Associated Stone Industries (Kotah) Ltd

To

The Members,

Associated Stone Industries (Kotah) Limited

The Directors have pleasure in presenting the 64th Annual Report together with theAudited Accounts of the Company for the year ended 31st March, 2010:

1. FINANCIAL RESULTS:

2 DIVIDEND

Your Directors had disbursed an Interim Dividend of Re.0.50 (equivalent to 5%) perequity share of face value of Rs 10/- each in November 2009. In addition to the interimdividend , your Directors have decided to recommend a final dividend amounting Re.0.75(equivalent to 15%) per equity share of the face value of Rs.5/-each, thus making totaldividend payout for the year Re.1/-(equivalent to 20%) per equity share of Rs. 5/- each asagainst Rs. 1.20 (equivalent to 12 %) per equity share of Rs. 10/- each during lastfinancial year.

3. CHANGES IN CAPITAL STRUCTURE

As approved by the shareholders at the Extra Ordinary General Meeting of the Companyheld on 15th January 2010, the equity share having face value of Rs. 10/- each has beensub-divided in to 2 equity shares of Rs 5/- each. Paid up capital of the Company asof date is Rs. 6,62,83,730/- consisting of 1,32,56,746 Equity shares of Rs 5/- each.

4. PERFORMANCE

For the year under view the production of Kotah Stone was 1395.95 lacs sq. fts. asagainst 1363.67 lacs sq. fts. in the previous year and sales were 1376.06 lacs sq. ft. asagainst 1327.32 lacs sq. fts. in the previous year.

During the year 2009-10 the Company has registered a turnover of Rs. 15922.63 lacs (Rs.12657.91 Lacs) and Gross Profit of Rs. 1989.68 Lacs (Rs. 1880.83 Lacs).

The profit during the year 2009-10 is Rs. 1310.93 Lacs as compared to Rs. 1289.91 Lacsduring last year 2008-2009.

5 WIND POWER PROJECT

The Company has so far installed 4.75 MW capacity wind power projects comprising of1.125 MW capacity in Tiruppur District of Tamilnadu, 1.125 MW capacity in Gadag Districtof Karnataka and 2.50MW capacity in Satara District of Maharashtra.

The wind power projects by themselves are not commercially viable since their operationdepends on availability of winds which is a function of nature and many times erraticsince it is linked to monsoon. Due to failure of monsoon during last two years, generationhas been less than estimated. At the same time, wind power generation is one of thecleanest forms of power generation as it does not involve use of fossil fuels which leadsto emission of large quantities of toxic gases into the atmosphere leading to climatechange. In fact recognizing this immense advantage of wind and similar forms of powergeneration like solar power, power utilities are mandated to buy certain percentage ofpower needs from the agencies installing such plants by Central Electricity RegulatoryAuthority, Govt, of India. To make such projects economically viable for investors, carboncredit benefit is also extended under Kyoto Protocol of UNFCCC (United Nations FrameworkConference on Climate Change).

Company has applied for such Carbon Credit benefit for 4.75 MW bundled Power Project(1.125 MW in Tamilnadu, 1.125 MW in Karnataka and 2.50MW in Maharashtra). The proposal hasbeen granted "Host Country Approval" by the Ministry of Environment &Forests, Government of India. The Proposal will go to the Executive Board of UNFCCC atBonn, Germany for their registration after recommendation by the validators.

The Company has appointed an international consultant M/s SGS India Pvt. Ltd., tovalidate the project and submit their recommendations to the UN Executive Board at Bonn.The final validation report has been received and sent to SGS Ltd., U.K. The registrationof the project by UNFCCC is expected in the second half of 2010-11.

6. ENVIRONMENT SAFETY & HEALTH

The Company continues to maintain high standards of safety at workplace through strongsupervision and improving the conditions where required. Regular health camps have beenorganized at the worksite to diagnose any serious ailment.

Company continues to work as per its Eco-friendly Mining Plan adhering to itsEnvironment Policy. Plantation of the trees in mine area continues as a yearly feature ofits policy.

7. CORPORATE GOVERNANCE

The Company has complied with mandatory provisions of Corporate Governance asprescribed under the Listing Agreement.

8. DIRECTORS' RESPONSIBILITY STATEMENT

A separate report on Corporate Governance is produced as a part of the Annual Reportalong with Auditors' Certificate on its compliance.

As stipulated in Section 217(2AA) of Companies Act, 1956, your Directors subscribe tothe "Directors Responsibility Statement" and confirm that:

• in the preparation of the annual accounts, the applicable accounting standardshave been followed along with proper explanation relating to material departures;

• the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;

• the Directors have taken proper and sufficient care of the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act,1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

• the annual accounts have been prepared on a going concern basis.

9. DIRECTORS

Shri. Sunil Kumar Goenka has resigned as Director of the Company w.e.f 29.10.2009. TheBoard wishes to place on record its gratitude and appreciation for the co-operation andguidance rendered by him during his tenure as Director of the Company.

Shri. Sanwar Mull Shroff retires by rotation in accordance with the provisions of theCompanies Act, 1956 and Articles of Association of the Company but being eligible, offershimself for reappointment.

Shri. Anshul M. Sonawala who was appointed by the Board of Directors of your Company inits meeting held on 02nd December, 2009 as Additional Director in terms of Article 110 ofthe Articles of Association of the Company, will hold office up to the date of ensuingAnnual General Meeting. Your Company has received notice under Section 257 of theCompanies Act, 1956 proposing Shri. Anshul M. Sonawala for the office of Director to beelected by the members in the ensuing Annual General Meeting.

10. AUDITORS

M/s. B.L. Ajmera & Co., Chartered Accountants, retire as auditors of the Company atthe ensuing Annual General Meeting and are eligible for reappointment.

11. STATUTORY INFORMATION

The information pursuant to Section 217 (2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975 is not applicable.

The Information pursuant to Section 217(1) (e) of the Companies Act, 1956 read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 isin Annexure.

The Company has been accepting deposits within the meaning of Section 58A of theCompanies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. The FixedDeposits as on 31st March, 2010 was Rs 263.21 Lacs.

12. APPRECIATION

Your Directors place on record their gratitude to Central and State Governments,Bankers, Financial Institutions, Customers, Staff & Workers, Members and InvestingPublic for their continued support.

ANNEXURE TO DIRECTORS' REPORT

CONSERVATION OF ENERGY

The aforesaid information is not applicable to the Company. Encouraged with the resultsof using grid power at 11 KV, Company is now using at 3 locations State Electricity Powerat 11 KV, replacing D. G. power generation. It has helped in reducing the cost ofproduction. Further replacement in coming years is planned.

TECHNOLOGY ABSORPTION / RESEARCH & DEVELOPMENT

Company always believed in innovation through R&D as central issue in economicprosperity. Company added, during the year, state of art processing facilities forcalibration, online polishing, chamfering, sandblasting and for designing the tiles tosupply high value product in the market. Company continues to regulate the reduction inwaste and improving the mineral recovery.

Benefits derived : Company is now in a much better position to offer a highvalue item of better quality and to the customers' satisfaction.

Imported Technology: None. It is all in-house development.

FOREIGN EXCHANGE EARNING AND OUTGO.

The relevant figures pertaining to Foreign Exchange Earning and Outgo are given innotes on accounts annexed to and forming part of Balance Sheet.