Ambuja Cements Ltd

Dear Members,

We are pleased to present the Annual Report of the Company for the year 2010.

Indian economy capitalises on inherent strengths

Expectations of a rapid economic recovery in 2010-11 were by and large fulfilled, asthe inherent strengths of the Indian economy, together with positive stimulatory measuresintroduced by the government, resulted in GDP growth of 7.4% for 2009-10 (6.7% in2008-09). Growth has further accelerated in 2010-11, reaching 8.9% in the first half.Industrial growth has however slowed to some extent in the second half, and GDP growth forthe full year is expected to be in the range of 8.5% to 8.8%.

Despite the gradual withdrawal of stimulus measures which were introduced in 2008,private consumption and investment, two important domestic demand drivers, recoveredstrongly in the first half of 2010-11 as the confidence of consumers and investors wasrestored. Private consumption returned to the pre-crisis growth rate of around 9%, ashousehold disposable incomes significantly increased. This also helped to boostinvestment, in particular private corporate investment, which increased by nearly 15% yearon year.

The slowdown in the second half was mainly a result of the gradually tighteningmonetary policy, in response to growing inflationary pressures. Food price inflation inparticular has remained stubbornly high, keeping the overall WPI in double digits in theearly part of the year. The series of interest rate increases implemented during 2010 wasintended to bring inflation under control, and the rate is expected to be in the range of6% to 6.5% by March 2011, but inflation remains one of the biggest challenges for thegovernment on the economic front.

In its 2010-11 budget, the government laid strong emphasis on fiscal consolidation, andtargeted a reduction in the budget deficit, to 5.5% of GDP. This looks likely to beachieved, through a combination of increased tax revenues resulting from faster growth,sales of stakes in State owned firms and 3G telcom licences, and gradual withdrawal offiscal stimulus measures. However, progress has been slower than hoped for in key areas ofinfrastructure development as well as much needed tax reforms.

The fragile state of recovery in mature economies resulted in a surge in capital flowsto emerging markets, particularly India, in search of better returns. Inflows from FIIsincreased to nearly USD 30 billion during the year, causing concern that this could leadto currency appreciation and loss of export competitiveness.

Overall the economy finished 2010 on a solid footing, still one of the fastest growingeconomies globally, and well positioned to attain a sustainable high growth trajectory.

Mixed fortunes for the cement industry

The first and second halves of calendar year 2010 told two very different stories forthe industry. The construction sector remained buoyant in the early part of the year,supported by the governments fiscal stimulus measures and easy monetary policy. Thisresulted in cement demand growth of almost 10% in the first quarter. However, insubsequent quarters, as interest rates began to rise and stimulus programmes werepartially rolled back, demand growth slowed and finished at just over 7% for the firsthalf.

The early onset of monsoon compared to 2009 had a further negative impact on cementdemand growth in the third quarter, as severe flooding in some regions caused majordisruption to construction activities. The anticipated pick up in demand following themajor festival season in November & December was then slow to materialise, partly as aresult of further un-seasonal weather conditions in several regions. Finally the overalldemand growth for 2010 was 6%, as industry despatches increased from 192.5 million tonnesto 204.0 million tonnes.

Export markets remained in the doldrums, as a result of the slow global recovery, andparticularly the slump in construction in the Gulf region. This created added pressure inthe western region of India, as greater quantities of cement and clinker were diverted tothe domestic market.

On the supply side, there have been significant cement capacity additions, totallingapproximately 60 million tonnes during the past two years, taking total industry capacityto around 300 million tonnes at the end of 2010. As a result of various delays incommissioning and ramp up of plants, in addition to the strong demand growth, this did notlead to a major imbalance until the second half of 2010. But during the latter period,average industry capacity utilisation fell as low as 70%, and even lower in the southernregion, which saw the highest capacity additions.

The combination of slower demand growth and increased supply put pressure on cementpricing and margins, and realisations declined sharply during the third quarter,particularly in the South. Prices stabilised to some extent in the fourth quarter,however, for the full year average prices were slightly lower than in 2009.

In what has become a challenging market environment, the Company capitalised on havingnew capacity available, and on its strong premium brand and distribution network, in orderto improve its market position at end of 2010 in relation to other major players.

2. KEY FIGURES 2010

• Clinker production increased 23.4%, to 14.1 million tonnes. Cement productionand sales volumes increased by 6.9% and 8.2% respectively, to reach 20.1 million tonnesand 20.3 million tonnes.

• Average sales realisation declined by 4%, to approximately Rs. 3,600 per tonne.Net sales were 4.4% higher, at Rs. 7,390 crore.

• EBITDA was 1.1% lower, at Rs. 1,951 crore.

• Consolidated net profit excluding exceptional items was 4% higher, at Rs. 1,263crore.

• Two new clinkerization plants at Bhatapara and Rauri, which were commissioned inDecember, 2009 and January, 2010 have stabilised fully. Two new cement grindingfacilities, at Nalagarh in HP and Dadri in UP were commissioned during the first quarterof 2010, increasing the Company's cement capacity to 25 million tonnes.

3. FINANCIAL RESULTS 2010

As a result of volatile market conditions in the second half, the company's operatingresults were lower than the previous year.

FINANCIAL RESULTS

4. DIVIDEND

The company has paid an interim dividend of 60% (Rs.1.20 per share) during the year.The directors are pleased to recommend a final dividend of 70% (Rs.1.40 per share). Thusthe aggregate dividend for the year 2010 works out to 130% (Rs.2.60 per share), and thetotal payout will be Rs. 462 crore, including dividend distribution tax of Rs. 65 crore.This represents a payout ratio of 37%.

5. MARKET DEVELOPMENTS

India witnessed cement demand growth of 6% in 2010, the slowest growth since 2004. Incomparison, the Company's domestic cement sales grew 8.3%, to 19.5 million tonnes asagainst 18.0 million tonnes in 2009. Total sales including exports increased 6.4%, to 20.0million tonnes compared to 18.8 million tonnes in 2009.

The Company maintained its strong position of approximately 16.5% market share in itsprimary markets, and around 10% on an all-India basis. The year saw significant industrycapacity additions, totalling approximately 30 million tonnes, following 60 million tonnesalready added during the previous two years. The impact of this surplus capacity, togetherwith tepid demand in the second half of 2010, exerted considerable pressure on cementprices.

The Company has built a large network of over 7,500 dealers and 20,000 retailers across18 states in India. Its reach and penetration helps the Company to manage the last miledelivery across our relevant markets, and gives us a strong position in our core rural andsemi-urban markets.

Along with strong brand equity, Ambuja has evolved a unique model of channelmanagement, based on values of trust and relationships. The strong bond between the dealernetwork and the Company has helped Ambuja to withstand severe competition for more thantwo decades. With the added support of Holcim's rich experience of operating in 70countries, Ambuja has now added sophisticated IT tools and global channel management toolsto its traditional Indian model. This has enhanced our capability to face the stiffcompetition resulting from a scenario of substantial oversupply.

Holcim's global experience has also helped Ambuja in fine tuning its product qualitymanagement, by introducing best practices from other countries. It has helped in enhancingthe overall marketing mix, clearly targeted at the retail market in rural and semi-urbansectors, and the large buyers in the metros and mega cities.

The Company's network of port, bulk terminals, and bulk cement ships, on the West coasthas supported a sustainable strong market position in Mumbai, Surat, and now Cochin.

All India

Demand analysis for all India is given below:

Domestic cement demand grew at 9.3% CAGR in the last 5 years. In 2010, the domesticdemand growth was 6%. However, exports reduced by 21% as international demand as well asprices continued to remain at low levels.

Northern Region

Demand analysis for the North Region is given below:

* (excluding Uttar Pradesh)

Cement market growth in North is showing 8.5% CAGR over the last 5 years. The demand in2010 grew by 1.8%, primarily due to reduction in the NCR region as a result of completionof Commonwealth Games construction activity. Ambuja continues to hold substantial marketshare in Punjab, Himachal Pradesh and Jammu & Kashmir. Meanwhile we have furtherincreased sales in Uttaranchal and Delhi. Regional market share was marginally improved.

Eastern Region

Demand analysis for the East Region is given below:

* Above figs are exclusive of North East except Assam & Bihar

Cement demand has grown at 10.1% CAGR over the last 5 years. The industry has grown by13% in 2010 on YoY basis. Ambuja performed well, recording 15.6% increase in dispatches,and thereby increasing regional market share. The Farakka grinding plant performed at fullcapacity. We could also further expand our footprints in Jharkhand, Orissa and Bihar.Additionally, clinker sales of 0.28 million tonnes were realised, as a result of the fastramp-up of production from the newly commissioned kiln at Bhatapara.

West / South Region

Demand analysis for the West / South Region is given below:

Cement demand has grown at 9.7% CAGR over the last 5 years, and 9.9% in 2010 comparedto last year. There was a further drop in exports of cement and clinker from the region.Despite the diversion of export volumes into the domestic market, our regional marketshare declined slightly.

Production Volumes

Clinker production was 23.4% higher than in 2009, following the commissioning of thetwo new kiln lines. It was still necessary to purchase around 0.36 million tonnes ofclinker, mainly in the first quarter, but this was substantially lower than the 1.7million tonnes purchased in 2009.

Total cement production increased by 6.9% compared to 2009, from 18.8 to 20.1 milliontonnes. Plant utilisation levels on average remained above 80% during the year with theexception of the new plants which were in the ramp-up phase. The Company continued tofocus on production of fly ash based PPC, and maintained an average blending ratio ofapproximately 1.43.

Major Costs

Total raw material costs were reduced significantly (Rs. 368 crore) compared to theprevious year, as a result of substituting own produced clinker for purchased clinker to alarge extent. However, the costs of other raw materials, principally fly ash and gypsum,including transportation costs, showed an increasing trend.

Fuel and power costs also increased in 2010, largely as a result of steadily risinginternational coal and freight prices. A lower percentage of the Company's total coalrequirements could be satisfied through linkages compared to the previous year, thereforeit was necessary to procure greater quantities of imported and e-auction coal. Even wherelinkage coal was available, deterioration in quality has increasingly become an issue,necessitating blending of linkage coal with higher quality imported coal.

Partially compensating for higher fuel prices, de-bottlenecking initiatives at plantsbegan to bear fruit in terms of improved energy consumption, with the average consumptionrate reducing from 757 kcal per kg of clinker in 2009, to 750 kcal per kg in 2010. Somefurther progress was also made in developing the alternative fuels and raw materials (AFR)business, in order to reduce dependence on coal in the future, as well as improveenvironmental performance.

Captive power generation capacity increased to more than 400 MW, with which around 80%of current power plant requirements are satisfied. Average power consumption furtherimproved in 2010, from 83.6 kWh to 82.7 kWh per tonne of cement produced, as a result ofcontinuous improvement in grinding process efficiency.

Freight forwarding costs increased by 12% in absolute terms, and freight on cementdespatches increased by 5% on per tonne basis. Partial liberalisation of fuel pricesduring 2010 led to increases in diesel costs, and average lead distance increased as saleswere expanded into new markets. In addition there was a further shift away from exports,sold on FOB basis, to domestic sales. The cost of packing materials also went up during2010, as PP granule prices increased in line with global oil prices.

7. EXPANSION PROJECTS

During the first quarter of 2010, commercial production commenced at two new 2.2million tonne clinker production lines, at Bhatapara (Chattisgarh) and Rauri (HP), as wellas two new 1.5 million tonne cement grinding facilities, at Dadri (UP) and Nalagarh (HP).In addition, a 33 MW captive power unit was commissioned at Bhatapara. Followingcompletion of these projects, which cost approximately Rs. 2,700 crores, the Company canfurther strengthen its competitive position in the northern and eastern markets.

In the western region, an additional 30 MW captive power unit was commissioned duringthe year at Ambujanagar (Gujarat). This brings total Company captive power capacity tomore than 400 MW. Also in Gujarat, a wind power project is currently under implementation,the first investment by the Company into renewable energy sources.

In the area of logistics, one of three new ships for western coastal transportation wasdelivered in 2010, with the remaining two expected to be brought into service during 2011bringing the total fleet size to ten. A number of projects to improve efficiency oflogistics operations, including rail connectivity at various locations, are also currentlyin progress.

Further cement grinding capacity additions totalling around 2 million tonnes are underconstruction, at the Bhatapara (CG) and Maratha (MH) units. These are scheduled forcompletion in early 2011, and will take the Company's installed cement capacity toapproximately 27 million tonnes.

All the expansion projects have been financed entirely with internal accruals.

In October 2010 it was announced that the Company had signed an agreement with theRajasthan State Industrial Development and Investment Corporation, to set up a 2.2 milliontonne clinkerisation unit in Nagaur district. Pre-project planning is at an advanced stageand construction is expected to start around middle of 2011. This project will support theCompany objective of maintaining long term market share at around 10 per cent.

Structural reforms still needed

The economy is poised to enter an era of sustained growth, and it is widely expectedthat average GDP growth can be maintained in the range of 8% to 9% in the coming years.Domestic demand as well as both public and private investment will continue to supportthat growth: an increasing number of young middle class households will have increasedcapacity for discretionary spending, and the housing sector will be a major beneficiary.

Nevertheless a number of policy challenges remain, which must be tackled in order forthe economy to realise its full potential. Government initiatives are needed, to implementstructural reforms in infrastructure, agriculture, and education, and attract more privateinvestment into these areas. In the short term, inflation continues to pose a seriousthreat and it will be a major challenge to tame inflation without harming growthprospects.

Period of adjustment for cement industry

The longer term outlook for the cement industry remains very positive. On one hand thegovernment has ambitious plans for infrastructure investment, looking to acceleratespending to USD 1 trillion in the next five year plan period. On the other hand, sustainedhigh growth should bring a significant increase in the demand for housing and commercialstructures.

While these developments augur well for long term cement demand, in the short term thedemand-supply imbalance as a result of the significant recent capacity additions is likelyto widen further. Effective supply is expected to increase by approximately 30 milliontonnes in the coming year, while demand may increase by around 20 million tonnes. Industrycapacity utilisation will consequently remain relatively low for some time, and temporarypricing pressures will continue to surface from time to time, and across almost allregions.

Meanwhile, the upward trend in input costs shows no sign of abatement, and Coal Indiahas a stated objective to bring coal prices in line with international prices, althoughthere is no clear timeframe for this.

Ambuja Cement is well positioned, following the commissioning of its new capacities,and with the strength of its brand and focused distribution channels, to consolidate itsposition as one of the most competitive and profitable players in the industry.

Energy Costs

Notwithstanding initiatives to reduce the dependence on coal, it will remain the mostimportant cost element for the cement industry for some time yet. Availability of linkagecoal is therefore an important cost driver, and every effort is being made to maximise thequantity of linkage coal supplied. Measures have also been implemented with a view toimprove the quality of coal received. Development of our allocated captive coal block isprogressing, but will still take some time before it is operational. Further opportunitiesto acquire captive fuel sources are continually being explored.

From a longer term perspective, it is important to continue developing AFR sources, inparticular industrial and agricultural waste materials, and we are investing significantamounts to develop this business model. Renewable energy sources for power, such as windand hydro, also become increasingly important as well as economically viable, and theCompany recently started implementation of its first wind power project in Gujarat.

Logistics Infrastructure

Availability of adequate logistics infrastructure is just as critical for futuresuccess as building clinker and cement plants. Implementation of the ambitious plans forpublic road and highway construction, expansion of rail networks and rolling stock, portimprovements, etc, will be vital to ensure the cost efficient - as well as safe - movementof materials between cement plants, customers, and suppliers. There have been severalexamples in the past year of shortages of rail wagons causing bottlenecks in the supplychain. Recognising the importance of this, the Company is also investing in severalprojects to improve its own logistics infrastructure, in particular rail connectivity ofour plants.

Competitive Environment

The developments in the second half of 2010, following the unexpected slowdown indemand growth, demonstrated how quickly the competitive environment can change, and howvolatile the market can become, particularly in a scenario of excess supply. Assuming thatdemand growth can recover fairly soon, in line with GDP resuming steady growth of 8.5% to9%, the supply overhang can potentially be absorbed relatively quickly. Infrastructurespending moving to a new higher trajectory would certainly help sustain a double-digitcement demand growth rate.

On the other hand, should there be a period of sustained low demand growth, this couldlead to further volatility and pricing pressures, especially in the more fragmentedmarkets such as South region. In addition, a disproportionate quantity of the newcapacities in the pipeline is being added by smaller regional and / or new players, whichcould further increase the possibility of future market instability.

Talent Crunch

The projected rate of growth for the cement industry in coming years will require aconstant stream of new skilled workers as well as managerial talent. Skill shortages havebeen developing for several years, and have become an issue for most sectors of theeconomy. Structural and policy reforms are needed, in order to improve the quality ofeducation and skill development, and promote vocational training. This will be critical tothe successful exploitation of the country's potential demographic advantages.

In order to mitigate the risk of skill shortages and maintain its competitive position,the Company endeavours to attract, develop and retain talented individuals by ensuring acontinuous inflow of bright campus graduates; skills-based trainings and structuredemployee engagement initiatives. Establishing a systematic approach to management andleadership development, in particular through its People Power initiative helps increation of a pipeline for future leaders and will play an important role in supportingthe achievement of the Company's business objectives.

Taxation / Administrative burden

As expected, the reduction in excise duties introduced as part of the 2008 stimuluspackage was partially rolled back in the 2010 Union budget, and had an impact on cementrealisations. Further roll-back of stimulus measures could prove damaging for the industryduring what already promises to be a challenging period.

Cement in India continues to be more highly taxed than anywhere else in the world. Inaddition, the system is very complex and places a heavy administrative and complianceburden on companies. The implementation of GST and the new direct tax code (DTC),hopefully in 2012, should bring much needed simplification making it easier to dobusiness, as well as a reduction in the overall administrative burden on the industry.

10. HUMAN RESOURCES

Talent Management a priority

An extensive job study has helped establish a well defined organisation structure andan appreciation of roles at different levels. This framework forms the basis of astructured talent management system, including people development, career pathing,succession management, and reward management. Since changes in business requirements andtechnology require changes in business processes, there is an ongoing effort to implementthe most effective organisation structure leading to enhanced manpower productivity.Linkage has been drawn from the People Power project to ensure uniformity across alllocations.

Succession management for critical roles has its genesis in a structured talent reviewat different management levels, leading to creation and implementation of individualdevelopment plans. Planned interventions for leadership development in general managementand leadership competencies serves as an efficient leadership pipeline. Leadershipdevelopment starts at lower levels of frontline management and extends to seniormanagement levels. Functional expertise development is being planned at individual andteam levels through competency mapping and development. Expansion and greenfield projects,expanding markets, and new cross functional initiatives, serve as holistic avenues forindividual development. Overseas learning trips and short term overseas assignments haveprovided exposure to international best practices that have been customised to ouroperational requirements.

Engagement levels of our employees are recognised by the Company as a leading indicatorfor Company growth, profitability and efficient operations. Towards this end, an objectivemechanism is in place for measuring employee engagement. Organisation Developmentinterventions, designed to enhance employee engagement, are being implemented at severallevels, including the plant teams. A structured mechanism monitors action plans andimplementation progress.

Rolling out People Power

The successful implementation of the People Power initiative at Ambujanagar has,through improved maintenance practices, resulted in significant improvement in meantimebetween failures (MTBF) in kilns, raw mills, and cement mills. Electricity and thermalenergy consumption have reduced and equipment availability has improved. In 2010 thePeople Power project was launched at the Bhatapara and Maratha plants, and during 2011 itwill be replicated at the remaining plants.

The roll-out at all locations would result in standardisation of organisationstructures across Units, institutionalisation of the Academy concept, and creation ofleadership positions at lower levels. This would also provide an opportunity to integratetechnical training at plants with the Academy.

The People Power roll-out has specific quantifiable KPIs in terms of attainingsustainable manufacturing excellence; competitive plants, EBITDA gain through efficiencyimprovement, and enhanced productivity and development of the leadership pipeline. 11.SUSTAINABLE DEVELOPMENT

The major thrust in 2010 was to provide renewed impetus on the process ofsustainability in our overall business planning and strategy. Faculty members of HarvardBusiness School (HBS) were engaged for a detailed assessment of our initiatives in thissphere, and have provided certain recommendations to improve our working in this area.

We have simultaneously worked out a strategy and framework to undertake endeavours in amore structured, systematic, integrated and coordinated manner to achieve our goal ofcorporate sustainability. To achieve this objective, the earlier formed SustainableDevelopment Steering Committee (SDSC) has been re-constituted as Corporate SustainabilitySteering Committee (CSSC) with a clear mandate and programme of implementation. Thiscommittee has been entrusted with the assessment of upcoming risks and opportunities inthe business, social, and environment, fields. The whole gamut of issues dealing withenvironment, community development, resource optimisation, Alternative Fuels and Rawmaterials, energy etc, are part of the mandate for this committee. The decisions will beadopted and implemented by units through Unit Sustainability Steering Committees. Therisks and opportunities arising from latest legislation and regulations in environment,labour, etc. are also included. As a leadership commitment we are updating our CSR,climate change, and green procurement policies, and decided to have an over-arching'Sustainability Policy.

We have released our third Corporate Sustainable Development Report in October 2010. Itis based on the Global Reporting Initiative (GRI) G3 format.

Proactive Environment Management

Moving ahead fulfilling our targets for the year, we have proactively commissionedContinuous Emission Monitoring Systems (CEMS) at 7 out of 9 kiln stacks so far. Thesesystems monitor all vital emissions from our operations online. We have also commissionedContinuous Ambient Air Quality Monitoring Stations at 5 plants, for keeping track of ourfugitive emissions.

In 2010, 50 solar street lights were commissioned at Roorkee (UT), a further 22 atDadri (UP), and 15 at Farakka (WB), in addition to the previous year's installations atAmbujanagar, Bhatapara and Bhatinda. This is in line with the target of installing solarstreet lights at all our plants.

Special type of dust suppression system has been installed at Maratha, in the open coalstorage area, which will be used for fire fighting, besides dust suppression.

At Rauri (HP) plant, 6 telescopic chutes were installed at the clinker loading point, atechnique to reduce dust generated during loading of clinker in trucks. Rubber curtainsare also attached with this telescopic chute, for dust minimisation.

Sankrail (WB) is our first unit to be certified for SA 8000, which is based onadherence to international human rights norms and national labour laws, to protect andempower all personnel within a company's scope of control and influence. It also includesthe Company's suppliers and sub-contractors.

Zero discharge-based Effluent Treatment Plant has been installed at Ropar plant with acapacity of 517 m3 per day, and its treated water is re-circulated for cooling.

Water treatment unit with a capacity of 9000 litres has been set up at Surat (Gujarat)in order to reduce water consumption. Waste bath water is re-used for the plantation. Rainwater harvesting structure with storage capacity of 2600 m3 is provided, and constructionfor another such structure with capacity of 4500 m3 is in progress at Nalagarh (HP).

Management Systems

Environment Management System (ISO 14001) is established at most of our plants.Currently all 5 integrated plants and 7 out of 8 grinding units are certified to ISO14001. In a path breaking effort, the Dadri grinding unit has been certified forIntegrated Management Systems including ISO 14001, ISO 9001, OHSAS 18001, within itsfirstyear of operation.

Co-processing: Solutions for waste disposal

A modern AFR laboratory has been set up at Ambujanagar for determining thephysico-chemical characteristics of wastes to be used for co-processing. This is done togain better control over legal aspects and stipulating the internal technicalspecifications and benchmarks, environmental monitoring, and heavy metals and organicanalysis. Each month 100 to 150 samples from all the locations are analysed.

Extending our steps further, paint sludge, a hazardous waste from the automobileindustry, is being co-processed at Rabriyawas (RJ). The wastes added for co-processing in2010 are: FMCG waste, liquid waste mix, gelatin waste, and mill scales, in addition to TDItar, shredded tyres, glycerin foot, groundnut husk, cotton stalk, FO sludge etc. whichwere earlier being processed.

Voluntary Reporting

Ambuja Cement is proud to be amongst the top 10 companies qualifying for first CarbonDisclosure Leadership Index, India (CDLI), 2010. This leadership index has been preparedby the Carbon Disclosure Project (CDP) of WWF and CII, India. Ambuja is one of the fewcompanies in India reporting GHG emissions through CDP, which today holds the largestdatabase of primary corporate climate change information in the world.

CORPORATE SOCIAL RESPONSIBILTY(CSR)

Ambuja Cement has consistently demonstrated its commitment to have positive andmeaningful relations with communities around the Company's plants. They are a large andsignificant stakeholder group, and our excellent relations with them is one of ourstrengths. This approach is integrated in our core values and business ethics.

Ambuja Cement Foundation (ACF), the CSR arm of the Company, works with communitystakeholders, balancing their expectations and concerns with our business needs.

Our strong relations with the community are built and strengthened on the basis ofmutual respect and trust. Initiatives in natural resource management, agro and skill-basedlivelihood, health and education, begin with careful assessment of their impact onsociety, company and the environment, and involve stakeholder participation. This yeartoo, the Foundation also strengthened and forged new partnerships with localcommunity-based organisations, the government, and other NGOs at the local, state,national and international level.

Innovations in Natural Resource Management

Salinity ingress, or the seepage of saline sea water into land-based water resources,is a major issue along the coastline of Gujarat. ACF has been working in partnership onseveral projects with the Government of Gujarat (GoG) and donor agencies, like Sir RatanTata Trust (SRTT), on this theme.

A two-day conference on Coastal Salinity Ingress Mitigation and Prevention: Experiencesand Challenges was conducted in Diu to look at various alternatives towards salinityingress prevention. The conference aimed at synergising efforts of various stakeholders,including corporate agencies working in the coastal regions. More than 120 delegatesrepresenting universities, scientific institutions, the government, corporates, NGOs, andlocal communities, participated. The conference helped pool information and resourcesabout the various methods of salinity ingress prevention undertaken by different groups.The Company's innovative water resource management programmes in Ambujanagar wereappreciated for their impact and effectiveness.

Rajasthan too faces frequent droughts and water scarcity. The team at Rabriyawasbrought in a mix of traditional as well as modern technological methods to conserve waterin many villages around the Company plant. Khadins are a traditional method to catch andstore rainwater. These structures, built around farms, prevent excess rain water fromdraining off, and help saturate the soil moisture. This ensures that farmers are able togrow an additional crop, with increased financial returns.

Agro-based Livelihood Initiatives

Enhancing agro-based livelihoods for rural communities is another area of focus forACF. Better Cotton Initiative (BCI) is a programme for producing economically,environmentally, and socially sustainable cotton. BCI is a farm level intervention thathas the potential to change the scenario on the global market, and has demonstrable long-term benefits for both farmers and the environment.

Better Cotton Initiative is an international programme implemented in major cottonproducing countries in the world, including India. Major retailers and promoters havepooled money in a Fast Track Fund (FTF), to enable cotton growers' access to technology,and inputs on producing environmentally friendly, higher grade cotton. ACF is the largestamong the 8 implementing agencies in the country, a process coordinated by the Dutchorganisation Solidairdad.

In 2010, ACF worked with cotton farmers in Bhatinda, Kodinar, Chandrapur and Nadikudi,to integrate BCI techniques in current farming practices. Through planned interventions,strategic pesticide use, contamination prevention and effective picking, storing andharvesting methods, more than 2552 farmers across locations have been able to show areduction of Rs. 3000 per acre on production costs. And BCI cotton has been able tocommand upper-band rates bringing in profits to farmers. Projected figures of BCI cottonproduced in 2010-11 under ACF are expected to be 83537 quintals. In recognition of ACF'sefforts, we have been invited to be a partner in the global BCI programme, a move thatwill bring in additional funds and technical inputs to processes here.

In 2010, ACF's nascent organic farming intervention grew exponentially to reach out tomore farmers. Awareness programmes among the farming community provided a glimpse of aviable, alternate way of farming. Currently there are 558 farmers growing organically onmore than 564 acres of land in Punjab alone. Using organic manures and preventive pestcontrol methods has ensured that the yield they get from their land is sufficient, and thecrop produced is healthy and safe for consumption. The soil is no longer getting strippedof its nutrients and is in fact on the road to recovery. Farmers are recognising theprofitability in organic farming, and motivating others to take it up as well.

Other innovative initiatives include the Wadi project, wherein fruit-bearing trees areplanted along existing farms. At no extra cost or effort, the farmer is ensured ofadditional income within five years. Quality Seed Production in collaboration with theRajasthan State Seed Corporation has taken root in Rajasthan. Farmers from 6 villages areinvolved in raising quality seeds in a controlled manner in more than 230 acres of land.The plots on which the seeds are produced are closely monitored and are inspectedperiodically by the Rajasthan State Seed Certifying Agency. These seeds are thencertified, bought and marketed by the State Agency, bringing in additional income to thefarmers.

Skills and Capacity Building

The construction sector is closely related to the cement industry. In view of thepaucity of skilled workers, ACF, along with the Tribal Development Department ofGovernment of Gujarat, has been working on mason training for the past two years. Theprocess brought together ACF's community mobilisation skills, ACL's technical inputs, andgovernmental support to train hundreds of unskilled tribal youths into skilled masons.

This year ACF initiated the Advanced Mason Training programme, to hone the semi-skilledinto skilled professionals. The course is shorter in duration, but more intense, andincludes skills such as plumbing, pointing, tiling and roofing.

ACF has also focused on providing alternate skills for employment generation to ruralyouth. The number of Skill and Entrepreneurship Development Institutes (SEDI) hasincreased to 12 this year. The new SEDIs though are in various stages of development. Morethan 1500 students have been trained this year in 17 different technical trades includingwelding, carpentry, repairs of domestic appliances, mobiles, two-wheelers, computer basicsand DTP and security guard training. SEDIs are also ideal vehicles for collaboration withother organisations. Apart from centres that are solely managed by ACF, SEDIs have alsobeen set up in PPP with the government in different locations.

Post-training, SEDI provides trainees assistance in finding suitable job opportunitiesor in establishing small scale enterprises. Across the Institutes, the rate of employmentof those trained has reached about 70%, which is very encouraging.

By concentrating on livelihood generation of various kinds, ACF is working towardsimproving the standard of living of people and improving the quality of their life - afactor that is inextricably linked to the Company's growth and expansion.

Integrated Health Programme

Access to health care has been identified by ACF as one of the critical communityissues. Communities around the Company plants have little or no access to clean drinkingwater, or health care services. ACF addresses these issues through its integrated healthprogramme.

In 2010, ACF continued to strengthen its cadre of health workers under the VillageHealth Functionary (VHF) Programme. VHFs, also called 'Sakhis', are village women trainedin clinical, preventive and promotive aspects of health. Sakhis are the crucial linkbridging the community with health care access. They conduct sessions on health withwomen, and youth, interact with Panchayats to implement sanitation programmes in thevillages, promote sustainable practices like kitchen garden and vermin composting, andwork closely with state-run anganwadis to monitor health of young children.

Currently, 309 Sakhis from 258 villages cater to a population of over 1.4 lacs. ACF isproud that the health programme is completely supportive of and complementary to theNational Rural Health Mission (NRHM) and will be replicated to more villages in ourcurrent operational areas in partnership with the government.

ACF's health programme is moulded to suit the conditions and the specific needs ofcommunities in the region. In Bhatinda, ACF implements a drug de-addiction programme,while malnutrition among young children is a key area of focus in Bhatapara inChhattisgarh. Given the skewed sex-ratio in Punjab, ACF implements a programme againstsex-selection in Ropar. In Chandrapur, Maharashtra, ACF broadened the Home Based Neo-natalCare (HBNC) programme to tackle maternal and infant mortality, institutionalise deliveriesand promote safe child care. This shift in approach has been able to meet community needsbetter, and in turn contributed to greater trust and a more solid stakeholder relationshipwith the Company.

Truckers are also an important stakeholder for a cement company. However, they also area high-risk group for HIV and AIDS. In 2010, the HIV and AIDS Prevention Programmecontinued to reach out to them and other communities though setting up of SexuallyTransmitted Infection (STI) Clinics and Voluntary Counselling and Testing Centres (VCTC).

Education Development

ACF's work in raising the quality of education in village-level government schools gota boost in 2010 with the introduction of various innovative learning tools and conceptsfor trainers, teachers, and students.

For many students, maths continues to remain a complex and unfriendly subject.'Activity-Based Maths Learning', introduced this year, combines a hands-on and practicalprocess to make maths enjoyable and fun. 'Reading as a Way to Literacy' focuses onbuilding and retaining a child's interest in reading. Introduced in three locations in HP,UP, and Maharashtra, the programme includes training of teachers, resource acquisition,and giving a new lease of life to existing school libraries. 'Concept Learning throughTechnology' was launched as a pilot project in primary schools in Dadri and Darlaghat.This programme integrates the use of computers into the education process.

ACF also concentrated on strengthening the existing School Management Committees (SMC).Set-up by the government, this group is empowered to make decisions for the school. WithACF's intervention these committees, in schools across three locations, are now able tomake a bigger difference.

Regular and sustained training of anganwadi workers and school teachers are animportant feature of the ACF education programme. Fifty anganwadi workers and teacherseach were trained this year on various methods of learning and teaching.

A significant collaboration has been with UNICEF in Maharashtra, to promote sport andleadership skills among school children in district Chandrapur.

Measuring Success

At ACF, communication and stakeholder involvement is a continuous activity.Understanding their needs and expectations is therefore fundamental to our work. It isimportant to assess, take stock and receive feedback from the communities we are workingwith, on a regular basis. This helps in gauging the effectiveness of our programmes.

The unique Social Engagement Scorecard (SES) was used this year as well to assesscommunity development initiatives at all locations. The responses have been encouraging,with scores in all locations in the range of 75% to 100%. Many discussions were also ableto identify newer issues facing the community, and the ways in which the Company couldcontribute to its solution. For example in the SES process in Bhatinda, communityrepresentatives expressed their satisfaction with the way ACF had taken up organic farmingpractices. However, they also shared their need for intensive programmes in watermanagement and sanitation, areas which ACF will include in future planning.

To further integrate CSR into its culture and thinking, ACF is in the process ofestablishing Community Advisory Panels (CAP). Comprising representatives from the Company,ACF, and community stakeholders, CAP is designed to coordinate and conduct engagement withstakeholders. Through regular meetings and other trust-building activities, CAP aims topromote sustainable local development and ensure synergy between community initiatives inall business segments. These processes are opportunities to identify and addressstakeholder concerns proactively, and the natural way to earn trust and gain acceptancefor our business activities.

Towards Zero Harm

We have significantly improved OH&S awareness across all levels and have adopted astructured approach towards achieving our objective of Zero Harm to People.The key focus areas in 2010 were:

1) Increase in Visible Leadership by line managers. This has been achieved throughconducting awareness programmes on OH&S, safety observation tours, and sharing ofleadership experience across the organisation.

2) Implementing OH&S management system, including Fatality Prevention Elements, andother Holcim directives.

3) Reducing vehicle and traffic safety risks through structured approach in the form ofconducting surveys and risk assessments. This has resulted in significant improvements inthe operating environment.

4) Establishing capacity and capability to manage projects, which present significantOH&S risks. We have addressed this challenge by strengthening OH&S systems andtheir application, by establishing formal project OH&S organisations.

We have also initiated the process of implementing Contractor Safety Managementsystems. This will enable us to significantly mitigate the OH&S risks. Our long termOH&S strategy is to reduce OH&S risks through engineering design improvements,together with behaviour-based safety interventions.

12. EMPLOYEE STOCK OPTION SCHEME

In recognition of the valuable contribution made by the employees in the progress ofthe Company, and with a view to remain a preferred employer, the Company has granted StockOptions for the eleventh year in succession to all management grade employees and the thenManaging Director. 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 2010

During the year 2010, the company granted 99,98,900 stock options on 22nd April, 2010(each option carrying entitlement for one share of the face value of Rs.2/- each) at anexercise price of Rs.119.00 per share. The exercise price was determined by averaging thedaily closing price of the equity shares of the Company on the National Stock Exchangeduring 7 days immediately preceding the date of grant. The market price of the shares onthe date of grant was Rs.121.05 per share. These stock options shall vest on expiry of oneyear from the date of grant and can be exercised during a period of four years from thedate of vesting.

Valuation and Accounting:

The company has adopted intrinsic value method for the valuation and accounting of thestock options as per SEBI guidelines. Since the market price per share on the previous dayof the date of grant was more by Rs. 2.05 than the exercise price, a sum of Rs. 2.05crores has been accounted for as compensation cost for the year ended 31st December, 2010.The fair value of the options as per the Black Scholes model comes to Rs.39.37 per option. Had the Company valued and accounted the options as per the BlackScholes model, the net profit for the year would have been lower by Rs. 39.37 croresand the diluted earnings per share (of the face value of Rs. 2 each) would have been Rs.8.05 instead of Rs. 8.26 per share.

The Black Scholes model captures all the variables with their respectiveappropriateness which influences the fair value of stock options. The significantassumptions to estimate the fair value of options as per Black Scholes modelare:

(i) Risk-free interest rate - 6.64%.

(ii) Expected life of the option - 3 years.

(iii) Expected volatility - 43.75%.

(iv) Expected dividend yield - 2.30%.

Grants beyond threshold:

No employee or Director has been granted options in excess of 1% of the issued equityshare capital of the Company. None of the Directors have been granted options of more than5% of the total options granted during the year.

Disclosure on grants:

(i) To senior management employees:

The options granted to the then Managing Director and other Executive Committee membersare as follows:

(ii) To other employees:

b) Cumulative disclosure

The particulars with regard to the stock options as on 31st December, 2010 as requiredto be disclosed under the SEBI's guidelines are as follows:

Cumulative position as on 31st December, 2010

*Options related to Equity Shares of the face value of Rs.10/-. ** Options related toEquity Shares of the face value of Rs.2/-.

As required under SEBI guidelines on ESOS, the information disclosed in respect of item(m) is for grants made after June 30,

2003.

13. CORPORATE GOVERNANCE

The company has complied with the Corporate Governance requirements as stipulated underthe listing agreement with the stock exchanges. A separate section on corporategovernance, along with a certificate from the auditors confirming the compliance, isannexed and forms part of the Annual Report. Corporate Governance Voluntary Guidelines Themajor part of the Corporate Governance Voluntary Guidelines, 2009, has been complied withby complying the requirements under the Companies Act, 1956, the Listing Agreement, andthe Company's own governance policies.

Cessation

A.L. Kapur

Mr. A.L. Kapur superannuated on 30th April 2010 as Managing Director of the Company. Hejoined the Board as Whole-time Director in May 1999 and became Managing Director in May2007.

Amongst many achievements during his tenure as Managing Director, his significantachievements were: efficient handling of the transition phase upon Holcim taking over themanagement control, implementation of SAP and People Power Projects, successfulcommissioning of Rauri, Bhatapara, Dadri and Nalagarh projects, and Captive Power Plantsat Bhatapara and Ambujanagar. He was also responsible for building a strong team acrossall levels in the Company. During his tenure, major thrust was given in the areas of HR,Health and Safety, Alternative Fuels and Raw materials.

The Board placed on record its appreciation for the valuable services rendered by Mr.Kapur during his tenure.

Retirement by rotation

In accordance with the provisions of Article 147 of the Articles of Association of thecompany, (i) Mr. M. L. Bhakta, (ii) Dr. Omkar Goswami, (iii) Mr. Naresh Chandra, Directorsof the company, will retire by rotation at the ensuing Annual General Meeting of theCompany and being eligible, offer themselves for re-appointment. The Board recommendstheir re-appointment.

Onne van der Weijde, new Managing Director

The Board has appointed Mr. Onne van der Weijde as the Managing Director of the Companyw.e.f. 1st May, 2010 upon superannuation of Mr. A. L. Kapur. The Members at their 27thAnnual General Meeting held on 5th April, 2010, approved his appointment. Since Mr. Weijdeis a foreign national, additional approval of the Central Government was also obtained on24th May, 2010, confirming his appointment as the Managing Director. Further details aboutDirectors are given in the Corporate Governance Report as well as in the Notice of theensuing Annual General Meeting being sent to the shareholders along with the AnnualReport.

15. DIRECTORS' RESPONSIBILITY

Pursuant to Section 217 (2AA) of the Companies Act, 1956 as amended, the Directorsconfirm that: i) In the preparation of the annual accounts, the applicable accountingstandards have been followed along with proper explanations relating to materialdepartures.

ii) Appropriate accounting policies have been selected and applied consistently, andjudgments and estimates made are reasonable and prudent, so as to give a true and fairview of the state of affairs of the company as on 31st December, 2010, and of the profitand cash flow of the company for the period ended 31st December, 2010.

iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities.

iv) The annual accounts have been prepared on a going concern basis.

16. INTERNAL CONTROL SYSTEM

The company has implemented a robust and comprehensive internal control system in orderto direct, monitor, and measure its resources. The internal control system has beenestablished by standardising and documenting policies and procedures for all the majorprocesses, to ensure reliability of financial reporting, timely feedback on achievement ofoperational and strategic goals, and compliance with laws and regulations. The formalisedsystems of control are designed to ensure effective compliance as per Clause 49 of theListing Agreement, and article 728 (a) of the Swiss Code of Obligations, applicable to theHolcim Group since 2008. The Company's Internal Audit department independently tests thedesign and operating effectiveness of the internal control system across the Company. Thisprovides an objective assurance to the Board of Directors and Audit Committee regardingthe adequacy and effectiveness of the internal control system.

The Internal Audit function monitors the effectiveness of controls, and also providesan independent and objective assessment of the overall governance processes in thecompany, including the application of a systematic risk management framework.

The scope and authority of the Internal Audit activity are well defined in the InternalAudit Charter, approved by the Audit Committee. Internal Audit plays a key role byproviding an assurance to the Board of Directors, and value adding consultancy service tothe business operations.

17. AUDITORS

M/s. S.R. Batliboi & Associates, the Statutory Auditors of the company, will retireat the ensuing Annual General Meeting and are eligible for re-appointment. M/s. S.R.Batliboi & Associates have expressed their unwillingness to get re-appointed as theStatutory Auditors of the company.

The Board, based on the recommendation of the Audit Committee, recommends theappointment of M/s S.R. Batliboi & Co. as the Statutory Auditors of the company, forwhom the company has received a notice u/s 225 read with section 190 of the Companies Actfrom a shareholder seeking their appointment in place of M/s.S.R. Batliboi &Associates. M/s S.R. Batliboi & Co have confirmed that their appointment, if made,shall be within the limits of Section 224(1B) of the Companies Act, 1956.

M/s. PM. Nanabhoy & Co., Cost Accountants, have been appointed as Cost Auditors ofthe company for the year 2011.

18. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The company has transferred a sum of Rs 0.31 crore during the financial year 2010 tothe Investor Education and Protection Fund established by the Central Government, incompliance with Section 205C of the Companies Act, 1956. The said amount representsunclaimed dividends which have been with the company for a period of 7 years from theirrespective due dates of payment. Prior to transferring the aforesaid sum, the Company hassent reminders to the shareholders for submitting their claims for unclaimed dividend.

19. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Information on conservation of energy,technology absorption, foreign exchange earnings and outgo, is required to be givenpursuant 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 annexedhereto marked Annexure - I, and forms part of this report.

20. PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956 read withCompanies (Particulars of Employees) Rules, 1975 as amended, in respect of the employeesof the Company, is provided in the Annexure forming part of this Report. In terms ofSection 219(1)(b) (iv) of the Act, the Report and Accounts are being sent to the Membersand others entitled thereto, excluding the aforesaid Annexure. The Annexure is availablefor inspection by Members at the Registered Office of the Company during business hours onworking days upto the date of the ensuing Annual General Meeting, and if any Member isinterested in obtaining a copy thereof such Member may write to the Company Secretary,whereupon a copy would be sent.

21. SUBSIDIARY COMPANIES

As required u/s 212 of the Companies Act, 1956, the audited statements of accounts,alongwith the report of Board of Directors, relating to the Company's subsidiaries, viz.Kakinada Cements Limited, MGT Cements Private Limited, and Chemical Limes Mundwa PrivateLimited, and respective Auditors Report thereon for the year ended 31st December, 2010,are annexed to this report.

22. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated by Clause 32 of the listing agreement with the stock exchanges, theconsolidated financial statements have been prepared by the company in accordance with theapplicable accounting standards issued by The Institute of Chartered Accountants of India.The audited consolidated financial statements together with Auditors' Report form part ofthe Annual Report. The consolidated net profit of the Company, its subsidiaries andassociates, amounted to Rs.1,263 crores for the corporate financial year ended on 31stDecember, 2010 as compared to Rs.1,264 crores for the Company on a standalone basis.

23. EQUAL OPPORTUNITY EMPLOYER

The company has always provided a congenial atmosphere for work to all sections of thesociety. It has provided equal opportunities of employment to all without regard to theircaste, religion, colour, marital status and sex.

24. AWARDS AND RECOGNITION

(a) Our mines continued to be adjudged among the best mines in their respective regionsby the Director General of Mines on various parameters such as mine working, maintenance,innovations, health & safety, training, environmental protection etc.

(b) Our MCW plant won the following awards:

1) Awarded for National award for Excellence in Water Management - 2010 given byConfederation of Indian Industries (CII).

2) Awarded Silver Medal in IMEA-2010 (Indian Manufacturing Excellence Award) conductedjointly by Frost and Sullivan and Economic Times.

3) Awarded Green Tech Environment Excellence award - 2010 in Gold category inCement Sector.

4) Awarded IIIrd in Inter Industrial Safety Performance 2009-10 conducted by VidarbhIndustrial Safety Council.

25. CAUTIONARY STATEMENT

Statements in the Directors' Report and the Management Discussion & Analysisdescribing the Company's objectives, expectations or predictions, may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Company's operations include: global and domestic demand and supplyconditions affecting selling prices, new capacity additions, availability of criticalmaterials and their cost, changes in government policies and tax laws, economicdevelopment of the country, and such other factors which are material to the businessoperations of the Company.

26. ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their deep sense of gratitude to thebanks, Central and state governments and their departments and the local authorities fortheir continued guidance and support. We would also like to place on record our sincereappreciation for the total commitment, dedication and hard work put in by every member ofthe Ambuja family. To them goes the credit for the Company's achievements. And to you, ourshareholders, we are deeply grateful for the confidence and faith that you have alwaysreposed in us.

For and on behalf of the Board,

N. S. Sekhsaria

Chairman

Mumbai

3rd February, 2011

ANNEXURE- I

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER COMPANIES (DISCLOSURE OFPARTICULARS IN REPORT OF BOARD OF DIRECTORS) RULES, 1988.

(a) Energy Conservation measures taken:

(1) Optimisation of Process & Equipments:

(1) Replacement of pre heater down comer duct of Ambuja unit Ambujanagar)

(ii) Upgradation of Reclaimer at Gaj - I (Ambujanagar)

(iii) Optimization of Ambuja Cement Mill-2 by shortening of first chamber (Ambujanagar)

(iv) Using of Positive Displacement Blower in place of compressor for fly ash unloading(Farakka,).

(v) Clinkerisation process optimised by various measures like installation of SPRS(Slip Power Recovery System) panel, removal cooler fresh air damper and reduction of fanspeed by changing pulley (Rabriyawas)

(2) Installation of speed control devices:

(i) Installation of Grid Rotor Resistance in place of Liquid Resistance control Line IRaw mill Fan (Bhatapara)

(ii) Installation of speed control devices like VVF (Variable Frequency) drive in fans,Reclaimer harrow drive, cement mill & Compressor drives (Maratha, Rabriyawas,Sankrail, Roorkee)

(3) Energy efficient plant & township lighting:

(i) At Colony Area, 250 W HPSV light fittings replaced by 70 W CFL Light Fittings(Maratha)

(ii) Optimisation of operating voltage of lighting transformers (Maratha).

(iii) Optimisation of plant lighting by taking in PLC instead of conventional timer(Maratha,).

(iv) Direct firing system for liquid alternate fuel at Gaj - I & II (Ambujanagar)

(v) Modification of compressed air pipe line to save power (Suli)

(vi) Installation of Light Emiting Diode (LED) lights in street / colony area (Suli,Sankrail)

(vii) Reducing the steps of Separator Fan & sepol drive (Roorkee)

(4) Installation of energy efficient new equipments:

(i) Alternative Fuel system for Line 2 (Bhatapara)

(ii) Installation of express feeder for uninterupted power supply for plant operation(Panvel)

(iii) Installation of CPP - Pet Coke Ash usage system for Coal Mill #2

(5) Solar power utilization:

(i) Installation of solar water heating system in Colony etc. (Bhatapara).

(b) Additional investments and proposals, if any, being implemented for reduction ofconsumption of energy:

(1) Optimisation of process & equipments:-

(1) Modification of Gaj Line I Raw Mill (Ambujanagar)

(ii) Installation fuel blending system for power plant (Ambujanagar)

(iii) High efficiency impeller to be installed in Raw Mill & Kiln

Fan (Suli)

(iv) Modification of Raw mill#2 fan inlet box (Rabriyawas)

(v) Retrofitting of impeller for ILC(Inline Calciner) Preheater fans and cooler ESP fan(Rabriyawas)

(vi) Inline Calciner preheater stage I cyclone dip tube modifications (Rabriyawas).

(2) Installation of speed control devices:

(i) Variable Frequency drives (VVF) in fans(Rabriyawas, Bhatinda, Sankrail, Farakka,Bhatapara).

(ii) Installation of Grid Rotor Resitance(GRR) in place of Liquid Resistance control infans (Rabriyawas).

(3) Energy conservation measures for plant & township lighting:

(i) Mid tap from Gaj Line I cooler for Raw mill heating up(Ambujanagar)

(ii) Preheater profile study to be carried out by FLS (Suli)

(iii) Energy audit to be done by external party (Suli, Rabriyawas)

(iv) Installation of Energy Monitoring system (Sankrail)

(v) Replacement of 70 W HPSV by 36 W CFL (Surat)

(vi) Rerouting of SLC coal firing locations to improve the combustion efficiency(Rabriyawas)

(vii) Study and optimisation of compressed air system (Surat, Sankrail)

(4) Installation of energy efficient equipments:

(i) Reactor installation & Grid connectivity with 3.5 MVA CD (Ambujanagar)

(ii) High efficiency classifier for Coal mill (Suli)

(iii) Installation of high momentum burner in Jan 2011 (Suli)

(iv) New generation Cooler to be installed in Oct 2011 (Suli)

(v) Installation of Coriolis fine coal feeding system for ILC (Rabriyawas)

(vi) Replacement of Low energy efficiency motors with High energy efficiency Motors(Bhatapara)

(vii) Lime stone screening & crushing (Ambujanagar)

(5) Solar Power Utilization:

(i) Installation of solar water heating system at various locations

reduction of energy consumption and consequent impact on the cost of production ofgoods:

Measures referred to in (a) will result in saving of Rs.19.00 crores per annum.Measures referred to in (b) is expected to result in saving of Rs.26.00 crores per annum.

per unit of production: Information given in the prescribed Form-A annexed.

B) TECHNOLOGY ABSORPTION

Efforts made in technology absorption are given in prescribed Form-B annexed.

(a) Activities relating to exports; initiatives taken to increase exports; developmentof new export markets for products & services; and export plans:

In view of good growth in domestic demand and fall in international demand and prices,the Company has reduced its exports to 5.06 lacs tonnes of cement as against 7.46 lacstonnes in the previous year. In terms of value, the exports during this year amounted toRs.97.27 crores (FOB) as against Rs. 170.72 crores (FOB) in the previous year.

(b) Total foreign exchange used and earned:

(See Rule 2)

Form for Disclosure of Particulars with respect to Conservation of Energy

* Power consumption at company's Distribution Terminals has been included in currentyear's figure and accordingly previous year's data have been recast wherever applicable.

Total power consumed includes 2.91 Crore kwh consumed for Capital Work in progress forproject work (previous year 1.51 Crore kwh) and also for distribution activities 0.87crore kwh (previous year 0.84 crore kwh)

** Does not include Electricity consumed in residential colony which is 0.53 kwh /tonneof cement (previous year 0.58 kwh/Tonne of cement).

# Includes 5.77 crore units of TG-power sold (previous year 7.51 crore units)

Power generation data mentioned under 1(b) above excludes power generated from powerplant under trial run at Bhatapara, with details as below:

Net Units (KWH) Crores 2.70 (previous year (kwh) crore 0.14), Net Units / T. of Fuel557 (previous year 268), Oil/Gas Cost Rs. / Unit 3.22 (previous year Rs. / unit 6.78).

FORM - B

(See Rule 2)

Form for disclosure of particulars with respect to Absorption

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

(a) Investigation on the Usage of special Refractory suitable to use with Alternatefuel (Ambujanagar)

(b) Installation of Phospho-gypsum Beneficiation plant based on cooler exhaust hotgases (Ambujanagar)

(c) Evaluation of fly ash from different sources with respect to their mineralogicalcomposition and reactivity to enhance its usage in PPC (Ambujanagar)

(d) Development of new product - Ambuja Cement Plus (Sankrail)

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

(a) Conservation of resources, improve plant performance and manufacturing costreduction.

(b) New product for finding new market

3) Future plan of action:

(a) Investigation on usage of waste derived fuel from various industries as areplacement of fossil fuel (Ambujanagar)

(b) Cultivation of Industrial Algae from CO2 exhaust from cement kiln for reduction ofCO2 emission and to use the product for bio diesel generation and as an unternative fuel(Ambujanagar)

(c) Mineral gypsum replacement with power plant gypsum to reduce cost of production(Sankrail)

4) Expenditure on R&D

1) Efforts, in brief, made towards Technology Absorption, Adaption and Innovation:

a) Automatic oxy acetylene cutting machine to minimise manual intervention andimproving cutting edge quality (Ambujanagar).

b) High efficiency multi channel burner for Ambuja kiln (Ambujanagar)

c) Introduction of Box type truck which resulted in reduction in CO2 emission andlogistics cost (Ambujanagar).

d) New energy management system in cement Plant & power plant (Maratha)

e) Power analyser for energy study (Maratha)

f) Solar traffic signal light and solar blinkers(Maratha)

g) Beck actuator in Kiln feed regulating valve to control feed variation from +/- 5% to+/- 2.0% (Maratha)

h) Flow conveyor in place of belt conveyor for CM-3 (Suli)

i) Gunning machine for refractory casting to save shutdown time and better quality ofcasting (Suli)

j) Vehicle mounted safety platform for working at height upto 40 mtrs (Suli)

k) 400 TPD Synthetic Gypsum production line to cater the needs of high purity Gypsum(Rabriyawas)

1) FLS QCX with new XRF with UPS which will result in online action thus improvehomogenizing of raw mix (Rabriyawas)

m) Microscope for clinker microscopy (Rabriyawas)

n) Kima Sound level sensor in Cement Mill 1 (Bhatapara)

0) Online Bag Printing Machine (Surat, Farakka, Panvel)

p) Alpine Jet Sieve adopted for analysis of better control of particle sizeparticularly 45 micronst. (Suli)

q) Optical Microscope for better process control through study of minerologycomposition of clinker(Rauri)

r) Plate type heat exchanger for Cement Mill slide shoe & Gear box in place ofshell & Tube type heat exchanger (Maratha)

s) Bag Identification Electronic System to discharge bag of diff. MRP at same time(Dadri)

t) Process Expert Server for cement mill to to improve operation & grindingefficiency (Dadri)

u) Replacement of existing KEC make HVSB panels with latest Siemens make HVSB panels(Ropar)

a) Improved operational efficiencies, equipment reliability, productivity and quality.

b) Reduction in manufacturing cost, increase safety and protection of environment.

3) Information regarding Technology Imported during last 5 years:

a) DALOG system for Raw mill & Coal mill gear box health monitoring.

b) X-ray analyzer for better quality analysis

c) Kiln shell scanner to improvement in kiln monitoring, refractory management andonline measurement of tyre sleep.

d) Continuous Emission Monitoring System (CEMS) installation in all Baghouse Stack foronline monotoring of emmission.

e) High momentum Duoflex Burner for Kilns

f) Membrane bags in place of Conventional glass bags in bag house.

g) Refracta bricks installation at Kiln outlet

h) World best fine coal feeding Coriolis system for Kiln.

1) PGNAA cross belt analyser installed on stacker belts

j) Mechanical Kiln Monitoring (MKM) System to improve mechanical reliability

k) Installation of Kima Sound level sensor in Cement Mill

l) Unipulse electronic in packers for fine tunning of weight, individual weight screenand online parameters

m) Partical Size Analyser has been used for optimisation of

grinding media

n) Wireless Software for Bag Counters in Packers

o) Installation of Mobile notification System