Ambuja Cements

It is a matter of great privilege to place before you the Companys
 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 Indias 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 bn equivalent to 0.7% of GDR
 
 The risks to Indias 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 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.
 
 Viarious initiatives aimed at promoting value addition and alignment
 with Holcim have been taken and I am happy to mention that projects
 such as SAR 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 companys leadership profile.
 
 I thank them.
 
 in your company, the management always believes in looking after the
 interest of our shareholders.  II express my gratitude to you, dear
 shareholders for your continued trust and faith in the companys
 destiny. l 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