rs. 0.71 crore) being the amortisation thereof upto 31st December, 2008.(b) Cost incurred by the Company, ownership of which vests with the State Maritime Boards.(c) Includes Rs. 21.58 crores (31.12.2007- Rs. 21.58 crores) being cost of bulkers used as Material Handling Equipment, which are being depreciated under the "Written Down Value

Method" at the rate applicable to vehicles.

BLACK 70 BLUE


Carried forward ........................................... 209.46 494.60

(d) Includes Rs. 1.77 crores (31.12.2007- Rs. 1.77 crores) being cost of Railway siding constructed by the Company, ownership of which vests with the Government / Railway Authoritiesand Rs. 0.54 crore (31.12.2007- Rs. 0.46 crore) being the amortization thereof upto 31st December, 2008.

(e) Railway wagons given on lease to the Railway under "Own Your Wagon Scheme".

(f) Cost incurred by the Company, ownership of which vests with the State Electricity Boards.

(g) Includes Rs. 0.81 crore (31.12.2007- Rs. 0.43 crore) capitalised as pre-operative expenses.

(h) Additions and depreciation for the year includes Rs. Nil (31.12.2007- Rs. 0.13 crore) and Rs. Nil (31.12.2007- Rs. 12,339/-) respectively pertaining to assets acquired on amalgamationof INSCL.

(i) Pursuant to Accounting Standard AS 28 "Impairment of assets", there is no impairment of assets.

As at As at31.12.2008 31.12.2007


SCHEDULE ‘F’ – INVESTMENTSLong-Term Investments (at cost) :

In Fully Paid Shares, Debentures and Bonds, other than Trade

Unquoted :

In Fully Paid Equity Shares :

– (9,53,70,000) Equity Shares of Rs. 10 each inAmbuja Cement India Private Limited (Refer Note 23) ................... – 285.71

11,74,87,181 Equity Shares of Rs. 10 each inING Vysya Life Insurance Co. Pvt. Limited ..................................... 120.39 120.39

10,00,000 Equity Shares of Rs. 10 each inGujarat Goldcoin Ceramics Limited ............................................. 1.00 1.00

Less: Provision for diminution in value of Investment ...................... 1.00 1.00

– –

120.39 406.10

In Subsidiary Companies:

In Fully Paid Equity Shares :

Unquoted:

50,000 Equity Shares of Rs. 10 each in Kakinada Cements Limited ............ 0.05 0.05

7,49,990 Equity Shares of Rs. 10 each in M.G.T. Cements Private Limited ..... 3.05 3.05

1,39,930 Equity Shares of Rs. 10 each inChemical Limes Mundwa Private Limited ...................................... 1.47 1.47

– (5,04,13,840) Ordinary Shares of LKR 10 each inCeylon Ambuja Cements (Private) Limited (CACL) ......................... – 29.54

Less: Provision for diminution in value of investment(Refer Note 25) ........................................................................... – 29.54

– –

4.57 4.57In Public Sector Bonds :

Unquoted:

296 5.13% taxable redeemable bonds of Rs. 10,00,000 each of

Himachal Pradesh Infrastructure Development Bonds

(Refer Note 2(b)) ......................................................................... 29.60 29.60

Current Investments (at cost or fair value, whichever is lower) :

In Fully Paid Debentures :

Quoted:*

300 5.85% Secured Redeemable Non-Convertible Debentures ofRs. 10,00,000 each of Housing Development FinanceCorporation Limited .................................................................... 29.95 29.61

100 7.20% Secured Redeemable Non-Convertible Debentures ofRs. 10,00,000 each of Housing Development FinanceCorporation Limited .................................................................... 10.00 9.93

50 6.5% Secured Redeemable Non-Convertible Debentures ofRs. 10,00,000 each of Hindalco Limited ....................................... 4.98 4.96

50 6% Unsecured Redeemable Non-Convertible Debentures ofRs. 10,00,000 each of Industrial Development Bank of India ......... 5.00 4.93

50 5.78% Secured Redeemable Non-Convertible Debentures of

Rs. 10,00,000 each of Ultratech Cemco Limited ........................... 4.97 4.90

54.90 54.33

SCHEDULE ‘E’ – FIXED ASSETS (Contd.)

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SCHEDULE ‘F’ – INVESTMENTS (Contd.)

Brought forward .................................. 209.46 494.60

As at As at31.12.2008 31.12.2007


In Units of Mutual Funds - Fully paid-up :

Unquoted:

– (93,167.717) units of AIG India Liquid Fund-Super IP - Growth ofRs. 1,000 each of AIG Global Investment Group .......................... – 9.50

2,11,19,609.850 (35,72,241.827) units of Fidelity Cash Fund- IP - Growth ofRs.10 each of Fidelity International Mutual Fund. .......................... 25.00 3.81

– (85,24,785.815) units of ING Liquid Super IP - Growth option of

Rs.10 each of ING Vysya Mutual Fund. ......................................... – 10.00

– (1,53,754.175) units of Tata Liquid Super High Investment Fund,Growth fund of Rs. 1,000 each of Tata Mutual Fund ..................... – 22.50

– (4,09,80,124.004) units of ABN AMRO Money Plus weeklyDividend of Rs. 10 each of ABN AMRO Mutual Fund ..................... – 40.98

– (5,14,17,357.770) units of Birla Sunlife Liquid Plus weeklyDividend of Rs. 10 each of Birla Sunlife Mutual Fund .................... – 51.50

– (5,10,45,728.394) units of DWS Money Plus Fund IP weeklyDividend of Rs. 10 each of Deutsche Mutual Fund ......................... – 51.24

– (6,29,37,199.508) units of HSBC Liquid Plus weekly Dividendof Rs. 10 each of HSBC Mutual Fund. ........................................... – 63.18

– (1,56,48,198.927) units of HDFC FRIF–STP – Wholesale Optionweekly Dividend of Rs. 10 each of HDFC Mutual Fund. ................. – 15.87

– (3,60,94,851.212) units of Prudential ICICI FlexibleIncome Plan weekly Dividend of Rs. 10 each ofPrudential ICICI Mutual Fund. ...................................................... – 38.06

– (5,51,10,048.113) units of ING Vysya Liquid Plus weeklyDividend of Rs. 10 each of ING Vysya Mutual Fund. ...................... – 57.62

– (1,04,56,087.633) units of Sundaram BNP Paribas Liquid Plusweekly Dividend of Rs. 10 each of Sundaram BNP Mutual Fund. ... – 10.64

– (1,58,76,351.730) ABN AMRO Fixed Term Plan–Series – 4quarterly Plan B – Dividend reinvestment–units of Rs.10 eachof ABN AMRO Asset Management Fund ....................................... – 15.88

– (1,01,60,768.700) ABN AMRO Flexible Short Term Plan–Series – A –Dividend of Rs.10 each of ABN AMRO Mutual Fund. ..................... – 10.16

– (75,00,000.000) units ABN AMRO Interval Fund–Qty Plan– G –Dividend of Rs.10 each of ABN AMRO Mutual Fund ...................... – 7.50

– (2,01,68,192.900) units of Birla Interval Income Plan– Monthly

Series 1 of Rs. 10 each of Birla Sunlife Mutual Fund. ..................... – 20.17

– (1,61,29,349.542) units of DBS Chola Monthly IntervalFund –IP – Dividend of Rs.10 each DBS Mutual Fund .................... – 16.15

– (3,01,93,652.790) units of HDFC Fixed Maturity Plan 90 –Dividend Option of Rs.10 each HDFC Mutual Fund. ..................... – 30.19

– (2,26,71,647.590) units of Kotak Fixed Maturity Plan– Series 26Dividend Option of Rs.10 each Kotak Mutual Fund. ...................... – 22.67

– (5,19,36,100.020) units of Reliance Fixed Interval Fund IIMonthly Plan–Series 4 Dividend Reinvestment ofRs.10 each Reliance Mutual Fund. ................................................ – 51.95

– (4,99,98,500.045) units of Reliance Fixed Interval Plan– Series II –Quarterly Dividend of Rs.10 each of Reliance Mutual Fund. ........... – 50.00

– (2,61,49,218.152) units of SBI Debt Fund Series 90 Days QuarterlyPlan Dividend Investment of Rs.10 each of SBI Mutual Fund. ......... – 26.15

– (1,59,73,575.320) JM Fixed Maturity Fund Series VQuarterly Plan Dividend reinvestment units of Rs.10 eachof JM Financial Mutual Fund. ....................................................... – 15.97

– (1,58,77,324.900) Lotus India Fixed Maturity Plan – Series– XVThree Months Plan Dividend Reinvestment unit of Rs.10 eachof Lotus India Mutual Fund. ......................................................... – 15.88

C/f ........................................... 25.00 657.57

Carried forward ........................................... 209.46 494.60

BLACK 72 BLUE


– (1,00,00,000.000) Lotus India Fixed Maturity Plan –

Series– XlV Quarterly Plan Dividend of Rs.10 each ofLotus India Mutual Fund. ............................................................. – 10.00

– (1,00,00,000.000) Lotus India Fixed Maturity Plan –Series– XlX Quarterly Plan Dividend of Rs.10 each ofLotus India Mutual Fund .............................................................. – 10.00

– (5,00,00,000.000) units of Prudential ICICI Interval Fund– IIQty. Plan–B Dividend of Rs.10 each of PrudentialICICI Mutual Fund ....................................................................... – 50.00

– (2,52,20,000.000) units of Prudential ICICI Interval Fund– IQty. Dividend of Rs.10 each of Prudential ICICI Mutual Fund. ........ – 25.22

– (1,61,33,899.716) units of Sundram BNP Paribas Fixed IncomeInterval Fund– Dividend of Rs.10 each of SundramBNP Paribas Mutual Fund ............................................................ – 16.13

70,05,486.402 (–) units of DWS Insta Cash Plus Fund– IP Growth ofRs. 10 each of Deutsche Mutual Fund ........................................... 9.50 –

92,76,158.300 (–) units of HDFC Liquid Fund Premium PlanGrowth Option of Rs. 10 each of HDFC Mutual Fund .................... 16.00 –

1,34,58,346,418 (–) units of HSBC Cash Fund Institutional Plus Growth Optionof Rs. 10 each of HSBC Mutual Fund ............................................ 18.00 –

2,69,32,127.706 (–) units of Prudential ICICI Interval Fund– I Qty. Interval PlanInstitutional Dividend – Reinvest Dividend of Rs.10 each ofPrudential ICICI Mutual Fund ....................................................... 26.93 –

2,74,91,378.445 (–) units of UTI Fixed Maturity Plan– Dividend of Rs.10

each of UTI Mutual Fund ............................................................. 27.50 –

– (2,54,29,886.700) units of UTI Fixed Maturity Plan– Dividend ofRs.10 each of UTI Mutual Fund .................................................... – 25.42

122.93 794.34

332.39 1,288.94

Book Value as on Market Value as on *

31.12.2008 31.03.2007 31.03.2008 31.03.2007Rs. in Crores Rs. in Crores Rs. in Crores Rs. in Crores

Aggregate amount of Quoted Investments ............................ 54.90 54.33 55.00 55.00

Aggregate amount of Unquoted Investments ......................... 277.49 1,234.61

332.39 1,288.94

* As the market value of the debentures is not available, face value is considered as market value.

Note: The following investments were purchased and sold during the year :

Face Value Purchase CostName Rs. Nos. Rs. in Crores

a) Units of Mutual Fund :

Fortis Overnight Institutional Plus Growth 10 23,696,984.337 24.74

Fortis (ABN AMRO) Flexible S T P – Series – 4 Quarterly Dividend 10 1,292,833.338 1.29

Fortis Money (ABN AMRO) Plus Institutional - Weekly Dividend 10 18,779,057.496 18.81

AIG India Liquid Fund - Institutional - Growth 1,000 228,059.646 24.50

AIG India Liquid Fund Super IP- Growth 1,000 571,906.173 59.50

AIG India Treasury Plus Fund Super Institutional Weekly Dividend 10 21,664,557.332 21.70

Birla Cash Plus-Institutional Premium Plan - Growth 10 162,414,999.167 212.00

Birla Interval Income Plan- Monthly Series - I 10 508,867.004 0.51

Birla Sunlife Liquid Plus Institutional- Weekly Dividend 10 1,136,118.421 1.14

DBS Chola Interval Income Fund-MIP-A- Dividend 10 374,030.472 0.38

Deutsche Money Plus Fund- Weekly Dividend 10 1,002,319.923 1.01

DSP ML Cash Plus Fund Growth 1,000 255,405.279 26.00

As at As at31.12.2008 31.12.2007



Brought forward .................................. 209.46 494.60

B/f .................................. 25.00 657.57

BLACK 73 BLUE


DSP ML Liquidity Fund Growth 1,000 168,855.284 20.00

Edelweiss Liquid Fund Growth 10 14,895,289.752 15.00

Fidelity Cash Fund- Super IP - Growth 10 11,067,126.378 13.00

HDFC Liquid Fund -Premium Plan -Growth 10 78,219,228.772 129.25

HDFC Liquid Fund -Premium Plan -Dividend 10 50,984,179.460 73.09

HDFC Cash Management Fund - Savings Plan Wholesale Growth 10 100,282,226.460 111.62

HDFC Cash Management Fund - Savings Plan Wholesale Dividend 10 50,031,974.732 50.19

HDFC FRIF- STP- Wholesale-Weekly Dividend 10 271,407.541 0.28

HDFC Fixed Maturity Plan -90D - Feb. 2008-Dividend Option 10 30,193,652.789 30.19

HDFC Fixed Maturity Plan -90D - May 2008-Dividend Option 10 58,553,945.559 65.01

HDFC Fixed Maturity Plan -90D - June 2008-Dividend Option 10 16,003,784.869 16.00

HDFC Fixed Maturity Plan - 90D - August 2008-Dividend Option 10 30,000,000.000 30.00

HDFC Fixed Maturity Plan -90D - Sep. 2008-Dividend Option 10 16,003,784.869 16.00

HSBC Cash Fund Institutional Plus Growth 10 404,190,428.626 451.88

HSBC Liquid Plus Fund Institutional Plus - Weekly Dividend 10 55,419,575.996 55.61

ING Vysya Liquid Fund -Super IP Growth 10 100,733,048.854 120.75

ING Vysya Liquid Plus Fund - Weekly Dividend 10 1,235,551.368 1.24

JM Fixed Maturity Fund - Series IV-Quarterly Plan 4-F3 Dividend 10 188,937.700 0.19

JM Interval Fund-Quarterly Plan 4-F3 - Dividend 10 17,153,652.503 17.15

JM Money Manager Fund Super Plus Plan Growth 10 14,257,327.067 17.24

JM Money Manager Fund Super Plus Plan Weekly Dividend (241) 10 16,880,465.240 17.24

JP Morgan India Liquid Fund- Growth 10 74,123,704.243 78.25

Kotak Quarterly Interval Plan Series -6 -Dividend 10 24,231,183.447 24.23

Kotak FMP 3M FMP Series -26 Dividend 10 218,453.700 0.22

Lotus India FMP-3 Month-Series XIV Institutional - Dividend 10 459,428.900 0.46

Lotus India FMP-3 Month-Series XIX Institutional - Dividend 10 171,340.000 0.17

Lotus India FMP-3 Month-Series XXIV Institutional - Dividend 10 10,366,577.303 10.37

Lotus India FMP-3 Month-Series XXV Institutional - Dividend 10 10,377,373.925 10.38

Lotus India FMP-3 Month-Series XXVI Institutional - Dividend 10 16,490,271.637 16.49

Lotus India Fixed Maturity Plan - Series-XXVII - Dividend 10 10,173,729.270 10.17

Lotus India FMP-3 Month-series XXXI Institutional Dividend 10 10,560,714.637 10.56

Lotus India Quarterly Interval Fund Plan A Dividend 10 17,162,893.358 17.16

Lotus India Monthly Interval Plan B Dividend 10 10,690,968.660 10.69

Prudential ICICI Liquid Plan Super Institutional Plan - Growth 10 307,834,584.653 377.68

Prudential ICICI Flexible Income Plan Weekly Dividend 10 36,813,682.930 38.81

Prudential ICICI Monthly Interval Fund Plan I Dividend 10 44,324,021.692 44.32

Prudential ICICI Interval Fund - Quarterly Interval Plan - Dividend 10 5,507,673.736 5.51

Prudential ICICI FMP Series 44 1 Month Plan - C- Dividend 10 20,000,000.000 20.00

Prudential ICICI FMP Series 44 1 Month Plan - D - Dividend 10 25,000,000.000 25.00

Reliance Liquidity Fund-Growth 10 1,273,641,085.750 1,588.58

Reliance Fixed Horizon Fund II Quarterly Plan- Series II -Institutional Dividend 10 49,998,500.045 50.00

Reliance Monthly Interval Fund Series I - Institutional Dividend 10 24,980,764.811 25.00

Reliance Interval Fund - Monthly Plan - Dividend 10 3,037,013.021 3.04

Reliance Liquid Plus - Weekly Dividend 10 8,755,805.505 58.66

SBI Magnum Insta Cash Fund Growth 10 63,035,205.640 117.89

SBI SHF Liquid Plus -IP - Growth 10 15,091,376.836 16.93

SBI SHF Liquid Plus -IP - Weekly Dividend 10 65,126,208.032 65.53

SBI SDFS Series-90 Days - Dividend 10 55,249,333.403 55.25

Sundaram BNP Paribas Money Fund Super Inst.- Growth 10 19,202,604.978 32.75

Sundaram BNP Paribas Liquid Plus Fund - Weekly Dividend 10 8,109,058.128 8.36

Sundaram BNP Paribas Fixed Income Interval Fund - Dividend 10 743,730.667 0.74

Tata Liquid Super High Investment Fund - Growth 1,000 559,993.789 84.25

Tata Floater Fund Weekly Dividend 10 15,144,244.765 15.28

Tata Floater Fund Growth 10 11,935,032.220 15.27

Templeton Treasury Management Fund - Growth 1,000 672,200.507 81.75

Templeton India Ultra Short Bond Fund Super IP - Dividend 10 65,485,982.136 67.11

UTI Liquid Fund- Cash Plan - IP - Growth 1,000 737,512.986 97.35

UTI FMP Institutional -Quarterly Plan - Dividend 10 81,220,672.950 81.22


Face Value Purchase CostName Rs. Nos. Rs. in Crores

BLACK 74 BLUE


As at As at31.12.2008 31.12.2007


SCHEDULE ‘G’ – INVENTORIES(At cost or net realisable value whichever is lower)Coal, Fuel, Packing Materials, Stores and Spare parts (including intransit - Rs. 23.37 crores; 31.12.2007- Rs. 28.75 crores) .......................................... 656.60 387.80

Stock-in-trade :

Raw materials (including in transit - Rs. 1.49 crores; 31.12.2007- Rs. 6.51 crores) 84.13 53.05

Materials-in-process ........................................................................................ 119.98 85.94

Finished goods ................................................................................................ 78.01 53.44

282.12 192.43

Construction Scrap, at estimated realisable value ...................................................... – 0.30

Scrapped assets awaiting disposal, at estimated realisable value ............................... 1.03 1.07

TOTAL ................................................................. 939.75 581.60

SCHEDULE 'H' - SUNDRY DEBTORSOver six months :

Good (Secured by way of security deposit Rs. 0.06 crore) ................................... 1.84 1.00

Doubtful ....................................................................................................... 8.72 9.00

Less : Provision ................................................................................................ 8.72 9.00

– –

1.84 1.00

Others (Secured by way of security deposit Rs. 53.58 crores)

(Refer Note below) ................................................................................................... 222.76 144.68

TOTAL ................................................................. 224.60 145.68

Notes :

Others Includes :

(a) Due from subsidiary Rs. Nil (31.12.2007 - Rs. 10.04 crores).

(b) Due from ACC Ltd. Rs. 0.01 crore (31.12.2007 - Rs. Nil) andACC Concrete Limited Rs. 2.58 crores (31.12.2007 - Rs. 2.42 crores),companies under same management

SCHEDULE 'I' - CASH AND BANK BALANCESCash on hand ....................................................................................................... 0.36 0.35

Cheques on hand with Banks as Collecting Agency in terms of an arrangement ......... 19.19 39.71

Bank Balances :

With Scheduled Banks :

In Current Account ........................................................................................... 104.18 74.88

In Fixed Deposits (Deposit Receipts of Rs. 2.12 crores(31.12.2007- Rs. 2.04 crores) deposited with GovernmentDepartments as Security Deposit and Rs. 25.63 crores(31.12.2007- Rs. 0.02 crore) deposited with banks as securitydeposit for guarantees (including accrued interest Rs. 2.01 crores(31.12.2007 - Rs. 0.03 crore)) ......................................................................... 728.11 527.64

832.29 602.52

TOTAL ................................................................. 851.84 642.58

SCHEDULE 'J' - OTHER CURRENT ASSETSInterest Receivable on Investments ............................................................................ 3.49 3.49

Other Interest receivable .......................................................................................... 18.66 8.59

Sundry receivables (including due from a subsidiary company Rs. Nil;31.12.2007 - Rs. 0.04 crore) 1.24 0.04

TOTAL ................................................................. 23.39 12.12

BLACK 75 BLUE


SCHEDULE 'K' - LOANS AND ADVANCES(Unsecured Good, unless otherwise stated)Loan to a subsidiary company (Refer Note 20) .......................................................... 0.25 0.25

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

Good (Due from ACC Limited a Company under same Management

Rs. 2.98 crores 31.12.2007 - Rs. Nil) ........................................................ 231.79 164.99

Doubtful .................................................................................................. 9.41 9.57

Less : Provision ........................................................................................ 9.41 9.57

– –

231.79 164.99

Deposits Including National Savings Certificates Rs. 34,500/-, deposited

with Government Departments as Security (31.12.2007- Rs. 34,500/-) ...................... 55.83 24.93

Balance with Central Excise, Customs, Port Trusts, etc. ............................................... 12.00 15.18

TOTAL ................................................................. 299.87 205.35

SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONSLIABILITIES

Sundry Creditors :

Dues of Micro, Medium and Small Enterprises (Refer Note 22) ........................... 0.40 0.20

Others ....................................................................................................... 879.83 573.76

880.23 573.96

Investor Education and Protection Fund shall be credited by thefollowing (See Note below) * :

Unclaimed Dividends ....................................................................................... 12.40 10.76

Unclaimed Application Money on Securities ...................................................... 0.15 0.01

Unclaimed Interest (Rs. 9,439/-)

Unclaimed sale proceeds of the odd lot shares belonging to the Shareholdersof erstwhile ACRL and ACEL ............................................................................. 2.99 3.06

15.54 13.83

Security Deposits ..................................................................................................... 100.83 82.08

Interest accrued but not due on loans ....................................................................... 6.64 5.67

1,003.24 675.54

PROVISIONS :

Provision for wealth tax, net of advances ........................................................... 0.31 0.51

Provision for fringe benefit tax, net of advances (Rs. 3,689/-) ............................. 0.01

Proposed Dividend .......................................................................................... 152.26 152.24

Provision for Dividend Distribution Tax .............................................................. 25.87 25.87

Provision for gratuity and staff benefit schemes .................................................. 16.53 4.58

Provision for Compensated absences ................................................................ 41.79 32.37

Provision for mines reclamation expenses (Refer Note 11) .................................. 9.96 8.15

Provision for Income tax, net of payments ......................................................... 223.84 269.82

470.56 493.55

TOTAL ................................................................. 1,473.80 1,169.09

* Note : Amounts to be transferred to said fund shall be determined on the respective due dates.

SCHEDULE 'M' - MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)

Project Development and Feasibility Report Expenses etc. ................................... – 1.83

Quarry / Mines Development Expenses ............................................................. 4.28 3.89

Unexpired premium on pre payment of term loans ............................................ – 0.39

Unexpired arrangement fees ............................................................................ – 0.11

TOTAL ................................................................. 4.28 6.22

As at As at31.12.2008 31.12.2007


BLACK 76 BLUE


SCHEDULE 'N' - OTHER INCOMEInsurance Claims ............................................................................................. 0.25 4.66

Dividend income from investment - other than trade .......................................... 41.11 22.80

Profit / (Loss) on Sale of Current Investments (net) .............................................. 14.46 23.54

Interest Income : (Gross; Tax deducted Rs. 14.77 crores; 31.12.2007 -Rs. 10.54 crores)

On Debentures and Bonds ....................................................................... 4.91 5.05

On Fixed deposits with banks ................................................................... 74.38 54.59

Others ..................................................................................................... 14.64 16.44

93.93 76.08

Miscellaneous Income : (Gross; Tax deducted Rs. 0.32 crore; 31.12.2007 -Rs. 0.18 crore) ................................................................................................. 23.12 23.71

Surplus on Sale of Assets .................................................................................. 0.70 2.10

Provisions no longer required ........................................................................... 11.28 7.08

184.85 159.97

Exchange Rate Difference (net) ......................................................................... (9.46) 33.56

TOTAL ................................................................. 175.39 193.53

SCHEDULE 'O' - MANUFACTURING AND OTHER EXPENSES1 Raw Materials Consumed :

Clinker Purchased ............................................................................................ 231.72 138.28

Others ....................................................................................................... 379.58 316.47

611.30 454.75

2 Freight and Handling Charges on inter-unit material transfer ............................. 208.25 162.69

3 Royalty and Cess ............................................................................................. 75.81 74.69

4 Stores and Spares Consumed ........................................................................... 221.00 162.43

5 Packing Materials Consumed ........................................................................... 210.53 180.03

6 Power and Fuel ................................................................................................ 1,325.69 1,019.77

7 Mines reclamation expenses ............................................................................. 1.82 2.96

8 Repairs and Maintenance :

Buildings ................................................................................................. 14.14 13.72

Machinery ............................................................................................... 67.98 52.65

Others ..................................................................................................... 16.41 7.84

98.53 74.21

9 Excise duty :

On captive consumption of clinker ............................................................ 51.64 31.40

Other ...................................................................................................... – 0.08

51.64 31.48

10 Employees' Remuneration and Benefits :

Salaries, Wages, Bonus, Allowances, etc. ................................................... 215.83 170.02

Contribution to Provident and other Funds ................................................. 38.27 23.45

Welfare Expenses ..................................................................................... 11.97 9.27

266.07 202.74

Commission to Managing Director (Refer Note 8) ...................................... – 5.88

11 Other Administrative Expenses :

Rent ....................................................................................................... 13.90 8.99

Rates and Taxes ............................................................................................... 6.19 2.40

Insurance ....................................................................................................... 14.20 12.89

Advertisement and Publicity .............................................................................. 53.94 40.72

Freight and Forwarding charges [including Rs. 5.85 croreson Exports (31.12.2007- Rs. 10.11 crores)] ...................................................... 1,012.23 926.83

Commission on sales ....................................................................................... 12.80 10.48

Discount on sales ............................................................................................. 75.04 71.06

Selling and Distribution Expenses ...................................................................... 25.42 28.79

Turnover Tax, Additional Tax and Purchase Tax .................................................. 7.92 9.08

Miscellaneous Expenses ................................................................................... 209.08 139.27

Directors' Fees and Expenses ............................................................................ 0.19 0.22


Carried forward ........................................... 4,501.55 3622.36

BLACK 77 BLUE


Commission to Non-executive Directors (Refer Note 8) ...................................... 0.87 0.84

Loss on Assets sold, scrapped or discarded and written off ................................. 4.26 6.30

Capital Projects written off (Refer Note 29) ........................................................ 8.11 2.54

Donations ....................................................................................................... 21.48 14.45

Bad Debts, Sundry Debit Balances and Claims written off .................................. 1.39 1.89

Provision for doubtful advances ........................................................................ – 2.44

Provision for diminution in value of investment .................................................. – 1.00

Part of Deferred Revenue expenditure, written off ............................................... 1.72 0.47

Wealth Tax ...................................................................................................... 0.22 0.24

12 Variation in Stocks :

CLOSING STOCKS :

Materials-in-process ................................................................................. 119.98 85.94

Finished goods ........................................................................................ 78.01 53.44

197.99 139.38OPENING STOCKS :

Materials-in-process ................................................................................. 85.94 45.85

Finished goods ........................................................................................ 53.44 38.55

139.38 84.40

(58.61) (54.98)LIMESTONE :

Closing Stock ........................................................................................... 27.75 23.74

Opening Stock ......................................................................................... 23.74 18.22

(4.01) (5.52)

(62.62) (60.50)

Less : Excise duty variation on opening / closing stock ....................................... 0.92 1.97

Less : TRIAL RUN STOCKS

At the commencement of commercial production of

Farakka and Roorkee unit ........................................................................ – 1.71

(Increase) / Decrease in Stocks ......................................................................... (61.70) (56.82)

TOTAL ................................................................. 4,477.90 3,595.71

SCHEDULE 'P' - INTEREST AND FINANCE CHARGESInterest :

On Debentures and Bonds ............................................................................... 6.87 7.75

On Fixed Loans (including interest on Swap Rs. 1.90 crores;31.12.2007- Rs. 8.10 crores) ........................................................................... 3.48 18.24

Others ....................................................................................................... 21.26 52.85

31.61 78.84

Unexpired premium on prepayment of term loans amortised ..................................... 0.38 0.49

Finance Charges ..................................................................................................... 0.14 1.34

32.13 80.67

Less : Capitalised during the year ............................................................................. (0.07) (4.82)

TOTAL ................................................................. 32.06 75.85

SCHEDULE 'Q' - EXCEPTIONAL ITEMSProfit on sale of investment / associate (Refer Note 23) .............................................. 303.20 490.07

Profit on sale of property .......................................................................................... 10.99 325.36

Provision for diminution in value of Investment in subsidiary Company ....................... – (29.54)

Loss on sale of Investment in subsidiary Company (Refer Note 25) ............................. (35.40) –

Less : Provision for diminution in value of Investment in subsidiary Company .............. 29.54 –

(5.86) –

TOTAL ................................................................. 308.33 785.89


SCHEDULE 'O' - MANUFACTURING AND OTHER EXPENSES (Contd.)

Brought forward .................................. 4,501.55 3622.36

BLACK 78 BLUE


SCHEDULE 'R' – NOTES FORMING PART OF THE ACCOUNTS1. (A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

(i) The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards byCompanies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(ii) Financial statements are based on historical cost and are prepared on accrual basis.

1. (B) SIGNIFICANT ACCOUNTING POLICIES :

(a) Fixed Assets:

(i) Fixed Assets are stated at their original cost of acquisition / installation (net of Modvat / Cenvat credit availed), net of accumulateddepreciation, amortization and impairment losses, except freehold land which is carried at cost.

(ii) Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet.

(iii) Machinery spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular, arecapitalised at cost net of Modvat / Cenvat.

(iv) Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition of fixedassets) incurred on projects under implementation are treated as Pre–operative expenses, pending allocation to the assets, and areincluded under "Capital Work-in-Progress". These expenses are apportioned to fixed assets on commencement of commercial production.

(b) Depreciation and Amortization :

I. Tangible Assets :

(i) Premium on leasehold land is amortized over the period of lease.

(ii) Depreciation on all assets, other than Vehicles, is provided on the "Straight Line Method" in accordance with the provisions ofSection 205(2)(b) of the Companies Act, 1956, and on Vehicles on the "Written Down Value Method" in accordance with theprovisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to theCompanies Act, 1956. Continuous process plants, are identified based on technical assessment and depreciated at the specifiedrate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is provided on a pro–rata basisfrom the date of acquisition or installation, and in the case of a new project, from the date of commencement of commercialproduction. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said assetis sold, discarded, demolished or scrapped. In respect of an asset for which impairment loss is recognised, depreciation isprovided on the revised carrying amount of the assets over its remaining useful life.

(iii) Machinery spares which are capitalised are depreciated over the useful life of the related fixed asset. The written down valueof such spares is charged to the Profit and Loss Account, on issue for consumption.

(iv) The cost of fixed assets, constructed by the Company, but ownership of which belongs to Government/Local Authorities, isamortized at the rate of depreciation specified in Schedule XIV to the Companies Act, 1956.

(v) Expenditure on Power Lines, ownership of which belongs to the State Electricity Boards, is amortized over the period as permittedin the Electricity Supply Act, 1948.

(vi) Expenditure on Marine Structures, ownership of which belongs to the Maritime Boards, is amortized over the period of agreement.

II. Intangible Assets :

(i) Expenditure to acquire Water Drawing Rights from Government / Local Authorities / other parties, is amortized over the periodof rights to use the facilities ranging from 10 to 30 years.

(ii) Expenditure on computer software is amortised over the period of expected benefit not exceeding five years.

(c) Impairment of assets :

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal /external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverableamount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discountedto the present value by using weighted average cost of capital. A previously recognised impairment loss is increased or reversed dependingon changes in circumstances.

(d) Investments :

Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long–term investments andare carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in thevalue of the investments. Investments other than long–term investments being current investments are valued at cost or fair value whicheveris lower, determined on an individual basis.

(e) Inventories :

(i) Coal, Fuel, Packing Materials and Stores & Spare Parts are valued at cost determined on weighted average basis or net realisablevalue, whichever is lower.

(ii) Raw Materials are valued at cost or net realisable value whichever is lower. Cost is determined on weighted average basis.

(iii) Materials–in–process are valued at cost or net realisable value, whichever is lower. (*)

(iv) Finished Goods are valued at cost or net realisable value, whichever is lower, including excise duty.(*)

(v) Trial Run Inventories are valued at cost or net realisable value, whichever is lower.(*)

(*) Cost is arrived at on full absorption basis as per Accounting Standard AS 2 – "Valuation of Inventories".

BLACK 79 BLUE


SCHEDULE ‘R’ – NOTES FORMING PART OF THE ACCOUNTS (Contd.)

(f) Provisions / Contingencies :

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be requiredto settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of theamount required to settle the obligation at the Balance Sheet date. A contingent liability is disclosed, unless the possibility of an outflow ofresources is remote.

(g) Foreign Currency Conversion :

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

Foreign currency monetary items are reported using the closing rate. Non–monetary items which are carried in terms of historical costdenominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from thoseat which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expensesin the year in which they arise.

(h) Revenue recognition :

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliablymeasured

(i) Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basis of dates of Bill ofLading. Sales are disclosed net of sales tax, discounts and returns, as applicable. Sales exclude self consumption of cement.

(ii) Benefit on account of entitlement to import goods free of duty under the "Duty Entitlement Pass Book under Duty Exemption Scheme"is recognised in the year of export.

(iii) Sales include the amount of Sales Tax / VAT remission entitlement due in accordance with the respective incentive schemes.

(iv) Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividendincome is recognised when right to receive the payment is established by the Balance Sheet date.

(i) Mines Reclamation Expenditure :

The Company provides for the expenditure to reclaim the quarries used for mining. The total estimate of reclamation expenses is apportionedover the estimate of mineral reserves and a provision is made based on the minerals extracted during the year.

Mines reclamation expenditure is incurred on an ongoing basis and until the closure of the mine. The actual expenses may vary based onthe nature of reclamation and the estimate of reclamation expenditure.

(j) Employee Benefits :

(i) Defined Contribution Plan

Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, EmployeesState Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to theProfit & Loss Account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan

Retirement benefits in the form of Gratuity, Shipping staff gratuity, Post retirement medical benefit and Death & disability benefit areconsidered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit creditmethod, as at the date of the Balance Sheet.

Employee Benefit in form of contribution to Provident Fund managed by a Trust set up by the Company is charged to Profit and LossAccount as and when the contribution is due. The deficit, if any, in the accumulated corpus of the Trust at the period end for whichthe Company is liable, is recognised as a provision in the Profit and Loss Account.

(iii) Other long–term benefits

Long–term compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, asat the date of the Balance Sheet.

Actuarial gains / losses, if any, are immediately recognised in the Profit and Loss Account.

(k) Miscellaneous Expenditure :

Expenses included under the head 'Miscellaneous Expenditure' are amortized over the period of estimated future benefits.

(l) Employee Stock Compensation cost :

The Company measures compensation cost relating to employee stock option using the intrinsic value method. Discount on Equity Sharesas compensation expenses under the Employee Stock Option Scheme, is amortized in accordance with Securities and Exchange Board ofIndia (SEBI) Guidelines.

(m) Borrowing Costs and Share Issue Expenses :

(i) Share issue expenses for specific projects and borrowing cost attributable to acquisition and construction of assets are capitalised aspart of the cost of such assets up to the date when such assets are ready for intended use.

(ii) Expenses on other issue of Shares, Debentures and Bonds as well as Premium on Redemption of Debentures are adjusted to SecuritiesPremium Account in accordance with Section 78 of the Companies Act, 1956.

BLACK 80 BLUE



(iii) Borrowing cost such as discount or premium and ancillary costs in connection with arrangement of borrowings excluding debentureand bonds, are amortised over the period of borrowings.

(iv) Other borrowing costs are charged as expense in the year in which these are incurred.

(n) Taxation :

Tax expense comprises of current, deferred and fringe benefit taxes. Current income tax and fringe benefit tax is measured at the amountexpected to be paid to the tax authorities in accordance with the Indian Income–tax Act. Deferred income tax reflects the impact of currentyear timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred taxassets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against whichthese assets can be realised in future whereas in case of existence of carry forward of losses or unabsorbed depreciation, deferred taxassets are recognised only if there is virtual certainty of realisation backed by convincing evidence. Deferred Tax Assets are reviewed ateach Balance Sheet date.

(o) Assets given under finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals areapportioned between principal and interest on the IRR method. The principal amount received reduces the net investment in the lease andinterest is recognised a revenue. Initial direct cost such as legal costs, brokerage costs, etc. are recognised immediately in the Profit andLoss Account.

(p) Segment Reporting Policies :

Identification of segments :

The Company's operating businesses are organized and managed separately according to the nature of products and services providedwith each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographicalsegments is based on the areas in which major operating divisions of the Company operate.

Segment Policies :

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting thefinancial statements of the company as a whole.

(q) Cash and cash equivalents in the Balance Sheet comprise cash at bank including fixed deposits, cheques in hand and cash in hand.

As at As at

31.12.2008 31.12.2007

Rs. in Crores Rs. in Crores2. a) Contingent liabilities not provided for in respect of :

(i) Bank Guarantee given to Mines & Geology Dept. Government ofRajasthan for setting up of Cement plant. .......................................... 2.00 –

(ii) Claims against the Company not acknowledged as debts

(a) Disputed liability relating to labour matters ................................ 26.31 23.69

(b) For acquisition of land .............................................................. 32.87 28.61

(c) For Non Agriculture Assessment Tax ........................................... 2.65 2.65

(d) Others ..................................................................................... 25.56 18.26

(iii) Tax matters

(a) Disputed liability in respect of Income–tax demands (includinginterest) – matters under appeal ................................................ 63.68 16.37

(b) Disputed Sales–tax demands (including interest and penalty)– matters under appeal ............................................................. 10.49 10.43

(c) Disputed Excise demands – matters under appeal (Deposit withExcise Department Rs. 0.40 crores; Previous Year Rs. 0.40 crores) 16.55 10.06

(d) Disputed Customs demands – matters under appeal .................. 2.22 1.74

(e) Disputed liability of RTO Tax on Mining Machinery ...................... 0.62 0.62

(iv) Disputed liabilities relating to Railway Freight on Cement – matter oncedecided in favour of the Company by the Honourable High Court ofGujarat was remanded back by the Honourable Supreme Courtpursuant to an Special Leave Petition filed by the railways. .................. 5.51 5.51

(v) Disputed liabilities relating to Coal claims – matter pending in theHonourable High Court :

(a) Railway freight on Coal ............................................................. 1.49 1.49

(b) Penal freight on Excess Weight of Coal ....................................... 0.24 0.24

(c) Interest on Premium on Coal ..................................................... 3.29 3.29

In respect of items above, future cash outflows in respect of contingent liabilitiesare determinable only on receipt of judgements / decisions pending at variousforums / authorities.

BLACK 81 BLUE


b) The Honourable High Court of Himachal Pradesh has passed an order infavour of the Company for its claim in respect of power subsidy in the form ofPower Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Againstthis, Government of Himachal Pradesh on 1st May, 2004 has issued 2965.13% H P Infrastructure Development Bonds of face value of Rs.10 lacs each,having a value of Rs.29.60 crores redeemable after 10 years and balance ofRs. 0.08 crore is refunded to the Company.The Government of Himachal Pradesh has filed Special Leave Petition in theHonourable Supreme Court against the decision of the Honourable High Courtof Himachal Pradesh. The Company has given an undertaking to refundRs. 29.68 crores paid by the State Government together with interest thereonup to the date of final judgment in time bound manner, in the event that thematter is decided against the Company. .................................................... 29.68 29.68

c) The Government of Rajasthan has granted 75% exemption from Sales Tax inrespect of Rabriyawas unit. However, the eligibility of exemption in excess of25% has been contested by the State Government in a similar matter of anotherCompany and the matter is pending before the Honourable Supreme Court.The Company has given an undertaking to the Government of Rajasthan thatthe Company will deposit the differential amount of Sales Tax, in case theSupreme Court’s decision goes against in the matter referred above. ......... 82.16 82.16

d) Writ petition filed against the order of Madhya Pradesh State MiningDepartment demanding Rs. 4.76 crores towards payment of additional royaltyon limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cementproduced at its factory in Chhattisgarh. The matter is now pending beforeHonourable High Court at Bilaspur. .......................................................... 44.94 38.54

3. Estimated amount of Contracts remaining to be executed on Capital Accountand not provided for (net of advances) ............................................................. 911.68 949.82

4. Related Party Disclosures :

a) List of Related Parties and relationships :

Party Relation

A Cement Ambuja International Ltd. ..................................... Subsidiary (Refer Note 26)

Ceylon Ambuja Cements (P) Ltd. ....................................... Fellow Subsidiary of Holderind Investments Ltd.

Mauritius (subsidiary till 02.06.2008)

Kakinada Cements Ltd. ..................................................... Subsidiary, (Associate upto 13.12.2007)

M.G.T. Cements Private Ltd. .............................................. Subsidiary from 20.10.2007

Chemical Limes Mundwa Private Ltd. ................................. Subsidiary from 20.10.2007

B Midigama Cements (P) Ltd. ............................................... Sub–subsidiary till 02.06.2008

C Key Management Personnel

Mr. A. C. Singhvi .............................................................. – (Previous year Managing Director Upto 30.04.2007)

Mr. A. L. Kapur ................................................................. Managing Director (Whole–time Director upto 30.04.2007)

Mr. P. B. Kulkarni .............................................................. Whole–time Director

Mr. N. P. Ghuwalewala ...................................................... Whole–time Director

Mr. B. L. Taparia ............................................................... Whole–time Director and Company Secretary

D Relatives of Key Management Personnel

Mr. Ajay Kapur ................................................................. Son of Mr. A. L. Kapur

Mr. Milind Kulkarni (Upto 8.8.2007) .................................. Son of Mr. P. B. Kulkarni

E Enterprises over which significant influence exercised by

(a) Directors

GACL Finance Ltd. .................................................... Mr. N. S. Sekhsaria

Radha Krishna Bimalkumar Pvt. Ltd. .......................... Mr. Suresh Neotia

(b) Major Shareholders

Holderind Investments Ltd., Mauritius ......................... Major shareholder having significant influence

Holcim Ltd. ............................................................... Holding Company of Holderind Investments Ltd., Mauritius

Ambuja Cement India Private Ltd. .............................. Subsidiary of Holderind Investments Ltd., Mauritius(Associate upto 30.4.2007)


As at As at

31.12.2008 31.12.2007

Rs. in Crores Rs. in Crores

BLACK 82 BLUE



Holderind BV ............................................................ Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim CTC Trading Co. ........................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Trading Pte Ltd., Singapore ............................ Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Group Supports Ltd. ...................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Trading FZCO, Dubai .................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

PT Holcim Indonesia ................................................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (Asia) Ltd. ......................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (South Asia) Ltd. ............................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Lanka Ltd. ..................................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Siam City Cement, Thailand ...................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

St. Lawrence Cement Inc., Canada ............................ Fellow Subsidiary of Holderind Investments Ltd., Mauritius

ACC Ltd. .................................................................. Associate of Holderind Investments Ltd., Mauritius

ACC Concrete Ltd. .................................................... Subsidiary of ACC Ltd. From 07.05.2007

ACC Nihon Casting Ltd. ............................................ Subsidiary of ACC Ltd.

ACC Machinery Company Ltd. .................................. Subsidiary of ACC Ltd, upto 10.03.2008

b) Disclosures required for related parties transactions :Rs. in Crores

Transactions Subsidiaries Key Management Relatives of Enterprises over whichPersonnel Key Management significant influence exercised

Personnel by Directors, Key ManagementPersonnel and Major Shareholders

I. Transactions during period

Purchase of Goods – – – 192.56

(–) (–) (–) (111.85)

Sale of Goods – – – 238.84

(25.35) (–) (–) (208.95)

Purchase of Fixed Assets – – – 0.11

(–) (–) (–) (34.13)

Sale of Fixed Assets – – – –

(–) (–) (–) (1.05)

Sale of Investments – – – 589.33

(–) (–) (–) (1,061.52)

Receiving of Services – – – 5.09

(–) (–) (–) (0.98)

Remuneration – 9.22 0.53 –

(–) (13.66) (0.35) (–)

Dividends Received – – – Rs.1700

(–) (–) (–) Rs.4250

Other Recoveries – – – 0.40

(–) (–) (–) (–)

Others Payments – – – 60.88

(0.25) (–) (–) (22.09)

Equity contribution – – – –

(2.34) (–) (–) (–)

Loans given – – – –

(0.25) (–) (–) (–)

II. Amounts Outstanding as at Balance Sheet date

Loans given Outstanding – – – –

(0.25) (–) (–) (–)

Amounts receivable – – – 53.23

(10.06) (–) (–) (32.11)

Amounts payable – – – 19.83

(0.26) (–) (–) (14.19)

Notes :

1. Related Party relationship is as identified by the Company on the basis of available information.

2. Figures for the previous year have been given in brackets.

Party Relation

BLACK 83 BLUE


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BLACK 84 BLUE



2008 2007Rs. in Crores Rs. in Crores

5. Earnings per Share (EPS) :

(i) Profit attributable to Equity Shareholders for Basic and Diluted EPS ............. 1,402.27 1,769.10

Nos. Nos.

(ii) Weighted average number of Equity Shares for Basic EPS ........................... 1,522,509,108 1,520,262,996

Add : Potential equity shares on exercise of option of ESOS ........................ 462,811 2,957,963

Add : Potential equity shares on exercise of Rights and Warrants

Add : kept in abeyance out of the Rights issue in 1992 ............................... 200,513 269,898

Weighted average number of shares for Diluted EPS .................................. 1,523,172,432 1,523,490,857

Rs. Rs.

(iii) Nominal Value of Shares .......................................................................... 2.00 2.00

(iv) Earning per Share :

Basic ........................................................................................ 9.21 11.64

Diluted ........................................................................................ 9.21 11.61

6. Segment reporting :

The Company has only one business segment 'Cement' as primary segment.The secondary segment is geographical, which is given as under:

a) Revenue

i) Sale (Net of Excise Duty)

Within India .............................................................................. 6,007.89 5,353.89

Outside India ........................................................................... 226.76 277.47

6,234.65 5,631.36

ii) Other Income

Within India .............................................................................. 81.46 116.98

Outside India ........................................................................... – 0.47

81.46 117.45

b) All the Assets of the Company, except the debtors and loans and advancesamounting to Rs. 47.63 crores (31.12.2007 - Rs. 44.39 crores), are withinIndia.

7. Deferred Tax Liability :

Break-up of Deferred Tax Assets and Liabilities are as under :

Deferred Tax Liabilities, on account of :

Depreciation ........................................................................................ 409.31 406.16

Total ........................................................................................ 409.31 406.16

Deferred Tax Assets, on account of :

Employee Benefits .................................................................................... 20.98 13.47

Provision for Diminution in Value of Investments ........................................ – 6.69

Others ........................................................................................ 7.58 7.62

Total ....................................................................................... 28.56 27.78

Net Deferred Tax Liabilities ............................................................................... 380.75 378.38


8. A) Managerial Remuneration :

i) Computation of Managing Directors', Whole-time Directors'and Directors' Commission :

Profit as per Profit and Loss Account .......................................................... 1,402.27 1,769.10

Add : Managing Directors' Remuneration (including perquisite) ................. 3.10 8.17

Whole-time Directors' Remuneration (including perquisite) ............... 6.12 5.49

Commission to Non-executive Directors .......................................... 0.87 0.84

Depreciation and Amortisation ....................................................... 259.76 236.34

Loss on sale / Provision for Diminution's in value of investment ........ – 1.00

Provision for Wealth Tax ................................................................. 0.22 0.24

Provision for Fringe Benefit Tax ....................................................... 5.20 5.15

C/f .................................. 275.27 257.23

Carried forward .................................. 1,402.27 1,769.10

BLACK 85 BLUE



Provision for Current Tax ................................................................ 560.00 939.00

Provision for Deferred Tax .............................................................. 2.37 (0.90)

837.64 1,195.33

2,239.91 2,964.43

Less : Depreciation under Section 350 of the Companies Act, 1956 .......... 259.76 236.34

Excess of Sale price over the cost of assets sold ............................... 10.99 326.40

Profit on sale of Subsidiary / Joint Venture / Associates .................... 297.34 460.53

Profit on sale of Investment, net ...................................................... 14.46 23.54

582.55 1,046.81

Profit on which Commission is payable ..................................................... 1,657.36 1,917.62

Eligible Remuneration to the Managing and Whole-time Directors interms of Section 309 of the Companies Act, 1956, 10% of profit onwhich commission is payable as computed above ........................... 165.74 191.76

Less : Managerial Remuneration (excluding commission) ................. 9.22 7.78

Balance available for payment of Commission 156.52 183.98

ii) Commission

a) Commission to be paid to the Managing Director as determinedby Board of Directors ................................................................ – 5.88

b) Commission to Non-executive and Independent Directors :

Eligible Commission in terms of Section 309 of the CompaniesAct, 1956, Rs. 16.57 crores (1% of Rs. 1657.36 crores)[(previous year 19.18 crores (1% of Rs. 1917.62 crores)]

Commission to be paid as determined by the Board of Directors . 0.87 0.84

0.87 6.72

B) The Profit & Loss Account includes payments to and provisions for Managerialremuneration as under :

Salaries, Allowances and Performance Bonus ............................................ 7.61 6.66

Commission to the Managing Director ...................................................... – 5.88

Contribution to Provident & Other Funds ................................................... 1.29 1.01

Perquisites ............................................................................................... 0.32 0.11

9.22 13.66

Notes :

1) Remuneration includes gratuity to the extent of contribution and leave encashment on payment basis.

9. Employee Defined Benefits:

a) Defined Contribution Plans -

The Company has recognised an expense of Rs. 32.82 crores (31.12.2007- Rs. 18.55 crores) towards the defined contribution plans.

b) Defined Benefit Plans - As per Actuarial Valuation on 31st December, 2008.Rs. in crores

2008 2007

Gratuity Death and Post Gratuity Death and PostDisability Retirement Disability Retirement

Particulars Funded Non Scheme Medical Funded Non Scheme MedicalFunded (Shipping Benefits Funded (Shipping Benefits

Staff) Non (PRMB) Staff) Non (PRMB)Funded Non Funded Non

Funded Funded

I. Expense recognised in the Statement of Profit andLoss Account for the year ended 31st December, 2008

1 Current Service Cost ........................................... 3.72 0.08 0.09 0.10 2.38 0.09 0.07 0.10

2 Interest Cost ....................................................... 3.49 0.05 0.03 0.12 1.89 0.06 0.03 0.09

3 Employee Contributions ...................................... – – – – – – – –

4 Expected Return on Plan Assets ........................... (2.89) – – – (1.82) – – –

5 Actuarial (Gains) / Losses ................................... 16.48 0.07 (0.15) 0.73 6.02 (0.10) (0.16) (0.03)


Brought forward .................................. 1,402.27 1,769.10

B/f .................................. 275.27 257.23

BLACK 86 BLUE



6 Past Service Cost ................................................ – – – – – – – –

7 Settlement Cost .................................................. – – – – – – – –

8 Losses / (gains) on acquisition / divesture ............ – – – – 2.47 – – –

9 Total Expense ..................................................... 20.80 0.20 (0.03) 0.95 10.94 0.05 (0.06) 0.16

II. Net Asset / (Liability) recognised in the Balance Sheetas at 31st December, 2008

1 Present Value of Defined Benefit Obligation ........ 63.21 0.74 0.33 2.29 42.39 0.68 0.35 1.33

2 Fair Value of Plan Assets ..................................... 50.04 – – – 40.17 – – –

3 Funded Status [Surplus / (Deficit)] ........................ (13.17) (0.74) (0.33) (2.29) (2.22) (0.68) (0.35) (1.33)

4 Net Asset / (Liability) as at 31st December, 2008 . (13.17) (0.74) (0.33) (2.29) (2.22) (0.68) (0.35) (1.33)

III. Change in Obligation during the Year ended31st December, 2008

1 Present value of Defined Benefit Obligation atthe beginning of the year .................................... 42.39 0.68 0.36 1.34 25.95 0.91 0.42 1.18

2 Current Service Cost ........................................... 3.72 0.08 0.09 0.10 2.38 0.09 0.07 0.10

3 Interest Cost ....................................................... 3.49 0.05 0.03 0.12 1.89 0.06 0.03 0.09

4 Settlement Cost .................................................. – – – – – – – –

5 Past Service Cost ................................................ – – – – – – – –

6 Employee Contributions ...................................... – – – – – – – –

7 Liabilities assumed on acquisition /(settled on divesture) ........................................... – – – – 7.15 – – –

8 Actuarial (Gains) / Losses ................................... 16.67 0.07 (0.15) 0.73 7.81 (0.10) (0.16) (0.03)

9 Benefits Payments ............................................... (3.06) (0.14) – – (2.79) (0.28) – –

10 Present Value of Defined Benefit Obligation atthe end of the year ............................................. 63.21 0.74 0.33 2.29 42.39 0.68 0.36 1.34

IV. Change in Assets during the Year endedMarch 31, 2008

1 Plan Assets at the beginning of the year .............. 40.17 – – – 24.39 – – –

2 Assets acquired on amalgamation in previous year – – – – 4.69 – – –

3 Settlements ......................................................... – – – – – – – –

4 Expected return on plan assets ............................ 2.89 – – – 1.82 – – –

5 Contributions by employer .................................. 9.85 0.14 – – 10.28 0.28 – –

6 Actual Benefit Paid .............................................. (3.06) (0.14) – – (2.79) (0.28) – –

7 Actuarial Gains / (Losses) ................................... 0.19 – – – 1.78 – – –

8 Plan Assets at the end of the year ........................ 50.04 – – – 40.17 – – –

9 Actual Return on plan assets ............................... 3.08 – – – 3.61 – – –

V. The major categories of plan assets as a percentage 2008 2007

of total plan Qualifying Insurance policy ............... 100% 100%

VI. Effect of One percentage point change in theassumed Medical Inflation rate : ........................... 1% increase 1% decrease 1% increase 1% decrease

Increase / (Decrease) on aggregate service andinterest cost ......................................................... 0.08 (0.06) 0.04 (0.04)

Increase / (Decrease) on Present value of DefinedBenefit obligation as at 31st December, 2008 ....... 0.50 (0.40) 0.27 (0.22)

VII. Actuarial Assumptions:

1 Discount Rate ............................................... 5.90% p.a. 8.05% p.a.

2 Expected rate of return on plan assets ........... 7.50% p.a. 7.50% p.a.

3 Mortality ...................................................... LIC (1994–96) mortality tables LIC (1994–96) mortality tables

4 Turnover rate ................................................ Age 21–44 : 2%, Age 45 –57 : 1% Age 21–44 : 2%, Age 45 –57 : 1%

5 Medical premium inflation ............................ 5% p.a. 5% p.a.

6 Salary Escalation .......................................... 7% p.a. 7% p.a.

Rs. in crores

2008 2007




Funded Funded

BLACK 87 BLUE



VIII. Provident Fund managed by a Trust set up by the Company

Pending the issuance of the Guidance Note from the Actuarial Society of India, the Company's actuary has expressed his inability to reliablymeasure the provident fund liability. The Company has recognised an expense of Rs. Nil (31.12.2007 Rs.– 0.20 crore) towards the deficitin the fund as at 31st December, 2008.

IX. Amounts recognized as an expense in respect of defined benefit plans as under :


a) Gratuity * ............................................................... 20.12 9.29

b) Shipping Staff Gratuity ............................................ 0.20 0.05

c) Post Retirement Medical Benefits .............................. 0.95 0.16

21.27 9.50

* Net of Rs. 0.68 crore (31.12.2007 Rs. 1.65 crores) capitalised as pre–operative Expenses.

c) Amount recognised as an expense in respect of Compensated Leave Absences is Rs 12.85 crores (31.12.2007 – Rs. 6.35 crores).

d) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the relatedobligation. The Gratuity Scheme is invested in a Group Gratuity–cum–Life Assurance cash accumulation policy offered by Life Insurance Corporation(LIC) of India. The investment return earned on the policy comprises bonuses declared by LIC having regard to LIC's investment earnings. Theinformation on the allocation of the fund into major asset classes and expected return on each major class are not readily available. Weunderstand that LIC's overall portfolio of assets is well diversified as such, the long–term return on the policy is expected to be higher than therate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have been higher than Governmentbond yields. As such, the expected return on assets assumption is taken by adding a margin of 0.50% on the current market yield on the CentralGovernment bonds (of term consistent with the terms of liabilities).

(e) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevantfactors, such as supply and demand in the employment market.

(f) The Company expects to contribute Rs. 13.00 crores to Gratuity Fund in the year 2009.

(g) Amount for the current and previous two periods ar as follows :


i) Gratuity - Funded

Defined benefit obligation ........................................................ 63.21 42.39

Plan assets ............................................................................... 50.04 40.17

Surplus / (deficit) ...................................................................... (13.17) (2.22)

Experience adjustments on plan assets ...................................... 4.48 9.73

Experience adjustments on plan liabilities .................................. 0.19 1.79

ii) Gratuity - Non Funded


Plan assets ............................................................................... – –

Surplus / (deficit) ...................................................................... (0.74) (0.68)

Experience adjustments on plan assets ...................................... (0.03) (0.08)

Experience adjustments on plan liabilities .................................. – –

iii) Death and Disability Scheme (Shipping Staff)


Plan assets ............................................................................... – –

Surplus / (deficit) ...................................................................... (0.33) (0.35)

Experience adjustments on plan assets ...................................... (0.18) (0.16)


iv) Post Retirement Medical Benefit (PRMB)


Plan assets ............................................................................... – –

Surplus / (deficit) ...................................................................... (2.29) (1.33)

Experience adjustments on plan assets ...................................... (0.02) –


BLACK 88 BLUE



10. Employee Stock Option Plans :

a) The Company has provided various share based payments to its employees. During the year ended December 31, 2008, the following schemes were in operation:

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2007 2007 2008

a) Date of grant ........................................... 13.11.2000 19.10.2001 24.10.2002 21.1.2004 10.3.2005 7.11.2005 7.6.2007 1.7.2008 1.7.2008

b) Date of Board Approval ............................ 8.8.2000 3.8.2001 20.8.2002 31.7.2003 23.7.2004 24.6.2005 11.1.2007 11.1.2007 1.7.2008

c) Date of Shareholders Approval ................. 6.10.2000 5.10.2001 11.10.2002 6.10.2003 18.10.2004 10.10.2005 26.3.2007 26.3.2007 22.4.2008

d) Number of options granted ....................... 970,700 711,100 815,800 864,600 812,325 873,075 7,386,750 111,150 7,384,300

e) Method of Settlement (Cash / Equity) ......... Equity Equity Equity Equity Equity Equity Equity Equity Equity

f) Vesting period from the date of ................. Equally 1 year 1 year 1 year 1 year 1 year 1 year 1 year 1 yearGrant ...................................................... in 4 years

g) Exercise Period from the date of ................ Equally 5 years 5 years 5 years 4 years 4 years 4 years 4 years 4 yearsVesting ..................................................... in 4 years

b) The details of activity under the ESOP schemes have been summarised below :

2008 2007

Number of Weighted Number of Weighted

Particulars Shares Average Shares Average

Exercise Exercise

price (Rs.) price (Rs.)

a) Outstanding at the beginning of the year ................. 9,692,013 97.90 8,216,938 57.03

b) Granted during the year ......................................... 7,495,450 113.00 7,386,750 113.00

c) Forfeited during the year ......................................... 635,000 95.12 255,550 113.00

d) Exercised during the year ........................................ 219,502 56.72 5,546,832 58.30

e) Expired during the year ........................................... 73,875 22.13 109,293 19.96

f) Outstanding at the end of the year .......................... 16,259,086 91.58 9,692,013 97.90

g) Exercisable at the end of the year ............................ 9,129,936 99.06 2,560,813 55.87

h) Weighted average remaining contractual life ........... 3.62 3.89(in years)

The weighted average share price at the date of exercise for stock options was Rs. 59.32 (31.12.2007 Rs. 135.27)

The weighted average share price for the period over which stock option were exercised was Rs. 101.18 (31.12.2007 - Rs. 130.70)

c) The details of exercise price for stock options outstanding at the end of the year ie. 31st December, 2008

2008 2007

ESOP Plans Number of Weighted Weighted Number of Weighted Weightedoptions average average options average average

outstanding remaining exercise outstanding remaining exercisecontractual price (Rs. contractual price (Rs.

life of options per share of life of options per share of(in years) Rs. 2 each) (in years) Rs. 2 each)

2000-01 * .......... 35,425 0.87 18.40 35,900 1.87 18.40

2002-03 * .......... – – -– 12,000 0.81 22.13

2003-04 * .......... 32,550 1.05 41.33 39,650 2.06 41.33

2004-05 * .......... 105,450 1.19 59.07 110,175 2.19 59.07

2005-06 # ......... 193,350 1.85 69.60 215,575 2.85 69.60

2007 .................. 6,862,500 3.43 113.00 7,131,200 4.44 113.00

2007 .................. 92,950 4.50 82.00 – – –

2008 .................. 7,036,200 4.50 82.00 – – –

* one option represents 7.5 equity shares.

# one option represents 5 equity shares.

BLACK 89 BLUE


d) Stock Options granted

The weighted average fair value of stock options granted for the year was Rs. 16.95 (31.12.2007 Rs. 29.28). The Black Scholes valuationmodel has been used for computing the weighted average fair value considering the following inputs:

Variables 2008 2007

Grant date .............................................................................................................. 1.7.2008 7.6.2007

Market Price (Rs. per share) on the date of grant ....................................................... 73.00 109.55

Volatility .................................................................................................................. 35.94% 33.73%

Risk free rate ........................................................................................................... 7.02% 7.89%

Exercise price in Rs. ................................................................................................. 82.00 113.00

Time to Maturity (Years) ........................................................................................... 3 3

Dividend yield ......................................................................................................... 2.58% 2.22%

Option fair value (Rs. per share) .............................................................................. 16.95 29.28

2008 2007Particulars Rs. in Crores Rs. in Crores

e) Effect of the employee share based payment plans on the profit and loss account andon its financial position:

Total Employee Compensation Cost pertaining to share based payment plans ........... – –

Compensation cost pertaining to equity settled employee share based paymentplan included above ............................................................................................... – –

Liability for employee stock options outstanding as at year end ................................. 0.34 0.38

Deferred Compensation Cost .................................................................................. – –

f) Since the enterprise used the intrinsic value method the impact on the reported netprofit and earnings per share by applying the fair value based method is as under :

Profit as reported .................................................................................................... 1,402.27 1,769.10

Add : Employee stock compensation under intrinsic value method ............................. – –

Less: Employee stock compensation under fair value method .................................... 15.10 11.84

Proforma profit ....................................................................................................... 1,387.17 1,757.26

Earning per share (Rs.)

Basic :

– As reported .................................................................................................. 9.21 11.64

– Proforma ...................................................................................................... 9.11 11.56

Diluted :

– As reported .................................................................................................. 9.21 11.61

– Proforma ...................................................................................................... 9.11 11.53

11. Movement of provisions during the period as required under Accounting Standard - 29Mines Reclamation Expenditure :


Opening Provision .......................................................................................................... 8.15 7.02

Add : Provision during the period .................................................................................... 3.03 1.44

11.18 8.46

Less : Utilisation during the period ................................................................................... – 0.31

11.18 8.15

Less : Reversal during the period ..................................................................................... 1.22 –

Closing Provision ............................................................................................................ 9.96 8.15

Mines reclamation expenditure is incurred on an ongoing basis and until the closure of themine. The actual expenses may vary based on the nature of reclamation and the estimateof reclamation expenditure.


BLACK 90 BLUE


12. Payment to Auditors :

(a) Statutory Auditors

(i) As Auditors ..................................................................................................... 0.84 0.61

(ii) Audit of financial statements as per International Financial Reporting Standard .. 0.30 0.25

(iii) In other capacity

– Certification Work ......................................................................................... 0.38 0.43

(iv) For Expenses ................................................................................................... 0.18 0.08

1.70 1.37

(b) Cost Auditors

(i) As Auditors ..................................................................................................... 0.03 0.03

(ii) For Expenses - (Previous year - Rs. 35,918/-) .................................................... 0.01 –

0.04 0.03

31.12.2008 31.12.2007

MT Rs. in Crores MT Rs. in Crores

13. Licensed & Installed Capacity, Production, Stocks and Turnover:

Cement

(i) Licensed Capacity (see Note "a")

(ii) Installed Capacity (see Note "b") ..................................... 22,000,000 18,500,000

(iii) Production (excluding Trial Run Production of NilMT; Previous Year 11948 MT) ......................................... 17,757,706 16,861,080

(iv) Stocks :

Opening ........................................................................ 252,828 53.44 216,253 38.55

Closing ......................................................................... 305,770 78.01 252,828 53.44

(v) Turnover (see Note "c" & "e")

Cement (including Trial Run stock of Nil MT;Previous Year 6471 MT) .......................................... 17,586,010 7,075.51 16,771,060 6,381.27

Sale of surplus generated power ............................................. 14.38 14.93

7,089.89 6,396.20

Notes:

(a) The Company's product is exempt from Licensing requirementsunder New Industrial Policy in terms of Notification no.S.O.477(E) dated 25th July, 1991.

(b) Annual Capacity as certified by the management and, beinga technical matter, accepted by the Auditors.

(c) Excludes Self Consumption for Capital and Revenue jobs .... 110,189 17.84 57,137 9.47

(d) Shortages, Samples and Handling Loss, etc. ....................... 8,565 2,779

(e) Includes VAT/Sales Tax remission ....................................... 73.76 73.08

14. Raw Materials consumed :

(i) Limestone and clay

Raised by the Company .......................................... 16,486,074 16,534,722

Purchased .............................................................. 58,131 1.47 139,941 3.54

Transportation and Handling Charges ..................... – 29.42 – 27.24

(ii) Gypsum ........................................................................ 1,055,055 140.85 952,985 116.67

(iii) Silica ............................................................................. 236,234 9.72 246,870 9.57

(iv) Iron ore ......................................................................... 96,147 6.98 91,073 5.96

(v) Clinker Purchased .......................................................... 703,695 231.72 467,536 138.28

(vi) Fly Ash .......................................................................... 4,421,037 161.38 4,078,012 136.73

(vii) Others ........................................................................... 29.76 16.76

TOTAL ................................................................... 611.30 454.75



BLACK 91 BLUE


31.12.2008 31.12.2007

Rs. in Crores Percentage Rs in Crores Percentage

15. (a) Raw Materials Consumed :

(i) Imported ................................................................ 51.46 8.42 50.08 11.01

(ii) Indigenous ............................................................. 559.84 91.58 404.67 88.99

TOTAL ................................................................... 611.30 100.00 454.75 100.00

(b) Spares Consumed :

(i) Imported ................................................................ 20.89 9.45 24.37 15.00

(ii) Indigenous ............................................................. 200.11 90.55 138.06 85.00

TOTAL ................................................................... 221.00 100.00 162.43 100.00

31.12.2008 31.12.2007Rs. in Crores Rs. in Crores

16. CIF Value of imports :

(i) Raw Materials ......................................................................................................... 51.14 28.03

(ii) Fuels ...................................................................................................................... 504.89 322.23

(iii) Spares .................................................................................................................... 50.41 25.84

(iv) Capital Goods ........................................................................................................ 142.20 19.77

17. Expenditure in Foreign currency :

(i) Technical Fees (Net of tax) (Capitalised Rs. 3.82 crores; Previous year - Rs. 0.93 crore) 6.71 2.02

(ii) Interest & Finance Charges (Capitalised Rs. 0.07 crore; Previous year - Rs. 11.69 crores) 3.51 20.15

(iii) Travelling Expenses ................................................................................................. 1.67 0.77

(iv) Ship Charter Hire, Port Dues, etc. ............................................................................. 6.02 2.21

(v) Consultancy Charges .............................................................................................. 0.49 -

(vi) Other Matters (Capitalised Rs. 2.14 crores; Previous year - Rs. Nil) ............................ 20.73 0.20

18. Remittances in Foreign Currency :

On account of dividend to non-resident shareholders

Final Dividend

No. of shareholders ................................................................................................ 274 307

No. of Equity Shares ................................................................................................ 546,019,469 274,258,767

Amount remitted, net of tax (Rs. in crores) ................................................................ 54.60 21.94

Year to which it pertains .......................................................................................... 2007 2005-2006

First Interim Dividend

No. of shareholders ................................................................................................ 254 293

No. of Equity Shares ................................................................................................ 545,920,064 342,704,758

Amount remitted, net of tax (Rs. in crores) ................................................................ 65.51 85.68

Period to which it pertains ........................................................................................ 2008 2007

19. Earnings in Foreign Exchange

(i) F.O.B. Value of Exports ............................................................................................ 226.53 277.47

(ii) Other Income ......................................................................................................... 2.00 0.47


BLACK 92 BLUE


20. Disclosure in respect of Loans and Advances in the nature of Loans pursuant to Clause 32 of the Listing Agreement :

As at 31.12.2008 As at 31.12.2007

Outstanding Maximum Outstanding Maximum

balance balance during balance balance during

the year the year

Rs in Crores Rs in Crores Rs in Crores Rs in Crores

Loans and Advances in the nature of loans given toSubsidiaries and Associates, etc.

Loans to Subsidiaries :

Chemical Limes Mundwa Private Limited ......................... 0.25 0.25 0.25 0.25

21. Derivative Instrument and Unhedged Foreign Currency Exposure

As at As at

31.12.2008 31.12.2007

S. No. Purpose Currency Amount in Amount inmillion million

(A) External Commercial Borrowing loan of JPY 2334 millionswapped against USD ........................................................................................ USD – 20.00

(B) Unhedged Foreign Currency Exposure

1. External Commercial Borrowing loan taken in JPY 2334 million and swappedagainst USD .................................................................................................... USD – 20.00

2. Outstanding creditors for purchase of Raw Material & Spares ............................ USD 9.11 0.58

3. Outstanding creditors for purchase of Raw Material & Spares ............................ EURO – 0.80

4. Outstanding creditors for purchase of Raw Material & Spares ............................ SEK – 0.09

5. Outstanding creditors for purchase of Raw Material & Spares ............................ DKK – 0.01

6. Outstanding creditors for purchase of Capital Goods ........................................ EURO 0.04 –

7. Outstanding creditors for Expenses ................................................................... USD 1.81 0.01

8. Outstanding creditors for Expenses ................................................................... CHF 1.22 0.10

9. Outstanding creditors for Expenses ................................................................... THB 7.48 –

10. Outstanding creditors for Expenses ................................................................... CAD 0.03 –

11. Outstanding creditors for Expenses ................................................................... AUD 0.12 –

12. Outstanding debtors ........................................................................................ USD 9.83 11.26

13. Exchange Earner Foreign Currency Account with Hongkong & Shanghai BankingCorporation .................................................................................................... USD 0.89 –

14. Exchange Earner Foreign Currency Account with Standard Chartered Bank ......... USD 0.18 –

22. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the

suppliers as defined under the 'Micro, Small and Medium Enterprises Development Act, 2006'. Principal amount overdue and interest amount

thereon payable to Micro, Small and Medium Enterprises as on 31st December, 2008, is Rs. 0.17 crore (31.12.2007 - Rs. Nil) and Rs. 0.09

crore (31.12.2007 - Rs. Nil) respectively.

23. In accordance with the Put and Call option agreement entered into with Holderind Investments Limited, the Company has during the year sold

the remaining 9,53,70,000 (31.12.2007 - 19,07,50,000) equity shares of Ambuja Cement India Private Limited for a consideration of

Rs. 588.91 crores (31.12.2007- Rs. 1,061.52 crores) and recognised a profit of Rs. 303.20 crores (31.12.2007- Rs. 490.07 crores). (Gross

of tax of Rs. 38.56 crores (31.12.2007- Rs. 63.16 crores).

24. Pursuant to the implementation of SAP ERP system, during the year, the Company has changed its inventory valuation method from annual

weighted average to daily moving weighted average for items procured and monthly moving weighted average in case of material-in-process

and finished goods. As a result profit for the year ended 31st December, 2008 is higher by Rs. 83.40 crores.


BLACK 93 BLUE




Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













25. The Company held 6,76,36,340 ordinary shares of Ceylon Ambuja Cements Private Limited (CACL) (including 1,72,22,500 shares acquired

during the year) at a cost of Rs. 35.82 crores. In the previous year the Company has recognised a provision for diminution in the value of these

investments of Rs. 29.54 crores. During the year the Company has sold its shareholding in CACL for a sale consideration of Rs. 0.42 crore and

recognised a loss of Rs. 5.86 crores. Consequently, CACL and its subsidiary Midigama Cements (Private) Limited ceased to be subsidiaries of

the Company w.e.f. 2nd June, 2008.

26. The Company's subsidiary Cement Ambuja International Limited (CAIL), Mauritius has initiated the voluntary winding up proceedings under the

Company Act, 2001, Mauritius and has repaid the outstanding paid-up capital and accumulated reserves to the Company during the period

ended 31st December, 2006. CAIL is in the process of seeking necessary regulatory approvals to complete the liquidation, pending which the

Company continues to be a member of CAIL.

27. Capital Work-in-Progress includes (a) Machinery in transit - Rs. 3.03 crores (31.12.2007 - Rs. 2.94 crores); (b) expenditure during construction

for project - Rs. 80.02 crores (31.12.2007 - Rs. 41.17 crores).

28. The Company is carrying out its Corporate Social Responsibility (CSR) activities through Ambuja Cement Foundation (ACF), and was during the

year running the schools at plant locations through the Ambuja Educational Institute (AEI), charitable organisations registered under Section 25

of the Companies Act, 1956. The Company has contributed Rs. 18.21 crores (31.12.2007- Rs. 11.61 crores) and Rs. 1.59 crores (31.12.2007-

Rs. 1.40 crores) to ACF and AEI respectively.

29. During the year the Company has written off pre-operative expenses incurred on certain capital projects and temporary structures amounting

to Rs. 8.11 crores (31.12.2007- Rs. 2.54 crores).

30. Figures less than Rs. 50,000/- have been shown at actuals, wherever statutorily required to be disclosed, as the figures have been rounded off

to the nearest lac.

31. Figures of the previous year have been regrouped wherever necessary to conform to the current year’s presentation.


Signatures to Schedules ‘A’ to ‘R’

BLACK 94 BLUE


BALANCE SHEET ABSTRACT AND COMPANY’S GENERALBUSINESS PROFILE

I. Registration Details

Registration No. 4717 State Code 04

Balance Sheet Date 31.12.2008

II. Capital Raised during the Year (Amount in Rs. Thousand)

Public Issue – Right Issue (Abeyance Cases) 9

Bonus Issue – Private Placement –

On Amalgamation – ESOS 439

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)

Total Liabilities 63,423,021 Total Assets 63,423,021

Sources of Funds

Paid-up Capital 3,045,199 Reserves & Surplus 53,680,210

Share Application Money – Unsecured Loans 1,886,735

Employee Stock Option Outstanding 3,412

Secured Loans 1,000,000

Deferred Tax Liabilities 3,807,465

Application of Funds

Net Fixed Assets 51,399,816 Investments 3,323,908

Net Current Assets 8.656,492 Misc. Expenditure 42,805

Accumulated Losses –

IV. Performance of Company (Amount in Rs. Thousand)

Turnover (Net of Excise duty) 62,346,427 Total Expenditure 47,485,225

Profit before Tax 19,698,445 Profit after Tax 14,022,776

Earning per Share in Rs. 9.21 Dividend Rate % 110%

V. Generic Name of Principal Product of the Company

Item Code No. 2,523

Product Description Portland Cement



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti










BLACK 95 BLUE


AUDITORS' REPORTTO THE BOARD OF DIRECTORS, AMBUJA CEMENTS LIMITED

ON THE CONSOLIDATED FINANCIAL STATEMENTS

1. We have audited the attached consolidated Balance

Sheet of Ambuja Cements Limited and its subsidiaries,

('the Group'), as at 31st December, 2008, and also

the consolidated Profit and Loss Account and the

consolidated Cash Flow Statement for the year ended

on that date annexed thereto. These financial

statements are the responsibility of the Ambuja

Cements Limited's management and have been

prepared by the management on the basis of separate

financial statements and other financial information

regarding components. 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 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

est imates made by management, as wel l 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 certain

subsidiaries, whose financial statements reflect total

assets of Rs. 1.94 crores as at 31st December, 2008,

the total revenue of Rs. 27.28 crores and cash flows

amounting to Rs. 0.08 crores for the year then ended.

These financial statements and other financial

information have been audited by other auditors

whose reports have been furnished to us, and our

opinion is based solely on the report of other auditors.

4. We report that the consolidated financial statements

have been prepared by the Ambuja Cements Limited's

management in accordance with the requirements

of Accounting Standards (AS) 21. Consolidated

Financial Statements noti f ied pursuant to the

Companies (Accounting Standards) Rules, 2006.

5. Based on our audit and on consideration of reports

of other auditors on separate financial statements

and on the other f inancial information of the

components, and to the best of our information and

according to the explanations given to us, we are of

the opinion that the attached consolidated financial

statements give a true and fair view in conformity

with the accounting principles generally accepted

in India:

(a) in the case of the consolidated Balance Sheet,

of the state of affairs of the Group as at December,

31, 2008;

(b) in the case of the consolidated Profit and Loss

Account, of the profit for the year ended on that

date; and

(c) in the case of the consolidated Cash Flow

Statement, of the cash flows for the year ended

on that date.



per Sudhir Soni

Partner


Mumbai

February 6, 2009

BLACK 96 BLUE


As at As at31.12.2008 31.12.2007

Schedule Rs. in Crores Rs. in Crores Rs. in Crores

SOURCES OF FUNDSShareholders' Funds

Share Capital ................................................................... A 304.52 304.48

Employee Stock Option Outstanding (Refer Note 9) ............ 0.34 0.38

Reserves and Surplus ........................................................ B 5,366.54 4,554.40

5,671.40 4,859.26

Minority Interest ........................................................................ – 0.42

Loan Funds

Secured Loans .................................................................. C 100.00 108.28

Unsecured Loans .............................................................. D 188.67 230.42

288.67 338.70

Deferred Tax Liability, net (Refer Note 7) ................................. 380.75 378.38

TOTAL ........................................ 6,340.82 5,576.76

APPLICATION OF FUNDSFixed Assets ........................................................................... E

Gross Block ...................................................................... 5,710.11 5,251.83

Less: Depreciation ............................................................. 2,512.87 2,273.98

Net Block .......................................................................... 3,197.24 2,977.85

Capital Work-in-Progress (Refer Note 10) ........................... 1,560.76 510.04

4,758.00 3,487.89

Advances against capital expenditure ................................. 386.47 186.86

5,144.47 3,674.75

Investments ........................................................................... F 327.82 1,480.36

Current Assets, Loans and Advances

Inventories ........................................................................ G 939.77 586.27

Sundry Debtors ................................................................. H 224.60 135.38

Cash and Bank Balances ................................................... I 852.13 643.37

Other Current Assets ......................................................... J 23.41 13.52

Loans and Advances ......................................................... K 299.67 205.18

2,339.58 1,583.72

Less: Current Liabilities and Provisions ......................... L

Current Liabilities ...................................................... 1,004.77 678.25

Provisions ................................................................. 470.56 490.04

1,475.33 1,168.29

Net Current Assets ................................................................ 864.25 415.43

Miscellaneous Expenditure(to the extent not written off or adjusted) ..................................... M 4.28 6.22

TOTAL ........................................ 6,340.82 5,576.76


CONSOLIDATED BALANCE SHEETas at 31st December, 2008



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













BLACK 97 BLUE


2008 2007Schedule Rs. in Crores Rs. in Crores Rs. in Crores

INCOMESales / Operating Income

Sales ............................................................................... 7,117.03 6,483.44

Less: Excise duty ................................................................ 855.24 764.84

6,261.79 5,718.60

Other Income ........................................................................... N 175.53 193.83

6,437.32 5,912.43

EXPENDITUREManufacturing and other Expenses ............................................ O 4,511.48 3,692.73

Interest and Finance Charges .................................................... P 32.60 77.09

Depreciation and Amortisation .................................................. 260.10 237.18

4,804.18 4,007.00Less: Self consumption of Clinker & Cement (net of exciseduty Rs. 2.88 crores: 31.12.2007 - Rs. 2.23 crores) .................... (21.19) (9.47)

4,782.99 3,997.53

Profit before Share of profit in Associates .................................... 1,654.33 1,914.90

Share of profit in Associates ....................................................... – 78.94

Profit before tax and exceptional items ....................................... 1,654.33 1,993.84

Exceptional items ...................................................................... Q 303.31 795.52

Profit before tax ........................................................................ 1,957.64 2,789.36Provision for Taxation

– Current tax ....................................................................... 560.36 737.00

– Income tax in respect of earlier years ................................. – 202.00

– Deferred tax (Refer Note 7) ................................................ 2.37 (0.90)

– Fringe Benefit tax .............................................................. 5.20 5.15

567.93 943.25

Net Profit ............................................................................... 1,389.71 1,846.11

Balance as per last Account ....................................................... 683.74 530.59

Credit balance of Profit and Loss Account of erstwhileIndo Nippon Special Cements Limited (INSCL) ........................... – 0.21

Transferred from Debenture Redemption Reserve ........................ – 30.00

Transferred from Exchange Fluctuation reserve oncessation of subsidiary ............................................................... (5.72) –

Transferred to General Reserve .................................................. 1,000.00 1,100.00

Interim Dividend on Equity Shares .............................................. 182.71 380.41


213.76 445.06

Proposed Final Dividend on Equity Shares .................................. 152.26 152.24


178.13 178.11

Balance carried to Balance Sheet ....................................................... 675.84 683.74

Earnings Per Share of Rs. 2 each (Refer Note 6) Rs. Rs.

Basic ............................................................................... 9.13 12.14

Diluted ............................................................................... 9.12 12.12


CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31st December, 2008



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













BLACK 98 BLUE


A) CASH FLOW FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX ................................................................................... 1,957.64 2,789.36

Adjustment for :

Depreciation and Amortisation ............................................................ 260.10 237.18

Surplus on sale of assets ...................................................................... (0.70) (2.10)

Exceptional Items ................................................................................ (303.31) (795.52)

Loss on assets discarded / sold ............................................................ 4.26 6.91

Capital Projects written off ................................................................... 8.11 2.54

Part of deferred revenue expenditure, written off ................................... 1.72 0.47

Provision for diminution in value of Investment ..................................... – 1.00

Profit on sale of investments ................................................................. (14.46) (23.54)

Interest and Finance Charges .............................................................. 32.60 77.09

Interest Income ................................................................................... (93.93) (76.10)

Exchange rate difference (net) .............................................................. 9.33 (33.82)

Dividend income ................................................................................. (41.11) (22.80)

Bad Debts, Sundry Debit Balance Claims Written off ............................. 1.39 1.89

Provision for Doubtful debts and advances (net) .................................... (0.43) 2.44

Provision for wealth tax ........................................................................ 0.22 0.24

Share in Associate ............................................................................... – (78.94)

(136.21) (703.06)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ...................... 1,821.43 2,086.30

Adjustment for :

Trade and other receivables ................................................................. (183.31) (106.45)

Inventories .......................................................................................... (348.36) (170.52)

Trade Payables .................................................................................... 256.76 161.96

(274.91) (115.01)

CASH GENERATED FROM OPERATIONS ..................................................... 1,546.52 1,971.29

Direct Taxes paid ................................................................................. (575.36) (451.25)

Miscellaneous Expenditure ................................................................... (0.27) (0.75)

Exchange rate difference ..................................................................... 2.87 24.90

(572.76) (427.10)

NET CASH FROM OPERATING ACTIVITIES ................................................... 973.76 1,544.19

B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets .............................................................................. (1,648.18) (794.35)

Sale of Fixed Assets (net of tax of Rs. 1.67 crores;31.12.2007 - Rs. 69.97 crores) ................................................................... 19.91 272.59

Investments (Net) ( net of tax of Rs. 26.69 crores;31.12.2007 - Rs. 62.24 crores) ................................................................... 657.28 (725.07)

Acquisition of subsidiaries net of cash .......................................................... (1.83)

Disposal of Subsidiaries / Joint ventures / Associate ..................................... 589.33 994.35

Interest received .......................................................................................... 83.86 69.03

Dividend received ....................................................................................... 41.11 22.80

NET CASH USED IN INVESTING ACTIVITIES ................................................ (256.69) (162.48)


CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31st December, 2008

Carried forward .................................. 717.07 1,381.71

BLACK 99 BLUE


CASH FLOW STATEMENT (Contd.)

Brought forward .................................. 717.07 1,381.71


C) CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital including Share premium .................... 1.24 32.29

Proceeds from borrowings ........................................................................... 33.94 57.68

Repayment of borrowings ............................................................................ (93.91) (575.32)

Interest and Finance Charges paid .............................................................. (58.87) (34.06)

Swap interest (net) ...................................................................................... (0.55) (15.24)

Unclaimed sale proceeds of the odd lot shares of erstwhile ACEL and ACRL .. (0.07) (0.08)

Unclaimed Application money on securities ................................................. 0.14 –

Dividend paid (including dividend distribution tax) ........................................ (390.23) (583.08)

NET CASH USED IN FINANCING ACTIVITIES ............................................... (508.31) (1,117.81)

Net Increase In Cash And Cash Equivalents ................................................. 208.76 263.90

CASH AND CASH EQUIVALENTS As At 01.01.2008 (Schedule I)

Ear marked for specific purpose .................................................................. 13.83 13.55

Other Balances ........................................................................................... 629.54 365.92

643.37 379.47

CASH AND CASH EQUIVALENTS As At 31.12.2008 (Schedule I)

Ear marked for specific purpose .................................................................. 15.40 13.83

Other Balances ........................................................................................... 836.73 629.54

852.13 643.37



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













BLACK 100 BLUE


SCHEDULE 'A' - SHARE CAPITAL

Authorised :

2,50,00,00,000 (31.12.2007 - 2,50,00,00,000) Equity Shares of Rs. 2 each ........... 500.00 500.00

15,00,00,000 (31.12.2007 - 15,00,00,000) Preference Shares of Rs. 10 each ...... 150.00 150.00

650.00 650.00

Issued :

1,52,29,30,444 (31.12.2007 - 1,52,27,10,942) Equity Shares of

Rs. 2 each fully paid-up ................................................................. 304.59 304.54

Subscribed :

1,52,25,99,424 (31.12.2007 - 1,52,23,75,422) Equity Shares of

Rs. 2 each fully paid-up ................................................................. 304.52 304.48

TOTAL ................................................................. 304.52 304.48

Notes :

1) Out of above Equity Shares :

a) 97,31,57,405 (31.12.2007 - 97,31,57,405) Equity Shares of Rs. 2 each have

been issued as fully paid-up Bonus Shares by way of capitalisation of Securities

Premium and Capital Redemption Reserve.

b) 2,47,17,240 (31.12.2007 - 2,47,14,990) Equity Shares of Rs. 2 each fully

paid-up have been issued against exercise of Tradable Warrants attached to

18.5% Secured Redeemable Non-Convertible Debentures.

c) 1,33,12,370 (31.12.2007 - 1,33,12,370) Equity Shares of Rs. 2 each fully

paid-up have been allotted to the Shareholders of the amalgamating company

Ambuja Cements Rajasthan Limited (ACRL) pursuant to the scheme of

amalgamation as approved by the Board of Industrial and Financial

Reconstruction (BIFR) without payment being received in cash.

d) 15,39,61,356 (31.12.2007 - 15,39,61,356) Equity Shares of Rs. 2 each fully

paid-up issued to the Shareholders of the amalgamating company Ambuja

Cement Eastern Limited (ACEL) without payment being received in cash.

2) Outstanding Employee stock options exercisable into 1,62,59,086 (31.12.2007 -

96,92,013) Equity Shares of Rs. 2 each fully paid-up (Refer Note 9)

SCHEDULE 'B' - RESERVES AND SURPLUSSubsidies :

(a) Cash Subsidies from Government and other authorities :

As per last Account ..................................................................................... 1.83 1.83

(b) Grant-in-aid Subsidy from DANIDA ............................................................. 0.12 0.12

1.95 1.95

Capital Reserve ............................................................................................... 132.35 132.35

Capital Redemption Reserve ........................................................................... 9.93 9.93

Security Premium :

As per last Account ..................................................................................... 1,183.53 1,151.59

Additions on exercise of employee stock options and others .......................... 1.24 31.94

1,184.77 1,183.53

As at As at31.12.2008 31.12.2007


SCHEDULES 'A' TO 'R'annexed to and forming part of the Consolidated Balance Sheet as at and

Consolidated Profit and Loss Account for the year ended 31st December, 2008

Carried forward ............................. 1,329.00 1,327.76

BLACK 101 BLUE


SCHEDULE ‘B’ – RESERVES AND SURPLUS (Contd.)

Brought forward ............................. 1,329.00 1,327.76

As at As at31.12.2008 31.12.2007


Debenture Redemption Reserve :

As per last Account ..................................................................................... 25.00 55.00

Less: Transferred to Profit and Loss Account .................................................. – 30.00

25.00 25.00

Unrealised Gain on Dilution :

Excess of Company's share of networth in Ambuja Cement India Ltd.

(ACIL) over the carrying amount

As per last account .............................................................................. 186.02 475.85

Add: Profit on sale of investment eliminated earlier, now recognized ...... – 27.40

Less: Transferred to profit on sale of investment pursuant to sale

of 11% stake in ACIL ................................................................... 186.02 317.23

– 186.02

General Reserve :

As per last Account ..................................................................................... 2,336.70 1,245.60

Addition during the year:

Set aside this year ....................................................................................... 1,000.00 1,100.00

3,336.70 2,345.60

Less:

Adjustment for employee benefits net of deferred tax .................................... – 8.90

3,336.70 2,336.70

Exchange Fluctuation Reserve on consolidation of overseas subsidiaries :

As per last Account ..................................................................................... (4.82) (5.59)

Add: Gain / (Loss) on translation of subsidiary ............................................. (0.90) 0.77

(5.72) (4.82)

Less: Transferred to Profit & Loss Account on disposal of subsidiary (5.72) –

– (4.82)

Surplus as per Profit and Loss Account 675.84 683.74

TOTAL ............................................................ 5,366.54 4,554.40

SCHEDULE 'C' - SECURED LOANS(a) Debentures (Refer Note Below) .................................................................... 100.00 100.00

(b) From Banks :

(ii) Working capital loan

(Secured by hypothecation of inventories and book debts) ..................... – 8.28

TOTAL ............................................................ 100.00 108.28

Above Debentures are secured by way of first pari passu charge by mortgage of

immovable properties of the three cement plants of the Company situated at

Ambujanagar, in the state of Gujarat, as covered under respective Trust Deeds.

SCHEDULE 'D' - UNSECURED LOANSLoans from Bank :

Foreign Currency Term Loan from Banks (Due within one year

Rs. Nil; 31.12.2007 - Rs. 78.84 crores) ....................................................... – 78.84

Sales Tax Deferment Loan under Sales Tax Incentive Scheme of various State

Governments (Due within one year Rs. 6.23 crores; 31.12.2007 - Rs. 6.80 crores) 188.67 151.58

TOTAL ............................................................ 188.67 230.42

BLACK 102 BLUE


SCHEDULE 'E' - FIXED ASSETSRs. in Crores

DESCRIPTION GROSS BLOCK (at Cost) DEPRECIATION / AMORTISATION NET BLOCK

As at Addition on Additions Deductions/ Deduction on As at As at Addition on For the Deductions/ Deduction on Upto As at As at01.01.2008 acquisition of Transfers Cessation of 31.12.2008 01.01.2008 acquisition of year Transfers Cessation of 31.12.2008 31.12.2008 01.01.2008

new subsidiaries Subsidiary new subsidiaries (e) Subsidiary

Tangible Assets:

Freehold Land ........... 223.10 – 18.10 – – 241.20 – – – – – – 241.20 223.10

Leasehold Land ......... 42.19 – 15.07 5.11 1.13 51.02 6.03 – 1.17 1.08 – 6.12 44.90 36.16

Buildings, Roads andWater Works (a) ........ 650.21 – 72.24 1.01 9.37 712.07 107.11 – 16.94 0.17 1.54 122.34 589.73 543.10

Marine Structures (c) .. 95.59 – – – – 95.59 40.63 – 3.82 – – 44.45 51.14 54.96

Plant and Machinery . 3,580.69 – 289.96 20.27 5.04 3,845.34 1,833.54 – 188.99 12.42 1.58 2,008.53 1,836.81 1,747.15

Electrical Installations 326.13 – 14.08 0.04 – 340.17 126.24 – 15.95 0.07 – 142.12 198.05 199.89

Railway Sidings andLocomotives (b) ......... 55.84 – 5.22 – – 61.06 25.97 – 2.18 – – 28.15 32.91 29.87

Railway Wagons givenon Lease (d) .............. 6.43 – – – – 6.43 3.31 – 0.31 – – 3.62 2.81 3.12

Furniture, Fixtures andOffice Equipments ..... 86.42 – 27.38 1.67 0.90 111.23 43.63 – 8.26 1.25 0.65 49.99 61.24 42.79

Ships ........................ 112.64 – – – – 112.64 54.03 – 5.78 – – 59.81 52.83 58.61

Vehicles .................... 29.75 – 8.48 3.62 1.17 33.44 16.11 – 4.60 2.58 0.68 17.45 15.99 13.64

Power Lines (c) .......... 19.89 – 14.03 – – 33.92 6.57 – 0.97 – – 7.54 26.38 13.32

Sub Total .................. 5,228.88 – 464.56 31.72 17.61 5,644.11 2,263.17 – 248.97 17.57 4.45 2,490.12 3,153.99 2,965.71

Intangible Assets:

Goodwill onConsolidation ........... 3.90 – – – – 3.90 – – – – – 3.90 3.90

Water DrawingRights ....................... 6.17 – 0.01 – – 6.18 3.51 – 0.52 – – 4.03 2.15 2.66

Computer Software ... 12.88 – 43.04 – – 55.92 7.30 – 11.42 – – 18.72 37.20 5.58

Sub Total .................. 22.95 – 43.05 – – 66.00 10.81 – 11.94 – – 22.75 43.25 12.14

TOTAL ...................... 5,251.83 – 507.61 31.72 17.61 5,710.11 2,273.98 – 260.91 17.57 4.45 2,512.87 3,197.24 2,977.85

Previous year's Total .. 4,559.18 4.42 729.14 40.91 5,251.83 2,055.16 0.11 237.61 18.90 2,273.98 2,977.85

Notes :

(a) Includes :

i) Premises on ownership basis of Rs. 6.21 crores (31.12.2007-Rs. 11.81 crores) and cost of shares in Co-operative Societies Rs.13,130/-

(31.12.2007 - Rs.13,130/-)

ii) Rs. 14.43 crores (31.12.2007 - Rs. 6.85 crores), being cost of roads constructed by the Company, ownership of which vests with the

Government / Local Authorities and Rs. 2.08 crores (31.12.2007 - Rs. 0.79 crore), being the amortisation thereof upto 31st December,

2008.

(b) Includes Rs. 1.77 crores (31.12.2007- Rs. 1.77 crores), being cost of Railway siding constructed by the Company, ownership of which vests with

the Government / Railway Authorities and Rs. 0.51 crore (31.12.2007 - Rs. 0.46 crore), being the amortisation thereof upto 31st December,

2008 included in Depreciation.

(c) Cost incurred by the Company, ownership of which vests with the Government Authorities and Board.

(d) Railway wagons given on lease to the Railways under " Own Your Wagon Scheme"

(e) Includes Rs. 0.81 crore (31.12.2007 - Rs. 0.43 crore) capitalised as pre-operative expenses.

(f) Pursuant to Accounted Standard AS 28 "Impairment of assets", there is no impairment of assets.

BLACK 103 BLUE


SCHEDULE 'F' - INVESTMENTSLong Term Investments (at cost) :

In Fully Paid Shares, Debentures and Bonds, other than Trade

Unquoted:

Equity Shares :

In Associates

Ambuja Cement India Private Limited, formerly known asAmbuja Cement India Limited ............................................................. – 481.70

In Others ................................................................................................. 120.39 120.39

In Public Sector Bonds ............................................................................. 29.60 29.60

149.99 149.99

149.99 631.69

Current Investment:

Quoted

In Debentures ............................................................................................. 54.90 54.33

Unquoted:

In Units of Mutual Fund ............................................................................... 122.93 794.34

TOTAL ............................................................ 327.82 1,480.36

SCHEDULE 'G' - INVENTORIES(At cost or net realisable value whichever is lower)

Coal, Fuel, Packing Materials, Stores and Spare parts(Including in transit - Rs. 23.37 crores; 31.12.2007 - Rs. 28.75 crores) ................. 656.60 391.02

Stock-in-trade :

Raw Materials (Including in transit Rs. 1.49 crores;31.12.2007 - Rs. 6.51 crores) ..................................................................... 84.13 52.82

Materials-in-process ................................................................................... 119.98 85.94

Finished goods ........................................................................................... 78.03 55.12

282.14 193.88

Construction Scrap, at estimated realisable value ................................................. – 0.30

Scrapped assets awaiting disposal, at estimated realisable value .......................... 1.03 1.07

TOTAL ............................................................ 939.77 586.27

SCHEDULE 'H' - SUNDRY DEBTORS (Unsecured)Over six months:

Good (Secured by way of security deposit Rs. 0.06 crore) .............................. 1.84 1.00

Doubtful .................................................................................................. 8.72 9.00

Less : Provision ........................................................................................... 8.72 9.00

– –

1.84 1.00

Others (Secured by way of security deposit Rs. 53.58 crores) ......................... 222.76 134.38(Refer note below)

TOTAL ............................................................ 224.60 135.38

Note:

Due from ACC Ltd. Rs. 0.01 crore (31.12.2007 - Rs. Nil) and ACC Concrete LimitedRs. 2.58 crores (31.12.2007 - Rs. 2.42 crores), companies under same management

As at As at31.12.2008 31.12.2007


BLACK 104 BLUE


SCHEDULE 'I' - CASH AND BANK BALANCESCash on hand .................................................................................................. 0.36 0.36

Cheques on hand with Banks as Collecting Agency in terms of an arrangement .... 19.19 39.71

Bank Balances:

With Scheduled Banks :

In Current Account ...................................................................................... 104.47 75.52

In Fixed Deposits

In Fixed Deposits (Deposit Receipts of Rs. 2.12 crores (31.12.2007-Rs. 2.04 crores) deposited with Government Departments as SecurityDeposit and Rs. 25.63 crores (31.12.2007 - Rs. 0.02 crore) deposited withbanks as security deposit for guarantees [including accrued interestRs. 2.01 crores (31.12.2007 Rs. 0.03 crore)] ............................................... 728.11 527.78

832.58 603.30

TOTAL ............................................................ 852.13 643.37

SCHEDULE 'J' - OTHER CURRENT ASSETSInterest Receivable on Investments ............................................................... 3.49 3.49

Other Interest receivable ............................................................................. 18.66 8.59

Sundry Receivables ..................................................................................... 1.26 1.44

TOTAL ............................................................ 23.41 13.52

SCHEDULE 'K' - LOANS AND ADVANCES(Unsecured Good, unless otherwise stated)

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

Good (Due from ACC Limited a Company under same ManagementRs. 2.98 crores 31.12.2007 - Rs. Nil) .......................................................... 231.84 164.99

Doubtful .................................................................................................. 9.41 9.57

Less : Provision ........................................................................................... 9.41 9.57

– –

231.84 164.99

Deposits Including National Savings Certificates Rs. 34,500/-, depositedwith Government Departments as Security (31.12.2007- Rs. 34,500/-) ................. 55.83 25.01

Balance with Central Excise, Customs, Port Trusts, etc. .......................................... 12.00 15.18

TOTAL ............................................................ 299.67 205.18

SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONSLIABILITIES

Sundry Creditors :

Dues of Micro, Medium and Small Enterprises (Refer Note 11) ...................... 0.40 0.20

Others .................................................................................................. 881.34 576.47

881.74 576.67

Investor Education and Protection Fund shall be credited by thefollowing (See note below ) *:

Unclaimed Dividends .................................................................................. 12.40 10.76

Unclaimed Application money on securities ................................................. 0.15 0.01

Unclaimed Interest (Rs.9,439/-)

Unclaimed sale proceeds of the odd lot shares belonging to the Shareholdersof erstwhile ACEL and ACRL ........................................................................ 2.99 3.06

15.54 13.83

Security Deposits ................................................................................................ 100.83 82.08

Interest accrued but not due on loans .................................................................. 6.66 5.67

As at As at31.12.2008 31.12.2007


Carried forward ............................. 1,004.77 678.25

BLACK 105 BLUE


PROVISIONS

Provision for wealth tax, net of advances .............................................................. 0.31 0.51

Provision for fringe benefit tax, net of advances (Rs.3,689/-) ................................. 0.01

Proposed Dividend ............................................................................................. 152.26 152.24

Provision for Dividend Distribution Tax ................................................................. 25.87 25.87

Provision for gratuity and staff benefit scheme ...................................................... 16.53 4.59

Provision for Compensated absence .................................................................... 41.79 32.36

Provision for mines reclamation expenses ............................................................ 9.96 8.15

Provision for Income tax, net of payments ............................................................ 223.84 266.31

470.56 490.04

TOTAL ............................................................ 1,475.33 1,168.29

* Note: Amounts to be transferred to said fund shall be determined on the respectivedue dates.

SCHEDULE 'M' - MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)

Project Development and Feasibility Report Expenses, etc. .................................... – 1.83

Quarry / Mines Development Expenses ............................................................... 4.28 3.89

Unexpired premium on pre payment of terms loans ............................................. – 0.39

Unexpired arrangement fees ............................................................................... – 0.11

TOTAL ............................................................ 4.28 6.22


SCHEDULE 'N' - OTHER INCOMEInsurance Claims ............................................................................................... 0.25 4.66

Dividend: income from investment - other than trade ........................................... 41.11 22.80

Profit / (Loss) on Sale of Current Investments (net) ................................................ 14.46 23.54

Interest Income : (Gross; Tax deducted Rs. 14.77 crores;31.12.2007 Rs. 10.54 crores)

On Debenture & Bonds ............................................................................... 4.91 5.05

On Fixed Deposits with Banks ...................................................................... 74.38 54.59

Others .................................................................................................. 14.64 16.46

93.93 76.10

Miscellaneous Income (Gross: Tax deducted Rs. 0.32 crore;31.12.2007 Rs. 0.18 crore) ................................................................................ 23.13 23.73

Surplus on Sale of Assets .................................................................................... 0.70 2.10

Provisions no longer required .............................................................................. 11.28 7.08

184.86 160.01

Exchange Rate Difference (net) ............................................................................ (9.33) 33.82

TOTAL ............................................................ 175.53 193.83

As at As at31.12.2008 31.12.2007


SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONS (Contd.)

Brought forward ............................. 1,004.77 678.25

BLACK 106 BLUE


SCHEDULE 'O' - MANUFACTURING AND OPERATING EXPENSES1 Raw Materials Consumed :

Clinker/ Cement Purchased ................................................................. 243.25 166.66

Others ................................................................................................ 379.58 316.47

622.83 483.13

2 Freight and Handling charges on interunit material transfer .......................... 208.25 162.69

3 Royalty and Cess ........................................................................................ 75.81 74.69

4 Stores and Spares Consumed ...................................................................... 221.00 162.43

5 Packing Materials Consumed ...................................................................... 211.58 184.29

6 Power and Fuel ........................................................................................... 1,325.77 1,020.23

7 Mines reclamation expenses ........................................................................ 1.82 2.96

8 Repairs and Maintenance :

Buildings ............................................................................................ 14.26 13.85

Machinery .......................................................................................... 68.16 53.19

Others ................................................................................................ 16.44 7.89

98.86 74.93

9 Excise duty:

On captive consumption of clinker ....................................................... 51.64 31.40

Other ................................................................................................. – 0.08

51.64 31.48

10 Employees' Remuneration and Benefits :

Salaries, Wages, Bonus, Allowances, etc. .............................................. 216.47 171.79

Contribution to Provident and other Funds ............................................ 38.31 23.61

Welfare Expenses ................................................................................ 12.04 9.52

266.82 204.92

Commission to Managing Director .............................................................. – 5.88

11 Other Administrative Expenses :

Rent .................................................................................................. 14.15 9.54

Rates and Taxes .......................................................................................... 7.49 2.66

Insurance .................................................................................................. 14.26 13.07

Advertisement and Publicity ......................................................................... 54.03 41.84

Freight and Forwarding charges [Including Rs. 5.85 crores on Export(31.12.2007 - Rs. 10.11 crores)] ................................................................. 1,029.20 973.44

Commission on Sale ................................................................................... 12.80 10.48

Discount on Sales ....................................................................................... 75.04 71.06

Selling and Distribution Expenses ................................................................. 25.42 28.79

Turnover Tax, Additional Tax and Purchase Tax ............................................. 7.92 9.08

Miscellaneous Expenses .............................................................................. 212.87 146.02

Directors' Fees and Expenses ....................................................................... 0.19 0.22

Commission to Non-executive Directors ....................................................... 0.87 0.84

Loss on Assets sold, scrapped or discarded and written off ............................ 4.26 6.91

Capital Projects written off (Refer note - 14) .................................................. 8.11 2.54

Donations .................................................................................................. 21.48 14.45

Bad Debts, Sundry Debit Balances and Claims written off ............................. 1.39 1.89

Provision for doubtful advances ................................................................... – 2.44

Provision for diminution in value of Investment ............................................. – 1.00

Part of Deferred Revenue expenditure, written off .......................................... 1.72 0.47

Wealth Tax ................................................................................................. 0.22 0.24


Carried forward ............................. 4,575.80 3,744.61

BLACK 107 BLUE


12 Variation in Stocks :

CLOSING STOCKS :

Materials-in-process ............................................................................ 119.98 85.94

Finished goods ................................................................................... 82.06 54.87

202.04 140.81

OPENING STOCKS :

Materials-in-process ............................................................................ 85.94 45.85

Finished goods ................................................................................... 54.87 44.92

140.81 90.77

(61.23) (50.04)

LIMESTONE :

Closing Stock ...................................................................................... 27.75 23.74

Opening Stock .................................................................................... 23.74 18.22

(4.01) (5.52)

(65.24) (55.56)

Less: Excise duty variation on opening / closing stock ................................... 0.92 1.97

Less: TRIAL RUN STOCKS

At the commencement of commercial production of Farakka& Roorkee unit .................................................................................... – 1.71

(Increase) / Decrease in Stocks .................................................................... (64.32) (51.88)

TOTAL ............................................................ 4,511.48 3,692.73

SCHEDULE 'P' - INTEREST AND FINANCE CHARGESInterest :

On Debentures and Bonds .......................................................................... 6.87 7.75

On Fixed Loans (including interest on Swap Rs. 1.90 crores;31.12.2007 - Rs. 8.10 crores) ..................................................................... 3.48 18.24

Others .................................................................................................. 21.70 53.74

32.05 79.73

Unexpired Premium on prepayment of term loan amortised ................................. 0.38 0.49

Finance Charges ................................................................................................ 0.24 1.69

32.67 81.91

Less: Capitalised during the year ......................................................................... (0.07) (4.82)

TOTAL ............................................................ 32.60 77.09

SCHEDULE 'Q' - EXCEPTIONAL ITEMSProfit on sale of Investment / Subsidiary / Associate (Refer Note 13 & 15) ............. 292.32 470.16

Profit on sale of property ..................................................................................... 10.99 325.36

TOTAL ............................................................ 303.31 795.52


SCHEDULE 'O' - MANUFACTURING AND OPERATING EXPENSES (Contd.)

Brought forward ............................. 4,575.80 3,744.61

BLACK 108 BLUE


SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS1. (A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

(i) The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards by Companies(Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(ii) The financial statements are based on historical cost convention and are prepared on accrual basis.

1. (B) SIGNIFICANT ACCOUNTING POLICIES :

(a) Principles of Consolidation:

(i) The consolidated financial statements of the Group have been prepared on the following basis:

a) The consolidated financial statements of the Group are prepared in accordance with Accounting Standard - 21 "ConsolidatedFinancial Statements" issued by ICAI.

b) The financial statements of the Company and its Subsidiary Companies have been consolidated on a line-by-line basis byadding together the book value of like items of assets, liabilities, income and expenses, after eliminating intra-group balancesand intra-group transactions resulting in unrealised profits or unrealised cash losses.

c) In cases where the financial year of Subsidiary Companies is different from that of the Company, the financial statements of thesaid companies have been drawn up so as to be aligned with the financial year of the Company.

d) The consolidated financial statements have been prepared using uniform accounting policies for like transactions and otherevents in similar circumstances and are presented, to the extent possible, in the same manner as the Company's separatefinancial statements.

e) The excess of cost of investment in the Subsidiary Companies over the company's portion of equity of the subsidiary at the dateof investment made is recognised in the financial statements as goodwill. This goodwill is tested for impairment at the close ofeach financial year. The excess of Company's portion of equity of the Subsidiary over the cost of the investment therein is treatedas Capital Reserve.

f) "The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have beenthose of the Company itself. Gains and losses arising from monetary items are recognised in the profit and loss account. Fornon-integral foreign operation, the assets and liabilities are translated at the closing rate. Income and expense items of the non-integral foreign operation are translated at exchange rates at the dates of the transactions and all resulting exchange differencesare accumulated in a foreign currency translation reserve on consolidation until the disposal of the net investment.

(ii) Companies considered in the consolidated financial statements are :

Name of the Company Country of Holding as on FinancialIncorporation 31.12.2008 Year ends on

a) Subsidiary:

Kakinada Cements Limited ...................................................... India 100.00% 31.12.2008

M.G.T. Cements Private Limited ............................................... India 100.00% 31.12.2008

Chemical Limes Mundwa Private Limited .................................. India 100.00% 31.12.2008

Sold during the year:

Ceylon Ambuja Cements (Private) Limited (CACPL) ................... Sri Lanka(Wholly owned subsidiary)

b) Sub subsidiary :

Sold during the year:

Midigama Cements (Private) Limited ........................................ Sri Lanka(Wholly owned subsidiary of CACPL)

(b) Other Accounting Policies :

(a) Fixed Assets:

(i) Fixed Assets are stated at their original cost of acquisition / installation (net of Modvat / Cenvat credit availed), net of accumulateddepreciation, amortization and impairment losses, except freehold land which is carried at cost.

(ii) Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet.

(iii) Machinery spares which can be used only in connection with a particular item of fixed asset and the use of which is irregular,are capitalised at cost net of Modvat / Cenvat.

(iv) Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition offixed assets) incurred on projects under implementation are treated as Pre-operative expenses, pending allocation to the assets,and are included under "Capital Work-in-Progress". These expenses are apportioned to fixed assets on commencement ofcommercial production.

(b) Depreciation and Amortization :

I. Tangible Assets :

(i) Premium on leasehold land is amortized over the period of lease.

(ii) Depreciation on all assets, other than Vehicles, is provided on the "Straight Line Method" in accordance with the provisionsof Section 205(2)(b) of the Companies Act, 1956, and on Vehicles on the "Written Down Value Method" in accordance withthe provisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIVto the Companies Act, 1956. Continuous process plants, are identified based on technical assessment and depreciated atthe specified rate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is providedon a pro-rata basis from the date of acquisition or installation, and in the case of a new project, from the date of

BLACK 109 BLUE


commencement of commercial production. Depreciation on assets sold, discarded, demolished or scrapped, is providedupto the date on which the said asset is sold, discarded, demolished or scrapped. In respect of an asset for which impairmentloss is recognised, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(iii) Machinery spares which are capitalised are depreciated over the useful life of the related fixed asset. The written downvalue of such spares is charged to the Profit and Loss Account, on issue for consumption.

(iv) The cost of fixed assets, constructed by the Company, but ownership of which belongs to Government / Local Authorities,is amortized at the rate of depreciation specified in Schedule XIV to the Companies Act, 1956.

(v) Expenditure on Power Lines, ownership of which belongs to the State Electricity Boards, is amortized over the period aspermitted in the Electricity Supply Act, 1948.

(vi) Expenditure on Marine Structures, ownership of which belongs to the Maritime Boards, is amortized over the period ofagreement.

II. Intangible Assets :

(i) Expenditure to acquire Water Drawing Rights from Government / Local Authorities / other parties, is amortized over theperiod of rights to use the facilities ranging from 10 to 30 years.

(ii) Expenditure on computer software is amortised over the period of expected benefit not exceeding five years.

(c) Impairment of assets :

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal /external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverableamount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discountedto the present value by using weighted average cost of capital. A previously recognised impairment loss is increased or reversed dependingon changes in circumstances.

(d) Investments :

Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments andare carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in thevalue of the investments. Investments other than long-term investments being current investments are valued at cost or fair value whicheveris lower, determined on an individual basis.

(e) Inventories :

(i) Coal, Fuel, Packing Materials and Stores & Spare Parts are valued at cost determined on weighted average basis or net realisablevalue, whichever is lower.

(ii) Raw Materials are valued at cost or net realisable value whichever is lower. Cost is determined on weighted average basis.

(iii) Materials-in-process are valued at cost or net realisable value, whichever is lower.(*)

(iv) Finished Goods are valued at cost or net realisable value, whichever is lower, including excise duty.(*)

(v) Trial Run Inventories are valued at cost or net realisable value, whichever is lower.(*)

(*) Cost is arrived at on full absorption basis as per Accounting Standard AS 2 - "Valuation of Inventories".

(f) Provisions / Contingencies :

A provision is recognised for a present obligation as a result of past events if it is probable that an outflow of resources will be requiredto settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of theamount required to settle the obligation at the Balance Sheet date. A contingent liability is disclosed, unless the possibility of an outflow ofresources is remote.

(g) Foreign Currency Conversion :

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

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical costdenominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from thoseat which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expensesin the year in which they arise.

(h) Revenue recognition :

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliablymeasured

(i) Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basis of dates of Bill ofLading. Sales are disclosed net of sales tax, discounts and returns, as applicable. Sales excludes self consumption of cement.

(ii) Benefit on account of entitlement to import goods free of duty under the "Duty Entitlement Pass Book under Duty Exemption Scheme"is accounted in the year of export.

(iii) Sales include the amount of Sales Tax / VAT remission entitlement due in accordance with the respective incentive schemes.

(iv) Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividendincome is recognised when right to receive the payment is established by the Balance Sheet date.

(i) Mines Reclamation Expenditure :

The Company provides for the expenditure to reclaim the quarries used for mining. The total estimate of reclamation expenses is apportionedover the estimate of mineral reserves and a provision is made based on the minerals extracted during the year.

Mines reclamation expenditure is incurred on an ongoing basis and until the closure of the mine. The actual expenses may vary based onthe nature of reclamation and the estimate of reclamation expenditure.

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

BLACK 110 BLUE



(j) Employee Benefits

(i) Defined Contribution Plan

Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, EmployeesState Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to theProfit & Loss Account of the year when the contributions to the respective funds are due.

(ii) Defined Benefit Plan

Retirement benefits in the form of Gratuity, Shipping staff gratuity, Post retirement medical benefit and Death & disability benefit areconsidered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit creditmethod, as at the date of the balance sheet.

Employee Benefit in form of contribution to Provident Fund managed by a Trust set up by the Company is charged to Profit and LossAccount as and when the contribution is due. The deficit, if any, in the accumulated corpus of the Trust at the period end for whichthe Company is liable, is recognised as a provision in the Profit and Loss Account.

(iii) Other long term benefits

Long term compensated absences are provided for on the basis of an actuarial valuation , using the projected unit credit method, asat the date of the Balance Sheet.

Actuarial gain / losses, if any, are immediately recognised in the Profit and Loss Account.

(k) Miscellaneous Expenditure :

Expenses included under the head 'Miscellaneous Expenditure' are amortized over the period of estimated future benefits.

(l) Employee Stock Compensation cost :

The Company measures compensation cost relating to employee stock option using the intrinsic value method. Discount on Equity Sharesas compensation expenses under the Employee Stock Option Scheme, is amortized in accordance with Securities and Exchange Board ofIndia (SEBI) Guidelines.

(m) Borrowing Costs and Share Issue Expenses :

(i) Share issue expenses for specific projects and borrowing cost attributable to acquisition and construction of assets are capitalised aspart of the cost of such assets upto the date when such assets are ready for intended use.

(ii) Expenses on other issue of Shares, Debentures and Bonds as well as Premium on Redemption of Debentures are adjusted to SecuritiesPremium Account in accordance with Section 78 of the Companies Act, 1956.

(iii) Borrowing cost such as discount or premium and ancillary costs in connection with arrangement of borrowings excluding debentureand bonds, are amortised over the period of borrowings.

(iv) Other borrowing costs are charged as expense in the year in which these are incurred.

(n) Taxation :

Tax expense comprises of current, deferred and fringe benefit taxes. Current income tax and fringe benefit tax is measured at the amountexpected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred income tax reflects the impact of currentyear timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred taxassets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against whichthese assets can be realised in future whereas in case of existence of carry forward of losses or unabsorbed depreciation, deferred taxassets are recognised only if there is virtual certainty of realisation backed by convincing evidence. Deferred Tax Assets are reviewed ateach Balance Sheet date.

(o) Assets given under finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals areapportioned between principal and interest on the IRR method. The principal amount received reduces the net investment in the lease andinterest is recognised a revenue. Initial direct cost such as legal costs, brokerage costs, etc. are recognised immediately in the Profit andLoss Account.

(p) Segment Reporting policies:

Identification of Segments:

The Company's operating businesses are organised and managed separately according to the nature of products and services providedwith each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographicalsegments is based on the areas in which major operating divisions of the Company operate.

Segment policies:

The Company prepares its segment information in conformity with the accouting policies adopted for preparing and presenting the financialstatements of the Compnay as a whole.

(p) Cash and cash equivalents in the Balance Sheet comprise cash at bank including fixed deposits, cheques in hand and cash in hand.


2. (a) Contingent liabilities not provided for in respect of :

(i) Bank Guarantee given to Mines & Geology Dept. Governmentof Rajasthan for setting up of Cement plant. ........................................... 2.00 –

(ii) Claims against the Company not acknowledged as debts

(a) Disputed liability relating to labour matters ..................................... 26.31 23.69

(b) For acquisition of land ................................................................... 32.87 28.61

(c) For Non Agriculture Assessment Tax ................................................ 2.65 2.65

(d) Others .......................................................................................... 30.41 18.26

BLACK 111 BLUE



(iii) Tax matters :

(a) Disputed liability in respect of Income-taxdemands (including interest) - matters under appeal ....................... 63.68 16.37

(b) Disputed Sales-tax demands (including interest and penalty) -matters under appeal

(i) Matter decided in favour of the Company by theHonourable High Court of Himachal Pradesh, against whichthe Department had filed a Special Leave Petition in theHonourable Supreme Court, since dismissed. .......................... 10.49 10.43

(c) Disputed Excise demands - matters under appeal (Deposit withExcise Department Rs. 0.40 crore, Previous Year Rs. 0.19 crore) ....... 16.55 10.06

(d) Disputed Customs demands - matters under appeal ........................ 2.22 1.74

(e) Disputed liabilities of RTO Tax on Mining Machinery ........................ 0.62 0.62

(iv) Disputed liabilities relating to Railway Freight on Cement - matter oncedecided in favour of the Company by the Honourable High Court ofGujarat was remanded back by the Honourable Supreme Court pursuantto an Special Leave Petition filed by the railways. ..................................... 5.51 5.51

(v) Disputed liabilities relating to Coal claims- matters pending in theHonourable High Court:

(a) Railway Freight on Coal ................................................................. 1.49 1.49

(b) Penal Freight on Excess Weight of Coal ........................................... 0.24 0.24

(c) Interest on Premium on Coal .......................................................... 3.29 3.29

In respect of items above, future cash outflows in respect of contingent liabilitiesare determinable only on receipt of judgements /decisions pending at variousforums / authorities.

(b) The Honourable High Court of Himachal Pradesh has passed an order in favourof the Company for its claim in respect of power subsidy in the form of PowerTariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this,Government of Himachal Pradesh on 1st May, 2004 has issued 296 5.13% H PInfrastructure Development Bonds of face value of Rs.10 lacs each, having a valueof Rs. 29.60 crores redeemable after 10 years and balance of Rs. 0.08 crore isrefunded to the Company.

The Government of Himachal Pradesh has filed Special Leave Petition in theHonourable Supreme Court against the decision of the Honourable High Courtof Himachal Pradesh. The Company has given an undertaking to refund Rs. 29.68crores paid by the State Government together with interest thereon upto the dateof final judgement in time bound manner, in the event that the matter is decidedagainst the Company. ................................................................................... 29.68 29.68

(c) The Government of Rajasthan has granted 75% exemption from Sales Tax inrespect of Rabriyawas unit. However, the eligibility of exemption in excess of 25%has been contested by the State Government in a similar matter of anotherCompany and the matter is pending before the Honourable Supreme Court. TheCompany has given an undertaking to the Government of Rajasthan that theCompany will deposit the differential amount of Sales Tax, in case the SupremeCourt’s decision goes against in the matter referred above. ............................ 82.16 82.16

(d) Writ petition filed against the order of Madhya Pradesh State Mining Departmentdemanding Rs. 4.76 crores towards payment of additional royalty on limestonebased on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced atits factory in Chhattisgarh. The matter is now pending before Honourable HighCourt at Bilaspur. .......................................................................................... 44.94 38.54

3. Estimated amount of Contracts remaining to be executed on Capital Account andnot provided for (net of advances) ......................................................................... 911.68 949.82

4. Segment reporting :

The Company has only one business segment 'Cement' as primary segment. Thesecondary segment is geographical, which is given as under:


(a) Revenue

Sales (Net of Excise Duty)

Within India ............................................................................................. 6,007.65 5,116.75

Outside India ............................................................................................. 254.14 601.85

TOTAL ................................................................................... 6,261.79 5,718.60


BLACK 112 BLUE



(b) Other Income

Within India ............................................................................................. 81.60 116.96

Outside India ............................................................................................. – 0.77

TOTAL ................................................................................... 81.60 117.73

(c) Assets

Within India ............................................................................................. 6,288.91 5,655.78

Outside India ............................................................................................. 47.63 84.78

TOTAL ................................................................................... 6,336.54 5,740.56

Cost incurred during the year to acquire tangible and intangible fixed assets.

Within India ............................................................................................. 507.61 732.37

Outside India ............................................................................................. – 1.19

TOTAL ................................................................................... 507.61 733.56

5. Related Party Disclosures :

a) List of Related Parties and relationships

Party Relation

A. Key Management Personnel

Mr. A. C. Singhvi ...................................................................... - (Previous year Managing Director Upto 30.04.2007)

Mr. A. L. Kapur ......................................................................... Managing Director (Whole-time Director

upto 30.04.2007)

Mr. P. B. Kulkarni ...................................................................... Whole-time Director

Mr. N. P. Ghuwalewala .............................................................. Whole-time Director

Mr. B. L. Taparia ....................................................................... Whole-time Director and Company Secretary

B. Relatives of Key Management Personnel

Mr. Ajay Kapur ......................................................................... Son of Mr. A. L. Kapur

Mr. Milind Kulkarni (Upto 8.8.2007) .......................................... Son of Mr. P. B. Kulkarni

C. Enterprises over which significant influence exercised by

(A) Directors

GACL Finance Ltd. ............................................................ Mr. N. S. Sekhsaria

Radha Krishna Bimalkumar Pvt. Ltd. .................................. Mr. Suresh Neotia

(C) Major Shareholders

Holderind Investments Ltd. Mauritius .................................. Major shareholder having significant influence

Holcim Ltd. ....................................................................... Holding Company of Holderind Investments Ltd.,

Mauritius

Ambuja Cement India Private Ltd. ...................................... Subsidiary of Holderind Investments Ltd, Mauritus

(Associate upto 30.4.2007)

Holderind BV .................................................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim CTC Trading Co. ................................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Trading Pte Ltd., Singapore .................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Group Supports Ltd. .............................................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Trading FZCO, Dubai ............................................ Fellow Subsidiary of Holderind Investments Ltd., Mauritius

PT Holcim Indonesia ......................................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (Asia) Ltd. ................................................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Services (South Asia) Ltd. ....................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Holcim Lanka Ltd. ............................................................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Ceylon Ambuja Cements Private Limited ............................ Fellow Subsidiary of Holderind Investments Ltd., Mauritius

Siam City Cement, Thailand .............................................. Fellow Subsidiary of Holderind Investments Ltd., Mauritius

St. Lawrence Cement Inc. Canada ..................................... Fellow Subsidiary of Holderind Investments Ltd., Mauritius

ACC Ltd. .......................................................................... Associate of Holderind Investments Ltd., Mauritius

ACC Concrete Ltd. ............................................................ Subsidiary of ACC Ltd. From 07.05.2007

ACC Nihon Casting Ltd. .................................................... Subsidiary of ACC Ltd.

ACC Machinery Company Ltd. .......................................... Subsidiary of ACC Ltd. upto 10.03.2008


BLACK 113 BLUE



b) Disclosures required for related parties transactions(Rs. in Crores)

Transactions Key Management Relatives of Enterprises over whichPersonnel Key Management significant influence

Personnel exercised by Directors,Key Management Personnel

and Major Shareholders

I. Transactions during the period

Purchase of Goods ............................................ – – 192.56

(–) (–) (111.85)

Sale of Goods ................................................... – – 238.84

(–) (–) (208.95)

Purchase of Fixed Assets .................................... – – 0.11

(–) (–) (34.13)

Sale of Fixed Assets ........................................... – – –

(–) (–) (1.05)

Sale of Investments ............................................ – – 589.33

(–) (–) (1,061.52)

Receiving of Services .......................................... – – 5.09

(–) (–) (0.98)

Remuneration ................................................... 9.22 0.53 –

(13.66) (0.35) (–)

Dividends Received ............................................ – – 0.00

(–) (–) Rs. 4,250

Other Recoveries ............................................... – – 0.40

(–) (–) (–)

Others Payments ............................................... – – 60.88

(–) (–) (22.09)

Equity contribution ............................................. – – –

(–) (–) (–)

Loans given ...................................................... – – –

(–) (–) (–)

II. Amounts Outstanding as at Balance Sheet date

Loans given Outstanding ................................... – – –

(–) (–) (–)

Amounts receivable ........................................... – – 53.23

(–) (–) (32.11)

Amounts payable .............................................. – – 19.83

(–) (–) (14.19)

Notes :

1. Related Party relationship is as identified by the Company on the basis of available information.

2. Figures for the previous year have been given in brackets.

BLACK 114 BLUE


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BLACK 115 BLUE




6. Earnings per Share (EPS) :

(i) Profit attributable to Equity Shareholders for Basic and Diluted EPS ............................ 1,389.71 1,846.11

Nos. Nos.

(ii) Weighted average number of shares for Basic EPS .................................................... 1,522,509,108 1,520,262,996

Add : Potential equity shares on exercise of option of ESOS ....................................... 462,811 2,957,963

Add : Potential equity shares on exercise of Rights and Warrants kept in abeyance out of the Rights issue in 1992 .............................................. 200,513 269,898

Weighted average number of shares for Diluted EPS ................................................. 1,523,172,432 1,523,490,857

Rs. Rs.

(iii) Nominal Value of Shares ......................................................................................... 2.00 2.00

(iv) Earnings Per Share :

Basic ...................................................................................................................... 9.13 12.14

Diluted ................................................................................................................... 9.12 12.12

7. Deferred Tax

Break up of Deferred Tax Assets & Liabilities are as under:

Deferred Tax Liabilities, on account of :Depreciation ........................................................................................................... 409.31 406.16Deferred Revenue Expenditure ................................................................................. – –

TOTAL .................................................................................................................... 409.31 406.16

Deferred Tax Assets, on account of :

Employee benefits ................................................................................................... 20.98 13.47

Provision for diminution in value of Investment ......................................................... – 6.69

Others .................................................................................................................... 7.58 7.62

TOTAL .................................................................................................................... 28.56 27.78

Net Deferred Tax Liabilities .............................................................................................. 380.75 378.38

8. Employee Defined Benefits:

a) Defined Contribution Plans -

The Company has recognised an expense of Rs. 32.82 crores. (31.12.2007- Rs. 18.55 crores) towards the defined contribution plans.

b) Defined Benefit Plans - As per Actuarial Valuation on 31st December, 2008.

Rs. in Crores

2008 2007




Funded Funded

I. Expense recognised in the Statement of Profit &Loss Account for the year ended 31stDecember, 2008

1 Current Service Cost ................................. 3.72 0.08 0.09 0.10 2.38 0.09 0.07 0.10

2 Interest Cost ............................................. 3.49 0.05 0.03 0.12 1.89 0.06 0.03 0.09

3 Employee Contributions ............................ – – – – – – – –

4 Expected Return on Plan Assets .................. (2.89) – – – (1.82) – – –

5 Actuarial (Gains) / Losses .......................... 16.48 0.07 (0.15) 0.73 6.02 (0.10) (0.16) (0.03)

6 Past Service Cost ....................................... – – – – – – – –

7 Settlement Cost ......................................... – – – – – – – –

8 Losses / (gains) on acquisition / divesture .. – – – – 2.47 – – –

9 Total Expense ............................................ 20.80 0.20 (0.03) 0.95 10.94 0.05 (0.06) 0.16

II. Net Asset / (Liability) recognised in the BalanceSheet as at 31st December, 2008

1 Present Value of DefinedBenefit Obligation ..................................... 63.21 0.74 0.33 2.29 42.39 0.68 0.35 1.33

BLACK 116 BLUE


2 Fair Value of Plan Assets ........................... 50.04 – – – 40.17 – – –

3 Funded Status [Surplus / (Deficit)] .............. (13.17) (0.74) (0.33) (2.29) (2.22) (0.68) (0.35) (1.33)

4 Net Asset / (Liability) as at31st December, 2008 ............................... (13.17) (0.74) (0.33) (2.29) (2.22) (0.68) (0.35) (1.33)

III. Change in Obligation during the Year ended31st December, 2008

1 Present value of Defined Benefit Obligationat the beginning of the year ...................... 42.39 0.68 0.36 1.34 25.95 0.91 0.42 1.18

2 Current Service Cost ................................. 3.72 0.08 0.09 0.10 2.38 0.09 0.07 0.10

3 Interest Cost ............................................. 3.49 0.05 0.03 0.12 1.89 0.06 0.03 0.09

4 Settlement Cost ......................................... – – – – – – – –

5 Past Service Cost ....................................... – – – – – – – –

6 Employee Contributions ............................ – – – – – – – –

7 Liabilities assumed on acquisition /(settled on divesture) ................................. – – – – 7.15 – – –

8 Actuarial (Gains) / Losses .......................... 16.67 0.07 (0.15) 0.73 7.81 (0.10) (0.16) (0.03)

9 Benefits Payments ..................................... (3.06) (0.14) – – (2.79) (0.28) – –

10 Present Value of Defined Benefit Obligationat the end of the year ................................ 63.21 0.74 0.33 2.29 42.39 0.68 0.36 1.34

IV. Change in Assets during the Year endedMarch 31, 2008

1 Plan Assets at the beginning of the year ..... 40.17 – – – 24.39 – – –

2 Assets acquired on amalgamationin previous year ........................................ – – – – 4.69 – – –

3 Settlements ............................................... – – – – – – – –

4 Expected return on plan assets .................. 2.89 – – – 1.82 – – –

5 Contributions by employer ........................ 9.85 0.14 – – 10.28 0.28 – –

6 Actual Benefit Paid .................................... (3.06) (0.14) – – (2.79) (0.28) – –

7 Actuarial Gains / (Losses) .......................... 0.19 – – – 1.78 – – –

8 Plan Assets at the end of the year .............. 50.04 – – – 40.17 – – –

9 Actual Return on plan assets ..................... 3.08 – – – 3.61 – – –

V. The major categories of plan assets as apercentage of total plan 2008 2007

Qualifying Insurance policy ................................ 100% 100%

VI. Effect of One percentage point change in theassumed Medical Inflation rate : 1% increase 1% decrease 1% increase 1% decrease

Increase / (Decrease) on aggregate serviceand interest cost ................................................ 0.08 (0.06) 0.04 (0.04)

Increase / (Decrease) on Present value of DefinedBenefit obligation as at 31st December, 2008 ..... 0.50 (0.40) 0.27 (0.22)

VII. Actuarial Assumptions:

1 Discount Rate ............................................ 5.90% p.a. 8.05% p.a.

2 Expected rate of return on plan assets ......... 7.50% p.a. 7.50% p.a.

3 Mortality .................................................... LIC (1994–96) mortality tables LIC (1994–96) mortality tables

4 Turnover rate ............................................. Age 21–44 –2%: Age 45 –57 : 1% Age 21–44 : 2%, Age 45 –57 : 1%

5 Medical premium inflation ......................... 5% p.a. 5% p.a.

6 Salary Escalation ....................................... 7% p.a. 7% p.a.

VIII. Provident Fund managed by a Trust set up by the Company

Pending the issuance of the Guidance Note from the Actuarial Society of India, the Company's actuary has expressed his inability toreliably measure the provident fund liability. The Company has recognised an expense of Rs. Nil (31.12.2007 - Rs. 0.20 crore)towards the deficit in the fund as at 31st December, 2008.

Rs. in Crores

2008 2007




Funded Funded


BLACK 117 BLUE


IX. Amounts recognized as an expense in respect of defined benefit plans as under :


a) Gratuity * ................................................................................................ 20.12 9.29

b) Shipping Staff Gratuity ............................................................................. 0.20 0.05

c) Post Retirement Medical Benefits ............................................................... 0.95 0.16

21.27 9.50

* Net of Rs. 0.68 crore (31.12.2007 Rs. 1.65 crores) capitalised as pre-operative Expenses.

c) Amount recognised as an expense in respect of Compensated Leave Absences is Rs 12.85 crores (31.12.2007 - Rs. 6.35 crores).

d) Basis used to determine expected rate of return on assets:

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of therelated obligation. The Gratuity Scheme is invested in a Group Gratuity-cum-Life Assurance cash accumulation policy offered by LifeInsurance Corporation (LIC) of India. The investment return earned on the policy comprises bonuses declared by LIC having regard to LIC'sinvestment earnings. The information on the allocation of the fund into major asset classes and expected return on each major class arenot readily available. We understand that LIC's overall portfolio of assets is well diversified as such, the long-term return on the policy isexpected to be higher than the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policieshave been higher than Government bond yields. As such, the expected return on assets assumption is taken by adding a margin of 0.50%on the current market yield on the Central Government bonds (of term consistent with the terms of liabilities).

e) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevantfactors, such as supply and demand in the employment market.

f) The Company expects to contribute Rs. 13.00 crores to Gratuity Fund in the year 2009.

g) Amount for the current and previous two periods ar as follows :


i) Gratuity - FundedDefined benefit obligation ............................................................................... 63.21 42.39Plan assets ...................................................................................................... 50.04 40.17Surplus / (deficit) ............................................................................................. (13.17) (2.22)Experience adjustments on plan assets ............................................................. 4.48 9.73Experience adjustments on plan liabilities ......................................................... 0.19 1.79

ii) Gratuity - Non FundedDefined benefit obligation ............................................................................... 0.74 0.68Plan assets ...................................................................................................... – –Surplus / (deficit) ............................................................................................. (0.74) (0.68)Experience adjustments on plan assets ............................................................. (0.03) (0.08)Experience adjustments on plan liabilities ......................................................... – –

iii) Death and Disability Scheme (Shipping Staff)Defined benefit obligation ............................................................................... 0.33 0.35Plan assets ...................................................................................................... – –Surplus / (deficit) ............................................................................................. (0.33) (0.35)Experience adjustments on plan assets ............................................................. (0.18) (0.16)Experience adjustments on plan liabilities ......................................................... – –

iv) Post Retirement Medical Benefit (PRMB)Defined benefit obligation ............................................................................... 2.29 1.33Plan assets ...................................................................................................... – –Surplus / (deficit) ............................................................................................. (2.29) (1.33)Experience adjustments on plan assets ............................................................. (0.02) –Experience adjustments on plan liabilities ......................................................... – –

9. Employee Stock Option Plans :

a) The Company has provided various share based payments to its employees. During the year ended December 31, 2008, the followingschemes were in operation:

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2007 2007 2008

a) Date of grant ........................................... 13.11.2000 19.10.2001 24.10.2002 21.1.2004 10.3.2005 7.11.2005 7.6.2007 1.7.2008 1.7.2008

b) Date of Board Approval ............................ 8.8.2000 3.8.2001 20.8.2002 31.7.2003 23.7.2004 24.6.2005 11.1.2007 11.1.2007 1.7.2008

c) Date of Shareholders Approval ................. 6.10.2000 5.10.2001 11.10.2002 6.10.2003 18.10.2004 10.10.2005 26.3.2007 26.3.2007 22.4.2008

d) Number of options granted ....................... 970,700 711,100 815,800 864,600 812,325 873,075 7,386,750 111,150 7,384,300

e) Method of Settlement (Cash / Equity) ......... Equity Equity Equity Equity Equity Equity Equity Equity Equity

f) Vesting period from the date of ................. Equally 1 year 1 year 1 year 1 year 1 year 1 year 1 year 1 yearGrant ...................................................... in 4 years

g) Exercise Period from the date of ................ Equally 5 years 5 years 5 years 4 years 4 years 4 years 4 years 4 yearsVesting ..................................................... in 4 years


BLACK 118 BLUE


b) The details of activity under the ESOP schemes have been summarised below :

2008 2007

Number of Weighted Number of Weighted

Particulars Shares Average Exercise Shares Average Exercise

price (Rs.) price (Rs.)

a) Outstanding at the beginning of the year ................. 9,692,013 97.90 8,216,938 57.03

b) Granted during the year ......................................... 7,495,450 113.00 7,386,750 113.00

c) Forfeited during the year ......................................... 635,000 95.12 255,550 113.00

d) Exercised during the year ........................................ 219,502 56.72 5,546,832 58.30

e) Expired during the year ........................................... 73,875 22.13 109,293 19.96

f) Outstanding at the end of the year .......................... 16,259,086 91.58 9,692,013 97.90

g) Exercisable at the end of the year ............................ 9,129,936 99.06 2,560,813 55.87

h) Weighted average remaining contractuallife (in years) .......................................................... 3.62 – 3.89 –

The weighted average share price at the date of exercise for stock options was Rs. 59.32 (31.12.2007 Rs. 135.27)

The weighted average share price for the period over which stock option were exercised was Rs. 101.18 (31.12.2007 Rs. 130.70)

c) The details of exercise price for stock options outstanding at the end of the year ie. 31st December, 2008

2008 2007

ESOP Plans Number of Weighted Weighted Number of Weighted Weightedoptions average average options average average

outstanding remaining exercise outstanding remaining exercisecontractual price (Rs. contractual price (Rs.

life of options per share of life of options per share of(in years) Rs. 2 each) (in years) Rs. 2 each)

2000-01* ......... 35,425 0.87 18.40 35,900 1.87 18.40

2002-03* ......... – – – 12,000 0.81 22.13

2003-04* ......... 32,550 1.05 41.33 39,650 2.06 41.33

2004-05* ......... 105,450 1.19 59.07 110,175 2.19 59.07

2005-06# ........ 193,350 1.85 69.60 215,575 2.85 69.60

2007 ................ 6,862,500 3.43 113.00 7,131,200 4.44 113.00

2007 ................ 92,950 4.50 82.00 – – –2008 ................ 7,036,200 4.50 82.00 – – –

* one option represents 7.5 equity shares.

# one option represents 5 equity shares.

d) Stock Options granted

The weighted average fair value of stock options granted for the year was Rs. 16.95 (31.12.2007 Rs. 29.28). The Black Scholes valuationmodel has been used for computing the weighted average fair value considering the following inputs:

Variables 2008 2007

Grant date ....................................................................................................... 01.07.2008 07.06.2007

Market Price (Rs. per share) on the date of grant ....................................................... 73.00 109.55

Volatility ....................................................................................................... 35.94% 33.73%

Risk free rate ....................................................................................................... 7.02% 7.89%

Exercise price in Rs. ................................................................................................. 82.00 113.00

Time to Maturity ...................................................................................................... 3 3

Dividend yield ....................................................................................................... 2.58% 2.22%

Option fair value (Rs. per share) .............................................................................. 16.95 29.28

e) Effect of the employee share based payment plans on the profit and loss account and on its financial position:

Particulars 2008 2007Rs. in Crores Rs. in Crores

Total Employee Compensation Cost pertaining to share based payment plans ........... – –

Compensation cost pertaining to equity settled employee share based paymentplan included above ............................................................................................... – –

Liability for employee stock options outstanding as at year end ................................. 0.34 0.38

Deferred Compensation Cost .................................................................................. – –


BLACK 119 BLUE


f) Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair valuebased method is as under :

Particulars 2008 2007Rs. in Crores Rs. in Crores

Profit as reported .................................................................................................... 1,389.71 1,846.11

Add : Employee stock compensation under intrinsic value method ............................. – –

Less: Employee stock compensation under fair value method .................................... 15.10 11.84

Proforma profit ....................................................................................................... 1,374.61 1,834.27

Earning per share (Rs.)

Basic :

– As reported ..................................................................................................... 9.13 12.14

– Proforma ....................................................................................................... 9.03 12.07

Diluted :

– As reported ..................................................................................................... 9.12 12.12

– Proforma ....................................................................................................... 9.02 12.04

10. Capital Work-in-Progress includes (a) Machinery in Transit Rs. 3.03 crores (31.12.2007- Rs.2.94 crores) and (b) expenditure during constructionfor project Rs. 80.02 crore (31.12.2007 - Rs. 41.17 crores).

11. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of thesuppliers as defined under the 'Micro, Small and Medium Enterprises Development Act, 2006'. Principal amount overdue and interest amountthereon payable to Micro, Small and Medium Enterprises as on 31st December, 2008, is Rs. 0.17 crore (31.12.2007 -Rs. Nil) and Rs. 0.09 crore (31.12.2007 - Rs. Nil) respectively.

12. Pursuant to the implementation of SAP ERP system during the year, the Company has changed its inventory valuation method from annualweighted average to daily moving weighted average for its items procured and monthly moving weighted average in case of material in processand finished goods. As a result profit for the year ended 31st December, 2008 is higher by Rs. 83.40 crores.

13. The Company held 6,76,36,340 ordinary shares of Ceylon Ambuja Cements Private Limited (CACL) (including 1,72,22,500 shares acquiredduring the year) at a cost of Rs. 35.82 crores. In the previous year the Company has recognised a provision for diminution in the value of theseinvestments of Rs. 29.54 crores. During the year the Company has sold its shareholding in CACL for a sale consideration of Rs. 0.42 crore andrecognised a loss of Rs. 0.91 crore. Consequently, CACL and its subsidiary Midigama Cements (Private) Limited ceased to be subsidiaries ofthe Company w.e.f. 2nd June, 2008.

14. During the year the Company has written off pre-operative expenses incurred on certain capital projects and the temporary structure amountingto Rs. 8.11 crores (31.12.2007 - Rs. 2.54 crores).

15. In accordance with the Put and Call option agreement entered into with Holderind Investments Limited, the Company has sold during the yearthe remaining 9,53,75,000 (31.12.2007 - 19,07,50,000) equity shares of Ambuja Cement India Private Limited for a consideration ofRs. 588.91 crores (31.12.2007 - Rs. 1062.52 crores) and recognised a profit of Rs. 293.23 crores (31.12.2007 - Rs. 470.16 crores).

16. The Company's subsidiary Cement Ambuja International Limited (CAIL), Mauritius has initiated the voluntary winding up proceedings under theCompany Act, 2001, Mauritius and has repaid the outstanding paid-up capital and accumulated reserves to the Company during the previousyear ended 31st December, 2006. CAIL is in the process of seeking necessary regulatory approvals to complete the liquidation, pending whichthe Company continues to be a member of CAIL.

17. The company is carrying out its Corporate Social Responsibility (CSR) activities through Ambuja Cement Foundation (ACF), and was during theyear running the schools at plant locations through the Ambuja Educational Institute (AEI), charitable organisations registered under Section 25of the Companies Act. The Company has contributed Rs. 18.21 crores (31.12.2007 Rs. 11.61 crores) and Rs. 1.59 crores (31.12.2007 Rs.1.40crores) to ACF and AEI respectively.

18. Figures less than Rs. 50,000/- have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded offto the nearest lac.

19. Figures of the previous year have been regrouped wherever necessary to conform to the current year’s presentation.




Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti













Signatures to Schedules ‘A’ to ‘R’

BLACK 120 BLUE


INFORMATION WITH REGARD TO SUBSIDIARY COMPANIES(Required to be disclosed in the Annual Report Pursuant to letter No. 47/568/2008-CL-III dated 04.12.2008 of

the Ministry of Company Affairs, exempting the Company from attaching the Annual Reports and otherparticulars of its Subsidiary Companies u/s 212 of the Companies Act, 1956.)

Rs. in Crores

Name of Subsidiary Company M.G.T. Cements Chemical Limes Kakinada Cements(Private) Limited Mundwa Limited

(Private) Limited

Financial Year ends on 31/12/2008 31/12/2008 31/12/2008

Share Capital 0.75 0.14 0.05

Reserves & Surplus (0.35) (1.61) (0.03)

Total Assets 0.50 0.21 0.02(Fixed Assets + Investments + Current Assets)

Total Liabilities 0.10 1.68 0.00(Debts + Current Liabilities)

Investments – – –(excluding investments in subsidiary companies)

Turnover – – –

Profit before Taxation (0.00) (1.34) (0.00)

Provision for Taxation – – –

Profit after Taxation (0.00) (1.34) (0.00)

Proposed Dividend – – –

alok

graphics



Paul Hugentobler

Onne van der Weijde

Shailesh Haribhakti










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