Kakatiya Cement Sugar & Industries Ltd

a. Industry Structure And Developments:

Implementation of major irrigation projects, setting up of special economic zones,National and State high ways, housing projects etc has sustained the increase in demandfor cement for the year 2009-10 and out look of the Cement Industry appears to be stable.

Sugar being an agro-based industry needs good rainfall and irrigation facilities. Dueto the lining works of Wyra canal the Irrigation facilities in the factory Zone havesuffered resulting in lesser crop cultivation. However with the expectation of areasonably good monsoon the area under sugar cultivation is likely to go up resulting inconsiderable improvement over last season crushing. As far as Power operations areconcerned, with the improvement in sugar cane crushing, the availability of bagasse willalso improve, resulting in higher generation of power. Further the directions issued bythe Government of Andhra Pradesh for generation of power during non-crushing season byusing coal as fuel will also improve the performance of the power division.

b. Opportunities and threats:

With the continued emphasis by the Government on infrastructure sector and housingsector, the demand for the cement is expected to remain strong.

c. Segment or product-wise performance:

Segment-wise or product-wise performance has already been furnished elsewhere in thisReport.

d. Outlook:

Division-wise outlook has already been furnished elsewhere in this Report.

e. Risks and concerns:

The Cement, Sugar and Power industries being core industries, there is no risk ofproduct obsolescence nor steep fall in demand by way of product substitution or otherwiseand therefore, your Directors do not foresee any major risks and concerns, in the nearfuture except as discussed elsewhere in this Report.

f. Internal control systems and their adequacy:

The Company has adequate internal control system. Apart from this, the Company also hasindependent internal auditors, who conduct periodical audit and their report is taken intoaccount by the Audit Committee for its review and suggest remedial actions whereverrequired.

g. Financial Performance with respect to operational performance:

This has been already discussed elsewhere in this Report.

h. Human Resources / Industrial Relations:

Presently the Company enjoys cordial industrial relations with employees and believesthat human resources are an invaluable asset. The Board wishes to place on record itsappreciation to all employees for their efforts and cooperation for the performance andgrowth of business during the year.

i. Social Responsibility:

During the financial year ended 31st March 2010 your Company supplied cement atconcessional price to the State Government as part of its Indiramma Housing WelfareScheme.

j. CAUTIONARY STATEMENT:

Statements in this "Management Discussion & Analysis" may be consideredto be "forward looking statements" within the meaning of applicable securitieslaws or regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make a difference to the Company's operationsinclude global and Indian demand-supply conditions, increased installed capacity, finishedgoods prices, raw materials availability and prices, cyclical demand and pricing in theCompany's markets, changes in Government regulations, tax regimes, besides other factors,such as litigations and labour negotiations.

ACKNOWLEDGEMENTS:

Your Directors thank the State Bank of India, Industrial Finance Branch, Somajiguda,Hyderabad and Andhra Bank, Specialised Corporate Finance Branch, Somajiguda, Hyderabad forextending the support towards working capital to meet the requirements of its operations.

Your Directors appreciate the support and the cooperation received from the StateGovernment, NEDCAP, APTRANSCO and the Central Government for the Company's growth anddevelopment.

Your Directors would like to convey the deep appreciation to all the employees andworkers of the Company for their sustained effort and wholehearted co-operation throughoutthe year.

Your Directors thank the Distributors, Dealers and Suppliers for their continuoussupport and active involvement.

Finally your Directors record their deep sense of gratitude to all the Shareholders forthe abundant confidence reposed in the Board of Directors.