2010 was a year of opportunities as well as challenges for the cement
 industry.
 
 The economy grew at 7.4% during the 2009-10 financial year, as against
 6.7% in the previous year, further accelerating to 8.5% by December
 2010. The manufacturing sector registered a robust growth of 10% during
 the 2010 calendar year. The monsoon was extremely good throughout the
 country. While the extended rains decreased cement demand temporarily,
 they will drive rural growth and demand for cement in the coming year.
 Household income increased significantly resulting in higher
 consumption, as well as higher investments in capital markets.
 
 There are some challenges ahead. Inflation has been a cause of serious
 concern. The RBI has increased the interest rates on several occasions
 to bring inflation under control. Oil and coal prices rose sharply and
 the trend does not seem to be reversing.
 
 It is heartening to share that the country is getting global
 recognition as an emerging economic power and a preferred investment
 destination for global players. Large Indian corporates have made
 sizeable overseas acquisitions, including in developed countries.
 Further endorsement of this recognition comes from visits of the
 worlds leaders to India, within a short span of time. Significantly,
 the common agenda of all these leaders was closer trade and business
 ties. This makes me believe that there are robust reasons for the spurt
 of growth in the economy, as well as enormous opportunities ahead.
 
 Corporate sustainability has become an important global agenda.
 Recognising that climate change and exploitation of nature poses a
 global threat to economic growth, the company has revisited its
 sustainability initiatives. The management team has renewed their focus
 on conserving natural resources like water, energy and alternate fuel,
 while safeguarding the health and safety of people and caring for
 communities.
 
 In order to accelerate the pace of sustainable operations in a
 systematic manner, the company has engaged Harvard Business School to
 do a case study.
 
 As far as the cement industry is concerned, demand during 2010 grew by
 6%. The main reason for this comparatively lower growth was the slowing
 down of infrastructure development, extended monsoon and unseasonal
 weather conditions in several regions. These factors, coupled with
 significant capacity addition over the past 2 years, put pressure on
 our cement prices, particularly during second half of the year. In
 addition input costs went up across the board.
 
 The company posted a net profit of Rs.1264 crores, as against Rs.1218
 crores in the previous year. This increase may look marginal per-se,
 but in light of the challenges faced in 2010 the performance of the
 company was commendable.
 
 Increased cement capacities, the pressure of inflation, higher interest
 rates, and repeated increases in oil and coal prices will further
 affect the margins of the cement industry in the coming year.
 
 The current year is a momentous one for the company as we celebrate our
 25th anniversary. I am confident that our people will make this a
 landmark year full of new records and achievements, and will once again
 demonstrate the spirit of I CAN.
 
 Finally, I would like to thank the management team and each one of you
 for your faith and confidence, which has helped to build Ambuja Cement
 into one of the most successful and admired cement companies in the
 country.
 
 With best regards,
 
 N.S. Sekhsaria
 February 3, 2011