To the Members,
 
 The Directors have pleasure in presenting the 72nd Annual Report and
 the Audited Accounts of your Company for the period of fifteen months
 ended 30th June 2011.
 
 FINANCIAL RESULTS                                     (Rs in crores)
 
                                         Current Period  Previous Year
 
                                             2010-11       2009-10
 
                                            (15 Months)   (12 Months)
 
 Gross Sales                                   70.91         323.27
 
 Net Sales                                     62.98         294.57
 
 PBITD                                        (16.50)         12.28
 
 Interest                                      13.31           5.66
 
 Depreciation                                   1.28           1.23
 
 Operating Profit /(Loss)                     (31.09)          5.40
 
 Deferred Tax (Liability)/Asset                 6.49          42.29
 
 Net Profit / (Loss)                          (24.60)         47.69
 
 DIVIDEND
 
 The plants of the Company have been non-operational for substantial
 period of the reporting period. In view of the losses incurred during
 the period under review, the Directors regret their inability to
 recommend dividend on equity share capital of the Company.
 
 OPERATIONS
 
 During the period under review, the Company and the industry have been
 going through a very challenging phase of slackening demand and
 expanding capacity leading to reduction in price realization. The DCW
 plant of the Company was in production primarily till the end of the
 first quarter of the period and production at VCW plant could not be
 continued from the beginning of September, 2010 due to disruptions by
 labor. The production activities remained suspended thereafter and
 could not have since been resumed. Consequent to this, the Company is
 facing severe liquidity crisis leading to stoppage of supply of
 material and services, disconnection of power and termination of
 agreement thereof, non-payment of employee related costs, statutory and
 other obligations and thereby affecting the business operation of the
 Company.
 
 The above plants produced 2.23 lacs tons of cement in aggregate during
 the period.
 
 PROPOSED FUND INFUSION BY JAYPEE GROUP AND CHANGE IN MANAGEMENT
 
 The Company has been going through a severe financial crisis and the
 production at its plants are suspended since July 2010 at DCW plant and
 since September 2010 at VCW plant. It requires huge capital infusion
 and other assistance to revive and restructure its business. In order
 to overcome the situation and to revive the production of the Company,
 the promoters have since entered into an agreement on 15th November,
 2011 to transfer the controlling stake to Jaypee Development
 Corporation Limited (JDCL), a company belonging to Jaypee Group. JDCL
 has also agreed to subscribe for 14,75,00,000 equity shares of Rs.10
 each of the Company at a premium of Rs 2 per share aggregating to
 Rs.177 crores on preferential basis and the same will be utilized for
 reviving, restructuring and meeting the requirements of the Company’s
 business. Necessary board resolution for giving effect to said
 arrangement has been passed on 15th November, 2011 and steps for making
 the consequential Open Offer etc. have since been taken.
 
 OUTLOOK FOR CEMENT INDUSTRY
 
 The Indian Economy continues to be vibrant and has emerged as a
 resilient player compared to other countries. The performance of the
 Cement Industry was a clear reflection of the general sloth prevailing
 in the Industrial sector as a whole. The cement industry which
 registered a decent growth over the last few years entered a phase of
 deceleration with the demand easing during the period under review.
 According to the experts, this eccentricity in the growth is mainly due
 to the general slow down in the infrastructure and real estate sectors
 lead by rising cost of finance. While there has been a decline in the
 demand, the cement industry has seen a growth in the capacity additions
 on All India basis and specifically in the Southern Region
 
 The southern region witnessed a decline in growth as compared to
 previous year and the State of Andhra Pradesh, which is an important
 market segments for the Company, had witnessed negative growth mainly
 due to lower infrastructure spending and slow-down in the realty
 sector.
 
 The industry also had to survive increase in price of fuel and cost of
 some of raw materials resulting in high production cost. The immediate
 outlook for cement industry continues to remain sluggish with over
 capacity wielding pressure on prices.
 
 ALLOTMENT OF EQUITY SHARES TO HDFC & IDFC
 
 The Company has issued and allotted 69,97,077 equity shares of Rs 10
 each at a premium of Rs 14 per shares aggregating to Rs. 16.79 crores
 to M/s. Housing Development Finance Corporation Limited (HDFC) and M/s
 Infrastructure Development Finance Company Limited (IDFC), upon
 conversion of outstanding obligation (i.e. interest and other charges)
 payable to them by the Company, on preferential issue as per the SEBI
 (ICDR) Regulation 2009.
 
 NATIONAL STOCK EXCHANGE (NSE) - LISTING
 
 During the period under review your Company’s Equity Shares enlisted at
 National Stock Exchange (NSE) w.e.f. 08.11.2010 vide NSE circular Ref.
 No. NSE/LIST/C/2010/1062, dt. 03.11. 2010. The Equity Shares of the
 Company (Symbol: ANDHRACEMT) shall be traded in the normal market
 segment (Rolling Settlement) in compulsory demat for all investors.
 
 STATUS OF BIFR
 
 Your Company implemented the Rehabilitation Scheme(MS-8) and the
 Hon’ble BIFR discharged the Company from the purview of Sick Industrial
 Companies (Special Provisions) Act,1985 vide its Order dated 22nd
 January 2010. In terms of the said order, the unimplemented provisions
 of MS-8 would be implemented by the concerned agencies.
 
 DIRECTORS
 
 Shri P.K. Goyenka, submitted resignation from the office of Executive
 Directorship / Directorship of the Company and ceased to be Executive
 Director of the Company w.e.f.  27.07.2010.
 
 Shri Shrivardhan Goenka, submitted resignation from the office of
 Executive Directorship w.e.f 08.10.2010 and from Directorship w.e.f
 15.02.2011 and ceased to be Director of the Company from that date.
 
 Shri M.S Ramakrishna, submitted resignation from the office of
 Directorship of the Company and ceased to be Director of the Company
 w.e.f. 17.11.2010.
 
 Shri Amitava Mondal, submitted resignation from the office of
 Directorship of the Company and ceased to be Director of the Company
 w.e.f. 12.07.2011.
 
 Shri J. Jayaraman, submitted resignation from the office of
 Directorship of the Company and ceased to be Director of the Company
 w.e.f. 07.10.2011.
 
 Your Directors wish to place on record their sincere appreciation for
 the valuable services rendered by them during their tenure on the
 Board.
 
 Shri K.N. Bhandari and Shri R.K. Bhargava, Directors of the Company who
 retire by rotation and being eligible offer themselves for
 re-appointment.
 
 Shri Vinayak Mavinkurve was appointed as Nominee Director by IDFC w.e.f
 09.11.2011.
 
 Shri Sain Ditta Mal Nagpal and Shri Radha Krishna Pandey were inducted
 as Additional Directors on the Board with effect from 15.11.2011. They
 will hold office till the date of Annual General Meeting and are
 eligible for re-appointment.
 
 HEALTH, SAFETY AND ENVIRONMENT
 
 Since the production at both the plants of the Company being suspended
 during the substantial period under review, the Health, Safety and
 Environment measures could not be properly followed by the Company. The
 Company took anti-pollution measures by installing bag filters and bag
 house to control the pollution which has substantially reduced the
 impact of industrial process on the environment.
 
 AUDITORS
 
 M/s. Lodha & Co, Chartered Accountants and M/s. Chaturvedi & Partners,
 Chartered Accountants will retire at the ensuing Annual General
 Meeting. M/s Lodha & Co, and M/s.  Chaturvedi & Partners, Chartered
 Accountants, expressed their willingness and eligibility to continue in
 office, if appointed by the members as joint auditors for the current
 year.  The proposed auditors have furnished the requisite certificate
 of eligibility under section 224 (1B) of the Companies Act, 1956.
 Members are requested to appoint the Auditors and to fix their
 remuneration.
 
 The observations in para 3 & 4 of the Auditors’ Report, which have been
 explained in the respective notes of Schedule “O”, are further
 explained by the Management as follows: Para 4 - since the production
 activities were suspended during the substantial part of the period and
 there being limitation & constrains and non-availability of employees &
 their support, confirmation/verification, reconciliation of various
 assets and liabilities could not be carried out. These shall be carried
 out upon resumption of normal production. Adjustments with respect to
 advances, debtors, claims, interest and other charges/expenses etc.
 shall be accounted for after negotiation/settlement/finalization of the
 related matters as explained in Note no. 21(a) and 21(b); interest on
 borrowing has been capitalised and necessary allocation/adjustment
 shall be carried out on completion of the project and certain bills,
 claims relating to project supplies/services shall also be accounted
 for on complete documentation, negotiation, etc as explained in Note
 no. 23(a) and 23(b); employees’ and other personnel expenses, etc shall
 be accounted for and disclosed in terms of AS-15 on determination of
 the same on finalization/settlement of amount payable thereon as stated
 in Note no. 24 & 39; as stated in Note no. 38, in view of the proposed
 recommencement of production as mentioned in Note no. 22(a) and
 emerging certainty with respect to the profitability, there would be
 sufficient taxable income to claim the deferred tax credit. The
 statutory dues and delay in making interest payments to financial
 institution and debenture-holders as given in para 3(ix) and (xi) were
 due to liquidity crisis. The dues to financial institutions to a
 certain extent have been discharged by conversion into equity shares of
 the Company as detailed herein above and partly by transferring shares
 pledged there against as explained in Note no. 19.
 
 COST AUDITOR
 
 Pursuant to the directives of the Central Government and provisions of
 section 233 B of the Companies Act 1956, M/s Parankusam & Co. Cost
 Accountants, have been appointed as Cost Auditor to conduct the Cost
 Audit for the period of fifteen months ended 30th June 2011.
 
 INSURANCE
 
 During the period under review, all the properties of the Company
 including its buildings, plant and machinery and stocks are adequately
 insured (except capital work-in-progress)
 
 CORPORATE GOVERNANCE
 
 A report on Corporate Governance together with Management Discussion
 and Analysis Reports and the certificate of compliance from the
 Practicing Company Secretary regarding compliance with clause 49 of the
 Listing Agreement with the Stock Exchange are annexed to this Report.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217 (2AA) of the Companies Act,
 1956, the Directors hereby confirm:
 
 a.  that in the preparation of the accounts in respect of the period
 under report, the applicable accounting standards have been followed
 along with proper explanation relating to material departures;
 
 b.  that they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as at the end of the reporting period and of the loss for
 the period ended 30th June, 2011;
 
 c.  that they have taken proper and sufficient care for the maintenance
 of adequate accounting records in accordance with the provisions of the
 Companies Act 1956 for safe guarding the assets of the Company and for
 preventing and detecting fraud and other irregularities, and
 
 d.  that the accounts have been prepared on a going concern basis.
 
 REDEMPTION OF PREFERENCE SHARES
 
 Preference Shares of par value of Rs. 1.92 lacs remain unclaimed. It
 has not been possible to locate the addresses of the shareholders,
 despite notices being published in daily newspapers. These are being
 paid as and when claimed. There is no liability for dividend on these
 shares.
 
 REPAYMENT OF FIXED DEPOSITS
 
 In accordance with the Modified Rehabilitation Scheme (MS-08), the
 Company is settling the claims lodged by fixed deposit holders. During
 the period Fixed Deposits claims amounting to Rs. 0.20 lacs were
 settled.
 
 REDEMPTION OF DEBENTURES
 
 In terms of MS-08, Debentures amounting to Rs. 0.81 lacs were redeemed
 during the period. An amount of Rs.196.41 lacs being balance of
 principal, remain unclaimed and deposited with bank, under lien
 infamous of Debenture Trustees.
 
 INVESTOR EDUCATION AND PROTECTION FUND
 
 As repayment of the matured fixed deposits and debentures are covered
 by the BIFR Sanctioned Scheme, are not remained unclaimed and unpaid
 for a period of seven years from the date they became due for payment,
 and hence, no amounts were required to be transferred to the Investor
 Education and Protection Fund.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS/OUTGO
 
 The information required under 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 with respect to those matters is
 appended hereto and forms part of this Report.
 
 EMPLOYEES
 
 The DCW plant of the Company was in production primarily till the end
 of the first quarter of the period and operations at VCW plant could
 not be continued from the beginning of September, 2010 due to
 disruptions by labor.
 
 Information in accordance with the provisions of Section 217(2A) of the
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975 as amended, regarding employees is given in Annexure to
 this Report.
 
 ACKNOWLEDGEMENTS
 
 Your Directors express their sincere gratitude for the continued
 support and guidance received by the Company from the various State &
 Central Governments Authorities and other regulatory agencies.
 
 Your Directors would like to acknowledge the continued support and
 co-operation extended by Government of Andhra Pradesh, Financial
 Institutions, Banks, Vendors, Distributors, Dealers, valued Customers
 and the Employees.
 
                                       For and on behalf of the Board
 
 Place :New Delhi           (K. N. Bhandari)         (R.K. Bhargava)
 
 Date :27.11.2011               Director                  Director