CONTENTS

Chairmans Letter Five Year Performance I Can Some Highlights Directors Report and Management Discussions & Analysis Annexures to Directors Report : i. ii. Conservation of Energy & Technology Absorption Employees Particulars

4 7 8 16

37 41 45 61 64 94 95 120

Corporate Governance Report Auditors Report Financial Statements Balance Sheet Abstract Consolidated Accounts with Auditors Report Information with regard to Subsidiary Companies

AMBUJA CEMENTS LTD.

BOARD OF DIRECTORS
Mr. Suresh Neotia,
Chairman Vice Chairman

Mr. N. S. Sekhsaria, 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) (w.e.f. 9/1/2009)

Mr. Onne van der Weijde, Mr. Omkar Goswami Mr. Naresh Chandra, Mr. A. L. Kapur,

(w.e.f. 26/7/2008)

Managing Director Whole-time Director (upto 31/1/2009) Whole-time Director

Mr. P. B. Kulkarni,

Mr. N. P Ghuwalewala, . 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

AMBUJA CEMENTS LTD.

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.

AMBUJA CEMENTS LTD.

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

AMBUJA CEMENTS LTD.

FIVE YEAR PERFORMANCE

Rs. in Crore 2004 2005 2006 (18 Months) Sales Operating Profit Cash Profit Profit before Tax Profit after Tax Gross Block Net Worth Debt Cash EPS (Rs.) EPS (Rs.) Dividend (%) Capacity - Million Tons Production - Million Tons 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) 1968 587 509 384 337 3782 2013 1270 28 19 80 12.86 10.37 2606 799 714 519 468 3827 2172 1127 5.28 3.46 * 90 ** 13.30 12.80 6268 2247 2168 1842 *** 1503 5177 3484 865 14.29 10.09 * 165 16.30 22.63 5705 2239 2163 2712 *** 1769 5928 4655 330 14.26 11.61 * 175 18.50 16.86 6235 1954 1922 1970 *** 1402 7654 5669 289 12.62 9.21 * 110 22.00 17.75 2007 2008

AMBUJA CEMENTS LTD.

DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

Dear Members,

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.

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

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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 pentup demand from the previous quarter, and may not be sustainable.

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

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

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 Sales (net of excise duty) Profit before Interest and Depreciation Less: Interest Gross Profit Less: Depreciation Profit before Tax Provision for Tax Profit after Tax Add: Balance brought forward from previous year Add: Credit Balance of Profit & Loss Account as on 01.07.2005 of erstwhile INSCL Profit available for appropriation Appropriations: Debenture Redemption Reserve (Net) Transfer from Exchange Fluctuation Reserve on cessation of subsidiary General Reserve Dividend on Equity Shares (including interim) Corporate Dividend Tax 1000.00 334.97 56.92 391.89 Balance carried forward 358.58 1750.47 1100.00 532.65 90.52 623.17 348.20 2041.37 5.72 1000.00 334.97 56.92 391.89 675.84 2073.45 1100.00 532.65 90.52 623.17 683.74 2376.91 (30.00) (30.00) 1750.47 0.21 2041.37 2073.45 0.21 2376.91 6234.65 2261.66 32.06 2229.60 259.76 1969.84 567.57 1402.27 348.20 31.12.2007 5631.36 3024.54 75.85 2948.69 236.34 2712.35 943.25 1769.10 272.06 31.12.2008 6261.79 2250.34 32.60 2217.74 260.10 1957.64 567.93 1389.71 683.74 31.12.2007 5718.60 3103.63 77.09 3026.54 237.18 2789.36 943.25 1846.11 530.59

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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.

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

KEY NUMBERS (STANDALONE)

l

Cement production up 5%, at 17.8 million tonnes.

Domestic cement sales up 9%, at 16.8 million tonnes.

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

Average Net Sales Realisation up 5%, at Rs. 3,544 per tonne.

Net Sales up 11%, at Rs. 6,235 crore. EBITDA down 12%, at Rs. 1,833 crore. Profit before Tax down 27%, at Rs. 1,970 crore. Net Profit down 21%, at Rs. 1,402 crore. Exceptional Income Rs. 308 crore compared to Rs. 786 crore in 2007.

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"

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

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 communities 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. All 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 Domestic Export Total - India 159.7 4.2 163.9 2008 173.9 2.9 176.8 % 9 -31 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 Demand Ambuja Volume Share (%) 2007 32.3 6.1 18.8 2008 34.4 6.2 18.1 % 7 3

* 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 twomonth 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
AMBUJA CEMENTS LTD. 20

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 Demand Ambuja Volume Share (%) 2007 19.2 2.2 11.5 2008 21.1 2.6 12.4 % 10 19

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

* 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 Demand Ambuja Volume Share (%) 2007 31.3 6.2 19.9 2008 33.8 6.9 20.3 % 8 11

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 completion 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.

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

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-disciplinary 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 alignment 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.

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

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

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
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of being expanded to cope with anticipated future demand growth. Three new vessels are in the pipeline, for delivery in 2009-2010.

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

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.

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

RISKS AND AREAS OF CONCERN

Energy Costs Coal remains the single most important input factor, both for the kilns and captive power plants,

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.
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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 its environmental and social performance. Last year, the Company produced its first 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

AMBUJA CEMENTS LTD.

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(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 CO 2. 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.
26

AMBUJA CEMENTS LTD.

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.

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 effectiveness of its social interventions simultaneously determining the location specific

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

SES being conducted

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 its varied community development initiatives, the ACF reaches out to
27

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

AMBUJA CEMENTS LTD.

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 collective 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

Refresher training of VHFs

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,

SHG meeting in progress

mason training programs were devised and

AMBUJA CEMENTS LTD. 28

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

SEDI, Darlaghat, theory class in progress

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.
Lush green farms

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.

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

While enhancing the lives of rural communities, sustainability can best be achieved with proper management and conservation of natural resources

harvesting structures, ACF partnered with the State Government on the Jalswarajya Project to make potable water available to the villages of Chandrapur.
29

AMBUJA CEMENTS LTD.

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.
A check dam in Chandrapur

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.

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 agrobased livelihoods are made profitable, over a period

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.
30

AMBUJA CEMENTS LTD.

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. 2. 3. 4.

Risk-free interest rate - 7.02%. Expected life of the option - 3 years. Expected volatility - 35.94%. 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 Mr. P B. Kulkarni . Mr. N. P Ghuwalewala . Mr. B. L. Taparia Mr. David Atkinson Mr. J. C. Toshniwal Mr. S. N. Toshniwal Mr. R. R. Darak Mr. Anil Kaul Mr. H. S. Patel 325000 200000 125000 100000 100000 70000 50000 41500 24900 41500 1077900 Other employees have been granted 63,06,400 options. The details of options granted to other employees are: Total number of employees Total number of options granted Max. number of options granted Min. number of options granted Avg. number of options granted 2922 6306400 29000 300 2158

1,15,700 stock options have been reserved to be granted to the SAP core team later.
31

AMBUJA CEMENTS LTD.

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 a. b. Options granted The pricing formula 20164450 2008, SAP 2007 & 2007 2004-05 & 2005-06 The exercise price was determined by averaging the daily closing price of the company's equity shares during 7 (seven) days on the National Stock Exchange immediately preceding the grant. The exercise price was determined by averaging the daily closing price of the company's equity shares during 15 (fifteen) days on the National Stock Exchange immediately preceding the grant. The exercise price was determined by averaging two weeks' High and Low price of the company's equity shares on the National Stock Exchange immediately preceding the grant. The exercise price was the average of the daily closing price of equity shares of the company on the Stock Exchange, Mumbai during the period of 30 (thirty) days immediately preceding the date on which the options were granted. Particulars

2003-2004

1999-2000 to 2002-2003

c. d. e. f. g. h. i. j.

Options vested Options exercised The total number of shares arising as a result of exercise of options Options lapsed / surrendered Variation of terms of option Money realised by exercise of options. Total number of options in force Details of options granted/ exercised by the Managing Director and Whole-time Directors 1. Mr. A. L. Kapur 2. Mr. P. B. Kulkarni 3. Mr. N. P. Ghuwalewala 4. Mr. B. L. Taparia Any other employee who received a grant in any one year of option amounting to 5% or more of options granted during that year

11769175 4515475 Total number of shares arising as a result of exercise of options shall be 3,22,76,170 shares of Rs. 2 each. 645700 Rs.113.51 crore 14358425 No. of options granted 855000 745000 375000 410000 Nil No. of options exercised 240250 295000 75000 135000 Nil

k.

Employees who were granted options during any one year, equal to or exceeding 1% of the issued capital of the company at the time of grant. Diluted earning per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard AS-20.

NIL

l.

2003-04 m. Weighted average exercise price of options Weighted average fair value of options 310* 67.44*

2004-05 443* 96.73*

2005-06

2007

2007

2008

69.60** 113** 82** 82** 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.
AMBUJA CEMENTS LTD. 32

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.

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

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 instituted 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

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.
33

AMBUJA CEMENTS LTD.

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 ii)

applicable accounting standards have been followed along with proper explanations relating to material departures. 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

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. M/s. P M. Nanabhoy & Co., Cost Accountants, . have been appointed Cost Auditors of the company for the year 2009. as Auditors and to fix their remuneration.

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

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

AMBUJA CEMENTS LTD.

34

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.

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.

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. 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.

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,

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.

35

AMBUJA CEMENTS LTD.

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

Second Prize

a)

Injury Rate Performance

b) Explosives Director General mines safety (Ministry of Labour & Mines, Govt. of India) Awarded the first prize to our Rabriyawas Mine (Ras Lime Stone Mine)

CII and Godrej Green Business Centre awarded National Award for Excellence in Water Management 2008 - "Excellent Water management Initiative - Beyond the Fence"

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.

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 Second Prize Afforestation a) Top Soil Management

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.

b) Air Quality Management Third Prize a) Management of Minerals and Sub-Grade Minerals

b) Water Quality Management c) Overall Performance.

For and on behalf of the Board,

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 Suresh Neotia Chairman Mumbai, 6th February, 2009

AMBUJA CEMENTS LTD.

36

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. 2. 3. 4. 5. 6. 7. 8. 9. Optimized Air requirement for Boiler Operation, Instead of two blowers, made a single blower operating for two Boilers (Ambujanagar). In CPP for steam condensing air cooled condenser is installed. Modified profile blade was replaced in one out of , six fans (Ambujanagar). Optimized Compressor outlet air pressure from 8.0 kg/cm2 to 5.5 kg/cm2 as per the requirement of instrument (Ambujanagar). Cooling tower fan blade angle was reduced from 10 to 6 based on relative humidity and change in water temperature (Ambujanagar). Optimization of Plant Lighting and installation of Energy efficient devices for plant & colony lighting (Ambujanagar, Ropar, Sankrail, Bhatinda). Optimized the grinding chamber length of the cement mills (MCW, Rabriyawas) Trimming of coal mill fan impeller by approx. 140 mm (Suli) Optimization of grinding media charge in Cement Mills (Suli, Ropar) 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. 2. 3. 4. Replacement of Gypsum Pre-grinder for Cement Mills (Ambujanagar). Replacement of cooler fan with more efficient fans (Ambujanagar). Modification / Installation of improved Fine coal feeding system (Ambujanagar and Rabriyawas). 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. 6. 7. 8. 9. Optimization of kiln & cooler by fuzzy control & various optimization measures (MCW). Replacement of triple gate with Rotary Air lock, and installation of rubber seals of improved design in Raw Mills (Suli). Conversion of low pressure compressors with high pressure compressors in flyash dense phase system (Suli). Pre-heater fan inlet duct modification to reduce gas velocity and thus power consumption (Suli). 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).
AMBUJA CEMENTS LTD. 37

ANNEXURE - I (Contd.)
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 2008 2009 Investment 3.17 18.60 (Proposed) Savings 11.47 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 ABSORPTION
Efforts 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 (12 months) (Rs. in crores) Used* Earned** * Excluding repayment of borrowings Rs. 117.09; Previous year Rs. Nil. 976.86 229.80 Previous Year (12 months) (Rs. in crores) 596.65 265.65

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

AMBUJA CEMENTS LTD.

38

FORM A
(See Rule 2) Form for Disclosure of Particulars with respect to Conservation of Energy

A. POWER & FUEL CONSUMPTION

Current Year 31.12.2008 1. Electricity : (a) Purchased Units (Crores kwh) Total amount (Rs. in Crores)* Rate / Unit-kwh (Rs.) (b) Own Generation (i) Through Liquid Fuel Generator Net Units (Crore kwh) Unit (kwh) / Ltr. of LDO / Furnace oil LDO / Furnace oil-Cost / Unit Generated (Rs. / kwh) (ii) Through Steam Turbine / Generator Units (Crore kwh) # Unit (kwh) / Tonne of Fuel (Coal / Rice Husk) Oil / Gas / Coal - Cost / Unit ( Rs. / kwh) 2. Coal & Other Fuels : Quantity (Million K. Cal) Total Cost (Rs. in Crores) Average Rate (Rs. / Million K.Cal) 3. Light Diesel Oil / High Speed Diesel / Furnace Oil : Quantity (K.Ltrs.) Total Cost (Rs. in Crores) Average Rate (Rs. / K.Ltr.) 4. Others / Internal Generation : Quantity Total Cost Rate / Unit NIL NIL NIL NIL NIL NIL 1703.09 5.99 35152 1480.21 4.31 29138 8560182 701 818.64 8618902 518 601.42 97.35 979 2.60 76.03 881 2.06 21.19 4.06 5.83 40.33 4.21 3.86 35.80 138.14 3.86 30.91 111.77 3.62 Previous Year 31.12.2007

B. CONSUMPTION PER UNIT OF PRODUCTION

Industry Norms Electricity (KWH / T. of Cement) ** LDO / HSD (Ltr. / T. of Clinker) Coal & Other Fuels (K.Cal / Kg. of Clinker) * 100 N.A. 800 Current Year 31.12.2008 86.3 0.15 744 Previous Year 31.12.2007 84.6 0.13 742

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)

AMBUJA CEMENTS LTD.

39

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) b) c) d) 4. Evaluation and application of special Refractory suitable to use with alternate fuel. Beneficiation of phospho gypsum from fertilizer plant to make it usable for cement manufacturing. Evaluation of various alternate fuels for their suitability to clinker manufacturing and power generation process. Installation of handling and preparation systems for such fuels. Installation of various process and quality monitoring instruments are planned to optimize processes and improve product quality.

Expenditure on R & D : Current Year 31.12.2008 (Rs. in lacs) A. B. C. D. Capital expenditure Recurring expenditure Total expenditure Total R & D expenditure as a percentage of total turnover 53.74 24.49 78.23 0.01% Previous Year 31.12.2007 (Rs. in lacs) 2.00 64.00 66.00 0.01%

B. TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION

1. Efforts, in brief, made towards Technology Absorption, Adaption and Innovation : a) b) Installation of Dalog system for Raw Mill gear box monitoring in plants. 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) b) The Dalog system for Raw Mill gear box monitoring imported in 2008. The online balancer for PH fan in 2008.

AMBUJA CEMENTS LTD.

40

ANNEXURE - II
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/ Nature of Duties Remuneration (Rupees) Qualifications Experience (years) Date of Commencement of Employment Last Employment Last Designation

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 & Corp. Strategies) General Manager (Accounts) Chief Financial Officer President (Accounts & IT) 3,252,274 B.Com., C.A., I.C.W.A. 14 19/02/1996 Parag Parikh Financial Advisory Services Ltd., Asst. Manager De-Nocil Crop Protection Ltd., Controller of Accounts Holcim Ltd., Regional Controller W. H. Brady & Co. Ltd., Chief Accountant-cumAsst. Secretary Torrent Lab Pvt. Ltd., Marketing Officer Indokem Ltd., Vice President (Finance) Raymond Woollen Mills, Assistant Tata Electric Co. Ltd., Manager (Civil) Modi Cement, General Manager Real Value Appliances Ltd., Dy. General Manager (Taxation) Tata Iron & Steel Co. Ltd. (Cement Division), Asst. Manager (Marketing) Birla Corporation Ltd., Whole-time Director Vasavadatta Cement, Sr. General Manager (PP) Century Shipping, Century Textile & Industries Ltd., Marine Manager Amforge Group, Vice President & Co. Secretary Gujarat Ambuja Cements Ltd., General Manager (Tech.) Birla Cement Works, Chief Chemist Vam Organic Chemicals Ltd., Vice President (Commercial) Ambuja Cement Eastern Ltd., Vice President (Finance) Hindustan Lever Ltd., Marketing & Dist. Manager Citi Bank, Assistant Manager Birla Corporation Ltd., Executive Director & CEO Floatglass India Ltd., Deputy Director (Sales & Marketing) Reliance Industries Ltd.,

2. 3. 4.

Anjaria R.P (47) . Atkinson D.* (51) Darak R.R. (52)

3,119,487 20,002,942 7,365,743

B.Com., C.A., C.S. B.A.(Hons.), F.C.M.A. B.Com., F.C.A., A.C.S., C.M.A., DISA (ICA) B.E. (Chem.), M.B.A. (Marketing) B.Com., A.C.A. B.Com., D.A. & P .R., Dip. in Journalism B.Tech., M.Tech. B.E. (Electrical) B.Com., LL.B., F.C.A.,

25 28 29

11/09/2000 01/09/2007 16/10/1985

5. 6. 7. 8. 9.

Desai A.R. (47) Deshpande A.V. (43) Deshpande V. V. (51) Dordi C.M.* (61) Duggal S. (46)

Marketing Head (East) Asst. Vice President Sr. Vice President (Brand & Promotion) Cust. Support Group Head-West & Export Jt. President Vice President (Harp & Taxation) Asst. Vice President (Marketing) Whole-time Director Sr. Vice President (Power Projects) Jt. President (Ports & Shipping) Jt. President (Legal) Sr. Vice President (Projects)

5,902,063 3,324,951 4,804,375 2,540,000 4,268,520 5,169,085

26 21 31 32 24 21

18/06/1987 18/07/2006 21/09/1987 14/05/1994 07/09/1992 03/07/2000

10. Gangal G. (43)

11. Ghosh A. (55)

2,874,053

B. Com. (Hons.)

31

22/10/1999

12. Ghuwalewala N. P (64) .* 13. Gupta A. (58) 14. Gupta S.K. (48)

19,994,303 3,533,151 6,982,597

B.Chem., M.Phil. B.Sc. (Engg.), Mech. Master Mariner (Foreign Going) B.Com., LL.M., F.C.S. B.E. (Production)

39 36 30

28/06/2004 16/11/2000 08/02/1993

15. Hariharan G. (55) 16. Hirpara M.M. (57)

4,572,622 4,050,635

36 33

15/01/2001 04/12/1993

17. Jagetiya B.K. (55) 18. Jain J. (42) 19. Jalpota S.R. (56) 20. Joshi S. (47) 21. Kampani R. J.* (68) 22. Kapur A. (43) 23. Kapur A.L.* (74) 24. Kaul A. (58) 25. Khajanchi S.K. (37)

Vice President (Sanand G.Unit) Asst. Vice President (Comm) Sr. Vice President (Comm) Head of Corporate Controlling Advisor (Commercial) Head - Marketing & Commercial Services Managing Director Marketing Head (North) Regional Controller, West Region Dy. General Manager (Accounts)

4,337,188 3,482,076 4,199,947 5,009,729 6,883,333 5,222,148 30,960,456 5,475,940 3,302,969

M.Sc. (Chem.) M.Com, A.C.A. M.Sc. (Hons.), M.B.A. B.Com., A.C.A. B.Com., F.C.A. B.A., M.M.S. B.A., F.C.A., F.I.C.W.A. M.A. B.Com. (Hons.), A.I.C.W.A., A.C.A., A.C.S., C.F.A. B.Com., C.A. (Intermediate - Group I)
41

35 20 35 24 47 19 50 36 15

01/12/1988 15/10/1988 09/09/2003 01/06/2004 01/7/2006 01/02/1993 20/02/1999 01/09/1994 29/08/2001

26. Khandelwal M.K. (51)

2,535,628

27

01/10/1985

Shah & Taparia, Chartered Accountants

AMBUJA CEMENTS LTD.

ANNEXURE - II (Contd.)
Name & Age (Years) Designation/ Nature of Duties Remuneration (Rupees) Qualifications Experience (years) Date of Commencement of Employment Last Employment Last Designation

27. Kolagada P (51) . 28. Kothari R.C. (52)

General Manager (Energy) Sr. Vice President

2,450,222 2,684,309

B.Tech., ME (Chem Engg.) B.E. (Mech.)

24 30

02/12/2002 25/05/2000

29. Kulkarni P B.* (66) . 30. Kumar A. (44) 31. Kumar C. (55) 32. Lalaji B. (55)

Whole-time Director Asst. Vice President (Shipping) Sr. Vice President Vice President (Special Projects) Asst. Vice President (Shipping) Regional Controller, Northern Region General Manager (Power Projects) Vice President (HR) Vice President (Shipping) General Manager (TSS) General Manager (Business Projects) Chief Internal Auditor President

25,877,403 3,176,377 5,043,038 4,562,998

B.E. (Mech.) Master (FG) Diploma in Electronics, MBA B.Tech. (Chem), M.Tech. (Indl. Engg.) B.E. (Mech.), DMET, Class I (MOT) B.Com. (Hons), F.C.A. B. Tech. B.Sc., MMS First Class Engineer (Motor) B.Tech., M. Tech. B. Sc. (Hons), DCM B. Com., FCA, DISA (ICAI), CIA M.Tech. (Chemical Engg.)

42 11 32 31

08/02/1983 24/10/2000 04/03/1985 01/06/1996

33. Malgonde B. (48) 34. Mantri S.K. (47) 35. Murthy A.S.N. (53) 36. Narain M. (47) 37. Nety R.M. (50) 38. Pal S.C. (55) 39. Pandharpurkar A.K. (46) 40. Pandya A.J. (55) 41. Patel H.S. (59)

3,958,487 4,115,009 2,893,470 3,625,617 4,792,098 2,793,619 2,479,400 4,552,500 5,868,604

21 22 27 24 27 29 26 31 33

16/07/1996 04/10/2000 04/04/1996 01/08/2006 22/01/1996 25/01/2005 21/10/2001 12/05/1986 01/08/2001

42. Rao A.V.* (77) 43. Rao R.P (54) .R. 44. Sadhu S.K. (61) 45. Saran P (48) .

Chief - Projects Vice President (Process) Sr. Vice President Sr. Vice President (Corporate Relation) General Manager (Costing) Head Commodity Group President

8,100,000 2,838,188 3,713,908 2,958,460

B.E. (Civil) B.Tech. (Chem. Engg.) B.Sc. (Engg.), PGDM, FIE, MIMA, MIIM B.Com.

55 31 39 18

01/09/2004 31/12/2001 23/03/1996 01/06/2007

46. Sarkar A.K. (53) 47. Sekhsaria K.R. (58) 48. Setty C.N.J.* (66)

3,297,778 3,234,289 6,346,128

M.Sc., I.C.W.A. B.Sc. (Hons.), DMS B.E. (Mechanical), M.I.E.

34 38 33

06/04/1993 12/12/1985 24/5/2007

49. Sharma K. (58) 50. Sharma R. (46) 51. Sharma R.P (50) . 52. Sharma S. (51)

Sr. Vice President (Corporate Affairs) Sr. Vice President Vice President (Operations) Sr. Vice President (Projects)

4,179,209 3,768,220 3,043,487 4,052,628

B.A.,D.M.M. B.Sc., LL.B., DPM & IA B.Tech. (Chem) B.E. (Mech.)

38 23 27 30

30/09/1994 17/01/1986 01/09/1988 08/04/1983

53. Sharma V.K. (55) 54. Singal A.K. (50)

Vice President (Civil) Vice President (Procurement) Sr. Vice President (Elec.) Sr. Vice President (A & C)

2,716,026 3,702,294

B.E. (Civil) B.E. (Mech.), GDMM, DFM, Dip. in Central Excise B.E. (Elec.) B.E. (Electro & Telecom), M.Tech.
42

32 30

29/08/2006 16/05/1983

Business Saurashtra Chemicals Ltd., General Manager (Production & Maints.- Dry Sect.) Lakshmi Cement, J.K. Cement Ltd., Chief Engineer Ocean Research Education Centre, Faculty Member Larsen & Toubro Ltd., Engineer Merind (I) Ltd. Bombay, Manager (Information Technology) Nomadic Ship Managem, Chief Engineer Xpro India Ltd., General Manager Lloyds Steel India Ltd., Sr. Manager VVF Ltd., General Manager (HR) ABS Marine Services, Staff CH. Engr. Gupta Coalfields, Director (Process) Recursion Software Ltd., General Manager Deepak Nitrite Ltd., Head (Internal Audit) Larsen & Toubro Ltd., Cement Division, Chief Executive (Works) Straw Products Ltd., Chief Engineer (Construction) Cemmanage Principal Consultant Hindustan Copper Ltd., DGM (Engg. Services) Ambuja Realty Development Ltd., Sr. Vice President (Business Development) Tata Chemicals Ltd., Cost Accountant Indian Tools Manufacturing, Purchase Manager Ambuja Cements Limited, Sr. Vice President (Operations) ACC Ltd., Resident Executive M/s. Pushpinder Sharma, Medical Representative Satna Cement Works Sr. Chemical Engineer Lakshmi Cement, J.K. Cement Ltd., Mechanical Engineer Binani Cement Ltd., AVP (Civil) Straw Products Ltd., Mechanical Engineer The UP State Cement Co., Electrical Engineer Orient Cement, Sr. Instrumentation Engineer

55. Srivastava K.S. (55) 56. Srivastava R.K. (55)

4,174,663 4,195,354

31 31

03/01/1985 07/10/1985

AMBUJA CEMENTS LTD.

ANNEXURE - II (Contd.)
Name & Age (Years) Designation/ Nature of Duties Remuneration (Rupees) Qualifications Experience (years) Date of Commencement of Employment Last Employment Last Designation

57. Tank V.V. (51)

Vice President (Engg.)

3,005,190

B.E. (Mech.), PGDBA, MIE,CE B.Com., LL.B., F.C.S.

28

15/11/1988

58. Taparia B.L.* (58)

Whole-time Director & Company Secretary Vice President (Technical) Vice President (CSR) Business Head (Northern Region) Business Head (East) Vice President (AFR)

15,342,450

38

28/11/1983

59. Thakur S.K. (54) 60. Tiwari P (45) . 61. Toshniwal J.C. (55)

3,102,785 2,409,470 10,578,347

B.Sc. Engg. (Chemical) M. A. (Social Work) B.E.(Hons.)(Mech.)

29 20 33

26/3/1987 11/09/2000 03/09/2007

62. Toshniwal S.N. (55) 63. Vaishnav L.P (58) .

7,537,417 2,583,739

B.Com., C.A., I.C.W.A., C.S. B.E. (Chem.)

30 36

29/06/2001 01/07/1997

Saurashtra Cement & Chemical Industires Ltd., Sr. Engineer Jain Spinners Ltd., Secretary & Finance Manager Cement Corporation of India, Sr. Chemical Engineer Meljol, Director Heidelberg Cement (India) Pvt. Limited, Director Technical Usha Beltron Ltd., Sr. Vice-President (Materials) 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/ Nature of Duties Remuneration (Rupees) Qualifications Experience (years) Date of Date of end Commence- of the Term ment of Employment Last Employment Last Designation

1.

Bains G.S.# (50)

Chief Engineer

2,028,480

Class I (MOT)

25

05/09/2007 22/05/2008 11/09/2008 02/09/2008 05/12/2008 17/05/2008 03/02/2008 31/10/2007 07/03/2008 21/06/2008 05/08/2008 05/11/2008 04/12/2007 02/06/2008 03/10/2008 28/02/1989

15/05/2008 05/07/2008 08/11/2008 06/11/2008 25/12/2008 10/07/2008 01/04/2008 11/01/2008 22/05/2008 11/07/2008 15/10/2008 31/12/2008 05/03/2008 03/08/2008 31/12/2008

Barber Shipping Management, Chief Engineer

2. 3. 4. 5.

Bakshi T.P .S.# (63) Bazaz S.C.# (53) Bhasin R.# (54) Chawla A.L.# (62)

Master Master Chief Engineer Chief Engineer

988,766 636,311 650,600 2,792,993

Master (FG) Master (FG) Class I (MOT) Class I (MOT)

40 32 33 38

Vamsee Shipping, Master

6.

Choudhary F.K.# (41)

Chief Engineer

2,099,133

Class III (NCV)

13

7.

Dave D.R. (47)

Vice President (Marketing)

2,554,221

B.Com., Executive Dip. in Marketing Master (FG) B.E. (Mech), MBA Class I (MOT)

23

P C I Group of Pharma Industries, Medical Representative 23/04/2008 Damania Shipping, Chief Officer K. Raheja Corporate Services Pvt. Ltd., General Manager 07/01/2008 07/05/2008 11/09/2008 31/12/2008 Walchandnagar Industries Ltd., Mechanical Erection Engineer 06/03/2008 13/06/2008 05/10/2008 31/12/2008 19/04/2008 05/11/2008 05/04/2008 Calchem Industries (India) Ltd., GM (Operation) Dole Fresh Fruit Ind. Ltd, Master Euresia, Chief Engineer

8. 9.

De Sales D.I.# (50) Deshmukh V. (50)

Master Sr. Vice President (Business Development) Chief Engineer

1,062,417 1,975,475 1,987,495

28 26 41

08/05/1997 23/06/2008 09/11/2007 05/03/2008 11/07/2008 17/11/2008 29/10/1985

10. Gopalkrishnan V.P (62) .#

11. Hapani N.K. (58)

President (Technical)

3,855,477

B.E. (Mechanical), M.I.E. Master (FG)

35

12. Iyengar G. R.# (61)

Master

1,956,122

38

27/01/2008 25/04/2008 16/08/2008 04/12/2008 30/01/2008 28/08/2008 11/01/2008 28/06/2008

13. Jhanb A.# (52) 14. Joshi S.K.# (44) 16. Karnawat M. (45)

Master Chief Engineer VP (Commercial)

885,508 751,151 662,370 1,311,891

Master (FG) Class I (MOT) Class III (NCV) B.Com., F.C.A.

33 16 15 20

15. Kalyanasundaram A.# (40) Chief Engineer

AMBUJA CEMENTS LTD.

43

ANNEXURE - II (Contd.)
Name & Age (Years) Designation/ Nature of Duties Remuneration (Rupees) Qualifications Experience (years) Date of Date of end Commence- of the Term ment of Employment Last Employment Last Designation

17. Khullar J.R.# (52) 18. Kundargi A.B.# (60) 19. Machado T.M.# (58) 20. Malik S.S.# (48) 21. Mehta R. (53) 22. Menon S.# (53)

Chief Engineer Master Chief Engineer 2nd Engineer General Manager (Commercial) Master

641,588 3,238,695 2,157,392 1,208,577 3,340,359 1,354,361

Class I (MOT) Master (FG) Class I (MOT) Class IV (MOT) B.Com. Master (FG)

27 40 37 16 39 21

22/04/2008 29/01/1995 13/11/2008 06/04/2008 14/10/2008 01/01/2008 21/05/2008 02/01/1988 06/12/2007 13/06/2008 06/10/2008 29/11/2007 05/07/2008 06/10/2008 19/12/2007 15/02/2008 10/05/2008 23/09/2008 07/07/1997

21/06/2008 24/10/2008 31/12/2008 06/08/2008 21/12/2008 05/02/2008 17/10/2008 Mitco Management Services Limited, Sr. Sales Officer 04/02/2008 22/06/2008 21/12/2008 05/03/2008 15/07/2008 31/12/2008 21/02/2008 14/04/2008 08/07/2008 04/12/2008 15/06/2008 Geepee Shipping, Master Essar Shipping, Chief Officer Century Shipping, Master Varun Shipping, Chief Engineer

23. Mohanan C.P (57) .#

Chief Officer

1,058,446

Mate (HT)

35

24. Nihalani A.T.# (64) 25. Pandey A.K.R.# (35)

Chief Engineer Master

512,586 2,078,044

Class I (MOT) Master (FG)

35 10

26. Pandey M.K.# (44) 27. Pandya V.K. (50) 28. Raju U.R. (56) 29. Rout G.P (58) .#

Chief Engineer Customer Support Group Head (North & East) Jt. President (Mineral Resources) Chief Engineer

3,374,700 2,675,580 2,842,010 2,507,525

Class I (MOT) B.E. (Civil), DCE, PDDC (Civil) M.Sc. (Tech.) Class I (MOT) 29 32 36

Great Eastern Shipping, Chief Engineer Orient Construction Company, Site Engineer N.C.C.B.M., Programme Leader

26/11/1986 22/07/1992 14/02/2008 01/04/2008 24/07/2008 08/11/2008 13/08/2008 15/03/2008 06/06/2008 01/10/2008 31/12/2008

30. Sanglikar N.Y. (53)

Head (Corporate Communication) Advisor - Training & Development Sr. Vice President (Envt)

1,235,102

B.A., MMM

21

Dow Chemicals International Pvt. Ltd., Director (Public Affairs) Khimji Ramdas, Group HR Head Chem Projects Design & Engg. Pvt. Ltd., Manager Env. Engg. 15/04/2008 14/07/2008 31/12/2008 Gujarat Siddhi Cements Ltd., Sr. Vice President 14/02/2008 17/05/2008 06/11/2008 24/07/2008 31/12/2008 28/02/2008 16/04/2008 03/09/2008 05/07/2008 Molmi Mosm, Master

31. Sastry P .N.* (60) 32. Saxena Y.K. (53)

2,475,000 3,222,077

B.Com., M.B.A. (Pers) B.Tech. (Chem.), M.Sc. (Tech.), PGDBM, Ph.D Master (FG)

34 31

03/11/2000 08/11/2006 08/09/1990

33. Sethi V.K.# (53)

Master

2,231,687

31

27/10/2007 16/04/2008 05/11/2008 25/01/1996 05/11/2007 19/04/2008 05/07/2008 07/05/2008 15/10/2008 07/02/2008 04/03/2008 27/06/2008 20/05/2008 29/12/2000 07/02/2008 06/06/2008 03/10/2008

34. Sharma V.P (55) . 35. Singh K.# (62)

President Chief Engineer

2,045,660 2,280,490

B.Sc., M.Sc. Class I (MOT)

32 41

36. Surve A.P (31) .# 37. Taleyarkhan E.P (53) .#

Chief Engineer Master

1,549,272 1,769,822

Class III (NCV) Master (FG)

9 35

38. Tanwar D.# (33) 39. Tejwani S.K. (50) 40. Verma H.# (37)

Chief Officer Sr. Vice President (Technical) Project Head Master

323,734 3,991,954 2,165,426

Mate (FG) BE (Mechanical) Master (FG)

15 28 8

I.T.M., 1st Officer Prism Cement, Jt. GM (Mechanical)

06/04/2008 03/08/2008 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.

AMBUJA CEMENTS LTD.

44

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.
AMBUJA CEMENTS LTD. 45

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 1st February, 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. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Name of Director Mr. Suresh Neotia Mr. N. S. Sekhsaria Mr. Markus Akermann Mr. Paul Hugentobler Mr. Nirmalya Kumar (resigned w.e.f. 01.01.2009) Mr. Onne van der Weijde (appointed w.e.f. 09.01.2009) Mr. M. L. Bhakta* Mr. Nasser Munjee Mr. Rajendra Chitale Mr. Shailesh Haribhakti Dr. Omkar Goswami Mr. Naresh Chandra (appointed w.e.f. 26.07.2008) Mr. A. L. Kapur Mr. P B. Kulkarni . (ceased to be a director w.e.f. 01.02.2009) Mr. N. P Ghuwalewala . Mr. B. L. Taparia Category Chairman Non Independent Vice Chairman Non Independent Non Executive Non Independent Non Executive Non Independent Non Executive Non Independent Non Executive Non Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Managing Director Non Independent Whole-time Director Non Independent Whole-time Director Non Independent Whole-time Director Non Independent No. of Board Meetings attended 5 6 3 5 6 N.A. 6 2 5 6 4 3 6 6 Attendance at last AGM No No No Yes No N.A. No No No Yes No N.A. Yes No

15. 16.

6 6

Yes Yes

* 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.
AMBUJA CEMENTS LTD. 46

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. No. of other Directorships Chairman of the Board Committee Member Mandatory 1. 2. 3. 4. 5. 6. 7. 8. 9. Mr. Suresh Neotia Mr. N. S. Sekhsaria Mr. Markus Akermann Mr. Paul Hugentobler Mr. M. L. Bhakta Mr. Nasser Munjee Mr. Rajendra P Chitale . Mr. Shailesh V. Haribhakti Dr. Omkar Goswami 5 2 1 2 4 13 8 14 8 10 1 1 1 2 4 9 6 9 9 9 NonMandatory 1 1 1 2 9 4 11 7 Chairman of the Committee (Mandatory) 1 1 1 4 2 5 2 1 -

10. Mr. Nirmalya Kumar (resigned w.e.f. 01.01.2009) 11. Mr. Naresh Chandra (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 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.
AMBUJA CEMENTS LTD. 47

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. No 1. 2. 3. 4. 5. 6. 7. 8. 9. Name of the Directors Salary (see note below) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 3,09,60,456 2,58,77,403 1,99,94,303 1,53,42,450 Sitting fees 1,00,000 1,50,000 60,000 2,50,000 1,20,000 3,40,000 60,000 2,00,000 2,90,000 1,00,000 60,000 Nil Nil Nil Nil Commi- Stock Option Service ssion (see note contract below) 6,00,000 6,00,000 6,00,000 12,00,000 6,00,000 12,00,000 6,00,000 12,00,000 12,00,000 6,00,000 2,60,656 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 325000 200000 125000 100000 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 5 years 5 years 5 years 5 years Notice period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. No. of shares held 39000 1000 Nil Nil Nil 225000 Nil Nil Nil Nil 48

Mr. Suresh Neotia Mr. N. S. Sekhsaria Mr. Markus Akermann Mr. Paul Hugentobler Mr. Nirmalya Kumar Mr. M. L. Bhakta Mr. Nasser Munjee Mr. Rajendra P Chitale . Mr. Shailesh Haribhakti

10. Dr. Omkar Goswami 11. Mr. Naresh Chandra 12. Mr. A. L. Kapur As Managing Director 13. Mr. P B. Kulkarni . Whole-time Director 14. Mr. N. P Ghuwalewala . Whole-time Director 15. Mr. B. L. Taparia Whole-time Director and Company Secretary TOTAL

6 months 1159920 6 months 803833 6 months 400000 6 months 660250

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.
AMBUJA CEMENTS LTD. 48

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 COMMITTEE
3.1 The Audit committee is headed by Mr. M. L. Bhakta and comprises of the following members:1. 2. 3. 4. Mr. M. L. Bhakta, Chairman Mr. Paul Hugentobler Mr. Rajendra P Chitale . 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,
AMBUJA CEMENTS LTD. 49

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. 1. 2. 3. 4. Name of the Directors Mr. M. L. Bhakta, Chairman Mr. Paul Hugentobler Mr. Rajendra P Chitale . Mr. Shailesh Haribhakti Category Non-Executive, Independent Non-Executive Non-Executive, Independent Non- Executive, Independent No. of Meetings attended 6 5 5 6

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 COMMITTEE

The 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. 1. 2. 3. 4. 5. Name of the Directors Mr. M. L. Bhakta, Chairman Mr. N. S. Sekhsaria Mr. Paul Hugentobler Mr. Nasser Munjee Mr. Shailesh Haribhakti (w.e.f. 25.04.2008) Category Non-Executive, Independent Non-Executive Non-Executive Non-Executive, Independent Non-Executive, Independent No. of Meetings attended 3 3 2 2 2

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.
AMBUJA CEMENTS LTD. 50

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 COMMITTEE

The 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. 1. 2. 3. 4. Name of the Member Mr. M. L. Bhakta, Chairman Mr. A. L. Kapur Mr. N. P Ghuwalewala . Mr. B. L. Taparia Category Independent Director Managing Director Whole-time Director Whole-time Director No. of Meetings attended 5 5 5 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 DIRECTORS

In 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 Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. M. L. Bhakta, Chairman A. L. Kapur N. P Ghuwalewala . B. L. Taparia A. L. Kapur, Chairman P B. Kulkarni (upto 31.01.09) . N. P Ghuwalewala . B. L. Taparia

Committee of Directors (Bank Matters)

Approval for various facilities granted by the Banks, execution of documents, opening and closing of Accounts, changes in authorised signatories, giving operating instructions and all other banking matters. To authorise and grant Power of Attorney to various executives of the company for attending and executing company's work as may be considered necessary. To review periodically, the legal and regulatory compliance, the effectiveness of legal compliance mechanism and review
AMBUJA CEMENTS LTD. 51

Management Committee

Compliance Committee

Mr. Shailesh Haribhakti, Chairman Mr. Paul Hugentobler Dr. Omkar Goswami

Name of the Committee

Business

Members as on 31st December, 2008 Mr. A. L. Kapur

and monitoring the compliance of Code of Business Conduct & Ethics and Code of Conduct for Prevention of Insider Trading Share Transfer Committee To approve transfer of shares / debentures / bonds, issue of duplicate / re-materialised shares, transmission of shares / debentures / bonds, consolidation and splitting of certificates etc.

Mr. Mr. Mr. Mr.

B. L. Taparia, Chairman P B. Kulkarni (upto 31.01.09) . N. P Ghuwalewala . A. L. Kapur

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 Yes Yes Yes

2004-2005 2005-2006 2007

23rd AGM held on Monday, 10th October, 2005 at 9.00 a.m. 24th AGM held on Monday, 26th March, 2007 at 10.00 a.m. 25th AGM held on Tuesday, 22nd April, 2008 at 10.00 a.m.

Registered Office Registered Office Registered Office

(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--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.

AMBUJA CEMENTS LTD.

52

9.

CEO / CFO CERTIFICATION

Chief 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 REQUIREMENTS

Among 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) ii) Fixing tenure for Independent directors viz. 9 years. 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 COMMUNICATION

The 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:shares@ambujacement.com 12.3 Plant Locations : Cement Plants 1. 2. 3. 4. 5. P O. Ambujanagar, Taluka Kodinar, District Junagadh, Gujarat - 362 715. . Village Suli, P O. Darlaghat, District Solan, Himachal Pradesh - 171 102. . Maratha Cement Works, At Post - Upperwahi, Dist. Chandrapur, Maharashtra - 442 908. Village Rabriyawas, Tehsil Jaitaran, Dist. Pali, Rajasthan - 306 709. Village Rawan, Tehsil Baloda Bazar, Dist. Raipur, Chhattisgarh - 493 331.
AMBUJA CEMENTS LTD. 53

Grinding Stations 1. 2. 3. 4. 5. 6. Village Daburji, District Roopnagar, Punjab - 140 001. P O. & District Bathinda, Punjab - 150 001. . P O. & Village Dhulagori, P S. Sankrail, Dist. Howrah, West Bengal - 711 302. . . Survey No. 39/40, Magdalla Port Road, Village Gavier, Taluka Choryasi, District Surat, Gujarat - 395 010. Village Lakeshwari, Pargana - Bhagwanpur, Tehsil - Roorkee, Dist. Haridwar, Uttaranchal. Village Kendua, P O. Shrimantapur, PS Farakka, Dist. Murshidabad 742 236 West Bengal. .

Bulk Cement Terminals 1. 2. 3. Muldwarka, Taluka Kodinar, District Junagadh, Gujarat - 362 715. Survey No. 39/40, Magdalla Port Road, Village Gavier, Taluka Choryasi, District Surat, Gujarat - 395 010. 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 - sharepro@shareproservices.com 12.5 Annual General Meeting : Day & Date Time Venue : Monday, 6th April, 2009 : 10.00 a.m. : 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 (i) Bombay Stock Exchange Ltd. Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 023. Stock Code / Symbol 500425

(ii) National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. B. Debentures

AMBUJACEM

There are no debentures listed at the wholesale debt segment of the National Stock Exchange of India Ltd.
AMBUJA CEMENTS LTD. 54

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 High January-08 February-08 March-08 April-08 May-08 June-08 July-08 August-08 September-08 October-08 November-08 December-08 149.85 125.90 128.50 124.60 114.95 97.00 86.20 91.70 90.00 80.50 66.00 76.00 Low 109.00 111.10 114.00 112.00 94.75 73.50 68.70 77.25 75.00 43.00 50.15 50.20 National Stock Exchange High 149.00 126.80 129.40 124.50 115.50 96.75 87.40 91.90 86.95 83.00 66.10 76.80 Low 109.00 111.05 96.00 112.00 93.60 73.70 69.00 77.00 74.25 43.00 50.05 50.05

12.11Performance in comparison to broad based indices :

AMBUJA CEMENTS LTD.

55

12.12 Distribution of Shareholding : The shareholding distribution of the equity shares as on 31st December, 2008 is given below:No. of Equity Shares Less than 50 51 to 100 101 to 500 501 to 1000 1001 to 5000 5001 to 10000 10001 to 50000 50001 to 100000 100001 to 500000 500001 & above TOTAL 12.13 Shareholding Pattern : The shareholding of different categories of the shareholders as on 31st December, 2008 is given below:Category Indian Promoters Foreign Promoters Foreign Investors (including FIIs) Mutual Funds, Banks & Institution OCB NRIs Body Corporates GDR Holders Others TOTAL 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.
AMBUJA CEMENTS LTD. 56

No. of Shareholders 123935 45511 47254 12089 21042 4097 2367 129 131 104 256659

No. of Shares 3193903 4091175 12307272 9508777 55575902 29566372 43579081 9268117 28571348 1326937477 1522599424

Percentage of Shareholding 0.21 0.27 0.81 0.62 3.65 1.94 2.86 0.61 1.88 87.15 100.00

No. of Shares Percentage % 12081909 695393717 334881485 242310100 21255644 21177182 48545194 146954193 1522599424 0.79 45.67 21.99 15.92 1.40 1.39 3.19 9.65 100.00

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 No. *Conversion rate (as adjusted) (Rs. per share) A. Employee Stock Options (i) 35425 Outstanding options granted under ESOS 2000-2001, one stock option convertible into 7.5 equity shares upto 12th November, 2009. 18.40 0.05 0.44 Likely impact on full conversion Share Capital (Rs. in crores) Share Premium (Rs. in crores)

(ii) 32550 Outstanding options granted under ESOS 2003-2004, one stock option convertible into 7.5 equity shares upto 20th January, 2010. (iii) 105450 Outstanding options granted under ESOS 2004-2005, one stock option convertible into 7.5 equity shares upto 9th March, 2010. (iv) 193350 Outstanding options granted under ESOS 2005-2006, one stock option convertible into 5 equity shares upto 6th November, 2010. (v) 6862500 Outstanding options granted under ESOS 2007, one stock option convertible into 1 equity share upto 6th June, 2012 (vi) 92950 outstanding options granted under ESOS 2007 (SAP CORE TEAM) one stock option convertible into 1 equity share upto 30th June, 2013 (vii) 7036200 Outstanding options granted under ESOS 2008, one stock option convertible into 1 equity share upto 30th June, 2013 SUB-TOTAL (A) 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

41.33

0.05

0.96

59.06

0.16

4.51

69.60

0.19

6.54

113.00

1.37

76.17

82.00

0.02

1.03

82.00

1.41

78.10

3.25

167.75

6.66 7.50

0.03 0.04 0.07 3.32

0.06 0.10 0.16 167.91

(ii) 188940 warrants SUB-TOTAL (B) GRAND TOTAL (A+B)

(*) conversion price has been arrived after appropriate adjustment of split and bonus issues except in respect of ESOS 2007 & 2008.
AMBUJA CEMENTS LTD. 57

(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 Second quarterly / Half yearly results Third quarterly results Annual results for the year ending on 31st December, 2009 Annual General Meeting for the year ending on 31st December, 2009 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 2002-03 2003-04 2004-05 2005-06 Dividend Interim Final Interim Final Interim Final 1st Interim 2nd Interim Final Interim Final Dividend Rate (%) 30 40 50 30 60 30 50 75 40 125 50 Dividend Amt. (Rs. in Crores) 46.58 62.13 88.25 53.82 108.05 81.11 135.80 204.08 121.34 380.40 152.24 : April, 2009 : July, 2009 : October, 2009 : February, 2010 : April, 2010

2007

13. SUBISIDIARY COMPANIES

There 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.

AMBUJA CEMENTS LTD.

58

AUDITOR'S CERTIFICATE
ON 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. 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.

4.

For S. R. BATLIBOI & ASSOCIATES Chartered Accountants

per Sudhir Soni Partner Membership No.: 41870 Mumbai, February 6, 2009

AMBUJA CEMENTS LTD.

59

DECLARATION REGARDING CODE OF CONDUCT

I 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 Managing Director

Mumbai, February 3, 2009

CEO / CFO CERTIFICATION

The 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 Chief Financial Officer Mumbai, February 5, 2009

A. L. Kapur Managing Director

AMBUJA CEMENTS LTD.

60

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. 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. 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. Further to our comments in the Annexure referred to above, we report that: i. ii. 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; 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;

2.

3.

4.

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. 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.

v.

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) c) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2008; in the case of Cash Flow Statement, of the cash flows for the year ended on that date. b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

For S. R. BATLIBOI & ASSOCIATES Chartered Accountants

per Sudhir Soni Partner Membership No.: 41870 Mumbai February 6, 2009

AMBUJA CEMENTS LTD.

61

Referred to in paragraph 3 of our report of even date

(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, salestax, 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 statute Central Excise Act, 1944 Nature of dues Demand of Excise Duty on Clearance of Cement & Others Denial of MODVAT credit on Inputs and Capital Goods Amount** (Rs. in crores) 0.13 0.68 0.11 0.02 0.75 3.18 2.32 0.45 1.28 0.56 3.06 0.90
62

ANNEXURE

(i)

Period to which the amount relates 1999-2008

Forum where dispute is pending CESTAT* CESTAT Commissioner (A) Supreme Court* High Court* CESTAT* CESTAT Commissioner (A)* Commissioner (A) High Court CESTAT Commissioner (A)

1994-1997 1993-1996 2002-2007 2002-2007 1995-2008 1995-2008 2005-2006 2005-2007 2005-2008

Denial of Service Tax Credit

AMBUJA CEMENTS LTD.

Name of the statute Central Sales Tax Act, 1956 and Various State Sales Tax Act

Nature of dues

Amount** (Rs. in crores) 3.30 7.18 0.89 9.62 0.93 0.06 0.44 14.57 0.60 1.18 4.26

Period to which the amount relates 1999-2006 2000-2008 1991-2002 1991-2005 2001-2007 2000-2007 2000-2007 2006-2009 2006-2008 2008 2006 onwards

Forum where dispute is pending Supreme Court High Court Tribunal Commissioner (A) CESTAT* Commissioner (A)* Commissioner (A) High Court Tax Board High Court High Court

Demand of Sales Tax / Additional Tax / Purchase Tax

Custom Act, 1962 Demand of Custom Duty

State Land Tax Act Chhattisgarh Upkar (Sanshodhan Adhiniyam) 2004

Demand of Land Tax Environmental Cess Energy Development Cess

(x) (xi)

(xii)

(xiii) (xiv)

(xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi)

* In respect of these cases the Department is in appeal ** Net of amount deposited 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. 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. 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. 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. 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. 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. The Company did not have any term loans outstanding during the year. 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. 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. According to the information and explanations given to us, the Company has created security on the debentures issued. The Company has not raised any money through a public issue during the year. 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.

For S. R. BATLIBOI & ASSOCIATES Chartered Accountants per Sudhir Soni Partner Membership No.: 41870 Mumbai February 6, 2009

AMBUJA CEMENTS LTD.

63

as at 31st December, 2008

As at 31.12.2008 Rs. in Crores As at 31.12.2007 Rs. in Crores

BALANCE SHEET

Schedule

Rs. in Crores

SOURCES OF FUNDS
Shareholders' Funds Share Capital ................................................................... Employee Stock Option Outstanding (Refer Note 10) .......... Reserves and Surplus ........................................................ Loan Funds Secured Loans .................................................................. Unsecured Loans .............................................................. Deferred Tax Liability, net (Refer Note 7) ................................. TOTAL ........................................ A B 304.52 0.34 5,368.01 304.48 0.38 4,356.39

5,672.87
C D 100.00 188.67 288.67 380.75 6,342.29 E 5,706.94 2,514.19 3,192.75 1,560.75 4,753.50 386.47 F G H I J K 939.75 224.60 851.84 23.39 299.87 2,339.45 Less: Current Liabilities and Provisions .................................. Current Liabilities .............................................................. Provisions ......................................................................... L 1,003.24 470.56 1,473.80 Net Current Assets ................................................................. Miscellaneous Expenditure (to the extent not written off or adjusted) ..................................... TOTAL ........................................ Notes forming part of the Accounts ....................................................
As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 64

4,661.25
100.00 230.42 330.42 378.38 5,370.05

APPLICATION OF FUNDS
Fixed Assets ............................................................................ Gross Block ...................................................................... Less: Depreciation ............................................................. Net Block .......................................................................... Capital Work-in-Progress (Refer Note 27) ........................... Advances against capital expenditure ................................. Investments Current Assets, Loans and Advances Inventories ........................................................................ Sundry Debtors ................................................................. Cash and Bank Balances ................................................... Other Current Assets ......................................................... Loans and Advances ......................................................... 5,231.05 2,271.19 2,959.86 510.03 3,469.89 186.76 5,139.97 332.39 3,656.65 1,288.94 581.60 145.68 642.58 12.12 205.35 1,587.33 675.54 493.55 1,169.09 865.65 6,338.01 M 4.28 6,342.29 R 418.24 5,363.83 6.22 5,370.05

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

for the year ended 31st December, 2008

Schedule Rs. in Crores 7,089.89 855.24 N 6,234.65 175.39 6,410.04 O P 4,477.90 32.06 259.76 4,769.72 Less : Self consumption of clinker, cement and limestone (net of excise duty Rs. 2.88 crores; 31.12.2007 Rs. 2.23 crores) ..................................................... (21.19) 4,748.53 Profit before tax and exceptional items ....................................... Exceptional items ...................................................................... Profit before tax ........................................................................ Provision for Taxation : Current tax ....................................................................... Income tax in respect of earlier years ................................. Deferred tax ..................................................................... Fringe benefit tax .............................................................. Q 1,661.51 308.33 1,969.84 560.00 2.37 5.20 567.57 Net Profit ................................................................................. Balance as per last Account ....................................................... Credit balance of Profit and Loss Account of erstwhile Indo Nippon Special Cements Limited (INSCL) ................................... Transferred from Debenture Redemption Reserve ........................ Transferred to General Reserve .................................................. Interim Dividends On Equity Shares ........................................... Dividend Distribution Tax on above ............................................ Proposed Final Dividend On Equity Shares ................................. Dividend Distribution Tax on above ............................................ 182.71 31.05 213.76 152.26 25.87 178.13 Balance carried to Balance Sheet ....................................................... 358.58 Rs. Earnings Per Equity Share of Rs. 2 each (Refer Note 5) ........................ Basic ............................................................................... Diluted ............................................................................... Notes forming part of the Accounts ....................................................
As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 65

PROFIT AND LOSS ACCOUNT

INCOME
Sales (Refer Note 13 (e)) ............................................................ Less : Excise duty ....................................................................... Other Income ...........................................................................

2008 Rs. in Crores

2007 Rs. in Crores 6,396.20 764.84 5,631.36 193.53 5,824.89 3,595.71 75.85 236.34 3,907.90 (9.47) 3,898.43 1,926.46 785.89 2,712.35 737.00 202.00 (0.90) 5.15 943.25 1,769.10 272.06 0.21 30.00 1,100.00 971.37 380.41 64.65 445.06 152.24 25.87 178.11 348.20 Rs. 11.64 11.61

EXPENDITURE
Manufacturing and other expenses ............................................ Interest and Finance Charges .................................................... Depreciation and Amortisation ..................................................

1,402.27 348.20 1,000.00 750.47

9.21 9.21 R

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

for the year ended 31st December, 2008

2008 Rs. in Crores 1,969.84 259.76 (0.70) (308.33) 4.26 8.11 1.72 (14.46) 32.06 (93.93) 9.46 (41.11) 1.39 (0.43) 0.22 (141.98) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ............................ Adjustment for : Trade and other receivables ...................................................................... Inventories ............................................................................................... Trade Payables ......................................................................................... (175.61) (358.15) 272.61 (261.15) CASH GENERATED FROM OPERATIONS .......................................................... Direct Taxes paid ...................................................................................... Miscellaneous Expenditure ........................................................................ Exchange rate difference .......................................................................... (592.42) (0.27) (7.80) (600.49) NET CASH GENERATED FROM OPERATING ACTIVITIES .................................... B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets ........................................................................... Sale of Fixed Assets (net of tax of Rs. 1.67 crores; 31.12.07 - Rs. 69.97 crores) .................................................................... Investments (net) ...................................................................................... Disposal of Subsidiary / Associate (net of tax of Rs. 26.69 crores; 31.12.07 - Rs. 62.24 crores) ...................... Loans and advances (net) ......................................................................... Interest received ....................................................................................... Dividend received .................................................................................... NET CASH USED IN INVESTING ACTIVITIES ..................................................... Carried forward ..................................
AMBUJA CEMENTS LTD. 66

CASH FLOW STATEMENT

Rs. in Crores A) CASH FLOW FROM OPERATING ACTIVITIES PROFIT BEFORE TAX ........................................................................................ Adjustment for : Depreciation and Amortisation ................................................................. Surplus on sale of assets (excluding exceptional items) ............................... Exceptional items ..................................................................................... Loss on assets discarded / sold ................................................................. Capital Projects written off ........................................................................ Part of deferred revenue expenditure, written off ........................................ Provision for diminution in value of Investment .......................................... Profit on sale of investments ...................................................................... Interest and Finance Charges ................................................................... Interest income ........................................................................................ Exchange rate difference .......................................................................... Dividend income ...................................................................................... Bad Debts, Sundry Debit Balances and Claims written off ........................... Provision for doubtful debts and advances (net) ......................................... Provision for wealth tax .............................................................................

2007 Rs. in Crores 2,712.35 236.34 (2.10) (785.89) 6.30 2.54 0.47 1.00 (23.54) 75.85 (76.08) (33.56) (22.80) 1.89 2.41 0.24 (616.93) 2,095.42 (109.33) (172.78) 164.24 (117.87) 1,977.55 (448.90) (0.76) 23.87 (425.79) 1,551.76

1,827.86

1,566.71

966.22

(1,661.44) 19.91 652.33 589.33 83.86 41.11 (274.90) 691.32

(793.34) 271.83 (729.64) 994.35 2.09 69.01 22.80 (162.90) 1,388.86

CASH FLOW STATEMENT (Contd.)

Rs. in Crores Brought forward .................................. C) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Share Capital including Securities premium .................... Proceeds from borrowings ................................................................................ Repayment of borrowings ................................................................................. Interest and Finance Charges paid ................................................................... Swap interest (net) ........................................................................................... Unclaimed sale proceeds of the odd lot shares of erstwhile ACEL and ACRL ............................................................................. Unclaimed Application Money on Securities ...................................................... Dividend paid (including dividend distribution tax) ............................................. NET CASH USED IN FINANCING ACTIVITIES .................................................... NET INCREASE IN CASH AND CASH EQUIVALENTS ......................................... CASH AND CASH EQUIVALENTS as at 01.01.2008 (Schedule I) : Earmarked for specific purposes ............................................................... Other Balances ........................................................................................ Add : Cash and Bank Balances taken over on amalgamation of erstwhile INSCL .................................................................................... CASH AND CASH EQUIVALENTS as at 31.12.2008 (Schedule I) : Earmarked for specific purposes ............................................................... Other Balances ........................................................................................ 15.40 836.44 851.84 13.83 628.75 642.58 13.83 628.75 642.58 13.55 364.55 378.10 0.06 1.24 42.22 (85.63) (49.18) (0.55) (0.07) 0.14 (390.23) (482.06) 209.26 32.29 50.00 (575.32) (33.01) (15.24) (0.08) (583.08) (1,124.44) 264.42 2008 Rs. in Crores 691.32 2007 Rs. in Crores 1,388.86

As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

AMBUJA CEMENTS LTD.

67

annexed to and forming part of the Balance Sheet as at and Profit and Loss Account for the year ended 31st December, 2008
As at 31.12.2008 Rs. in Crores As at 31.12.2007 Rs. in Crores

SCHEDULES A TO R

SCHEDULE A SHARE CAPITAL

Authorised : 250,00,00,000 (31.12.2007 - 250,00,00,000) Equity Shares of Rs. 2 each ............ 15,00,00,000 (31.12.2007 - 15,00,00,000) Preference Shares of Rs. 10 each ......

Rs. in Crores

500.00 150.00 650.00

500.00 150.00 650.00

Issued : 152,29,30,444 (31.12.2007 - 152,27,10,942) Equity Shares of Rs. 2 each fully paid-up ................................................................. Subscribed : 152,25,99,424 (31.12.2007 - 152,23,75,422) Equity Shares of Rs. 2 each fully paid-up ................................................................. 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 10) 304.52 304.48 304.59 304.54

SCHEDULE 'B' - RESERVES AND SURPLUS

Subsidies : (a) Cash Subsidies from Government and other authorities ..................................... (b) Grant-in-aid Subsidy from DANIDA .................................................................. 1.60 0.12 1.72 Capital Reserve .................................................................................................... Capital Redemption Reserve ................................................................................ Securities Premium : As per last Account ............................................................................................. Additions on exercise of employee stock options and others ................................. 1,186.35 1.24 1,187.59 Debenture Redemption Reserve : As per last Account ............................................................................................. Less: Transferred to Profit and Loss Account ......................................................... 25.00 25.00 Carried forward ..................................
AMBUJA CEMENTS LTD. 68

1.60 0.12 1.72 130.71 9.93 1,154.41 31.94 1,186.35 55.00 30.00 25.00 1,353.71

130.71 9.93

1,354.95

SCHEDULE B RESERVES AND SURPLUS (Contd.)

Brought forward .................................. General Reserve : As per last Account ............................................................................................. Add : Set aside this year ..................................................................................... Less : Adjustment for employee benefits net of deferred tax .................................. Surplus as per Profit and Loss Account ................................................................ TOTAL .................................................................

Rs. in Crores

As at 31.12.2008 Rs. in Crores 1,354.95

As at 31.12.2007 Rs. in Crores 1,353.71

2,654.48 1,000.00 3,654.48 3,654.48 358.58 5,368.01

1,563.38 1,100.00 2,663.38 8.90 2,654.48 348.20 4,356.39

SCHEDULE C SECURED LOANS

Debentures : 100 6.85% Secured Redeemable Non-Convertible Debentures of Rs. 1,00,00,000 each - Series '30' (Redeemable at par on 31.03.2010) ............... TOTAL ................................................................. 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.

100.00 100.00

100.00 100.00

SCHEDULE 'D' - UNSECURED LOANS

Foreign Currency Term Loan from Banks (Due within one year Rs. Nil; 31.12.2007- Rs. 78.84 crores) ........................................................................... 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) ............................................................................. TOTAL ................................................................. 78.84

188.67 188.67

151.58 230.42

SCHEDULE E FIXED ASSETS

Rs. in Crores DESCRIPTION
As at 01.01.2008 Tangible Assets : Freehold Land ........................................ Leasehold Land ...................................... Buildings, Roads and Water Works (a) ..... Marine Structures (b) ............................... Plant and Machinery (c) ........................... Electrical Installations .............................. Railway Sidings and Locomotives (d) ........ Railway wagons given on lease (e) ........... Furniture, Fixtures and Office Equipments Ships ...................................................... Vehicles .................................................. Power Lines (f) ......................................... Sub Total ....................................................... Intangible Assets : Water Drawing Rights .............................. Computer Software ................................. Sub Total ....................................................... TOTAL .................................................... Previous year's Total ....................................... 221.12 43.12 640.31 95.58 3,574.54 326.16 55.82 6.43 85.08 115.65 28.32 19.89 5,212.02 6.15 12.88 19.03 5,231.05 4,542.50

GROSS BLOCK (at Cost)

Additions (h) 18.10 15.07 72.24 289.96 14.08 5.22 27.38 8.48 14.03 464.56 0.01 43.04 43.05 507.61 728.09 Deductions/ Transfers 5.11 1.01 20.27 0.04 1.67 3.62 31.72 31.72 39.54 As at 31.12.2008 239.22 53.08 711.54 95.58 3,844.23 340.20 61.04 6.43 110.79 115.65 33.18 33.92 5,644.86 6.16 55.92 62.08 5,706.94 5,231.05 Upto 01.01.2008 6.01 104.90 40.63 1,824.69 133.25 25.97 3.31 42.82 56.93 15.30 6.57 2,260.38 3.51 7.30 10.81 2,271.19 2,053.32

DEPRECIATION / AMORTISATION
For the year (g)&(h) 1.17 16.84 3.82 188.86 15.95 2.18 0.31 8.22 5.78 4.53 0.97 248.63 0.52 11.42 11.94 260.57 236.77 Deductions/ Transfers 1.08 0.17 12.42 0.07 1.25 2.58 17.57 17.57 18.90 Upto 31.12.2008 6.10 121.57 44.45 2,001.13 149.13 28.15 3.62 49.79 62.71 17.25 7.54 2,491.44 4.03 18.72 22.75 2,514.19 2,271.19

NET BLOCK
As at 31.12.2008 239.22 46.98 589.97 51.13 1,843.10 191.07 32.89 2.81 61.00 52.94 15.93 26.38 3,153.42 2.13 37.20 39.33 3,192.75 2,959.86 As at 01.01.2008 221.12 37.11 535.41 54.95 1,749.85 192.91 29.85 3.12 42.26 58.72 13.02 13.32 2,951.64 2.64 5.58 8.22 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.
AMBUJA CEMENTS LTD. 69

SCHEDULE E FIXED ASSETS (Contd.)

(d) (e) (f) (g) (h) (i) 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. 0.54 crore (31.12.2007- Rs. 0.46 crore) being the amortization thereof upto 31st December, 2008. Railway wagons given on lease to the Railway under "Own Your Wagon Scheme". Cost incurred by the Company, ownership of which vests with the State Electricity Boards. Includes Rs. 0.81 crore (31.12.2007- Rs. 0.43 crore) capitalised as pre-operative expenses. 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 amalgamation of INSCL. Pursuant to Accounting Standard AS 28 "Impairment of assets", there is no impairment of assets.

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE F INVESTMENTS
Long-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 in Ambuja Cement India Private Limited (Refer Note 23) ................... 11,74,87,181 Equity Shares of Rs. 10 each in ING Vysya Life Insurance Co. Pvt. Limited ..................................... 10,00,000 Equity Shares of Rs. 10 each in Gujarat Goldcoin Ceramics Limited ............................................. Less: Provision for diminution in value of Investment ......................

120.39 1.00 1.00 120.39

285.71 120.39 1.00 1.00 406.10

In Subsidiary Companies: In Fully Paid Equity Shares : Unquoted: 50,000 Equity Shares of Rs. 10 each in Kakinada Cements Limited ............ 7,49,990 Equity Shares of Rs. 10 each in M.G.T. Cements Private Limited ..... 1,39,930 Equity Shares of Rs. 10 each in Chemical Limes Mundwa Private Limited ...................................... (5,04,13,840) Ordinary Shares of LKR 10 each in Ceylon Ambuja Cements (Private) Limited (CACL) ......................... Less: Provision for diminution in value of investment (Refer Note 25) ...........................................................................

0.05 3.05 1.47 4.57

0.05 3.05 1.47 29.54 29.54 4.57

In 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)) ......................................................................... Current Investments (at cost or fair value, whichever is lower) : In Fully Paid Debentures : Quoted:* 300 5.85% Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each of Housing Development Finance Corporation Limited .................................................................... 100 7.20% Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each of Housing Development Finance Corporation Limited .................................................................... 50 6.5% Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each of Hindalco Limited ....................................... 50 6% Unsecured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each of Industrial Development Bank of India ......... 50 5.78% Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each of Ultratech Cemco Limited ...........................

29.60

29.60

29.95

29.61

10.00 4.98 5.00 4.97 54.90

9.93 4.96 4.93 4.90 54.33 494.60

Carried forward ...........................................

AMBUJA CEMENTS LTD. 70

209.46

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE F INVESTMENTS (Contd.)

Brought forward .................................. In Units of Mutual Funds - Fully paid-up : Unquoted: (93,167.717) units of AIG India Liquid Fund-Super IP - Growth of Rs. 1,000 each of AIG Global Investment Group .......................... 2,11,19,609.850 (35,72,241.827) units of Fidelity Cash Fund- IP - Growth of Rs.10 each of Fidelity International Mutual Fund. .......................... (85,24,785.815) units of ING Liquid Super IP - Growth option of Rs.10 each of ING Vysya Mutual Fund. ......................................... (1,53,754.175) units of Tata Liquid Super High Investment Fund, Growth fund of Rs. 1,000 each of Tata Mutual Fund ..................... (4,09,80,124.004) units of ABN AMRO Money Plus weekly Dividend of Rs. 10 each of ABN AMRO Mutual Fund ..................... (5,14,17,357.770) units of Birla Sunlife Liquid Plus weekly Dividend of Rs. 10 each of Birla Sunlife Mutual Fund .................... (5,10,45,728.394) units of DWS Money Plus Fund IP weekly Dividend of Rs. 10 each of Deutsche Mutual Fund ......................... (6,29,37,199.508) units of HSBC Liquid Plus weekly Dividend of Rs. 10 each of HSBC Mutual Fund. ........................................... (1,56,48,198.927) units of HDFC FRIFSTP Wholesale Option weekly Dividend of Rs. 10 each of HDFC Mutual Fund. ................. (3,60,94,851.212) units of Prudential ICICI Flexible Income Plan weekly Dividend of Rs. 10 each of Prudential ICICI Mutual Fund. ...................................................... (5,51,10,048.113) units of ING Vysya Liquid Plus weekly Dividend of Rs. 10 each of ING Vysya Mutual Fund. ...................... (1,04,56,087.633) units of Sundaram BNP Paribas Liquid Plus weekly Dividend of Rs. 10 each of Sundaram BNP Mutual Fund. ... (1,58,76,351.730) ABN AMRO Fixed Term PlanSeries 4 quarterly Plan B Dividend reinvestmentunits of Rs.10 each of ABN AMRO Asset Management Fund ....................................... (1,01,60,768.700) ABN AMRO Flexible Short Term PlanSeries A Dividend of Rs.10 each of ABN AMRO Mutual Fund. ..................... (75,00,000.000) units ABN AMRO Interval FundQty Plan G Dividend of Rs.10 each of ABN AMRO Mutual Fund ...................... (2,01,68,192.900) units of Birla Interval Income Plan Monthly Series 1 of Rs. 10 each of Birla Sunlife Mutual Fund. ..................... (1,61,29,349.542) units of DBS Chola Monthly Interval Fund IP Dividend of Rs.10 each DBS Mutual Fund .................... (3,01,93,652.790) units of HDFC Fixed Maturity Plan 90 Dividend Option of Rs.10 each HDFC Mutual Fund. ..................... (2,26,71,647.590) units of Kotak Fixed Maturity Plan Series 26 Dividend Option of Rs.10 each Kotak Mutual Fund. ...................... (5,19,36,100.020) units of Reliance Fixed Interval Fund II Monthly PlanSeries 4 Dividend Reinvestment of Rs.10 each Reliance Mutual Fund. ................................................ (4,99,98,500.045) units of Reliance Fixed Interval Plan Series II Quarterly Dividend of Rs.10 each of Reliance Mutual Fund. ........... (2,61,49,218.152) units of SBI Debt Fund Series 90 Days Quarterly Plan Dividend Investment of Rs.10 each of SBI Mutual Fund. ......... (1,59,73,575.320) JM Fixed Maturity Fund Series V Quarterly Plan Dividend reinvestment units of Rs.10 each of JM Financial Mutual Fund. ....................................................... (1,58,77,324.900) Lotus India Fixed Maturity Plan Series XV Three Months Plan Dividend Reinvestment unit of Rs.10 each of Lotus India Mutual Fund. ......................................................... C/f ........................................... Carried forward ...........................................
AMBUJA CEMENTS LTD. 71

209.46

494.60

25.00

9.50 3.81 10.00 22.50 40.98 51.50 51.24 63.18 15.87

38.06 57.62 10.64

15.88 10.16 7.50 20.17 16.15 30.19 22.67

51.95 50.00 26.15

15.97

25.00 209.46

15.88 657.57 494.60

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE F INVESTMENTS (Contd.)

Brought forward .................................. B/f .................................. (1,00,00,000.000) Lotus India Fixed Maturity Plan Series XlV Quarterly Plan Dividend of Rs.10 each of Lotus India Mutual Fund. ............................................................. (1,00,00,000.000) Lotus India Fixed Maturity Plan Series XlX Quarterly Plan Dividend of Rs.10 each of Lotus India Mutual Fund .............................................................. (5,00,00,000.000) units of Prudential ICICI Interval Fund II Qty. PlanB Dividend of Rs.10 each of Prudential ICICI Mutual Fund ....................................................................... (2,52,20,000.000) units of Prudential ICICI Interval Fund I Qty. Dividend of Rs.10 each of Prudential ICICI Mutual Fund. ........ (1,61,33,899.716) units of Sundram BNP Paribas Fixed Income Interval Fund Dividend of Rs.10 each of Sundram BNP Paribas Mutual Fund ............................................................ 70,05,486.402 () units of DWS Insta Cash Plus Fund IP Growth of Rs. 10 each of Deutsche Mutual Fund ........................................... 92,76,158.300 () units of HDFC Liquid Fund Premium Plan Growth Option of Rs. 10 each of HDFC Mutual Fund .................... 1,34,58,346,418 () units of HSBC Cash Fund Institutional Plus Growth Option of Rs. 10 each of HSBC Mutual Fund ............................................ 2,69,32,127.706 () units of Prudential ICICI Interval Fund I Qty. Interval Plan Institutional Dividend Reinvest Dividend of Rs.10 each of Prudential ICICI Mutual Fund ....................................................... 2,74,91,378.445 () units of UTI Fixed Maturity Plan Dividend of Rs.10 each of UTI Mutual Fund ............................................................. (2,54,29,886.700) units of UTI Fixed Maturity Plan Dividend of Rs.10 each of UTI Mutual Fund .................................................... 209.46 25.00 494.60 657.57

10.00

10.00

50.00 25.22

9.50 16.00 18.00

16.13

26.93 27.50 122.93 332.39

25.42 794.34 1,288.94

Book Value as on 31.12.2008 Rs. in Crores Aggregate amount of Quoted Investments ............................ Aggregate amount of Unquoted Investments ......................... 54.90 277.49 332.39 31.03.2007 Rs. in Crores 54.33 1,234.61 1,288.94

Market Value as on * 31.03.2008 Rs. in Crores 55.00 31.03.2007 Rs. in Crores 55.00

* 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 : Name a) Units of Mutual Fund : Fortis Overnight Institutional Plus Growth Fortis (ABN AMRO) Flexible S T P Series 4 Quarterly Dividend Fortis Money (ABN AMRO) Plus Institutional - Weekly Dividend AIG India Liquid Fund - Institutional - Growth AIG India Liquid Fund Super IP- Growth AIG India Treasury Plus Fund Super Institutional Weekly Dividend Birla Cash Plus-Institutional Premium Plan - Growth Birla Interval Income Plan- Monthly Series - I Birla Sunlife Liquid Plus Institutional- Weekly Dividend DBS Chola Interval Income Fund-MIP-A- Dividend Deutsche Money Plus Fund- Weekly Dividend DSP ML Cash Plus Fund Growth
AMBUJA CEMENTS LTD. 72

Face Value Rs. 10 10 10 1,000 1,000 10 10 10 10 10 10 1,000

Nos. 23,696,984.337 1,292,833.338 18,779,057.496 228,059.646 571,906.173 21,664,557.332 162,414,999.167 508,867.004 1,136,118.421 374,030.472 1,002,319.923 255,405.279

Purchase Cost Rs. in Crores 24.74 1.29 18.81 24.50 59.50 21.70 212.00 0.51 1.14 0.38 1.01 26.00

SCHEDULE F INVESTMENTS (Contd.)

Name DSP ML Liquidity Fund Growth Edelweiss Liquid Fund Growth Fidelity Cash Fund- Super IP - Growth HDFC Liquid Fund -Premium Plan -Growth HDFC Liquid Fund -Premium Plan -Dividend HDFC Cash Management Fund - Savings Plan Wholesale Growth HDFC Cash Management Fund - Savings Plan Wholesale Dividend HDFC FRIF- STP- Wholesale-Weekly Dividend HDFC Fixed Maturity Plan -90D - Feb. 2008-Dividend Option HDFC Fixed Maturity Plan -90D - May 2008-Dividend Option HDFC Fixed Maturity Plan -90D - June 2008-Dividend Option HDFC Fixed Maturity Plan - 90D - August 2008-Dividend Option HDFC Fixed Maturity Plan -90D - Sep. 2008-Dividend Option HSBC Cash Fund Institutional Plus Growth HSBC Liquid Plus Fund Institutional Plus - Weekly Dividend ING Vysya Liquid Fund -Super IP Growth ING Vysya Liquid Plus Fund - Weekly Dividend JM Fixed Maturity Fund - Series IV-Quarterly Plan 4-F3 Dividend JM Interval Fund-Quarterly Plan 4-F3 - Dividend JM Money Manager Fund Super Plus Plan Growth JM Money Manager Fund Super Plus Plan Weekly Dividend (241) JP Morgan India Liquid Fund- Growth Kotak Quarterly Interval Plan Series -6 -Dividend Kotak FMP 3M FMP Series -26 Dividend Lotus India FMP-3 Month-Series XIV Institutional - Dividend Lotus India FMP-3 Month-Series XIX Institutional - Dividend Lotus India FMP-3 Month-Series XXIV Institutional - Dividend Lotus India FMP-3 Month-Series XXV Institutional - Dividend Lotus India FMP-3 Month-Series XXVI Institutional - Dividend Lotus India Fixed Maturity Plan - Series-XXVII - Dividend Lotus India FMP-3 Month-series XXXI Institutional Dividend Lotus India Quarterly Interval Fund Plan A Dividend Lotus India Monthly Interval Plan B Dividend Prudential ICICI Liquid Plan Super Institutional Plan - Growth Prudential ICICI Flexible Income Plan Weekly Dividend Prudential ICICI Monthly Interval Fund Plan I Dividend Prudential ICICI Interval Fund - Quarterly Interval Plan - Dividend Prudential ICICI FMP Series 44 1 Month Plan - C- Dividend Prudential ICICI FMP Series 44 1 Month Plan - D - Dividend Reliance Liquidity Fund-Growth Reliance Fixed Horizon Fund II Quarterly Plan- Series II Institutional Dividend Reliance Monthly Interval Fund Series I - Institutional Dividend Reliance Interval Fund - Monthly Plan - Dividend Reliance Liquid Plus - Weekly Dividend SBI Magnum Insta Cash Fund Growth SBI SHF Liquid Plus -IP - Growth SBI SHF Liquid Plus -IP - Weekly Dividend SBI SDFS Series-90 Days - Dividend Sundaram BNP Paribas Money Fund Super Inst.- Growth Sundaram BNP Paribas Liquid Plus Fund - Weekly Dividend Sundaram BNP Paribas Fixed Income Interval Fund - Dividend Tata Liquid Super High Investment Fund - Growth Tata Floater Fund Weekly Dividend Tata Floater Fund Growth Templeton Treasury Management Fund - Growth Templeton India Ultra Short Bond Fund Super IP - Dividend UTI Liquid Fund- Cash Plan - IP - Growth UTI FMP Institutional -Quarterly Plan - Dividend Face Value Rs. Nos. Purchase Cost Rs. in Crores 20.00 15.00 13.00 129.25 73.09 111.62 50.19 0.28 30.19 65.01 16.00 30.00 16.00 451.88 55.61 120.75 1.24 0.19 17.15 17.24 17.24 78.25 24.23 0.22 0.46 0.17 10.37 10.38 16.49 10.17 10.56 17.16 10.69 377.68 38.81 44.32 5.51 20.00 25.00 1,588.58 50.00 25.00 3.04 58.66 117.89 16.93 65.53 55.25 32.75 8.36 0.74 84.25 15.28 15.27 81.75 67.11 97.35 81.22

1,000 168,855.284 10 14,895,289.752 10 11,067,126.378 10 78,219,228.772 10 50,984,179.460 10 100,282,226.460 10 50,031,974.732 10 271,407.541 10 30,193,652.789 10 58,553,945.559 10 16,003,784.869 10 30,000,000.000 10 16,003,784.869 10 404,190,428.626 10 55,419,575.996 10 100,733,048.854 10 1,235,551.368 10 188,937.700 10 17,153,652.503 10 14,257,327.067 10 16,880,465.240 10 74,123,704.243 10 24,231,183.447 10 218,453.700 10 459,428.900 10 171,340.000 10 10,366,577.303 10 10,377,373.925 10 16,490,271.637 10 10,173,729.270 10 10,560,714.637 10 17,162,893.358 10 10,690,968.660 10 307,834,584.653 10 36,813,682.930 10 44,324,021.692 10 5,507,673.736 10 20,000,000.000 10 25,000,000.000 10 1,273,641,085.750 10 10 10 10 10 10 10 10 10 10 10 1,000 10 10 1,000 10 1,000 10 49,998,500.045 24,980,764.811 3,037,013.021 8,755,805.505 63,035,205.640 15,091,376.836 65,126,208.032 55,249,333.403 19,202,604.978 8,109,058.128 743,730.667 559,993.789 15,144,244.765 11,935,032.220 672,200.507 65,485,982.136 737,512.986 81,220,672.950

AMBUJA CEMENTS LTD.

73

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

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) .......................................... Stock-in-trade : Raw materials (including in transit - Rs. 1.49 crores; 31.12.2007- Rs. 6.51 crores) Materials-in-process ........................................................................................ Finished goods ................................................................................................ Construction Scrap, at estimated realisable value ...................................................... Scrapped assets awaiting disposal, at estimated realisable value ............................... TOTAL ................................................................. 84.13 119.98 78.01 282.12 1.03 939.75 656.60 387.80 53.05 85.94 53.44 192.43 0.30 1.07 581.60

SCHEDULE 'H' - SUNDRY DEBTORS

Over six months : Good (Secured by way of security deposit Rs. 0.06 crore) ................................... Doubtful ....................................................................................................... Less : Provision ................................................................................................ 1.84 8.72 8.72 1.84 Others (Secured by way of security deposit Rs. 53.58 crores) (Refer Note below) ................................................................................................... TOTAL ................................................................. 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) and ACC Concrete Limited Rs. 2.58 crores (31.12.2007 - Rs. 2.42 crores), companies under same management 222.76 224.60 1.00 9.00 9.00 1.00 144.68 145.68

SCHEDULE 'I' - CASH AND BANK BALANCES

Cash on hand ....................................................................................................... Cheques on hand with Banks as Collecting Agency in terms of an arrangement ......... Bank Balances : With Scheduled Banks : In Current Account ........................................................................................... In Fixed Deposits (Deposit Receipts of Rs. 2.12 crores (31.12.2007- Rs. 2.04 crores) deposited with Government Departments as Security Deposit and Rs. 25.63 crores (31.12.2007- Rs. 0.02 crore) deposited with banks as security deposit for guarantees (including accrued interest Rs. 2.01 crores (31.12.2007 - Rs. 0.03 crore)) ......................................................................... 104.18 74.88 0.36 19.19 0.35 39.71

728.11 832.29

527.64 602.52 642.58

TOTAL .................................................................

851.84

SCHEDULE 'J' - OTHER CURRENT ASSETS

Interest Receivable on Investments ............................................................................ Other Interest receivable .......................................................................................... Sundry receivables (including due from a subsidiary company Rs. Nil; 31.12.2007 - Rs. 0.04 crore) TOTAL ................................................................. 3.49 18.66 1.24 23.39 3.49 8.59 0.04 12.12

AMBUJA CEMENTS LTD.

74

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE 'K' - LOANS AND ADVANCES (Unsecured Good, unless otherwise stated)
Loan to a subsidiary company (Refer Note 20) .......................................................... 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) ........................................................ Doubtful .................................................................................................. Less : Provision ........................................................................................ 0.25 0.25

231.79 9.41 9.41 231.79

164.99 9.57 9.57 164.99 24.93 15.18 205.35

Deposits Including National Savings Certificates Rs. 34,500/-, deposited with Government Departments as Security (31.12.2007- Rs. 34,500/-) ...................... Balance with Central Excise, Customs, Port Trusts, etc. ............................................... TOTAL .................................................................

55.83 12.00 299.87

SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONS

LIABILITIES Sundry Creditors : Dues of Micro, Medium and Small Enterprises (Refer Note 22) ........................... Others ....................................................................................................... Investor Education and Protection Fund shall be credited by the following (See Note below) * : Unclaimed Dividends ....................................................................................... Unclaimed Application Money on Securities ...................................................... Unclaimed Interest (Rs. 9,439/-) Unclaimed sale proceeds of the odd lot shares belonging to the Shareholders of erstwhile ACRL and ACEL ............................................................................. Security Deposits ..................................................................................................... Interest accrued but not due on loans ....................................................................... PROVISIONS : Provision for wealth tax, net of advances ........................................................... Provision for fringe benefit tax, net of advances (Rs. 3,689/-) ............................. Proposed Dividend .......................................................................................... Provision for Dividend Distribution Tax .............................................................. Provision for gratuity and staff benefit schemes .................................................. Provision for Compensated absences ................................................................ Provision for mines reclamation expenses (Refer Note 11) .................................. Provision for Income tax, net of payments .........................................................

0.40 879.83 880.23

0.20 573.76 573.96

12.40 0.15

10.76 0.01

2.99 15.54 100.83 6.64 1,003.24 0.31 152.26 25.87 16.53 41.79 9.96 223.84 470.56

3.06 13.83 82.08 5.67 675.54 0.51 0.01 152.24 25.87 4.58 32.37 8.15 269.82 493.55 1,169.09

TOTAL ................................................................. * Note : Amounts to be transferred to said fund shall be determined on the respective due dates.

1,473.80

SCHEDULE 'M' - MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted)
Project Development and Feasibility Report Expenses etc. ................................... Quarry / Mines Development Expenses ............................................................. Unexpired premium on pre payment of term loans ............................................ Unexpired arrangement fees ............................................................................ TOTAL ................................................................. 4.28 4.28 1.83 3.89 0.39 0.11 6.22

AMBUJA CEMENTS LTD.

75

Rs. in Crores

2008 Rs. in Crores

2007 Rs. in Crores

SCHEDULE 'N' - OTHER INCOME

Insurance Claims ............................................................................................. Dividend income from investment - other than trade .......................................... Profit / (Loss) on Sale of Current Investments (net) .............................................. Interest Income : (Gross; Tax deducted Rs. 14.77 crores; 31.12.2007 Rs. 10.54 crores) On Debentures and Bonds ....................................................................... On Fixed deposits with banks ................................................................... Others ..................................................................................................... Miscellaneous Income : (Gross; Tax deducted Rs. 0.32 crore; 31.12.2007 Rs. 0.18 crore) ................................................................................................. Surplus on Sale of Assets .................................................................................. Provisions no longer required ........................................................................... Exchange Rate Difference (net) ......................................................................... TOTAL ................................................................. 0.25 41.11 14.46 4.66 22.80 23.54

4.91 74.38 14.64 93.93 23.12 0.70 11.28 184.85 (9.46) 175.39

5.05 54.59 16.44 76.08 23.71 2.10 7.08 159.97 33.56 193.53

SCHEDULE 'O' - MANUFACTURING AND OTHER EXPENSES

1 Raw Materials Consumed : Clinker Purchased ............................................................................................ Others ....................................................................................................... Freight and Handling Charges on inter-unit material transfer ............................. Royalty and Cess ............................................................................................. Stores and Spares Consumed ........................................................................... Packing Materials Consumed ........................................................................... Power and Fuel ................................................................................................ Mines reclamation expenses ............................................................................. Repairs and Maintenance : Buildings ................................................................................................. Machinery ............................................................................................... Others ..................................................................................................... Excise duty : On captive consumption of clinker ............................................................ Other ...................................................................................................... Employees' Remuneration and Benefits : Salaries, Wages, Bonus, Allowances, etc. ................................................... Contribution to Provident and other Funds ................................................. Welfare Expenses ..................................................................................... Commission to Managing Director (Refer Note 8) ...................................... Other Administrative Expenses : Rent ....................................................................................................... Rates and Taxes ............................................................................................... Insurance ....................................................................................................... Advertisement and Publicity .............................................................................. Freight and Forwarding charges [including Rs. 5.85 crores on Exports (31.12.2007- Rs. 10.11 crores)] ...................................................... Commission on sales ....................................................................................... Discount on sales ............................................................................................. Selling and Distribution Expenses ...................................................................... Turnover Tax, Additional Tax and Purchase Tax .................................................. Miscellaneous Expenses ................................................................................... Directors' Fees and Expenses ............................................................................ Carried forward ...........................................
AMBUJA CEMENTS LTD. 76

231.72 379.58 611.30 208.25 75.81 221.00 210.53 1,325.69 1.82 14.14 67.98 16.41 98.53

138.28 316.47 454.75 162.69 74.69 162.43 180.03 1,019.77 2.96 13.72 52.65 7.84 74.21 31.40 0.08 51.64 31.48 170.02 23.45 9.27 266.07 13.90 6.19 14.20 53.94 1,012.23 12.80 75.04 25.42 7.92 209.08 0.19 4,501.55 202.74 5.88 8.99 2.40 12.89 40.72 926.83 10.48 71.06 28.79 9.08 139.27 0.22 3622.36

2 3 4 5 6 7 8

51.64

10

215.83 38.27 11.97

11

Rs. in Crores

2008 Rs. in Crores

2007 Rs. in Crores

SCHEDULE 'O' - MANUFACTURING AND OTHER EXPENSES (Contd.)

Brought forward .................................. Commission to Non-executive Directors (Refer Note 8) ...................................... Loss on Assets sold, scrapped or discarded and written off ................................. Capital Projects written off (Refer Note 29) ........................................................ Donations ....................................................................................................... Bad Debts, Sundry Debit Balances and Claims written off .................................. Provision for doubtful advances ........................................................................ Provision for diminution in value of investment .................................................. Part of Deferred Revenue expenditure, written off ............................................... Wealth Tax ...................................................................................................... 12 Variation in Stocks : CLOSING STOCKS : Materials-in-process ................................................................................. Finished goods ........................................................................................ OPENING STOCKS : Materials-in-process ................................................................................. Finished goods ........................................................................................ 119.98 78.01 197.99 85.94 53.44 139.38 (58.61) LIMESTONE : Closing Stock ........................................................................................... Opening Stock ......................................................................................... 27.75 23.74 (4.01) Less : Excise duty variation on opening / closing stock ....................................... Less : TRIAL RUN STOCKS At the commencement of commercial production of Farakka and Roorkee unit ........................................................................ (Increase) / Decrease in Stocks ......................................................................... TOTAL ................................................................. (62.62) 0.92 85.94 53.44 139.38 45.85 38.55 84.40 (54.98) 23.74 18.22 (5.52) (60.50) 1.97 4,501.55 0.87 4.26 8.11 21.48 1.39 1.72 0.22 3622.36 0.84 6.30 2.54 14.45 1.89 2.44 1.00 0.47 0.24

(61.70) 4,477.90

1.71 (56.82) 3,595.71

SCHEDULE 'P' - INTEREST AND FINANCE CHARGES

Interest : On Debentures and Bonds ............................................................................... On Fixed Loans (including interest on Swap Rs. 1.90 crores; 31.12.2007- Rs. 8.10 crores) ........................................................................... Others ....................................................................................................... Unexpired premium on prepayment of term loans amortised ..................................... Finance Charges ..................................................................................................... Less : Capitalised during the year ............................................................................. TOTAL ................................................................. 6.87 3.48 21.26 31.61 0.38 0.14 32.13 (0.07) 32.06 7.75 18.24 52.85 78.84 0.49 1.34 80.67 (4.82) 75.85

SCHEDULE 'Q' - EXCEPTIONAL ITEMS

Profit on sale of investment / associate (Refer Note 23) .............................................. Profit on sale of property .......................................................................................... Provision for diminution in value of Investment in subsidiary Company ....................... Loss on sale of Investment in subsidiary Company (Refer Note 25) ............................. Less : Provision for diminution in value of Investment in subsidiary Company .............. 303.20 10.99 (35.40) 29.54 (5.86) TOTAL ................................................................. 308.33 490.07 325.36 (29.54) 785.89

AMBUJA CEMENTS LTD.

77

SCHEDULE 'R' NOTES FORMING PART OF THE ACCOUNTS

1. (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) 1. (B) (a) Financial statements are based on historical cost and are prepared on accrual basis.

SIGNIFICANT ACCOUNTING POLICIES : Fixed Assets: (i) Fixed Assets are stated at their original cost of acquisition / installation (net of Modvat / Cenvat credit availed), net of accumulated depreciation, 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, are capitalised at cost net of Modvat / Cenvat. (iv) Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Preoperative expenses, pending allocation to the assets, and are included 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 of Section 205(2)(b) of the Companies Act, 1956, and on Vehicles on the "Written Down Value Method" in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Continuous process plants, are identified based on technical assessment and depreciated at the specified rate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is provided on a prorata basis from the date of acquisition or installation, and in the case of a new project, from the date of commencement of commercial production. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped. In respect of an asset for which impairment loss is recognised, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Machinery spares which are capitalised are depreciated over the useful life of the related fixed asset. The written down value of such spares is charged to the Profit and Loss Account, on issue for consumption. 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. Expenditure on Power Lines, ownership of which belongs to the State Electricity Boards, is amortized over the period as permitted in the Electricity Supply Act, 1948. Expenditure on Marine Structures, ownership of which belongs to the Maritime Boards, is amortized over the period of agreement.

(iii) (iv) (v) (vi) II.

Intangible Assets : (i) Expenditure to acquire Water Drawing Rights from Government / Local Authorities / other parties, is amortized over the period 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 recoverable amount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. Investments : Investments that are intended to be held for more than a year, from the date of acquisition, are classified as longterm investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. Investments other than longterm investments being current investments are valued at cost or fair value whichever is lower, determined on an individual basis. Inventories : (i) Coal, Fuel, Packing Materials and Stores & Spare Parts are valued at cost determined on weighted average basis or net realisable value, 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) Materialsinprocess 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".

(d)

(e)

AMBUJA CEMENTS LTD.

78

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 required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date. A contingent liability is disclosed, unless the possibility of an outflow of resources is remote. 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. Nonmonetary items which are carried in terms of historical cost denominated 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 those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in 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 reliably measured (i) (ii) Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basis of dates of Bill of Lading. Sales are disclosed net of sales tax, discounts and returns, as applicable. Sales exclude self consumption of cement. 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.

(g)

(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. Dividend income 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 apportioned over 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 on the nature of reclamation and the estimate of reclamation expenditure. Employee Benefits : (i) Defined Contribution Plan Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to the Profit & 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 are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, 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 Loss Account as and when the contribution is due. The deficit, if any, in the accumulated corpus of the Trust at the period end for which the Company is liable, is recognised as a provision in the Profit and Loss Account. (iii) Other longterm benefits Longterm compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet. Actuarial gains / losses, if any, are immediately recognised in the Profit and Loss Account. (k) (l) Miscellaneous Expenditure : Expenses included under the head 'Miscellaneous Expenditure' are amortized over the period of estimated future benefits. Employee Stock Compensation cost : The Company measures compensation cost relating to employee stock option using the intrinsic value method. Discount on Equity Shares as compensation expenses under the Employee Stock Option Scheme, is amortized in accordance with Securities and Exchange Board of India (SEBI) Guidelines.

(j)

(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 as part 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 Securities Premium Account in accordance with Section 78 of the Companies Act, 1956.
AMBUJA CEMENTS LTD. 79

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

(iii) Borrowing cost such as discount or premium and ancillary costs in connection with arrangement of borrowings excluding debenture and 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 amount expected to be paid to the tax authorities in accordance with the Indian Incometax Act. Deferred income tax reflects the impact of current year 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 tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which these assets can be realised in future whereas in case of existence of carry forward of losses or unabsorbed depreciation, deferred tax assets are recognised only if there is virtual certainty of realisation backed by convincing evidence. Deferred Tax Assets are reviewed at each Balance Sheet date. Assets given under finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the IRR method. The principal amount received reduces the net investment in the lease and interest is recognised a revenue. Initial direct cost such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account. Segment Reporting Policies : Identification of segments : The Company's operating businesses are organized and managed separately according to the nature of products and services provided with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments 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 the financial 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 31.12.2008 Rs. in Crores 2. a) Contingent liabilities not provided for in respect of : (i) (ii) Bank Guarantee given to Mines & Geology Dept. Government of Rajasthan for setting up of Cement plant. .......................................... Claims against the Company not acknowledged as debts (a) (b) (c) (d) (a) (b) (c) (d) (e) Disputed liability relating to labour matters ................................ For acquisition of land .............................................................. For Non Agriculture Assessment Tax ........................................... Others ..................................................................................... Disputed liability in respect of Incometax demands (including interest) matters under appeal ................................................ Disputed Salestax demands (including interest and penalty) matters under appeal ............................................................. Disputed Excise demands matters under appeal (Deposit with Excise Department Rs. 0.40 crores; Previous Year Rs. 0.40 crores) Disputed Customs demands matters under appeal .................. Disputed liability of RTO Tax on Mining Machinery ...................... 26.31 32.87 2.65 25.56 23.69 28.61 2.65 18.26 2.00 As at 31.12.2007 Rs. in Crores

(o)

(p)

(iii) Tax matters 63.68 10.49 16.55 2.22 0.62 16.37 10.43 10.06 1.74 0.62

(iv) Disputed liabilities relating to Railway Freight on Cement matter once decided in favour of the Company by the Honourable High Court of Gujarat was remanded back by the Honourable Supreme Court pursuant to an Special Leave Petition filed by the railways. .................. (v) Disputed liabilities relating to Coal claims matter pending in the Honourable High Court : (a) (b) (c) Railway freight on Coal ............................................................. Penal freight on Excess Weight of Coal ....................................... Interest on Premium on Coal .....................................................

5.51

5.51

1.49 0.24 3.29

1.49 0.24 3.29

In respect of items above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgements / decisions pending at various forums / authorities.
AMBUJA CEMENTS LTD. 80

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

As at 31.12.2008 Rs. in Crores b) The Honourable High Court of Himachal Pradesh has passed an order in favour of the Company for its claim in respect of power subsidy in the form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this, Government of Himachal Pradesh on 1st May, 2004 has issued 296 5.13% 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 of Rs. 0.08 crore is refunded to the Company. The Government of Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme Court against the decision of the Honourable High Court of Himachal Pradesh. The Company has given an undertaking to refund Rs. 29.68 crores paid by the State Government together with interest thereon up to the date of final judgment in time bound manner, in the event that the matter is decided against the Company. .................................................... The Government of Rajasthan has granted 75% exemption from Sales Tax in respect of Rabriyawas unit. However, the eligibility of exemption in excess of 25% has been contested by the State Government in a similar matter of another Company and the matter is pending before the Honourable Supreme Court. The Company has given an undertaking to the Government of Rajasthan that the Company will deposit the differential amount of Sales Tax, in case the Supreme Courts decision goes against in the matter referred above. ......... Writ petition filed against the order of Madhya Pradesh State Mining Department demanding Rs. 4.76 crores towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is now pending before Honourable High Court at Bilaspur. .......................................................... As at 31.12.2007 Rs. in Crores

29.68

29.68

c)

82.16

82.16

d)

44.94 911.68

38.54 949.82

3. 4.

Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances) ............................................................. Related Party Disclosures : a) List of Related Parties and relationships : Party A Cement Ambuja International Ltd. ..................................... Ceylon Ambuja Cements (P) Ltd. ....................................... Kakinada Cements Ltd. ..................................................... M.G.T. Cements Private Ltd. .............................................. Chemical Limes Mundwa Private Ltd. ................................. B C Midigama Cements (P) Ltd. ............................................... Key Management Personnel Mr. A. C. Singhvi .............................................................. Mr. A. L. Kapur ................................................................. Mr. P B. Kulkarni .............................................................. . Mr. N. P Ghuwalewala ...................................................... . Mr. B. L. Taparia ............................................................... D Relatives of Key Management Personnel Mr. Ajay Kapur ................................................................. Mr. Milind Kulkarni (Upto 8.8.2007) .................................. E Enterprises over which significant influence exercised by (a) Directors GACL Finance Ltd. .................................................... Radha Krishna Bimalkumar Pvt. Ltd. .......................... (b) Major Shareholders Holderind Investments Ltd., Mauritius ......................... Holcim Ltd. ............................................................... Ambuja Cement India Private Ltd. .............................. Mr. N. S. Sekhsaria Mr. Suresh Neotia Son of Mr. A. L. Kapur Son of Mr. P B. Kulkarni . Relation Subsidiary (Refer Note 26)

Fellow Subsidiary of Holderind Investments Ltd. Mauritius (subsidiary till 02.06.2008) Subsidiary, (Associate upto 13.12.2007) Subsidiary from 20.10.2007 Subsidiary from 20.10.2007 Subsubsidiary till 02.06.2008 (Previous year Managing Director Upto 30.04.2007) Managing Director (Wholetime Director upto 30.04.2007) Wholetime Director Wholetime Director Wholetime Director and Company Secretary

Major shareholder having significant influence Holding Company of Holderind Investments Ltd., Mauritius Subsidiary of Holderind Investments Ltd., Mauritius (Associate upto 30.4.2007)
81

AMBUJA CEMENTS LTD.

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

Party Holderind BV ............................................................ Holcim CTC Trading Co. ........................................... Holcim Trading Pte Ltd., Singapore ............................ Holcim Group Supports Ltd. ...................................... Holcim Trading FZCO, Dubai .................................... PT Holcim Indonesia ................................................. Holcim Services (Asia) Ltd. ......................................... Holcim Services (South Asia) Ltd. ............................... Holcim Lanka Ltd. ..................................................... Siam City Cement, Thailand ...................................... St. Lawrence Cement Inc., Canada ............................ ACC Ltd. .................................................................. ACC Concrete Ltd. .................................................... ACC Nihon Casting Ltd. ............................................ ACC Machinery Company Ltd. .................................. b) Disclosures required for related parties transactions : Rs. in Crores Transactions Subsidiaries Key Management Personnel Relatives of Key Management Personnel Enterprises over which significant influence exercised by Directors, Key Management Personnel and Major Shareholders 192.56 (111.85) 238.84 (208.95) 0.11 (34.13) (1.05) 589.33 (1,061.52) 5.09 (0.98) () Rs.1700 Rs.4250 0.40 () 60.88 (22.09) () () () 53.23 (32.11) 19.83 (14.19) Relation Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Associate of Holderind Investments Ltd., Mauritius Subsidiary of ACC Ltd. From 07.05.2007 Subsidiary of ACC Ltd. Subsidiary of ACC Ltd, upto 10.03.2008

I. Transactions during period Purchase of Goods Sale of Goods Purchase of Fixed Assets Sale of Fixed Assets Sale of Investments Receiving of Services Remuneration Dividends Received Other Recoveries Others Payments Equity contribution Loans given II. Amounts Outstanding as at Balance Sheet date Loans given Outstanding Amounts receivable Amounts payable

() (25.35) () () () () () () () (0.25) (2.34) (0.25) (0.25) (10.06) (0.26)

() () () () () () 9.22 (13.66) () () () () () () () ()

() () () () () () 0.53 (0.35) () () () () () () () ()

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.
AMBUJA CEMENTS LTD. 82

Details of material related party transactions [included in b] Rs. in Crores Key Management Personnel Holcim Holcim Holcim CTC Trading Services Trading Pte. Ltd. (South Co. Singapore Asia) Ltd. () () 216.78 () () () () () () () () () () () 0.01 () () () () 0.13 () () 0.13 () () 12.64 (0.04) 2.98 (3.37) 6.00 (8.19) () () (7.69) () () () () () 1.15 (1.08) () () () () () () 2.58 (2.42) () () () () () (2.81) 47.66 (28.74) 6.86 (2.96) () () () () () () () () () () () () () () () () 25.54 (3.98) () 0.17 (0.69) (5.88) () () () () 0.42 () () () () () () () () () () () () () () () () 2.97 (1.04) () 1.05 () 109.84 (25.52) () () () () () 2.33 () () () () () () () 1.42 () () 18.42 (5.45) () 5.61 (2.34) () () () () () () Holcim Holcim Lanka Services Ltd. (Asia) Ltd. Holcim Holcim Trading Group FZCO, Supports Dubai Ltd. (0.12) () () () () 588.91 (1,061.52) Enterprises Over which significant influence is exercised by Directors / Key Management Personnel, Major shareholders Holderind Investments Ltd.

Description

Subsidiary

Ceylon Chemical M.G.T. Mr. A. L. Mr. P. B. Mr. N. P. Mr. B. L. Mr. A. C. PT Holcim Radha St. ACC Ltd. Ambuja GACL ACC Ambuja Limes Cements Kapur Kulkarni Ghuwale- Taparia Singhvi Indonesia Krishna Lawrence Cement Finance Concrete Cements Mundwa (P) Ltd. wala Bimalkumar Cement India Ltd. Ltd. (P) Ltd. (P) Ltd. Pvt. Ltd. Inc. Pvt. Ltd. Canada () () () () () () () (0.98) () () () () () () () () () () () () () () () 0.04 () () () () () () () () () () () () () () () () 1.34 () (2.52) (1.80) (1.54) (1.14) (6.66) () () () () 3.10 2.59 2.00 1.53 () () () () () () () (1.05) () () () () () () () () () () () () () () () () () () () () () () () () () () (14.60) () () () (194.35) 3.83 18.24 () () () () () () () () () (5.32) (28.81) () () 0.11 () () () () () () () () () (80.33) () () () 82.55

Purchase of Goods .................................

() ()

()

Purchase of Fixed Assets ..........................

()

Sale of Goods ........................................

(25.35)

Sale of Investments .................................

()

Sale of Fixed Assets .................................

()

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

AMBUJA CEMENTS LTD.

Remuneration .........................................

()

83

Receiving of Services ...............................

()

Equity Contribution .................................

() () () ()

(1.36)

Other Payments ......................................

()

Amount Receivable .................................

0.02

(10.06)

Amount Payable .....................................

(0.26)

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

2008 Rs. in Crores 5. Earnings per Share (EPS) : (i) Profit attributable to Equity Shareholders for Basic and Diluted EPS ............. (ii) Weighted average number of Equity Shares for Basic EPS ........................... Add : Potential equity shares on exercise of option of ESOS ........................ Add : Potential equity shares on exercise of Rights and Warrants Add : kept in abeyance out of the Rights issue in 1992 ............................... Weighted average number of shares for Diluted EPS .................................. (iii) Nominal Value of Shares .......................................................................... (iv) Earning per Share : Basic ........................................................................................ Diluted ........................................................................................ 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 .............................................................................. Outside India ........................................................................... ii) Other Income Within India .............................................................................. Outside India ........................................................................... 1,402.27 Nos. 1,522,509,108 462,811 200,513 1,523,172,432 Rs. 2.00 9.21 9.21 2007 Rs. in Crores 1,769.10 Nos. 1,520,262,996 2,957,963 269,898 1,523,490,857 Rs. 2.00 11.64 11.61

6,007.89 226.76 6,234.65 81.46 81.46

5,353.89 277.47 5,631.36 116.98 0.47 117.45

b)

All the Assets of the Company, except the debtors and loans and advances amounting to Rs. 47.63 crores (31.12.2007 - Rs. 44.39 crores), are within India.

7.

Deferred Tax Liability : Break-up of Deferred Tax Assets and Liabilities are as under : Deferred Tax Liabilities, on account of : Depreciation ........................................................................................ Total ........................................................................................ Deferred Tax Assets, on account of : Employee Benefits .................................................................................... Provision for Diminution in Value of Investments ........................................ Others ........................................................................................ Total ....................................................................................... Net Deferred Tax Liabilities ...............................................................................

409.31 409.31 20.98 7.58 28.56 380.75 2008 Rs. in Crores

406.16 406.16 13.47 6.69 7.62 27.78 378.38 2007 Rs. in Crores

Rs. in Crores 8. A) Managerial Remuneration : i) Computation of Managing Directors', Whole-time Directors' and Directors' Commission : Profit as per Profit and Loss Account .......................................................... Add : Managing Directors' Remuneration (including perquisite) ................. Whole-time Directors' Remuneration (including perquisite) ............... Commission to Non-executive Directors .......................................... Depreciation and Amortisation ....................................................... Loss on sale / Provision for Diminution's in value of investment ........ Provision for Wealth Tax ................................................................. Provision for Fringe Benefit Tax ....................................................... C/f .................................. Carried forward ..................................
AMBUJA CEMENTS LTD. 84

1,402.27 3.10 6.12 0.87 259.76 0.22 5.20 275.27 1,402.27

1,769.10 8.17 5.49 0.84 236.34 1.00 0.24 5.15 257.23 1,769.10

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

Rs. in Crores Brought forward .................................. B/f .................................. Provision for Current Tax ................................................................ Provision for Deferred Tax .............................................................. 275.27 560.00 2.37 837.64 2,239.91 Less : Depreciation under Section 350 of the Companies Act, 1956 .......... Excess of Sale price over the cost of assets sold ............................... Profit on sale of Subsidiary / Joint Venture / Associates .................... Profit on sale of Investment, net ...................................................... Profit on which Commission is payable ..................................................... Eligible Remuneration to the Managing and Whole-time Directors in terms of Section 309 of the Companies Act, 1956, 10% of profit on which commission is payable as computed above ........................... Less : Managerial Remuneration (excluding commission) ................. Balance available for payment of Commission ii) Commission a) Commission to be paid to the Managing Director as determined by Board of Directors ................................................................ b) Commission to Non-executive and Independent Directors : Eligible Commission in terms of Section 309 of the Companies Act, 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 . 259.76 10.99 297.34 14.46 582.55 1,657.36 2008 Rs. in Crores 1,402.27 2007 Rs. in Crores 1,769.10 257.23 939.00 (0.90) 1,195.33 2,964.43 236.34 326.40 460.53 23.54 1,046.81 1,917.62

165.74 9.22 156.52

191.76 7.78 183.98

5.88

0.87 0.87

0.84 6.72

B)

The Profit & Loss Account includes payments to and provisions for Managerial remuneration as under : Salaries, Allowances and Performance Bonus ............................................ Commission to the Managing Director ...................................................... Contribution to Provident & Other Funds ................................................... Perquisites ...............................................................................................

7.61 1.29 0.32 9.22

6.66 5.88 1.01 0.11 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 Gratuity Particulars Funded Death and Post Disability Retirement Non Scheme Medical Funded (Shipping Benefits Staff) Non (PRMB) Funded Non Funded Gratuity Funded Non Funded 2007 Death and Post Disability Retirement Scheme Medical (Shipping Benefits Staff) Non (PRMB) Funded Non Funded

I.

Expense recognised in the Statement of Profit and Loss Account for the year ended 31st December, 2008 1 Current Service Cost ........................................... 2 Interest Cost ....................................................... 3 Employee Contributions ...................................... 4 Expected Return on Plan Assets ........................... 5 Actuarial (Gains) / Losses ...................................

3.72 3.49 (2.89) 16.48

0.08 0.05 0.07

0.09 0.03 (0.15)

85

0.10 0.12 0.73

2.38 1.89 (1.82) 6.02

0.09 0.06 (0.10)

0.07 0.03 (0.16)

0.10 0.09 (0.03)

AMBUJA CEMENTS LTD.

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

Rs. in crores 2008 Gratuity Particulars Funded Death and Post Disability Retirement Non Scheme Medical Funded (Shipping Benefits Staff) Non (PRMB) Funded Non Funded 0.20 (0.03) 0.95 Gratuity Funded Non Funded 2007 Death and Post Disability Retirement Scheme Medical (Shipping Benefits Staff) Non (PRMB) Funded Non Funded (0.06) 0.16

6 7 8 9 II.

Past Service Cost ................................................ Settlement Cost .................................................. Losses / (gains) on acquisition / divesture ............ Total Expense .....................................................

20.80

2.47 10.94

0.05

Net Asset / (Liability) recognised in the Balance Sheet as at 31st December, 2008 1 Present Value of Defined Benefit Obligation ........ 2 Fair Value of Plan Assets ..................................... 3 Funded Status [Surplus / (Deficit)] ........................ 4 Net Asset / (Liability) as at 31st December, 2008 . Change in Obligation during the Year ended 31st December, 2008 1 Present value of Defined Benefit Obligation at the beginning of the year .................................... 2 Current Service Cost ........................................... 3 Interest Cost ....................................................... 4 Settlement Cost .................................................. 5 Past Service Cost ................................................ 6 Employee Contributions ...................................... 7 Liabilities assumed on acquisition / (settled on divesture) ........................................... 8 Actuarial (Gains) / Losses ................................... 9 Benefits Payments ............................................... 10 Present Value of Defined Benefit Obligation at the end of the year ............................................. Change in Assets during the Year ended March 31, 2008 1 Plan Assets at the beginning of the year .............. 2 Assets acquired on amalgamation in previous year 3 Settlements ......................................................... 4 Expected return on plan assets ............................ 5 Contributions by employer .................................. 6 Actual Benefit Paid .............................................. 7 Actuarial Gains / (Losses) ................................... 8 Plan Assets at the end of the year ........................ 9 Actual Return on plan assets ...............................

63.21 50.04 (13.17) (13.17)

0.74 (0.74) (0.74)

0.33 (0.33) (0.33)

2.29 (2.29) (2.29)

42.39 40.17 (2.22) (2.22)

0.68 (0.68) (0.68)

0.35 (0.35) (0.35)

1.33 (1.33) (1.33)

III.

42.39 3.72 3.49 16.67 (3.06) 63.21

0.68 0.08 0.05 0.07 (0.14) 0.74

0.36 0.09 0.03 (0.15) 0.33

1.34 0.10 0.12 0.73 2.29

25.95 2.38 1.89 7.15 7.81 (2.79) 42.39

0.91 0.09 0.06 (0.10) (0.28) 0.68

0.42 0.07 0.03 (0.16) 0.36

1.18 0.10 0.09 (0.03) 1.34

IV.

40.17 2.89 9.85 (3.06) 0.19 50.04 3.08

0.14 (0.14)

2008 100%

24.39 4.69 1.82 10.28 (2.79) 1.78 40.17 3.61

0.28 (0.28) 2007 100% 1% increase 0.04 0.27

V. VI.

The major categories of plan assets as a percentage of total plan Qualifying Insurance policy ...............

Effect of One percentage point change in the assumed Medical Inflation rate : ........................... Increase / (Decrease) on aggregate service and interest cost ......................................................... Increase / (Decrease) on Present value of Defined Benefit obligation as at 31st December, 2008 ....... VII. Actuarial Assumptions: 1 Discount Rate ............................................... 2 Expected rate of return on plan assets ........... 3 Mortality ...................................................... 4 Turnover rate ................................................ 5 Medical premium inflation ............................ 6 Salary Escalation ..........................................

1% increase 0.08 0.50

1% decrease (0.06) (0.40)

1% decrease (0.04) (0.22)

5.90% p.a. 7.50% p.a. LIC (199496) mortality tables Age 2144 : 2%, Age 45 57 : 1% 5% p.a. 7% p.a.
86

8.05% p.a. 7.50% p.a. LIC (199496) mortality tables Age 2144 : 2%, Age 45 57 : 1% 5% p.a. 7% p.a.

AMBUJA CEMENTS LTD.

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

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 reliably 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. IX. Amounts recognized as an expense in respect of defined benefit plans as under : 2008 Rs. in Crores a) b) c) Gratuity * ............................................................... Shipping Staff Gratuity ............................................ Post Retirement Medical Benefits .............................. * Net of Rs. 0.68 crore (31.12.2007 Rs. 1.65 crores) capitalised as preoperative Expenses. c) d) Amount recognised as an expense in respect of Compensated Leave Absences is Rs 12.85 crores (31.12.2007 Rs. 6.35 crores). 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 related obligation. The Gratuity Scheme is invested in a Group GratuitycumLife 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. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. We understand that LIC's overall portfolio of assets is well diversified as such, the longterm return on the policy is expected to be higher than the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have 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). The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The Company expects to contribute Rs. 13.00 crores to Gratuity Fund in the year 2009. Amount for the current and previous two periods ar as follows : 2008 Rs. in Crores i) Gratuity - Funded Defined benefit obligation ........................................................ Plan assets ............................................................................... Surplus / (deficit) ...................................................................... Experience adjustments on plan assets ...................................... Experience adjustments on plan liabilities .................................. ii) Gratuity - Non Funded Defined benefit obligation ........................................................ Plan assets ............................................................................... Surplus / (deficit) ...................................................................... Experience adjustments on plan assets ...................................... Experience adjustments on plan liabilities .................................. iii) Death and Disability Scheme (Shipping Staff) Defined benefit obligation ........................................................ Plan assets ............................................................................... Surplus / (deficit) ...................................................................... Experience adjustments on plan assets ...................................... Experience adjustments on plan liabilities .................................. iv) Post Retirement Medical Benefit (PRMB) Defined benefit obligation ........................................................ Plan assets ............................................................................... Surplus / (deficit) ...................................................................... Experience adjustments on plan assets ...................................... Experience adjustments on plan liabilities ..................................
AMBUJA CEMENTS LTD. 87

2007 Rs. in Crores 9.29 0.05 0.16 9.50

20.12 0.20 0.95 21.27

(e) (f) (g)

2007 Rs. in Crores 42.39 40.17 (2.22) 9.73 1.79 0.68 (0.68) (0.08) 0.35 (0.35) (0.16) 1.33 (1.33)

63.21 50.04 (13.17) 4.48 0.19 0.74 (0.74) (0.03) 0.33 (0.33) (0.18) 2.29 (2.29) (0.02)

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

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 a) b) c) d) e) f) g) Date of grant ........................................... Date of Board Approval ............................ Date of Shareholders Approval ................. Number of options granted ....................... Method of Settlement (Cash / Equity) ......... Vesting period from the date of ................. Grant ...................................................... Exercise Period from the date of ................ Vesting ..................................................... 2000-01 13.11.2000 8.8.2000 6.10.2000 970,700 Equity Equally in 4 years Equally in 4 years 2001-02 19.10.2001 3.8.2001 5.10.2001 711,100 Equity 1 year 5 years 2002-03 24.10.2002 20.8.2002 11.10.2002 815,800 Equity 1 year 5 years 2003-04 21.1.2004 31.7.2003 6.10.2003 864,600 Equity 1 year 5 years 2004-05 10.3.2005 23.7.2004 18.10.2004 812,325 Equity 1 year 4 years 2005-06 7.11.2005 24.6.2005 10.10.2005 873,075 Equity 1 year 4 years 2007 7.6.2007 11.1.2007 26.3.2007 7,386,750 Equity 1 year 4 years 2007 1.7.2008 11.1.2007 2008 1.7.2008 1.7.2008

26.3.2007 22.4.2008 111,150 7,384,300 Equity 1 year 4 years Equity 1 year 4 years

b)

The details of activity under the ESOP schemes have been summarised below : 2008 Particulars Number of Shares Weighted Average Exercise price (Rs.) 97.90 113.00 95.12 56.72 22.13 91.58 99.06 Number of Shares 2007 Weighted Average Exercise price (Rs.) 57.03 113.00 113.00 58.30 19.96 97.90 55.87

a) b) c) d) e) f) g) h)

Outstanding at the beginning of the year ................. Granted during the year ......................................... Forfeited during the year ......................................... Exercised during the year ........................................ Expired during the year ........................................... Outstanding at the end of the year .......................... Exercisable at the end of the year ............................ Weighted average remaining contractual life ........... (in years)

9,692,013 7,495,450 635,000 219,502 73,875 16,259,086 9,129,936 3.62

8,216,938 7,386,750 255,550 5,546,832 109,293 9,692,013 2,560,813 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 ESOP Plans Number of options outstanding Weighted average remaining contractual life of options (in years) 0.87 1.05 1.19 1.85 3.43 4.50 4.50 Weighted average exercise price (Rs. per share of Rs. 2 each) 18.40 - 41.33 59.07 69.60 113.00 82.00 82.00 Number of options outstanding 2007 Weighted average remaining contractual life of options (in years) 1.87 0.81 2.06 2.19 2.85 4.44 Weighted average exercise price (Rs. per share of Rs. 2 each) 18.40 22.13 41.33 59.07 69.60 113.00

2000-01 * .......... 2002-03 * .......... 2003-04 * .......... 2004-05 * .......... 2005-06 # ......... 2007 .................. 2007 .................. 2008 ..................

35,425 32,550 105,450 193,350 6,862,500 92,950 7,036,200

35,900 12,000 39,650 110,175 215,575 7,131,200

* one option represents 7.5 equity shares. # one option represents 5 equity shares.
AMBUJA CEMENTS LTD. 88

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

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 valuation model has been used for computing the weighted average fair value considering the following inputs: Variables Grant date .............................................................................................................. Market Price (Rs. per share) on the date of grant ....................................................... Volatility .................................................................................................................. Risk free rate ........................................................................................................... Exercise price in Rs. ................................................................................................. Time to Maturity (Years) ........................................................................................... Dividend yield ......................................................................................................... Option fair value (Rs. per share) .............................................................................. 2008 1.7.2008 73.00 35.94% 7.02% 82.00 3 2.58% 16.95 2008 Rs. in Crores 2007 7.6.2007 109.55 33.73% 7.89% 113.00 3 2.22% 29.28 2007 Rs. in Crores

Particulars e) Effect of the employee share based payment plans on the profit and loss account and on its financial position: Total Employee Compensation Cost pertaining to share based payment plans ........... Compensation cost pertaining to equity settled employee share based payment plan included above ............................................................................................... Liability for employee stock options outstanding as at year end ................................. Deferred Compensation Cost .................................................................................. f) Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method is as under : Profit as reported .................................................................................................... Add : Employee stock compensation under intrinsic value method ............................. Less: Employee stock compensation under fair value method .................................... Proforma profit ....................................................................................................... Earning per share (Rs.) Basic : As reported .................................................................................................. Proforma ...................................................................................................... Diluted : As reported .................................................................................................. Proforma ...................................................................................................... 11. Movement of provisions during the period as required under Accounting Standard - 29 Mines Reclamation Expenditure :

0.34

0.38

1,402.27 15.10 1,387.17

1,769.10 11.84 1,757.26

9.21 9.11 9.21 9.11

11.64 11.56 11.61 11.53

2008 Rs. in Crores Opening Provision .......................................................................................................... Add : Provision during the period .................................................................................... Less : Utilisation during the period ................................................................................... Less : Reversal during the period ..................................................................................... Closing Provision ............................................................................................................ Mines reclamation expenditure is incurred on an ongoing basis and until the closure of the mine. The actual expenses may vary based on the nature of reclamation and the estimate of reclamation expenditure.
AMBUJA CEMENTS LTD. 89

2007 Rs. in Crores 7.02 1.44 8.46 0.31 8.15 8.15

8.15 3.03 11.18 11.18 1.22 9.96

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

2008 Rs. in Crores 12. Payment to Auditors : (a) Statutory Auditors (i) As Auditors ..................................................................................................... (ii) Audit of financial statements as per International Financial Reporting Standard .. (iii) In other capacity Certification Work ......................................................................................... (iv) For Expenses ................................................................................................... (b) Cost Auditors (i) As Auditors ..................................................................................................... (ii) For Expenses - (Previous year - Rs. 35,918/-) .................................................... 2007 Rs. in Crores

0.84 0.30 0.38 0.18 1.70 0.03 0.01 0.04

0.61 0.25 0.43 0.08 1.37 0.03 0.03

31.12.2008 MT 13. Licensed & Installed Capacity, Production, Stocks and Turnover: Cement (i) (ii) Licensed Capacity (see Note "a") Installed Capacity (see Note "b") ..................................... 22,000,000 17,757,706 252,828 305,770 53.44 78.01 Rs. in Crores

31.12.2007 MT Rs. in Crores

18,500,000 16,861,080 216,253 252,828 38.55 53.44

(iii) Production (excluding Trial Run Production of Nil MT; Previous Year 11948 MT) ......................................... (iv) Stocks : Opening ........................................................................ Closing ......................................................................... (v) Turnover (see Note "c" & "e") Cement (including Trial Run stock of Nil MT; Previous Year 6471 MT) .......................................... Sale of surplus generated power .............................................

17,586,010

7,075.51 14.38 7,089.89

16,771,060

6,381.27 14.93 6,396.20

Notes: (a) The Company's product is exempt from Licensing requirements under New Industrial Policy in terms of Notification no. S.O.477(E) dated 25th July, 1991. (b) (c) (d) (e) Annual Capacity as certified by the management and, being a technical matter, accepted by the Auditors. Excludes Self Consumption for Capital and Revenue jobs .... Shortages, Samples and Handling Loss, etc. ....................... Includes VAT/Sales Tax remission ....................................... 110,189 8,565 73.76 17.84 57,137 2,779 73.08 9.47

14. Raw Materials consumed : (i) Limestone and clay Raised by the Company .......................................... Purchased .............................................................. Transportation and Handling Charges ..................... (ii) Gypsum ........................................................................ (iii) Silica ............................................................................. (iv) Iron ore ......................................................................... (v) Clinker Purchased .......................................................... (vi) Fly Ash .......................................................................... (vii) Others ........................................................................... TOTAL ...................................................................
AMBUJA CEMENTS LTD. 90

16,486,074 58,131 1,055,055 236,234 96,147 703,695 4,421,037 1.47 29.42 140.85 9.72 6.98 231.72 161.38 29.76 611.30

16,534,722 139,941 952,985 246,870 91,073 467,536 4,078,012 3.54 27.24 116.67 9.57 5.96 138.28 136.73 16.76 454.75

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

31.12.2008 Rs. in Crores 15. (a) Raw Materials Consumed : (i) (ii) Imported ................................................................ Indigenous ............................................................. TOTAL ................................................................... (b) Spares Consumed : (i) (ii) Imported ................................................................ Indigenous ............................................................. TOTAL ................................................................... 20.89 200.11 221.00 9.45 90.55 100.00 24.37 138.06 162.43 31.12.2008 Rs. in Crores 16. CIF Value of imports : (i) (ii) Raw Materials ......................................................................................................... Fuels ...................................................................................................................... 51.14 504.89 50.41 142.20 28.03 322.23 25.84 19.77 15.00 85.00 100.00 31.12.2007 Rs. in Crores 51.46 559.84 611.30 8.42 91.58 100.00 50.08 404.67 454.75 11.01 88.99 100.00 Percentage 31.12.2007 Rs in Crores Percentage

(iii) Spares .................................................................................................................... (iv) Capital Goods ........................................................................................................ 17. Expenditure in Foreign currency : (i) (ii) Technical Fees (Net of tax) (Capitalised Rs. 3.82 crores; Previous year - Rs. 0.93 crore) Interest & Finance Charges (Capitalised Rs. 0.07 crore; Previous year - Rs. 11.69 crores)

6.71 3.51 1.67 6.02 0.49 20.73

2.02 20.15 0.77 2.21 0.20

(iii) Travelling Expenses ................................................................................................. (iv) Ship Charter Hire, Port Dues, etc. ............................................................................. (v) Consultancy Charges ..............................................................................................

(vi) Other Matters (Capitalised Rs. 2.14 crores; Previous year - Rs. Nil) ............................ 18. Remittances in Foreign Currency : On account of dividend to non-resident shareholders Final Dividend No. of shareholders ................................................................................................ No. of Equity Shares ................................................................................................ Amount remitted, net of tax (Rs. in crores) ................................................................ Year to which it pertains .......................................................................................... First Interim Dividend No. of shareholders ................................................................................................ No. of Equity Shares ................................................................................................ Amount remitted, net of tax (Rs. in crores) ................................................................ Period to which it pertains ........................................................................................ 19. Earnings in Foreign Exchange (i) (ii) F.O.B. Value of Exports ............................................................................................ Other Income .........................................................................................................

274 546,019,469 54.60 2007

307 274,258,767 21.94 2005-2006

254 545,920,064 65.51 2008

293 342,704,758 85.68 2007

226.53 2.00

277.47 0.47

AMBUJA CEMENTS LTD.

91

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

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 Outstanding balance Rs in Crores Loans and Advances in the nature of loans given to Subsidiaries and Associates, etc. Loans to Subsidiaries : Chemical Limes Mundwa Private Limited ......................... 21. Derivative Instrument and Unhedged Foreign Currency Exposure As at 31.12.2008 Amount in million As at 31.12.2007 Amount in million 20.00 0.25 0.25 0.25 0.25 Maximum balance during the year Rs in Crores As at 31.12.2007 Outstanding balance Rs in Crores Maximum balance during the year Rs in Crores

S. No. Purpose (A) (B) External Commercial Borrowing loan of JPY 2334 million swapped against USD ........................................................................................ Unhedged Foreign Currency Exposure 1. External Commercial Borrowing loan taken in JPY 2334 million and swapped against USD .................................................................................................... 2. Outstanding creditors for purchase of Raw Material & Spares ............................ 3. Outstanding creditors for purchase of Raw Material & Spares ............................ 4. Outstanding creditors for purchase of Raw Material & Spares ............................ 5. Outstanding creditors for purchase of Raw Material & Spares ............................ 6. Outstanding creditors for purchase of Capital Goods ........................................ 7. Outstanding creditors for Expenses ................................................................... 8. Outstanding creditors for Expenses ................................................................... 9. Outstanding creditors for Expenses ................................................................... 10. Outstanding creditors for Expenses ................................................................... 11. Outstanding creditors for Expenses ................................................................... 12. Outstanding debtors ........................................................................................ 13. Exchange Earner Foreign Currency Account with Hongkong & Shanghai Banking Corporation .................................................................................................... 14. Exchange Earner Foreign Currency Account with Standard Chartered Bank .........

Currency

USD

USD USD EURO SEK DKK EURO USD CHF THB CAD AUD USD USD USD

9.11 0.04 1.81 1.22 7.48 0.03 0.12 9.83 0.89 0.18

20.00 0.58 0.80 0.09 0.01 0.01 0.10 11.26

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.

AMBUJA CEMENTS LTD.

92

SCHEDULE R NOTES FORMING PART OF THE ACCOUNTS (Contd.)

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 (31.12.2007Rs. 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 years presentation.

Signatures to Schedules A to R As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

AMBUJA CEMENTS LTD.

93

BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE

I. Registration Details Registration No. Balance Sheet Date II. 4717 31.12.2008 State Code 04

Capital Raised during the Year (Amount in Rs. Thousand) Public Issue Bonus Issue On Amalgamation Right Issue (Abeyance Cases) Private Placement ESOS 9 439

III.

Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand) Total Liabilities Sources of Funds Paid-up Capital Share Application Money Employee Stock Option Outstanding Secured Loans Deferred Tax Liabilities Application of Funds Net Fixed Assets Net Current Assets Accumulated Losses 51,399,816 8.656,492 Investments Misc. Expenditure 3,323,908 42,805 3,045,199 3,412 1,000,000 3,807,465 Reserves & Surplus Unsecured Loans 53,680,210 1,886,735 63,423,021 Total Assets 63,423,021

IV.

Performance of Company (Amount in Rs. Thousand) Turnover (Net of Excise duty) Profit before Tax Earning per Share in Rs. 62,346,427 19,698,445 9.21 Total Expenditure Profit after Tax Dividend Rate % 47,485,225 14,022,776 110%

V.

Generic Name of Principal Product of the Company Item Code No. Product Description 2,523 Portland Cement

For and on behalf of the Board B. L. Taparia Whole-time Director & Company Secretary Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 94

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

AUDITORS' REPORT
TO 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. 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 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. 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 notified pursuant to the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial 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. For S. R. BATLIBOI & ASSOCIATES Chartered Accountants per Sudhir Soni Partner Membership No.: 41870 Mumbai February 6, 2009

5.

2.

3.

AMBUJA CEMENTS LTD.

95

CONSOLIDATED BALANCE SHEET

as at 31st December, 2008
As at 31.12.2008 Rs. in Crores As at 31.12.2007 Rs. in Crores

Schedule

Rs. in Crores

SOURCES OF FUNDS
Shareholders' Funds Share Capital ................................................................... Employee Stock Option Outstanding (Refer Note 9) ............ Reserves and Surplus ........................................................ Minority Interest ........................................................................ Loan Funds Secured Loans .................................................................. Unsecured Loans .............................................................. Deferred Tax Liability, net (Refer Note 7) ................................. TOTAL ........................................ A B 304.52 0.34 5,366.54 5,671.40 C D 100.00 188.67 288.67 380.75 6,340.82 304.48 0.38 4,554.40 4,859.26 0.42 108.28 230.42 338.70 378.38 5,576.76

APPLICATION OF FUNDS
Fixed Assets ........................................................................... Gross Block ...................................................................... Less: Depreciation ............................................................. Net Block .......................................................................... Capital Work-in-Progress (Refer Note 10) ........................... Advances against capital expenditure ................................. Investments ........................................................................... Current Assets, Loans and Advances Inventories ........................................................................ Sundry Debtors ................................................................. Cash and Bank Balances ................................................... Other Current Assets ......................................................... Loans and Advances ......................................................... F G H I J K 939.77 224.60 852.13 23.41 299.67 2,339.58 Less: Current Liabilities and Provisions ......................... Current Liabilities ...................................................... Provisions ................................................................. Net Current Assets ................................................................ Miscellaneous Expenditure (to the extent not written off or adjusted) ..................................... TOTAL ........................................ Notes forming part of the Accounts .................................................... R L 1,004.77 470.56 1,475.33 864.25 M 4.28 6,340.82 678.25 490.04 1,168.29 415.43 6.22 5,576.76 E 5,710.11 2,512.87 3,197.24 1,560.76 4,758.00 386.47 5,144.47 327.82 5,251.83 2,273.98 2,977.85 510.04 3,487.89 186.86 3,674.75 1,480.36 586.27 135.38 643.37 13.52 205.18 1,583.72

As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 96

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 31st December, 2008
Schedule 2008 Rs. in Crores 2007 Rs. in Crores

Rs. in Crores

INCOME
Sales / Operating Income Sales ............................................................................... Less: Excise duty ................................................................ Other Income ........................................................................... N 7,117.03 855.24 6,261.79 175.53 6,437.32 O P 4,511.48 32.60 260.10 4,804.18 Less: Self consumption of Clinker & Cement (net of excise duty Rs. 2.88 crores: 31.12.2007 - Rs. 2.23 crores) .................... Profit before Share of profit in Associates .................................... Share of profit in Associates ....................................................... Profit before tax and exceptional items ....................................... Exceptional items ...................................................................... Profit before tax ........................................................................ Provision for Taxation Current tax ....................................................................... Income tax in respect of earlier years ................................. Deferred tax (Refer Note 7) ................................................ Fringe Benefit tax .............................................................. Net Profit ............................................................................... Balance as per last Account ....................................................... Credit balance of Profit and Loss Account of erstwhile Indo Nippon Special Cements Limited (INSCL) ........................... Transferred from Debenture Redemption Reserve ........................ Transferred from Exchange Fluctuation reserve on cessation of subsidiary ............................................................... Transferred to General Reserve .................................................. Interim Dividend on Equity Shares .............................................. Dividend Distribution Tax on above ............................................ Proposed Final Dividend on Equity Shares .................................. Dividend Distribution Tax on above ............................................ Balance carried to Balance Sheet ....................................................... Earnings Per Share of Rs. 2 each (Refer Note 6) Basic ............................................................................... Diluted ............................................................................... Notes forming part of the Accounts ....................................................
As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 97

6,483.44 764.84 5,718.60 193.83 5,912.43 3,692.73 77.09 237.18 4,007.00 (9.47) 4,782.99 1,654.33 1,654.33 303.31 1,957.64 3,997.53 1,914.90 78.94 1,993.84 795.52 2,789.36 737.00 202.00 (0.90) 5.15 567.93 1,389.71 683.74 (5.72) 1,000.00 943.25 1,846.11 530.59 0.21 30.00 1,100.00 380.41 64.65 445.06 152.24 25.87 178.13 675.84 Rs. 9.13 9.12 178.11 683.74 Rs. 12.14 12.12

EXPENDITURE
Manufacturing and other Expenses ............................................ Interest and Finance Charges .................................................... Depreciation and Amortisation ..................................................

(21.19)

560.36 2.37 5.20

182.71 31.05 213.76 152.26 25.87

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31st December, 2008
2008 Rs. in Crores 2007 Rs. in Crores

Rs. in Crores A) CASH FLOW FROM OPERATING ACTIVITIES PROFIT BEFORE TAX ................................................................................... Adjustment for : Depreciation and Amortisation ............................................................ Surplus on sale of assets ...................................................................... Exceptional Items ................................................................................ Loss on assets discarded / sold ............................................................ Capital Projects written off ................................................................... Part of deferred revenue expenditure, written off ................................... Provision for diminution in value of Investment ..................................... Profit on sale of investments ................................................................. Interest and Finance Charges .............................................................. Interest Income ................................................................................... Exchange rate difference (net) .............................................................. Dividend income ................................................................................. Bad Debts, Sundry Debit Balance Claims Written off ............................. Provision for Doubtful debts and advances (net) .................................... Provision for wealth tax ........................................................................ Share in Associate ............................................................................... 260.10 (0.70) (303.31) 4.26 8.11 1.72 (14.46) 32.60 (93.93) 9.33 (41.11) 1.39 (0.43) 0.22

1,957.64

2,789.36 237.18 (2.10) (795.52) 6.91 2.54 0.47 1.00 (23.54) 77.09 (76.10) (33.82) (22.80) 1.89 2.44 0.24 (78.94)

(136.21) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ...................... Adjustment for : Trade and other receivables ................................................................. Inventories .......................................................................................... Trade Payables .................................................................................... (183.31) (348.36) 256.76 (274.91) CASH GENERATED FROM OPERATIONS ..................................................... Direct Taxes paid ................................................................................. Miscellaneous Expenditure ................................................................... Exchange rate difference ..................................................................... (575.36) (0.27) 2.87 (572.76) NET CASH FROM OPERATING ACTIVITIES ................................................... B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets .............................................................................. Sale of Fixed Assets (net of tax of Rs. 1.67 crores; 31.12.2007 - Rs. 69.97 crores) ................................................................... Investments (Net) ( net of tax of Rs. 26.69 crores; 31.12.2007 - Rs. 62.24 crores) ................................................................... Acquisition of subsidiaries net of cash .......................................................... Disposal of Subsidiaries / Joint ventures / Associate ..................................... Interest received .......................................................................................... Dividend received ....................................................................................... NET CASH USED IN INVESTING ACTIVITIES ................................................ Carried forward .................................. 589.33 83.86 41.11 (256.69) 717.07 (1,648.18) 19.91 657.28 973.76 1,546.52 1,821.43

(703.06) 2,086.30 (106.45) (170.52) 161.96 (115.01) 1,971.29 (451.25) (0.75) 24.90 (427.10) 1,544.19

(794.35) 272.59 (725.07) (1.83) 994.35 69.03 22.80 (162.48) 1,381.71

AMBUJA CEMENTS LTD.

98

Rs. in Crores

2008 Rs. in Crores

2007 Rs. in Crores

CASH FLOW STATEMENT (Contd.)

Brought forward .................................. C) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of Share Capital including Share premium .................... Proceeds from borrowings ........................................................................... Repayment of borrowings ............................................................................ Interest and Finance Charges paid .............................................................. Swap interest (net) ...................................................................................... Unclaimed sale proceeds of the odd lot shares of erstwhile ACEL and ACRL .. Unclaimed Application money on securities ................................................. Dividend paid (including dividend distribution tax) ........................................ NET CASH USED IN FINANCING ACTIVITIES ............................................... Net Increase In Cash And Cash Equivalents ................................................. CASH AND CASH EQUIVALENTS As At 01.01.2008 (Schedule I) Ear marked for specific purpose .................................................................. Other Balances ........................................................................................... CASH AND CASH EQUIVALENTS As At 31.12.2008 (Schedule I) Ear marked for specific purpose .................................................................. Other Balances ........................................................................................... 15.40 836.73 852.13 13.83 629.54 643.37 13.83 629.54 643.37 13.55 365.92 379.47 1.24 33.94 (93.91) (58.87) (0.55) (0.07) 0.14 (390.23) (508.31) 208.76 32.29 57.68 (575.32) (34.06) (15.24) (0.08) (583.08) (1,117.81) 263.90 717.07 1,381.71

As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

AMBUJA CEMENTS LTD.

99

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
As at 31.12.2008 Rs. in Crores As at 31.12.2007 Rs. in Crores

SCHEDULES 'A' TO 'R'

SCHEDULE 'A' - SHARE CAPITAL

Authorised : 2,50,00,00,000 (31.12.2007 - 2,50,00,00,000) Equity Shares of Rs. 2 each ........... 15,00,00,000 (31.12.2007 - 15,00,00,000) Preference Shares of Rs. 10 each ......

Rs. in Crores

500.00 150.00 650.00

500.00 150.00 650.00

Issued : 1,52,29,30,444 (31.12.2007 - 1,52,27,10,942) Equity Shares of Rs. 2 each fully paid-up ................................................................. Subscribed : 1,52,25,99,424 (31.12.2007 - 1,52,23,75,422) Equity Shares of Rs. 2 each fully paid-up ................................................................. TOTAL ................................................................. 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. 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. 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. 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. 304.52 304.52 304.48 304.48 304.59 304.54

b)

c)

d)

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 SURPLUS

Subsidies : (a) Cash Subsidies from Government and other authorities : As per last Account ..................................................................................... (b) Grant-in-aid Subsidy from DANIDA .............................................................

1.83 0.12 1.95

1.83 0.12 1.95 132.35 9.93 1,151.59 31.94 1,184.77 1,183.53 1,327.76

Capital Reserve ............................................................................................... Capital Redemption Reserve ........................................................................... Security Premium : As per last Account ..................................................................................... Additions on exercise of employee stock options and others .......................... 1,183.53 1.24

132.35 9.93

Carried forward .............................

1,329.00

AMBUJA CEMENTS LTD.

100

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE B RESERVES AND SURPLUS (Contd.)

Brought forward ............................. Debenture Redemption Reserve : As per last Account ..................................................................................... Less: Transferred to Profit and Loss Account .................................................. 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 .............................................................................. Add: Profit on sale of investment eliminated earlier, now recognized ...... Less: Transferred to profit on sale of investment pursuant to sale of 11% stake in ACIL ................................................................... General Reserve : As per last Account ..................................................................................... Addition during the year: Set aside this year ....................................................................................... Less: Adjustment for employee benefits net of deferred tax .................................... Exchange Fluctuation Reserve on consolidation of overseas subsidiaries : As per last Account ..................................................................................... Add: Gain / (Loss) on translation of subsidiary ............................................. Less: Transferred to Profit & Loss Account on disposal of subsidiary Surplus as per Profit and Loss Account TOTAL ............................................................ (4.82) (0.90) (5.72) (5.72) 675.84 5,366.54 (5.59) 0.77 (4.82) (4.82) 683.74 4,554.40 3,336.70 8.90 2,336.70 25.00 25.00 1,329.00 1,327.76 55.00 30.00 25.00

186.02 186.02 2,336.70 1,000.00 3,336.70

475.85 27.40 317.23 186.02 1,245.60 1,100.00 2,345.60

SCHEDULE 'C' - SECURED LOANS

(a) (b) Debentures (Refer Note Below) .................................................................... From Banks : (ii) Working capital loan (Secured by hypothecation of inventories and book debts) ..................... TOTAL ............................................................ 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. 100.00 100.00

100.00

8.28 108.28

SCHEDULE 'D' - UNSECURED LOANS

Loans from Bank : Foreign Currency Term Loan from Banks (Due within one year Rs. Nil; 31.12.2007 - Rs. 78.84 crores) ....................................................... 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) TOTAL ............................................................

188.67 188.67

78.84 151.58 230.42

AMBUJA CEMENTS LTD.

101

SCHEDULE 'E' - FIXED ASSETS

Rs. in Crores DESCRIPTION
As at 01.01.2008

GROSS BLOCK (at Cost)

Addition on acquisition of new subsidiaries Additions Deductions/ Transfers Deduction on Cessation of Subsidiary As at 31.12.2008

DEPRECIATION / AMORTISATION
As at Addition on 01.01.2008 acquisition of new subsidiaries For the year (e) Deductions/ Deduction on Transfers Cessation of Subsidiary Upto 31.12.2008

NET BLOCK
As at 31.12.2008 As at 01.01.2008

Tangible Assets: Freehold Land ........... Leasehold Land ......... Buildings, Roads and Water Works (a) ........ Marine Structures (c) .. Plant and Machinery . Electrical Installations Railway Sidings and Locomotives (b) ......... Railway Wagons given on Lease (d) .............. Furniture, Fixtures and Office Equipments ..... Ships ........................ Vehicles .................... Power Lines (c) .......... Sub Total .................. Intangible Assets: Goodwill on Consolidation ........... Water Drawing Rights ....................... Computer Software ... Sub Total .................. TOTAL ...................... Previous year's Total .. 3.90 6.17 12.88 22.95 5,251.83 4,559.18 4.42 0.01 43.04 43.05 507.61 729.14 31.72 40.91 17.61 3.90 6.18 55.92 66.00 5,710.11 5,251.83 3.51 7.30 10.81 2,273.98 2,055.16 0.11 0.52 11.42 11.94 260.91 237.61 17.57 18.90 4.03 18.72 22.75 3.90 2.15 37.20 43.25 3,197.24 2,977.85 3.90 2.66 5.58 12.14 2,977.85 223.10 42.19 650.21 95.59 3,580.69 326.13 55.84 6.43 86.42 112.64 29.75 19.89 5,228.88 18.10 15.07 72.24 289.96 14.08 5.22 27.38 8.48 14.03 464.56 5.11 1.01 20.27 0.04 1.67 3.62 31.72 1.13 9.37 5.04 0.90 1.17 17.61 241.20 51.02 712.07 95.59 3,845.34 340.17 61.06 6.43 111.23 112.64 33.44 33.92 5,644.11 6.03 107.11 40.63 1,833.54 126.24 25.97 3.31 43.63 54.03 16.11 6.57 2,263.17 1.17 16.94 3.82 188.99 15.95 2.18 0.31 8.26 5.78 4.60 0.97 248.97 1.08 0.17 12.42 0.07 1.25 2.58 17.57 1.54 6.12 122.34 44.45 241.20 44.90 589.73 51.14 1,836.81 198.05 32.91 2.81 61.24 52.83 15.99 26.38 3,153.99 223.10 36.16 543.10 54.96 1,747.15 199.89 29.87 3.12 42.79 58.61 13.64 13.32 2,965.71

1.58 2,008.53 0.65 0.68 142.12 28.15 3.62 49.99 59.81 17.45 7.54

4.45 2,490.12

4.45 2,512.87 2,273.98

Notes : (a) Includes : i) ii) 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/-) 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. Cost incurred by the Company, ownership of which vests with the Government Authorities and Board. Railway wagons given on lease to the Railways under " Own Your Wagon Scheme" Includes Rs. 0.81 crore (31.12.2007 - Rs. 0.43 crore) capitalised as pre-operative expenses. Pursuant to Accounted Standard AS 28 "Impairment of assets", there is no impairment of assets.

(c) (d) (e) (f)

AMBUJA CEMENTS LTD.

102

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE 'F' - INVESTMENTS

Long 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 as Ambuja Cement India Limited ............................................................. In Others ................................................................................................. In Public Sector Bonds ............................................................................. 120.39 29.60 149.99 149.99 Current Investment: Quoted In Debentures ............................................................................................. Unquoted: In Units of Mutual Fund ............................................................................... TOTAL ............................................................

481.70 120.39 29.60 149.99 631.69

54.90 122.93 327.82

54.33 794.34 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) ................. Stock-in-trade : Raw Materials (Including in transit Rs. 1.49 crores; 31.12.2007 - Rs. 6.51 crores) ..................................................................... Materials-in-process ................................................................................... Finished goods ........................................................................................... Construction Scrap, at estimated realisable value ................................................. Scrapped assets awaiting disposal, at estimated realisable value .......................... TOTAL ............................................................

656.60

391.02

84.13 119.98 78.03 282.14 1.03 939.77

52.82 85.94 55.12 193.88 0.30 1.07 586.27

SCHEDULE 'H' - SUNDRY DEBTORS (Unsecured)

Over six months: Good (Secured by way of security deposit Rs. 0.06 crore) .............................. Doubtful .................................................................................................. Less : Provision ........................................................................................... 1.84 8.72 8.72 Others (Secured by way of security deposit Rs. 53.58 crores) ......................... (Refer note below) TOTAL ............................................................ Note: Due from ACC Ltd. Rs. 0.01 crore (31.12.2007 - Rs. Nil) and ACC Concrete Limited Rs. 2.58 crores (31.12.2007 - Rs. 2.42 crores), companies under same management 1.84 222.76 224.60 1.00 9.00 9.00 1.00 134.38 135.38

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103

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE 'I' - CASH AND BANK BALANCES

Cash on hand .................................................................................................. Cheques on hand with Banks as Collecting Agency in terms of an arrangement .... Bank Balances: With Scheduled Banks : In Current Account ...................................................................................... In Fixed Deposits In Fixed Deposits (Deposit Receipts of Rs. 2.12 crores (31.12.2007Rs. 2.04 crores) deposited with Government Departments as Security Deposit and Rs. 25.63 crores (31.12.2007 - Rs. 0.02 crore) deposited with banks as security deposit for guarantees [including accrued interest Rs. 2.01 crores (31.12.2007 Rs. 0.03 crore)] ............................................... TOTAL ............................................................ 0.36 19.19 0.36 39.71

104.47

75.52

728.11 832.58 852.13

527.78 603.30 643.37

SCHEDULE 'J' - OTHER CURRENT ASSETS

Interest Receivable on Investments ............................................................... Other Interest receivable ............................................................................. Sundry Receivables ..................................................................................... TOTAL ............................................................ 3.49 18.66 1.26 23.41 3.49 8.59 1.44 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 Management Rs. 2.98 crores 31.12.2007 - Rs. Nil) .......................................................... Doubtful .................................................................................................. Less : Provision ...........................................................................................

231.84 9.41 9.41 231.84

164.99 9.57 9.57 164.99 25.01 15.18 205.18

Deposits Including National Savings Certificates Rs. 34,500/-, deposited with Government Departments as Security (31.12.2007- Rs. 34,500/-) ................. Balance with Central Excise, Customs, Port Trusts, etc. .......................................... TOTAL ............................................................

55.83 12.00 299.67

SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONS

LIABILITIES Sundry Creditors : Dues of Micro, Medium and Small Enterprises (Refer Note 11) ...................... Others .................................................................................................. Investor Education and Protection Fund shall be credited by the following (See note below ) *: Unclaimed Dividends .................................................................................. Unclaimed Application money on securities ................................................. Unclaimed Interest (Rs.9,439/-) Unclaimed sale proceeds of the odd lot shares belonging to the Shareholders of erstwhile ACEL and ACRL ........................................................................ Security Deposits ................................................................................................ Interest accrued but not due on loans .................................................................. Carried forward .............................

0.40 881.34 881.74

0.20 576.47 576.67

12.40 0.15

10.76 0.01

2.99 15.54 100.83 6.66 1,004.77

3.06 13.83 82.08 5.67 678.25

AMBUJA CEMENTS LTD.

104

Rs. in Crores

As at 31.12.2008 Rs. in Crores

As at 31.12.2007 Rs. in Crores

SCHEDULE 'L' - CURRENT LIABILITIES AND PROVISIONS (Contd.)

Brought forward ............................. PROVISIONS Provision for wealth tax, net of advances .............................................................. Provision for fringe benefit tax, net of advances (Rs.3,689/-) ................................. Proposed Dividend ............................................................................................. Provision for Dividend Distribution Tax ................................................................. Provision for gratuity and staff benefit scheme ...................................................... Provision for Compensated absence .................................................................... Provision for mines reclamation expenses ............................................................ Provision for Income tax, net of payments ............................................................ TOTAL ............................................................ * Note: Amounts to be transferred to said fund shall be determined on the respective due dates. 152.26 25.87 16.53 41.79 9.96 223.84 470.56 1,475.33 1,004.77 0.31 678.25 0.51 0.01 152.24 25.87 4.59 32.36 8.15 266.31 490.04 1,168.29

SCHEDULE 'M' - MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted) Project Development and Feasibility Report Expenses, etc. .................................... Quarry / Mines Development Expenses ............................................................... Unexpired premium on pre payment of terms loans ............................................. Unexpired arrangement fees ............................................................................... TOTAL ............................................................ 4.28 4.28 1.83 3.89 0.39 0.11 6.22

2008 Rs. in Crores

2007 Rs. in Crores 4.66 22.80 23.54

SCHEDULE 'N' - OTHER INCOME

Insurance Claims ............................................................................................... Dividend: income from investment - other than trade ........................................... Profit / (Loss) on Sale of Current Investments (net) ................................................ Interest Income : (Gross; Tax deducted Rs. 14.77 crores; 31.12.2007 Rs. 10.54 crores) On Debenture & Bonds ............................................................................... On Fixed Deposits with Banks ...................................................................... Others .................................................................................................. 4.91 74.38 14.64 93.93 Miscellaneous Income (Gross: Tax deducted Rs. 0.32 crore; 31.12.2007 Rs. 0.18 crore) ................................................................................ Surplus on Sale of Assets .................................................................................... Provisions no longer required .............................................................................. 23.13 0.70 11.28 184.86 Exchange Rate Difference (net) ............................................................................ TOTAL ............................................................ (9.33) 175.53 5.05 54.59 16.46 76.10 23.73 2.10 7.08 160.01 33.82 193.83 0.25 41.11 14.46

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105

Rs. in Crores

2008 Rs. in Crores

2007 Rs. in Crores

SCHEDULE 'O' - MANUFACTURING AND OPERATING EXPENSES

1 Raw Materials Consumed : Clinker/ Cement Purchased ................................................................. Others ................................................................................................ 2 3 4 5 6 7 8 Freight and Handling charges on interunit material transfer .......................... Royalty and Cess ........................................................................................ Stores and Spares Consumed ...................................................................... Packing Materials Consumed ...................................................................... Power and Fuel ........................................................................................... Mines reclamation expenses ........................................................................ Repairs and Maintenance : Buildings ............................................................................................ Machinery .......................................................................................... Others ................................................................................................ 9 Excise duty: On captive consumption of clinker ....................................................... Other ................................................................................................. 10 Employees' Remuneration and Benefits : Salaries, Wages, Bonus, Allowances, etc. .............................................. Contribution to Provident and other Funds ............................................ Welfare Expenses ................................................................................ Commission to Managing Director .............................................................. 11 Other Administrative Expenses : Rent .................................................................................................. 14.15 7.49 14.26 54.03 1,029.20 12.80 75.04 25.42 7.92 212.87 0.19 0.87 4.26 8.11 21.48 1.39 1.72 0.22 4,575.80
106

243.25 379.58 622.83 208.25 75.81 221.00 211.58 1,325.77 1.82 14.26 68.16 16.44 98.86 51.64 51.64 216.47 38.31 12.04 266.82

166.66 316.47 483.13 162.69 74.69 162.43 184.29 1,020.23 2.96 13.85 53.19 7.89 74.93 31.40 0.08 31.48 171.79 23.61 9.52 204.92 5.88 9.54 2.66 13.07 41.84 973.44 10.48 71.06 28.79 9.08 146.02 0.22 0.84 6.91 2.54 14.45 1.89 2.44 1.00 0.47 0.24 3,744.61

Rates and Taxes .......................................................................................... Insurance .................................................................................................. Advertisement and Publicity ......................................................................... Freight and Forwarding charges [Including Rs. 5.85 crores on Export (31.12.2007 - Rs. 10.11 crores)] ................................................................. Commission on Sale ................................................................................... Discount on Sales ....................................................................................... Selling and Distribution Expenses ................................................................. Turnover Tax, Additional Tax and Purchase Tax ............................................. Miscellaneous Expenses .............................................................................. Directors' Fees and Expenses ....................................................................... Commission to Non-executive Directors ....................................................... Loss on Assets sold, scrapped or discarded and written off ............................ Capital Projects written off (Refer note - 14) .................................................. Donations .................................................................................................. Bad Debts, Sundry Debit Balances and Claims written off ............................. Provision for doubtful advances ................................................................... Provision for diminution in value of Investment ............................................. Part of Deferred Revenue expenditure, written off .......................................... Wealth Tax ................................................................................................. Carried forward .............................
AMBUJA CEMENTS LTD.

Rs. in Crores

2008 Rs. in Crores

2007 Rs. in Crores

SCHEDULE 'O' - MANUFACTURING AND OPERATING EXPENSES (Contd.)

Brought forward ............................. 12 Variation in Stocks : CLOSING STOCKS : Materials-in-process ............................................................................ Finished goods ................................................................................... OPENING STOCKS : Materials-in-process ............................................................................ Finished goods ................................................................................... 85.94 54.87 140.81 (61.23) LIMESTONE : Closing Stock ...................................................................................... Opening Stock .................................................................................... 27.75 23.74 (4.01) (65.24) Less: Excise duty variation on opening / closing stock ................................... Less: TRIAL RUN STOCKS At the commencement of commercial production of Farakka & Roorkee unit .................................................................................... (Increase) / Decrease in Stocks .................................................................... TOTAL ............................................................ (64.32) 4,511.48 1.71 (51.88) 3,692.73 0.92 23.74 18.22 (5.52) (55.56) 1.97 45.85 44.92 90.77 (50.04) 119.98 82.06 202.04 85.94 54.87 140.81 4,575.80 3,744.61

SCHEDULE 'P' - INTEREST AND FINANCE CHARGES

Interest : On Debentures and Bonds .......................................................................... On Fixed Loans (including interest on Swap Rs. 1.90 crores; 31.12.2007 - Rs. 8.10 crores) ..................................................................... Others .................................................................................................. 6.87 3.48 21.70 32.05 Unexpired Premium on prepayment of term loan amortised ................................. Finance Charges ................................................................................................ Less: Capitalised during the year ......................................................................... TOTAL ............................................................ 0.38 0.24 32.67 (0.07) 32.60 7.75 18.24 53.74 79.73 0.49 1.69 81.91 (4.82) 77.09

SCHEDULE 'Q' - EXCEPTIONAL ITEMS

Profit on sale of Investment / Subsidiary / Associate (Refer Note 13 & 15) ............. Profit on sale of property ..................................................................................... TOTAL ............................................................ 292.32 10.99 303.31 470.16 325.36 795.52

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107

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS

1. (A) (i) (ii) (B) (a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS : 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. The financial statements are based on historical cost convention and are prepared on accrual basis. SIGNIFICANT ACCOUNTING POLICIES : 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 "Consolidated Financial Statements" issued by ICAI. b) The financial statements of the Company and its Subsidiary Companies have been consolidated on a line-by-line basis by adding together the book value of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and 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 the said 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 other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company's separate financial statements. e) The excess of cost of investment in the Subsidiary Companies over the company's portion of equity of the subsidiary at the date of investment made is recognised in the financial statements as goodwill. This goodwill is tested for impairment at the close of each financial year. The excess of Company's portion of equity of the Subsidiary over the cost of the investment therein is treated as Capital Reserve. f) "The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the Company itself. Gains and losses arising from monetary items are recognised in the profit and loss account. For non-integral foreign operation, the assets and liabilities are translated at the closing rate. Income and expense items of the nonintegral foreign operation are translated at exchange rates at the dates of the transactions and all resulting exchange differences are 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 Financial Incorporation 31.12.2008 Year ends on 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) 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 accumulated depreciation, 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 of fixed 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 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 of Section 205(2)(b) of the Companies Act, 1956, and on Vehicles on the "Written Down Value Method" in accordance with the provisions of Section 205(2)(a) of the Companies Act, 1956, in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Continuous process plants, are identified based on technical assessment and depreciated at the specified rate as per Schedule XIV to the Companies Act, 1956. Depreciation on additions to fixed assets is provided on a pro-rata basis from the date of acquisition or installation, and in the case of a new project, from the date of
AMBUJA CEMENTS LTD. 108

1.

a)

(b)

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

commencement of commercial production. Depreciation on assets sold, discarded, demolished or scrapped, is provided upto the date on which the said asset is sold, discarded, demolished or scrapped. In respect of an asset for which impairment loss 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 down value 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 as permitted in 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 period 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. 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 recoverable amount is greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. Investments : Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. Investments other than long-term investments being current investments are valued at cost or fair value whichever is lower, determined on an individual basis. Inventories : (i) Coal, Fuel, Packing Materials and Stores & Spare Parts are valued at cost determined on weighted average basis or net realisable value, 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". 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 required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date. A contingent liability is disclosed, unless the possibility of an outflow of resources is remote. 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 cost denominated 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 those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise. 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 reliably measured (i) Domestic sales are accounted on dispatch of products to customers and Export sales are accounted on the basis of dates of Bill of Lading. 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. Dividend income is recognised when right to receive the payment is established by the Balance Sheet date. Mines Reclamation Expenditure : The Company provides for the expenditure to reclaim the quarries used for mining. The total estimate of reclamation expenses is apportioned over 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 on the nature of reclamation and the estimate of reclamation expenditure.

(c)

(d)

(e)

(f)

(g)

(h)

(i)

AMBUJA CEMENTS LTD.

109

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

(j) Employee Benefits (i) Defined Contribution Plan Employee benefits in the form of contribution to Superannuation Fund, Provident Fund managed by Government Authorities, Employees State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to the Profit & 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 are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, 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 Loss Account as and when the contribution is due. The deficit, if any, in the accumulated corpus of the Trust at the period end for which the 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, as at 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 Shares as compensation expenses under the Employee Stock Option Scheme, is amortized in accordance with Securities and Exchange Board of India (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 as part 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 Securities Premium 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 debenture and 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 amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred income tax reflects the impact of current year 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 tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which these assets can be realised in future whereas in case of existence of carry forward of losses or unabsorbed depreciation, deferred tax assets are recognised only if there is virtual certainty of realisation backed by convincing evidence. Deferred Tax Assets are reviewed at each 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 are apportioned between principal and interest on the IRR method. The principal amount received reduces the net investment in the lease and interest is recognised a revenue. Initial direct cost such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss 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 provided with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments 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 financial statements 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. 31.12.2008 Rs. in Crores 2. (a) Contingent liabilities not provided for in respect of : (i) Bank Guarantee given to Mines & Geology Dept. Government of Rajasthan for setting up of Cement plant. ........................................... (ii) Claims against the Company not acknowledged as debts (a) Disputed liability relating to labour matters ..................................... (b) For acquisition of land ................................................................... (c) For Non Agriculture Assessment Tax ................................................ (d) Others ..........................................................................................
AMBUJA CEMENTS LTD. 110

31.12.2007 Rs. in Crores

2.00 26.31 32.87 2.65 30.41

23.69 28.61 2.65 18.26

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

31.12.2008 Rs. in Crores (iii) Tax matters : (a) Disputed liability in respect of Income-tax demands (including interest) - matters under appeal ....................... (b) Disputed Sales-tax demands (including interest and penalty) matters under appeal (i) Matter decided in favour of the Company by the Honourable High Court of Himachal Pradesh, against which the Department had filed a Special Leave Petition in the Honourable Supreme Court, since dismissed. .......................... (c) Disputed Excise demands - matters under appeal (Deposit with Excise Department Rs. 0.40 crore, Previous Year Rs. 0.19 crore) ....... (d) Disputed Customs demands - matters under appeal ........................ (e) Disputed liabilities of RTO Tax on Mining Machinery ........................ (iv) Disputed liabilities relating to Railway Freight on Cement - matter once decided in favour of the Company by the Honourable High Court of Gujarat was remanded back by the Honourable Supreme Court pursuant to an Special Leave Petition filed by the railways. ..................................... (v) Disputed liabilities relating to Coal claims- matters pending in the Honourable High Court: (a) Railway Freight on Coal ................................................................. (b) Penal Freight on Excess Weight of Coal ........................................... (c) Interest on Premium on Coal .......................................................... In respect of items above, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgements /decisions pending at various forums / authorities. (b) The Honourable High Court of Himachal Pradesh has passed an order in favour of the Company for its claim in respect of power subsidy in the form of Power Tariff Freeze (PTF) and Peak Load Exemption Charges (PLEC). Against this, Government of Himachal Pradesh on 1st May, 2004 has issued 296 5.13% 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 of Rs. 0.08 crore is refunded to the Company. The Government of Himachal Pradesh has filed Special Leave Petition in the Honourable Supreme Court against the decision of the Honourable High Court of Himachal Pradesh. The Company has given an undertaking to refund Rs. 29.68 crores paid by the State Government together with interest thereon upto the date of final judgement in time bound manner, in the event that the matter is decided against the Company. ................................................................................... (c) The Government of Rajasthan has granted 75% exemption from Sales Tax in respect of Rabriyawas unit. However, the eligibility of exemption in excess of 25% has been contested by the State Government in a similar matter of another Company and the matter is pending before the Honourable Supreme Court. The Company has given an undertaking to the Government of Rajasthan that the Company will deposit the differential amount of Sales Tax, in case the Supreme Courts decision goes against in the matter referred above. ............................ (d) Writ petition filed against the order of Madhya Pradesh State Mining Department demanding Rs. 4.76 crores towards payment of additional royalty on limestone based on the ratio of 1.6 tonnes of limestone to 1 tonne of cement produced at its factory in Chhattisgarh. The matter is now pending before Honourable High Court at Bilaspur. .......................................................................................... Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances) ......................................................................... Segment reporting : The Company has only one business segment 'Cement' as primary segment. The secondary segment is geographical, which is given as under: 31.12.2007 Rs. in Crores

63.68

16.37

10.49 16.55 2.22 0.62

10.43 10.06 1.74 0.62

5.51

5.51

1.49 0.24 3.29

1.49 0.24 3.29

29.68

29.68

82.16

82.16

44.94 911.68

38.54 949.82

3. 4.

2008 Rs. in Crores (a) Revenue Sales (Net of Excise Duty) Within India Outside India ............................................................................................. ............................................................................................. TOTAL ................................................................................... 6,007.65 254.14 6,261.79

2007 Rs. in Crores

5,116.75 601.85 5,718.60

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111

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

2008 Rs. in Crores (b) Other Income Within India ............................................................................................. Outside India ............................................................................................. TOTAL ................................................................................... (c) Assets Within India Outside India ............................................................................................. ............................................................................................. TOTAL ................................................................................... Cost incurred during the year to acquire tangible and intangible fixed assets. Within India ............................................................................................. Outside India ............................................................................................. TOTAL ................................................................................... 5. Related Party Disclosures : a) List of Related Parties and relationships Party A. Key Management Personnel Mr. A. C. Singhvi ...................................................................... Mr. A. L. Kapur ......................................................................... Mr. P B. Kulkarni ...................................................................... . Mr. N. P Ghuwalewala .............................................................. . Mr. B. L. Taparia ....................................................................... B. Relatives of Key Management Personnel Mr. Ajay Kapur ......................................................................... Mr. Milind Kulkarni (Upto 8.8.2007) .......................................... C. Enterprises over which significant influence exercised by (A) Directors GACL Finance Ltd. ............................................................ Radha Krishna Bimalkumar Pvt. Ltd. .................................. (C) Major Shareholders Holderind Investments Ltd. Mauritius .................................. Holcim Ltd. ....................................................................... Ambuja Cement India Private Ltd. ...................................... Holderind BV .................................................................... Holcim CTC Trading Co. ................................................... Holcim Trading Pte Ltd., Singapore .................................... Holcim Group Supports Ltd. .............................................. Holcim Trading FZCO, Dubai ............................................ PT Holcim Indonesia ......................................................... Holcim Services (Asia) Ltd. ................................................. Holcim Services (South Asia) Ltd. ....................................... Holcim Lanka Ltd. ............................................................. Ceylon Ambuja Cements Private Limited ............................ Siam City Cement, Thailand .............................................. St. Lawrence Cement Inc. Canada ..................................... ACC Ltd. .......................................................................... ACC Concrete Ltd. ............................................................ ACC Nihon Casting Ltd. .................................................... ACC Machinery Company Ltd. .......................................... Major shareholder having significant influence Holding Company of Holderind Investments Ltd., Mauritius Subsidiary of Holderind Investments Ltd, Mauritus (Associate upto 30.4.2007) Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Fellow Subsidiary of Holderind Investments Ltd., Mauritius Associate of Holderind Investments Ltd., Mauritius Subsidiary of ACC Ltd. From 07.05.2007 Subsidiary of ACC Ltd. Subsidiary of ACC Ltd. upto 10.03.2008 Mr. N. S. Sekhsaria Mr. Suresh Neotia Son of Mr. A. L. Kapur Son of Mr. P B. Kulkarni . - (Previous year Managing Director Upto 30.04.2007) Managing Director (Whole-time Director upto 30.04.2007) Whole-time Director Whole-time Director Whole-time Director and Company Secretary Relation 81.60 81.60 6,288.91 47.63 6,336.54 507.61 507.61 2007 Rs. in Crores 116.96 0.77 117.73 5,655.78 84.78 5,740.56 732.37 1.19 733.56

AMBUJA CEMENTS LTD.

112

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

b) Disclosures required for related parties transactions (Rs. in Crores) Transactions Key Management Personnel Relatives of Key Management Personnel Enterprises over which significant influence exercised by Directors, Key Management Personnel and Major Shareholders

I.

Transactions during the period Purchase of Goods ............................................ () () Purchase of Fixed Assets .................................... () Sale of Fixed Assets ........................................... () Sale of Investments ............................................ () Receiving of Services .......................................... () Remuneration ................................................... 9.22 (13.66) Dividends Received ............................................ () Other Recoveries ............................................... () Others Payments ............................................... () Equity contribution ............................................. () Loans given ...................................................... () () () () () () () 0.53 (0.35) () () () () () 192.56 (111.85) 238.84 (208.95) 0.11 (34.13) (1.05) 589.33 (1,061.52) 5.09 (0.98) () 0.00 Rs. 4,250 0.40 () 60.88 (22.09) () ()

Sale of Goods ...................................................

II.

Amounts Outstanding as at Balance Sheet date Loans given Outstanding ................................... () Amounts receivable ........................................... () Amounts payable .............................................. () () () () () 53.23 (32.11) 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.

AMBUJA CEMENTS LTD.

113

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

Details of material related party transactions [included in b] Rs. In Crores

Enterprises Over which significant influence is exercised by Directors / Key Management Cersonnel, Major Shareholders Mr. B. L. Taparia Mr. A. C. Singhvi PT Holcim Indonesia Radha St. Lawrence Krishna Cement Inc. BimalCanada Kumar Pvt. Ltd. () () () () (1.05) () () () () () () () 0.13 () 2.98 (3.37) 6.00 (8.19) () (0.04) 0.13 12.64 (7.69) () () () () () () () () () () 1.15 (1.08) () () 1.34 () () () () () () () () 2.58 () () () () () () () () () () () (2.81) 47.66 (28.74) 6.86 (2.96) () () () () () () () () () () () () () () () (14.60) () () () (194.35) () 3.83 18.24 216.78 () () () () () () 25.54 (3.98) () 0.17 (0.69) () (5.32) (28.81) () () () () () 0.11 () () 0.42 () () () () () () () () () (80.33) () () () () (5.88) () () 82.55 () () () () () () () () 2.97 (1.04) () 1.05 () ACC Ltd. Ambuja Cement India P. Ltd GACL Finance Ltd. ACC Concrete Ltd. Holcim Holcim Holcim CTC Trading Services Trading Pte.Ltd. (South Asia) Co. Singapore Ltd.. Holcim Lanka Ltd Holcim Services (Asia) Ltd. Holcim Trading FZCO, Dubai 109.84 (25.52) () () () () () 2.33 () () () () () () () 1.42 () () 18.42 (5.45) () 5.61 (2.34) () () () () () () Holcim Group Supports Ltd. (0.12) () () () () 588.91 (1,061.52) Holdrind Investments Ltd.

Description

Key Management Personnel

Mr. A. L. Kapur

Mr. P. B. Mr. N. P. Kulkarni Ghuwalewala

Purchase of Goods ................. () () () () () 2.00 (1.54) () () () () () () () () 0.01 () () () () () () 0.04 () () () () () () (1.14) (6.66) () 1.53 () () () () () () () () () () () () () () ()

() ()

()

()

Purchase of Fixed Assets ..........

()

()

Sale of Goods ........................

()

()

Sale of Investments .................

()

()

Sale of Fixed Assets .................

()

()

Remuneration .........................

3.10

2.59

(2.52)

(1.80)

Receiving of Services ...............

AMBUJA CEMENTS LTD.

()

()

Equity Contribution .................

114

()

()

Other Payments ......................

()

()

Amount Receivable .................

()

()

Amount Payable .....................

()

()

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

2008 Rs. in Crores 6. Earnings per Share (EPS) : (i) Profit attributable to Equity Shareholders for Basic and Diluted EPS ............................ (ii) Weighted average number of shares for Basic EPS .................................................... Add : Potential equity shares on exercise of option of ESOS ....................................... Add : Potential equity shares on exercise of Rights and Warrants kept in abeyance out of the Rights issue in 1992 .............................................. Weighted average number of shares for Diluted EPS ................................................. (iii) Nominal Value of Shares ......................................................................................... (iv) Earnings Per Share : Basic ...................................................................................................................... Diluted ................................................................................................................... Deferred Tax Break up of Deferred Tax Assets & Liabilities are as under: Deferred Tax Liabilities, on account of : Depreciation ........................................................................................................... Deferred Revenue Expenditure ................................................................................. TOTAL .................................................................................................................... Deferred Tax Assets, on account of : Employee benefits ................................................................................................... Provision for diminution in value of Investment ......................................................... Others .................................................................................................................... TOTAL .................................................................................................................... Net Deferred Tax Liabilities .............................................................................................. 8. 1,389.71 Nos. 1,522,509,108 462,811 200,513 1,523,172,432 Rs. 2.00 9.13 9.12 2007 Rs. in Crores 1,846.11 Nos. 1,520,262,996 2,957,963 269,898 1,523,490,857 Rs. 2.00 12.14 12.12

7.

409.31 409.31

406.16 406.16

20.98 7.58 28.56 380.75

13.47 6.69 7.62 27.78 378.38

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 Gratuity Particulars Funded Death and Post Disability Retirement Non Scheme Medical Funded (Shipping Benefits Staff) Non (PRMB) Funded Non Funded Gratuity Funded Non Funded 2007 Death and Post Disability Retirement Scheme Medical (Shipping Benefits Staff) Non (PRMB) Funded Non Funded

I.

II.

Expense recognised in the Statement of Profit & Loss Account for the year ended 31st December, 2008 1 Current Service Cost ................................. 2 Interest Cost ............................................. 3 Employee Contributions ............................ 4 Expected Return on Plan Assets .................. 5 Actuarial (Gains) / Losses .......................... 6 Past Service Cost ....................................... 7 Settlement Cost ......................................... 8 Losses / (gains) on acquisition / divesture .. 9 Total Expense ............................................ Net Asset / (Liability) recognised in the Balance Sheet as at 31st December, 2008 1 Present Value of Defined Benefit Obligation .....................................

3.72 3.49 (2.89) 16.48 20.80

0.08 0.05 0.07 0.20

0.09 0.03 (0.15) (0.03)

0.10 0.12 0.73 0.95

2.38 1.89 (1.82) 6.02 2.47 10.94

0.09 0.06 (0.10) 0.05

0.07 0.03 (0.16) (0.06)

0.10 0.09 (0.03) 0.16

63.21

0.74

0.33

2.29

42.39

0.68

0.35

1.33

AMBUJA CEMENTS LTD.

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SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

Rs. in Crores 2008 Gratuity Particulars Funded Death and Post Disability Retirement Non Scheme Medical Funded (Shipping Benefits Staff) Non (PRMB) Funded Non Funded (0.74) (0.74) (0.33) (0.33) (2.29) (2.29) Gratuity Funded Non Funded 2007 Death and Post Disability Retirement Scheme Medical (Shipping Benefits Staff) Non (PRMB) Funded Non Funded (0.35) (0.35) (1.33) (1.33)

III.

IV.

Fair Value of Plan Assets ........................... Funded Status [Surplus / (Deficit)] .............. Net Asset / (Liability) as at 31st December, 2008 ............................... Change in Obligation during the Year ended 31st December, 2008 1 Present value of Defined Benefit Obligation at the beginning of the year ...................... 2 Current Service Cost ................................. 3 Interest Cost ............................................. 4 Settlement Cost ......................................... 5 Past Service Cost ....................................... 6 Employee Contributions ............................ 7 Liabilities assumed on acquisition / (settled on divesture) ................................. 8 Actuarial (Gains) / Losses .......................... 9 Benefits Payments ..................................... 10 Present Value of Defined Benefit Obligation at the end of the year ................................ Change in Assets during the Year ended March 31, 2008 1 Plan Assets at the beginning of the year ..... 2 Assets acquired on amalgamation in previous year ........................................ 3 Settlements ............................................... 4 Expected return on plan assets .................. 5 Contributions by employer ........................ 6 Actual Benefit Paid .................................... 7 Actuarial Gains / (Losses) .......................... 8 Plan Assets at the end of the year .............. 9 Actual Return on plan assets ..................... The major categories of plan assets as a percentage of total plan

2 3 4

50.04 (13.17) (13.17)

40.17 (2.22) (2.22)

(0.68) (0.68)

42.39 3.72 3.49 16.67 (3.06) 63.21

0.68 0.08 0.05 0.07 (0.14) 0.74

0.36 0.09 0.03 (0.15) 0.33

1.34 0.10 0.12 0.73 2.29

25.95 2.38 1.89 7.15 7.81 (2.79) 42.39

0.91 0.09 0.06 (0.10) (0.28) 0.68

0.42 0.07 0.03 (0.16) 0.36

1.18 0.10 0.09 (0.03) 1.34

40.17 2.89 9.85 (3.06) 0.19 50.04 3.08

0.14 (0.14)

2008 100%

24.39 4.69 1.82 10.28 (2.79) 1.78 40.17 3.61

0.28 (0.28) 2007 100% 1% increase 0.04 0.27

V.

Qualifying Insurance policy ................................ VI. Effect of One percentage point change in the assumed Medical Inflation rate : Increase / (Decrease) on aggregate service and interest cost ................................................ Increase / (Decrease) on Present value of Defined Benefit obligation as at 31st December, 2008 .....

1% increase 1% decrease 0.08 0.50 (0.06) (0.40)

1% decrease (0.04) (0.22)

VII. Actuarial Assumptions: 1 Discount Rate ............................................ 2 Expected rate of return on plan assets ......... 3 Mortality .................................................... 4 Turnover rate ............................................. 5 Medical premium inflation ......................... 6 Salary Escalation .......................................

5.90% p.a. 7.50% p.a. LIC (199496) mortality tables Age 2144 2%: Age 45 57 : 1% 5% p.a. 7% p.a.

8.05% p.a. 7.50% p.a. LIC (199496) mortality tables Age 2144 : 2%, Age 45 57 : 1% 5% 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 to reliably 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.
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SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

IX. Amounts recognized as an expense in respect of defined benefit plans as under : 2008 Rs. in Crores a) b) c) Gratuity * ................................................................................................ Shipping Staff Gratuity ............................................................................. Post Retirement Medical Benefits ............................................................... 20.12 0.20 0.95 21.27 c) d) 2007 Rs. in Crores 9.29 0.05 0.16 9.50

e) f) g)

* Net of Rs. 0.68 crore (31.12.2007 Rs. 1.65 crores) capitalised as pre-operative Expenses. Amount recognised as an expense in respect of Compensated Leave Absences is Rs 12.85 crores (31.12.2007 - Rs. 6.35 crores). 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 related obligation. 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. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. We understand 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 the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have 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). The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The Company expects to contribute Rs. 13.00 crores to Gratuity Fund in the year 2009. Amount for the current and previous two periods ar as follows : 2008 2007 Rs. in Crores Rs. in Crores i) Gratuity - Funded Defined benefit obligation ............................................................................... Plan assets ...................................................................................................... Surplus / (deficit) ............................................................................................. Experience adjustments on plan assets ............................................................. Experience adjustments on plan liabilities ......................................................... Gratuity - Non Funded Defined benefit obligation ............................................................................... Plan assets ...................................................................................................... Surplus / (deficit) ............................................................................................. Experience adjustments on plan assets ............................................................. Experience adjustments on plan liabilities ......................................................... Death and Disability Scheme (Shipping Staff) Defined benefit obligation ............................................................................... Plan assets ...................................................................................................... Surplus / (deficit) ............................................................................................. Experience adjustments on plan assets ............................................................. Experience adjustments on plan liabilities ......................................................... Post Retirement Medical Benefit (PRMB) Defined benefit obligation ............................................................................... Plan assets ...................................................................................................... Surplus / (deficit) ............................................................................................. Experience adjustments on plan assets ............................................................. Experience adjustments on plan liabilities ......................................................... 63.21 50.04 (13.17) 4.48 0.19 0.74 (0.74) (0.03) 0.33 (0.33) (0.18) 2.29 (2.29) (0.02) 42.39 40.17 (2.22) 9.73 1.79 0.68 (0.68) (0.08) 0.35 (0.35) (0.16) 1.33 (1.33)

ii)

iii)

iv)

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 following schemes were in operation: Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2007 2007 2008 a) b) c) d) e) f) g) Date of grant ........................................... Date of Board Approval ............................ Date of Shareholders Approval ................. Number of options granted ....................... Method of Settlement (Cash / Equity) ......... Vesting period from the date of ................. Grant ...................................................... Exercise Period from the date of ................ Vesting ..................................................... 13.11.2000 8.8.2000 6.10.2000 970,700 Equity Equally in 4 years Equally in 4 years 19.10.2001 3.8.2001 5.10.2001 711,100 Equity 1 year 5 years 24.10.2002 20.8.2002 11.10.2002 815,800 Equity 1 year 5 years 21.1.2004 31.7.2003 6.10.2003 864,600 Equity 1 year 5 years 10.3.2005 23.7.2004 18.10.2004 812,325 Equity 1 year 4 years 7.11.2005 24.6.2005 10.10.2005 873,075 Equity 1 year 4 years 7.6.2007 11.1.2007 26.3.2007 7,386,750 Equity 1 year 4 years 1.7.2008 1.7.2008 11.1.2007 1.7.2008 26.3.2007 22.4.2008 111,150 7,384,300 Equity Equity 1 year 1 year 4 years 4 years

AMBUJA CEMENTS LTD.

117

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

b) The details of activity under the ESOP schemes have been summarised below : 2008 Particulars a) b) c) d) e) f) g) h) Outstanding at the beginning of the year ................. Granted during the year ......................................... Forfeited during the year ......................................... Exercised during the year ........................................ Expired during the year ........................................... Outstanding at the end of the year .......................... Exercisable at the end of the year ............................ Weighted average remaining contractual life (in years) .......................................................... Number of Shares 9,692,013 7,495,450 635,000 219,502 73,875 16,259,086 9,129,936 3.62 Weighted Average Exercise price (Rs.) 97.90 113.00 95.12 56.72 22.13 91.58 99.06 Number of Shares 8,216,938 7,386,750 255,550 5,546,832 109,293 9,692,013 2,560,813 3.89 2007 Weighted Average Exercise price (Rs.) 57.03 113.00 113.00 58.30 19.96 97.90 55.87

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 ESOP Plans Number of options outstanding Weighted average remaining contractual life of options (in years) 0.87 1.05 1.19 1.85 3.43 4.50 4.50 Weighted average exercise price (Rs. per share of Rs. 2 each) 18.40 41.33 59.07 69.60 113.00 82.00 82.00 Number of options outstanding 2007 Weighted average remaining contractual life of options (in years) 1.87 0.81 2.06 2.19 2.85 4.44 Weighted average exercise price (Rs. per share of Rs. 2 each) 18.40 22.13 41.33 59.07 69.60 113.00

2000-01* ......... 2002-03* ......... 2003-04* ......... 2004-05* ......... 2005-06# ........ 2007 ................ 2007 ................ 2008 ................

35,425 32,550 105,450 193,350 6,862,500 92,950 7,036,200

35,900 12,000 39,650 110,175 215,575 7,131,200

* 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 valuation model has been used for computing the weighted average fair value considering the following inputs: Variables Grant date Volatility Risk free rate ....................................................................................................... ....................................................................................................... ....................................................................................................... Market Price (Rs. per share) on the date of grant ....................................................... 2008 01.07.2008 73.00 35.94% 7.02% 82.00 3 2.58% 16.95 2007 07.06.2007 109.55 33.73% 7.89% 113.00 3 2.22% 29.28

Exercise price in Rs. ................................................................................................. Time to Maturity ...................................................................................................... Dividend yield ....................................................................................................... Option fair value (Rs. per share) .............................................................................. e)

Effect of the employee share based payment plans on the profit and loss account and on its financial position: Particulars Total Employee Compensation Cost pertaining to share based payment plans ........... Compensation cost pertaining to equity settled employee share based payment plan included above ............................................................................................... Liability for employee stock options outstanding as at year end ................................. Deferred Compensation Cost ..................................................................................
AMBUJA CEMENTS LTD. 118

2008 Rs. in Crores 0.34

2007 Rs. in Crores 0.38

SCHEDULE 'R' - CONSOLIDATED NOTES FORMING PART OF THE ACCOUNTS (Contd.)

f) Since the enterprise used the intrinsic value method the impact on the reported net profit and earnings per share by applying the fair value based method is as under : Particulars Profit as reported .................................................................................................... Add : Employee stock compensation under intrinsic value method ............................. Less: Employee stock compensation under fair value method .................................... Proforma profit ....................................................................................................... Earning per share (Rs.) Basic : As reported ..................................................................................................... Proforma ....................................................................................................... Diluted : As reported ..................................................................................................... Proforma ....................................................................................................... 2008 Rs. in Crores 1,389.71 15.10 1,374.61 2007 Rs. in Crores 1,846.11 11.84 1,834.27

9.13 9.03 9.12 9.02

12.14 12.07 12.12 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 construction for 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 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. 12. 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 its 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. 13. 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. 0.91 crore. Consequently, CACL and its subsidiary Midigama Cements (Private) Limited ceased to be subsidiaries of the 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 amounting to 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 year the remaining 9,53,75,000 (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. 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 the Company Act, 2001, Mauritius and has repaid the outstanding paid-up capital and accumulated reserves to the Company during the previous year 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. 17. 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. 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. 18. Figures less than Rs. 50,000/- have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest lac. 19. Figures of the previous year have been regrouped wherever necessary to conform to the current years presentation.

Signatures to Schedules A to R As per our report of even date For S. R. BATLIBOI & ASSOCIATES Chartered Accountants B. L. Taparia Whole-time Director & Company Secretary per Sudhir Soni Partner Membership No. 41870 For and on behalf of the Board Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .
AMBUJA CEMENTS LTD. 119

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

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 other particulars of its Subsidiary Companies u/s 212 of the Companies Act, 1956.)
Rs. in Crores Name of Subsidiary Company M.G.T. Cements (Private) Limited 31/12/2008 0.75 (0.35) 0.50 0.10 (0.00) (0.00) Chemical Limes Mundwa (Private) Limited 31/12/2008 0.14 (1.61) 0.21 1.68 (1.34) (1.34) Kakinada Cements Limited 31/12/2008 0.05 (0.03) 0.02 0.00 (0.00) (0.00)

Financial Year ends on Share Capital Reserves & Surplus Total Assets (Fixed Assets + Investments + Current Assets) Total Liabilities (Debts + Current Liabilities) Investments (excluding investments in subsidiary companies) Turnover Profit before Taxation Provision for Taxation Profit after Taxation Proposed Dividend

For and on behalf of the Board B. L. Taparia Whole-time Director & Company Secretary Suresh Neotia Chairman N. S. Sekhsaria Vice Chairman Paul Hugentobler Onne van der Weijde Shailesh Haribhakti Rajendra P Chitale . Omkar Goswami Nasser Munjee Naresh Chandra N. P Ghuwalewala .

David Atkinson Chief Financial Officer

M. L. Bhakta Chairman Audit Committee

A. L. Kapur Managing Director Mumbai, 6th February, 2009

Directors

Whole-time Director

graphics

alok

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