The Directors have pleasure in presenting their 57th Annual Report
 together with the audited financial statements for the year ended 31st
 March 2011. The management discussion & analysis report, which is
 required to be furnished as per the requirements of stock exchanges,
 has been included in the Directors Report so as to avoid duplication
 and overlap.
 
 The year 2010 witnessed the reemergence of the world economy from the
 throes of recession caused by the global financial crisis of 2008-09.
 World economy recorded a growth of 5¼ percent during the first half of
 2010 and decelerated to about 33/4 percent during the second half. As
 fears of a global depression receded in 2009, businesses at first
 slowed their rate of de-stocking, and then, as confidence improved,
 began to rebuild depleted inventories. This fostered a sharp rebound in
 industrial production and trade, which lasted through the first half of
 2010. As this phase progressed, inventory rebuilding and, as a
 consequence, industrial production and trade moved into lower gear in
 the second half of last year. In the meantime, however, reduced excess
 capacity, accommodative policies and further improvements in confidence
 and financial conditions encouraged investment and sharply reduced the
 rate of unemployment. Consumption also regained strength.
 Consequently, the recovery become more self-sustaining, risks of a
 double-dip recession in advanced economies receded, and global activity
 has started accelerating again.
 
 While growth was visible across geographies, the pace of economic
 growth was geographically uneven. The recovery broadly moved at two
 speeds in emerging and developing economies, with appreciable
 differences amongst each set of countries. In major advanced economies,
 economic growth was modest, especially considering the depth of the
 recession in earlier years, reaching just 3 percent. In contrast, many
 emerging and developing economies witnessed robust growth, reaching
 more than 7 percent in 2010.
 
 In India, the economy has emerged with remarkable rapidity from the
 slowdown caused by the global financial crisis. Growth in 2010-11 as
 per the Advance Estimates released in January 2011 is estimated at
 8.6%. Rebound in agriculture and continued momentum in manufacturing,
 despite the deceleration in services, helped to drive the economy. The
 slight slowdown in industrial
 
 production in the later part of the year was more in the nature of a
 road bump than any indication of a long term problem. On the demand
 side, a rise in savings and investment and pick-up in private
 consumption have resulted in strong growth of the GDP Inflation however
 has remained a concern during a large part of the year, mainly driven
 by food prices.
 
 Top Line Summary
 
 Against the backdrop of a resurgent world economy, the Companys global
 revenues for 2010-11 registered a strong growth of 25 percent over the
 previous year. The top line summary is as follows:
 
                                                         (Rs. million)
 
                                            31.3.2011        31.3.2010
 
 Net Sales *
 
 - India                                       8540             7006
 
 - Rest of the world                           7467             5792
 
 Total Net Sales                              16007            12798
 
 Other Income                                   474              345
 
 Total Revenues+                              16481            13143
 
 * Includes income from contracts and processing charges.
 
 +Excludes exceptional items of profit / loss i.e. profit on sale of
 land, building and investments/provision for dimunition in value of
 investments
 
 The growth in global revenues was particularly driven by the strong
 performances of the Indian and Russian operations and also moderate
 improvement recorded in the operations in South Africa and North
 America. The Australian operations which experienced strong growth
 during the past few years appeared to lose some of its momentum. Share
 of international operations in the overall revenue pie increased from
 45 percent to 47 percent during the year depicting an increasingly
 international character which the Companys businesses are assuming.
 
 On a standalone basis, the growth was even more pronounced, aided by
 the strong acceleration in the Indian economy. Growth in revenues was
 driven not only by robust performance in the domestic business but also
 by sales to international markets.
 
 While home sales grew by about 20 percent, export growth was explosive
 with an increase of 43 percent.
 
 The top line summary on a standalone basis for 2010-11 was as follows
 registering an impressive growth of 25 percent:
 
                                                         (Rs. million)
 
                                          31.3.2011         31.03.2010
 
 Net Sales *
 
 - Domestic                                7251                6022
 
 - Exports                                 1946                1359
 
 Total Net Sales                           9197                7381
 
 Other Income +                             337                 238
 
 Total Revenues +                          9534                7619
 
 * Includes income from contracts
 
 + Excludes exceptional items of profit / loss
 
 Driven by the upswing in demand in most served markets, all business
 segments performed creditably particularly the Abrasives business which
 registered a sales growth of Rs.1483 million. It was a dream year for
 the Abrasives business with sales crossing the Rs.5 billion mark on a
 standalone basis. In percentage terms, the abrasives business topped
 the pack registering a growth of 27 percent, electrominerals by 25
 percent and Ceramics by 22 percent.
 
 Off take was strong from key customer segments particularly from
 automobiles, auto components, steel, construction and fabrication,
 glass and petro chemical and iron and steel industries.  Inflow of
 project orders was also strong, barring the anti-corrosives product
 group. The growth in order flow from the direct customer segment, which
 is the barometer of the manufacturing sector of the economy, surpassed
 that of the trade segment.
 
 A noteworthy feature of the current year performance was that the
 growth rate was sustained right through the year, with the Company
 consistently clocking a sales increase of around 25 percent every
 quarter compared to the corresponding quarter of the previous year.
 
 The manufacturing teams performed creditably to service the enhanced
 demand requirements of the markets. The additional capacities built 
 up over the last 3-4 years in various product lines helped the 
 Company to capture the benefits of the surge in volume.
 
 Concerted effort was made during the year by various business units to
 leverage the strength of the other business units with respect to
 knowledge of local market or customer access or through advantages
 afforded by lower factor cost.
 
 Cost of key inputs, including abrasive grains, glass fibre discs,
 cotton yarn, raw petroleum coke and zircon sand showed a spiraling
 trend. To the extent feasible, the businesses managed to offset these
 cost increases by passing them to the customers through price
 increases. Power cost increase, which was quite steep in certain
 geographies, further accentuated the cost push.  Also, the bottleneck
 in availability of power from the state grid due to power-cuts during
 some parts of the year was managed to a very large extent with power
 availability from the Companys power generating subsidiary. This
 helped the business to deliver uninterrupted production which was very
 critical given the buoyancy in demand.
 
 Employee cost registered an increase of nearly 14% due to conclusion of
 long term settlements with the workmen in two factories, increments in
 management staff compensation and increase in flexi staff strength. The
 growth in revenues helped the Company to absorb the resultant
 additional burden.
 
 Capital expenditure of Rs.669 million was incurred during the year.
 The major investments were Phase II of the silicon carbide microgrit
 project in Kochi, India, setting up of a line for manufacture of non
 woven abrasives in the bonded abrasives plant in Chennai, India,
 installation of balancing equipment in the metallised cylinders and
 wear resistant tiles plant at Hosur, India, reconstruction and
 technological upgradation of SiC black and green fusion cells and
 installation of equipments for manufacture of new categories of
 refractories and abrasives in Volzhsky, Russia and expansion of
 facilities for manufacture of castable cement at Jabalpur, India.  Some
 minor investments were also done in the operations in Australia, China
 and South Africa.
 
 Barring brief spells, there was no volatile movement in the US dollar
 exchange rates versus the Indian Rupee, which helped the Indian
 operations to avoid uncertainties on export sales realization and cost
 of imported inputs. In South Africa, the appreciation in the South
 African currency against the US Dollar
 
 and the strong volatility posed a threat to overall earnings since a
 large part of the revenues were from international sales and US Dollar
 denominated. The Company benefited from the foreign currency hedges
 taken and protected earnings and profits.  CUMI Australia benefited in
 terms of lower raw material cost as a result of the strengthening of
 the Australian currency against the US Dollar. The Russian Rouble
 strengthened appreciably against the US Dollar posing a significant
 challenge, as nearly all costs were in Roubles and a significant part
 of the revenue in Euro and US Dollar.
 
 Earnings
 
 Gross operating margins on a consolidated basis remained at about last
 years levels, though there was a mixed trend amongst product lines.
 
 Aided by the 25 percent growth in revenues, EBITDA from operations
 witnessed an increase of 27 percent.
 
 Depreciation was higher by Rs.60 million as a result of the continuing
 investments being made in various projects. Interest costs were lower
 by 12 percent as a result of the soft interest rate regime that
 prevailed in the first half of the year, improved working capital
 management and decline in borrowings consequent to the healthy cash
 flows generated by operations. Earnings before interest and tax and
 exceptional items (EBIT) increased by 30 percent.
 
 The Company continued to pursue its strategy of divesting non-core
 assets to fund investments into core operations, which resulted in an
 exceptional item of profit of Rs.235 million.
 
 As a result of the upswing in operations and also the exceptional item
 of profit, consolidated profit before tax for the year recorded a
 significant increase of 51 percent over last year. Consequently profit
 after tax was also higher by 68 percent at Rs.1708 million (previous
 year Rs.1017 million)
 
 On a standalone basis, earnings before interest and tax (excluding
 exceptional items) increased by 48%. Profit after tax more than doubled
 from Rs.580 million to Rs.1243 million.
 
 The key earnings indicators (on a consolidated and standalone basis)
 were as follows:
 
                                                         (Rs. million)
 
                                   Consolidated            Standalone
 
                            31.3.2011   31.3.2010  31.3.2011  31.3.2010
 
 Total net                     16481        13143     9535       7619
 revenues*
 
 Earnings
 before interest,
 depreciation &                 3121         2460     2002       1439
 tax (‘EBITDA)
 from operations*
 
 Earnings before
 interest and tax
                               2616          2016      1602      1085
 from operations
 (EBIT)*
 
 Finance cost                   271           308       203       239
 
 Exceptional                    235                               (5)
 items
 
 Profit before tax             2580          1714      1643       842
 
 Profit after tax              1708          1017      1243       580
 
 Earnings per
 share of Rs.2/-              18.27         10.90     13.29      6.21
 each
 
 EBIT/ Net Sales              16.3%         15.8%     17.4%     14.7%
 ratio *
 
 Return on capital            21.9           18.0     20.6       14.2
 employed (%) *
 
 * excluding exceptional items.
 
 + Exceptional items represent one time profit arising on sale of land,
 buildings and investments and loss on provision for diminution in value
 of investments.
 
 Net sales includes income from processing charges / contracts.
 
 On a consolidated basis, shareholders fund as on 31st March 2011 was
 Rs.7455 million. Addition for the year (net of proposed dividend) was
 Rs.1527 million.
 
 Year-end debt levels (Rs.4085 million) comprise of secured loans
 (including lease liability) of Rs.2201 million and unsecured borrowings
 of Rs.1884 million. Borrowings have reduced by Rs.306 million during 
 the year. As a result, the debt-to-equity ratio on a consolidated basis 
 was 0.5 and on a standalone basis has improved to a comfortable 0.4 
 (from 0.7 last year).
 
 Net fixed assets were at Rs. 5525 million (previous year Rs. 5316
 million). The total capital expenditure for the year was Rs. 669
 million, which exceeded the depreciation of Rs.505 million for the
 year. During the year, the investments in the subsidiaries in USA,
 Canada and Middle East were consolidated into CUMI International
 Limited, Cyprus which is also a 100% subsidiary.  This is a step
 towards simplifying the holding structure of the international
 operations.
 
 The sharp focus given on working capital management paid rich
 dividends. Though net current assets (excluding bank balances and
 dividend provisions) increased from Rs.4057 million to Rs.4911 million,
 this was primarily due to stepped up sales levels.  Working capital
 ratios showed marginal improvement.
 
 The summary financial snapshot (on a consolidated and standalone basis)
 were as follows:
 
                                                           (Rs. million)
 
                               Consolidated                Standalone
 
                           31.3.2011   31.3.2010  31.3.2011  31.3.2010
 
 Assets Summary
 
 Fixed Assets                5525         5316      3885       3788
 
 Goodwill on                  832          849       -
 consolidation
 
 Net Current                 5505         4315      2464       2036
 Assets
 
 Investments                  749          779      1641       1718
 
 Total                      12611        11259      7990       7542
 
 Funded by
 
 Shareholders                7455         5929      5282       4289
 funds
 
 Minority Interest            594          490         -
 
 Borrowings                  4085         4391      2288       2838
 
 Deferred Tax                 477          449       420        415
 Liability
 
 Total                      12611        11259      7990       7542
 
                                                       (Rs. million)
 
                                 Consolidated            Standalone
 
                       31.3.2011    31.3.2010   31.3.2011    31.3.2010
 
 Debt Equity              0.5          0.7          0.4          0.7
 Ratio
 
 Current Ratio            3.4          3.3          2.7          2.6
 
 With stock markets turning buoyant during the year, the employee stock
 options turned attractive for employees as a result of which 114,761
 options were exercised and an equivalent number of equity shares
 allotted. A total sum of Rs. 21 million was realized as exercise price.
 
 Cash Flow
 
 On a consolidated basis, cash generation from operations was Rs. 2055
 million in 2010-11. Net Cash used for purchase of fixed assets and
 other investing activities was Rs.544 million. Net cash used for
 repayment / servicing of borrowings and other financing activities was
 Rs.1282 million. The net increase in cash and its equivalents was
 Rs.229 million.
 
 The amounts available for appropriation and the recommended
 appropriations on a standalone basis are given below:
 
                                                  (Rs. million)
 
 Available for appropriation
 
 Profit after tax                                      1242.58
 
 Balance brought forward from previous year            1640.29
 
 Total                                                 2882.87
 
 Recommended appropriation
 
 Transfer to debenture redemption reserve                31.25
 
 Transfer to general reserve                            750.00
 Dividend
 
 - Interim                                              140.05
 
 - Final                                                 93.47
 
 Dividend tax                                            26.93
 
 Balance carried forward                               1841.17
 
 Total                                                 2882.87
 
 Considering the increase in earnings for the year, the Board had in
 February 2011 declared and paid an interim dividend at the rate Rs.1.50
 per equity share of Rs.2 each. The Board is now pleased to recommend a
 final dividend of Rs.1 per equity share of Rs.2 each for the financial
 year 2010-11. This would make a total dividend of Rs.2.50 per equity
 share for the year (as against Rs.2 paid for 2009-10).
 
 PERFORMANCE OF BUSINESS SEGMENTS
 
 (Including information required to be given in the Management
 Discussion and Analysis Report)
 
 The market developments, current year performance and outlook for
 various business segments are elaborated below.
 
 ABRASIVES
 
 Business Profile
 
 This business comprises of the following major product groups viz.
 bonded abrasives, coated abrasives (including non-wovens), super
 abrasives (through a joint venture), and power tools.  The operations
 are carried out through eleven manufacturing facilities located in
 India, Russia and China. The subsidiaries/ related entities located in
 North America, Middle East and Thailand support this business in
 getting an extended customer reach.
 
 On a consolidated basis, the Company continues to maintain a leadership
 position in the Indian market. In the Russian market, the Company is
 the market leader in bonded abrasives. Customers located in over 50
 countries are also serviced through the network of subsidiaries and
 related entities. Abrasives are used in a wide spectrum of industries
 the key among them being automobile, engineering, fabrication, wood
 working, home maintenance, construction and infrastructure.
 
 Industry Overview
 
 The global industry continues to be lead by few players who have a
 complete portfolio of abrasive products. There are also a large number
 of players specializing in specific categories of abrasives. During the
 year, there was some consolidation in the global industry by
 acquisition of a strong European bonded and super abrasives player by
 another global abrasives player.
 
 The Indian abrasives industry continues to be catered largely by two
 leading players. There are a few smaller players specializing in select
 products. The market is also catered to by imports particularly from
 China. Many global abrasive manufacturers have entered the Indian
 market either through sales offices or manufacturing facilities.
 
 There are three major players in the domestic Russian industry.
 Imports service a sizeable portion of the market. There was no major
 change in the industry structure in this market.
 
 Market scenario
 
 CUMIs Abrasives business started the year on a very robust note
 clocking a growth of 19 percent in the first quarter. With each
 oncoming quarter the sales tempo was enhanced, riding the wave of
 resurgence in the manufacturing sector in the Indian and Russian
 economies. While sales in the Indian market increased by 21 percent,
 in the Russian market growth was more strident touching 79 percent.
 All major product categories witnessed healthy growth rates.
 
 Sale of custom-built abrasives, which is a key indicator of the health
 of the manufacturing industry, registered a steep increase of 37 per
 cent. The Company was able to leverage the strong ties established with
 various direct customers through several decades of partnership by
 delivering quality products and extending its strong application
 engineering skills and capture the benefits of the buoyancy in demand.
 
 Sales into construction, fabrication, wood working and home maintenance
 segments which are largely addressed through the trade channel also
 improved through the product management approach. Efforts were taken to
 improve brand visibility through road shows, end user meets and
 participation in regional level exhibitions. To harness the business
 opportunities arising from infrastructure development in India, special
 focus was given on project sales, particularly in thin wheels.
 
 During the year, the Company continued to pursue its strategy of
 addressing the complete market spectrum with an appropriate combination
 of brand and product. The product portfolio was continuously upgraded
 to suit the evolving demands and needs
 
 of customers. New product sales during the year was Rs. 605 million.
 The product basket was also critically reviewed periodically to promote
 a balance between healthy margins and product volumes. As a result,
 some low margin products were taken off the line. Traded products were
 used to address gaps in product portfolio and also where they offered a
 comparative advantage in terms of manufacturing cost.
 
 Generic product development especially in the areas of speciality
 resinoid products has given the lead over competition in terms of
 performance price parity. Growth in super abrasives and thin wheels was
 encouraging with the supply and development of a slew of new products.
 Product differentiation continued to remain the cornerstone of the
 Companys competitive strategy.
 
 Sales of super abrasive and other products by the joint venture viz.
 Wendt India Ltd. grew by about 47 percent, with the Company focusing
 on supply of precision components along with the traditional super
 abrasive tooling business, for select customers. The effective change
 in the joint venture partner is being challenged by the Company as it
 is in breach of contractual arrangements and legal requirements.
 
 In the power tools business the Company reinforced its position as a
 long term player. Sales increased by 55 percent to Rs.110 million with
 several products getting continued patronage from end users.
 Relationships with several channel partners, who play a critical role
 in promoting these products were strengthened. Market presence was
 intensified in several states across India. The product portfolio was
 strengthened, both by addition of products hitherto not in the product
 basket and also by quality enhancement and value engineering of
 existing products. New sources for products were identified to offer
 value benefits and also to service the pipeline of new products planned
 for the next year.
 
 Manufacturing
 
 All abrasives plants functioned immaculately to cater to the volume
 requirements of the market. Given the strong off take from end users,
 the Indian facilities operated at near full capacity in industrial
 products.
 
 Construction of a new line for manufacture of non-woven abrasives in
 the Tiruvottiyur, India plant was completed towards the end of the
 year. The facility was set up with know how from international sources.
 In the last two years, the Company has been offering these products in
 a small way by sourcing them from third party
 
 manufacturers. By acquiring the capability to manufacture this product
 in house the Company will be able to offer the complete spectrum of
 abrasive products.
 
 In the bonded abrasives plant in Hosur, India manufacturing process for
 new varieties of castable wheels were developed and stabilized.
 Improved fast firing cycles were introduced in kilns for vitrified
 products which will yield benefits in terms of lower fuel consumption.
 
 The abrasives plant at Roorkee, India graduated into a reliable source
 for bonded and coated abrasives addressing the mass market segment.
 Production levels were stepped up substantially over last year. The
 individual disc coating facility has been fully stabilized for certain
 sizes.
 
 In Volzhsky, Russia re-layout of the manufacturing line was undertaken,
 in certain parts of the facility, to accommodate additional equipment
 designed to address the market requirements for specific categories of
 products. Automatic presses were put into operation for manufacture of
 small size vitrified wheels which has helped to widen the product
 portfolio. Further work has also been undertaken to increase capacity
 for manufacture of resinoid products.
 
 The business witnessed steep cost increase in key raw materials like
 abrasive grains, glass fabric disc etc. To counter the negative impact
 of this, targets for cost savings were undertaken and achieved. In
 spite of a double digit growth in cost of inputs, the business improved
 operating margins from 9 percent to 14 percent. This was made
 possible by improvement in internal efficiencies (like power and fuel
 consumption rates, raw material input-output norms, identification of
 alternate sources for inputs, development of alternate raw materials
 and recycling of materials) and externally on the market side by
 rationalizing prices through a segmented approach and also through
 general price increases. Since the overall mood was positive, the
 business was able to give effect to price increases smoothly.
 
 2010-11 was a good year in terms of working capital management.
 Collections were uniformly good and by virtue of tight sales
 administration, receivables rates were improved. However inventory of
 certain raw materials was consciously kept high to tide over supply
 constraints in the market and also hedge against volatilities in
 prices.
 
 Key financial summary
 
                                                          (Rs. million)
 
                       Consolidated Operations    Standalone Operations
 
                    2010 -11  2009-10  Growth  2010-11  2009-10  Growth
 
 Net sales             6990     5507     27%    5155      4282    20%
 
 Operating profits 
 before interest & 
 tax (PBIT)           960      517     86%     776       466    67%
 
 Capital employed      4460      4127     8%    2782      2633     6%
 
 Contribution to 
 total segment 
 revenue of CUMI        44%       43%            56%       58%
 
 Contribution to 
 total segment 
 operating PBIT of 
 CUMI                   35%       24%            49%       40%
 
 CERAMICS
 
 Business Profile
 
 The ceramics business operates in three niche product groups viz.
 industrial ceramics, super refractories and anti corrosives.
 Industrial ceramics business offers alumina and zirconia products of
 technical ceramic grades addressing wear & corrosion protection,
 electrical insulation, thermal protection and ballistic protection
 requirements. The super refractories product group supplies fired and
 monolithic super refractories, refractory fibre and also refractory
 design and installation services addressing the insulation / thermal
 resistance requirements of industries. The refractory fibre and
 refractory design and installation businesses are addressed through
 joint ventures. The anti corrosives product group offers acid resistant
 cements, polymer concrete cells and various other products addressing
 the anticorrosion requirements of end users.
 
 The key user industries for ceramics business are power generation and
 transmission, coal washeries, grain handling, sanitary tiles and ware,
 ballistic protection, cement, non ferrous metals, iron and steel
 industries, carbon black, cement, non-ferrous metals, iron and steel,
 insulators, furnace building, glass, petro-chemical and construction
 industries.
 
 The operations are carried out through eight manufacturing facilities
 located in India and Russia. The subsidiaries in Australia, Canada,
 Middle East, China and South Africa also support this business in
 getting an extended customer reach. CUMI Australia also provides
 installation cum service facilities. The Company is mainly a regional
 player with leadership positions in India and
 
 Australia and also a key position in Russia. The Company also exports
 to over 30 countries.
 
 Industry structure
 
 There has been no material change in the industry structure in India,
 which is catered to by 4-5 major players. CUMI is a market leader in
 certain market segments. In Australia, CUMI Australia is one of the
 leading players in the lined equipment and industrial ceramic tiles
 industry. There are about a dozen players in the industry, most of whom
 market products imported from China and USA. There was no major change
 in the industry structure during the year.
 
 Market scenario
 
 The Ceramics business grew by 27 percent on a consolidated basis
 during the year. In industrial ceramics, the Company continued to
 pursue its business model of designing and manufacturing ceramic tiles
 in India and marketing them through the subsidiaries in Australia,
 Canada, South Africa and lately CUMI China in their respective markets
 and with other markets being handled directly by the Indian operations.
 Driven by the strong recovery in the Indian market and also the revival
 in many parts of the international markets, the business registered a
 strong growth. The growth was to some extent dampened by the decline in
 turnover in the Australian markets during the third and fourth quarters
 of the year owing to floods in Australia and the resultant slowdown in
 mining and bulk material handling segments.  Further supplies from
 Chinese suppliers who competed on price continued to be intense. The
 business increased its share in the lined equipment business. Sales of 
 composite liners in rubber, ceramic and steel was promising. Sales 
 effort was strengthened by upgrading the installation facility and 
 also by increasing the sales force.
 
 During the year, focused approach in servicing the Original Equipment
 Manufacturers (OEMs) in projects for coal and power and offering
 solutions to bulk material handling operators resulted in a 38 percent
 growth in sales in India. Sales of wear protection products in
 international markets grew by 22 percent owing to the improved
 performance of the North American and European markets. CUMIs overseas
 subsidiaries played a key role in stepping up sales in South Africa and
 China. Initial supplies to new markets like Russia and Middle East have
 prepared the ground for future growth.
 
 Growth in engineered ceramics business was largely driven by exports
 which more than doubled on account of supply of structural ceramic
 parts for certain niche market segments where the Company has gained a
 strong foothold. Metallized ceramics business grew by 30 percent and
 50 percent in domestic and exports markets respectively.
 
 In super refractories, sales of fired and monolithic products grew by
 over 31 percent during the year in the Indian operations. Growth was
 driven primarily by the strong offtake from user industries.  Sales
 growth was in excesss of 30 percent both in Indian and export markets.
 In respect of the Russian operations, sales grew by 14 percent, with
 the growth in international sales being off set by a marginal decline
 in sales to the Russian markets. The refractory fibre business
 registered a growth of over 27 percent in revenues. Refractory design
 and installation services business registered a steep growth of 64 per
 cent driven by strong offtake from project orders in the petrochemical
 and fertilizer industries.
 
 In the Indian markets the uptrend in sales was largely driven by higher
 off take from iron & steel, glass, petro-chemical industries, power,
 chemical processing, steel and furnace building industries.  The
 initiative to address turnkey orders paid rich dividends and helped to
 enhance revenues from project orders from these customer segments.
 Services of channel partners were engaged to supplement the sales
 effort. The company has enhanced its reach by widening its customer
 base in the domestic segment.  Competition from imports affected few
 product categories. During the year, the Company was empanelled as 
 an approved supplier by a leading international product licensor of 
 refractories for petro-chemical industry. Market development 
 initiatives were in the form of participation in international fairs.
 
 Sales of anti-corrosive products were at last year levels. Sales of
 polymer concrete cells, particularly in the export market, was
 encouraging and helped to off set the lower order inflow on account of
 project sales
 
 Manufacturing
 
 The operating margins of the Ceramics business was maintained at last
 years levels despite intense competition particularly in large fixed
 price project orders, steep increase in prices of fuel and some
 increase in price of silicon carbide. Raw material costs for the high
 alumina ceramics however remained generally stable. Raw material
 consumption efficiencies were maintained at standard norms. With sales
 volumes and revenues registering an increase, operating profits were
 higher as a result of control on fixed costs.
 
 The wear resistant liner plant at Hosur, India operated at peak
 capacity and helped service the demand from domestic and overseas
 customers. Robust processes helped the business to deliver consistent
 products. With flexible manufacturing processes the business was able
 to deliver the required product mix. In order to meet increased demand
 for small tiles a state of the art high speed press was commissioned
 during the year. With this in place, the plant bolstered its capability
 to meet customer requirements for wear resistant tiles of varied
 geometries. In order to further enhance manufacturing capabilities,
 automation of additional processes were taken up. This coupled with six
 sigma quality initiatives helped the plant to deliver consistent and
 reliable products to customers.  The plant also developed the
 capability to manufacture certain hi-tech products addressing climate
 control.
 
 Addition of capacity balancing equipments and robust processes enabled
 the metallized ceramics plant in Hosur, India to deliver consistent and
 reliable metallized cylinders to suit the stringent requirements of
 customers as also meet the escalating demand for volumes.
 
 At the engineered ceramics plant at Aurangabad, India, production
 processes were modified and stabilized and additional machines were put
 into operation for injection moulding and stabilized.
 
 The fired refractories plants in Ranipet, India and the newly set up
 plant in Serkadu, India improved capacity utilisation. The Jabalpur,
 India plant, continued to play a pivotal role in augmenting sales of
 monolithic refractories. During the year additional investments in
 equipment were made in this plant to augment capacity to manufacture
 high alumina refractories cement production.
 
 The anti-corrosives manufacturing facility at Serkadu, India which
 commenced operations last year functioned well. Work on establishing a
 line for manufacture of FRP composites has commenced and will be
 completed in 2011-12.
 
 Cost pressures in the refractory fibre business increased stress on
 profitability which was to a certain extent addressed through cost
 savings initiatives and price action at the customer end.
 
 In Russia, the nitride bonded silicon carbide refractories line which
 was set up with overseas technology functioned well. The products were
 tested at labs in Switzerland and was certified as comparable with in
 industry. First set of orders from a large aluminum producer was
 obtained.
 
 Key financial summary
 
                                                          (Rs. million)
 
                             Consolidated                  Standalone
 
                     2010-11  2009-10  Growth   2010-11  2009-10  Growth
 
 Net Sales            3476      2857    22%      2469     1991      24%
 
 Operating profits 
 before interest & 
 tax                   612        557   10%       368      315      17%
 (‘PBIT)
 
 Capital employed     3113       2845    9%      2265     2080       9%
 
 Contribution to 
 total segment 
 revenue of            22%        22%             27%      27%
 CUMI
 
 Contribution to 
 total segment 
 operating             22%        26%             23%      27%
 PBIT of CUMI
 
 Business Profile
 
 The major product groups of this business segment are fused alumina
 (comprising brown and white alumina), silicon carbide and fused
 zirconia. The operations are carried out through 6 manufacturing
 facilities located in India, Russia and South Africa.  Products are
 sold to customers located in over 40 countries. Key user industries for
 this business are abrasives, refractories and steel.  The business also
 has captive mines and power plant.
 
 Industry Overview
 
 The market structure in the global electrominerals business remained
 largely unchanged with the Company continuing to be the second largest
 player in the silicon carbide segment of this business.
 
 In fused alumina, the company is mainly a national player focused on
 India.  The Indian market continues to be catered by two
 players. Apart from the domestic players, imported products have a
 visible share in the market. In fused zirconia, the Company is the
 third largest manufacturer globally. The global industry is largely
 catered to by top five players. There was no major change in the
 industry structure during the year.
 
 Market scenario
 
 The domestic and international markets for electro minerals, was very
 buoyant both on account of supply constraints and also demand growth.
 The business recorded a growth of 25 percent in revenues with the
 Indian operations achieving a growth of 34 percent and the Russian
 operations by 24 percent over last year. The South African operations
 grew by 21 percent. The increase in sales was both on account of
 volume increase and also escalation in prices.
 
 The silicon carbide business in Russia benefited from the upturn in the
 local economy and also revival in the European markets.  Exports
 increased by 22 percent and domestic sales grew by 13
 percent. Sales volumes increased by 13 percent. Prices for silicon
 carbide, which was firm in the early part of the year, stabilized
 later.  Steps were taken to change the product mix to increase focus on
 value added products.
 
 In India, slow down in supplies from China helped the business in terms
 of improved price realization across the entire product range. Buoyancy
 in the manufacturing sector in India drove up demand for abrasives
 which in turn resulted in brown fused alumina sales (including captive
 supplies) increasing by 11 percent. The upturn in the abrasives
 industry and the continued escalating requirements of the photovoltaic
 industry helped silicon carbide sales to achieve a steep increase of
 over 50 percent.  White fused alumina sales increased by about 25 per
 cent helped by the strong off take from refractory manufacturers. The
 Indian operations continued its focus on specialty products addressing
 select industries and developing and adapting products to meet the
 emerging needs of this industry. This helped the Indian operations
 double its international revenues and continue the stellar performance
 of the past.
 
 In South Africa, sales of fused zirconia and fumed silica witnessed a
 11 percent growth in volumes aided by the recovery in key user
 industries viz. refractories and steel. The appreciation of the South
 African currency diminished competitiveness. In the second half of the
 year the business witnessed a steep increase in input costs.  To
 protect profitability, prices were increased which met with some
 resistance from key customers. As a result the growth in revenues was
 lower than expected. Efforts to widen the customer base have been
 initiated and the benefits of this would be seen in 2011-12.
 Initiatives have been undertaken to enter new markets.
 
 Manufacturing
 
 To meet the increased demand, volumes were increased at all locations
 by increasing throughputs from existing facilities.
 
 Silicon carbide business was faced with steep increase in price of raw
 petroleum coke. The cost push could not be fully passed on to customers
 and as a result the business witnessed a drop in margins.
 
 In the fused zirconia business, though off take increased, appreciation
 of the South African currency increased the stress on earnings and
 profitability. Steep escalation in sand prices hurt cost structure.
 Preliminary steps for capacity expansion has been taken.
 
 Investments have been made during the year in the silicon carbide
 fusion facilities in Volzhsky, Russia to enhance efficiencies and
 upgrade fusion technology.
 
 The first phase of the silicon carbide microgrit facility at Cochin
 Special Economic Zone, India commenced commercial production in April
 2010. Subsequent phases are being implemented in a phased manner.
 
 Key financial summary
 
                                                          (Rs. million)
 
                          Consolidated                      Standalone
 
                     2010-11  2009-10   Growth  2010-11  2009-10  Growth
 
 Net Sales             5979     4789      25%     2102    1566     34%
 
 Operating profits 
 before interest       1102     1027       7%      442     372     19%
 & tax (‘PBIT)
 
 Capital employed      3439     2665      29%     1314    1105     19%
 
 Contribution to
 total segment          37%      37%                        23%    21%
 revenue of CUMI
 
 Contribution to 
 total segment          40%      47%                        28%    32%
 operating PBIT of 
 CUMI
 
 In Volzhsky Abrasive Works, turnover at RUB 2.8 billion for the year
 ended December 2010 constituted a growth of 34% over previous year.
 With the Russian and European economies emerging out from the
 recessionary trends and supply constraints continuing in commodities,
 the fortunes of the business became stronger.  The uptrend in sales was
 both on account of volume growth and also improved price realization.
 Abrasives which witnessed steep growth benefited most from the
 turnaround of the economy. Electro minerals also grew well. The
 profitability of the business came under pressure because of higher
 input costs.
 
 In CUMI Australia, turnover of AUD 12 million for the year 2010- 11 was
 lower than that for the previous year (AUD 13.6 million).  Increased
 competition from China and floods in the last quarter of the year which
 affected the mining industry were some of the factors responsible for
 the lower sales. Gross margins however recorded a marginal increase.
 
 In South Africa, the operations of Foskor Zirconia saw a revival
 consequent to the upturn in the off take from various user industries.
 Sales at ZAR 160 million recorded a growth of 21 percent for the year
 2010-11.
 
 CUMI Abrasives and Ceramics Co. Ltd., China, has progressed well since
 commencing full fledged operations in the first quarter of the current
 financial year. Though the Company came into existence in December 2009
 upon the earlier de-merger of the Chinese joint venture, considerable
 time was taken to obtain various approvals and permission as a result
 of which full fledged business could be commenced only much later.
 During the year ended December 2010, the Company clocked a turnover of
 CNY 18 million for the year. Capacity utilization improved as the year
 progressed. A large part of the production was supplied to CUMI India
 and VAW, Russia. The Company also established relationships with
 customers in South America, Middle East and Europe including some for
 OEM supplies. At CUMI Canada, sales for the year 2010-11 was CAD 3.1
 million recording a growth of 25 percent. Increase in sale of
 industrial ceramics products as a result of the improved economic
 climate in Canada helped the Company to record higher turnover. CUMI
 America doubled sales during the year. Turnover increased from USD 0.7
 million to USD 1.3 million helped by the rebound in the US economy. The
 Company enhanced its market reach and also its customer base. CUMI
 Middle East recorded a decline in sales from USD 2.9 million last year
 to USD 1.8 million in 2010-11. CUMI America, CUMI Canada and CUMI
 Middle East became subsidiaries of CUMI International Cyprus during the
 year.
 
 Sterling Abrasives continued its strong run registering a 31 percent
 growth in turnover. Sales of bonded abrasives was at Rs.418 million
 aided by the strong off take from user industries. Southern Energy
 Development Corporation Limited, the subsidiary engaged in power
 generation, operated at about 85 percent capacity and supported the
 power requirements of the various manufacturing units of CUMI in Tamil
 Nadu as also other units belonging to the Murugappa Group. Turnover for
 the year was Rs.156 million, at last year levels. Net Access India
 Limited, which is in IT facilities management and managed services,
 increased revenues by 19 percent. CUMI Fine Materials Limited is yet
 to commence commercial activities. During the year the authorised
 capital of the Company was enhanced in anticipation of new projects.
 
 CUMI International Limited, Cyprus recorded a total income of USD 2
 million representing mainly dividend and interest inflow.
 
 A consolidated financial statement (incorporating the financial results
 of the company, its subsidiaries, joint ventures and associate) has
 been provided in the Annual Report. The key financial highlights of
 each subsidiary based on the financial statements for their respective
 financial years prepared by them under their applicable regulations is
 also attached. In view of this, the annual reports of the subsidiary
 companies have not been annexed pursuant to the exemption accorded by
 the Ministry of Corporate Affairs vide Circular No 51/12/2007-CL-lll
 dated 8th February 2011. However, the annual accounts of the subsidiary
 companies and the related detailed information will be made available
 to the investors of the Company and its subsidiary companies seeking
 such information at any point of time. These annual accounts will also
 be kept for inspection by any investor, in the head office of the
 Company and that of its respective subsidiary companies.
 
 Finance
 
 With the world economy just entering the recovery phase, money markets
 were benign during the first two quarters of the year.
 
 With inflation showing an upward trend, bank rates witnessed an uptrend
 in India as the year progressed. However interest rates in overseas
 locations continued to remain fairly supportive and stable.
 
 Given the healthy cash flows, the Company did not contract any major
 long term borrowings during the year. Substitution of debt with more
 favourable terms has been done at CUMI International Cyprus. The
 relationships with the CUMIs bankers in India have been leveraged to
 get credit facilities for overseas subsidiaries.  All debts have been
 serviced on time (including scheduled repayments).
 
 All capital expenditure was funded from internal accruals. The Indian
 operations benefited from the benign interest regime in the first two
 quarters of the year. Taking advantage of this, the Company had
 contracted six month funding to finance its working capital needs which
 helped it to enjoy the benefit of lower interest rates even when the
 market rates increased during the latter part of the year.
 
 With the Indian entity enjoying a significant natural hedge, a cautious
 approach was adopted to hedge the remaining exposures. Given the
 significant increase in business volumes and risks imposed in terms of
 higher receivables, considerable focus was given on keeping the
 receivables tidy.
 
 The Company continued to retain its strong credit ratings - ‘P1+ for
 short-term borrowings and ‘AA+ Stable for long-term borrowings - from
 CRISIL.
 
 Human Resources
 
 The year 2010-11 went beyond resilience and revival from a global
 slowdown, to one of growth exceeding expectations. HR initiatives were
 aligned to this pace set by the business to ensure such growth
 continues in the coming years.
 
 The leadership team revisited ‘Vision CUMI 2020 in a session
 facilitated by a consultant of international repute, setting the tone
 for the rest of the organization. They identified key observable
 behaviors that they are committed to uphold at all times. The team also
 followed through with their 360-degree feedback from the previous year,
 by taking up individual development plans focusing on leveraging their
 strengths and working on developmental needs.
 
 The second-line leaders were also being geared up for their turn.  The
 CUMI Leadership Program saw its second batch graduate successfully with
 the promise to be at the helm when CUMI 2020 happens. Young aspirants
 werent far behind with CUMI ‘Ustaad programs conducted to hone their
 technical skills, especially the application engineering capabilities,
 which are at the heart of CUMIs business.
 
 The engagement levels of employees was measured and found to be higher
 compared to similar companies in India.  Based on a comparison of
 market compensation levels across locations, compensation package was
 selectively restructured during the year. An ‘Online Performance
 Management System was launched in order to align to the Groups
 performance management framework and also to make it user-friendly for
 employees spread across various locations. ‘My Space, the enhanced
 employee portal, was unveiled to provide a single window of access to
 employees information needs.
 
 The Company continues its commitment to employment and empowerment of
 women through its ‘Mitr Forum and other initiatives. Womens Day
 Awards and participation in the MMA Womens Convention events were some
 of the additional activities of this year.
 
 At the workmen level, successful long-term settlements were signed in
 major locations towards a healthy and productive work environment. A
 basic training centre was started to build a supply of skilled
 workforce to meet future needs, through an apprenticeship model
 approved and recognized by the State Government in Tamilnadu. It also
 proved to be a socially impactful program, turning school drop-outs and
 unemployed youth from the local communities into a pool of employable
 and skilled candidates.
 
 Safety and Environment initiatives were undertaken in the form of
 awareness campaigns, competitions, continuously monitoring matrices and
 training programs.
 
 Retaining critical talent and acquiring new talent to meet the business
 needs was the biggest challenge in the last year; going forward,
 initiatives like Graduate Engineer Training programs and recognising
 top talents are expected to help the Company counter this challenge in
 the coming years.
 
 International Operations: Acquiring and retaining talent in CUMI China
 continues to be a challenge and efforts towards employee orientation
 and culture-building have been taken to address the same. In Foskor
 Zirconia, South Africa, employee orientation and efforts to build a
 positive culture have been initiated. Developing an e-learning platform
 on CUMIs culture and best practices to replicate them in our overseas
 ventures is being explored.
 
 The total staff on rolls, of the Company (including subsidiaries and
 joint ventures) was 4481 with 2548 people in India as on 31st March
 2011.
 
 The Companys dependence on petroleum products as fuel and as a raw
 material input is sizeable. With prices taking a steep upward curve and
 supply constraints becoming visible, profitability of various
 businesses could come under pressure. While the cost increase would be
 passed to customers, to the extent permitted by market situation,
 concerted efforts are also being made to optimize consumption through
 upgradation of firing equipment, improvement in technological processes
 and practices. Risks of dependence on one or two suppliers for critical
 raw materials are being addressed by initiating steps to widen the
 supplier base.
 
 The pace of change in customers requirements poses a constant
 challenge in certain product lines. The technical teams are
 continuously working to address these through improved manufacturing
 processes. The possibility of lifting of tariff barriers could
 intensify competition in certain geographies for some product lines.
 Proactive interactions with the regulatory authorities through trade
 associations are being done to address this.
 
 Availability of workforce with the desired skills set and their
 retention is becoming challenging in certain markets. Effective HR
 intervention would be done to mitigate the effects of this trend.
 
 Given the multiple countries in which the Company operates with each
 location having sizeable trade flows in the form of imports or exports,
 violent fluctuations could impair the profitability of the Company.
 These risks are sought to be mitigated by adopting a prudent forex
 policy whereby risks are hedged using financial products.
 
 CUMI has put in place a framework of internal controls to mitigate
 operational risks. The internal audit team periodically evaluates
 
 the adequacy and effectiveness of these internal controls, recommends
 improvements and also reviews adherence to policies and corrective
 action taken to address any gaps.
 
 Capital and revenue expenditure are monitored and controlled with
 reference to approved budgets.
 
 Investment decisions are subject to formal detailed evaluation and
 approval according to schedule of authority in place. Review of capital
 expenditure undertaken with reference to benefits forecasted is done.
 Physical verification of assets is periodically undertaken.
 
 The Audit Committee reviews the significant internal audit observations
 and overall functioning of the internal audit on a periodical basis.
 
 World real GDP growth is forecasted at 4.5 percent in 2011 and 2012,
 down modestly from 5 percent in 2010. Real GDP in advanced economies
 and emerging and developing economies is expected to expand by about
 2.5 percent and 6.5 percent, respectively. In advanced economies, the
 handoff from public to private demand is advancing well, reducing
 concerns that diminishing fiscal policy support might cause a
 double-dip recession. Financial conditions continue to improve,
 although they remain unusually fragile. In many emerging market
 economies, demand is robust and overheating is a growing policy
 concern.  Unemployment remains high in advanced economies, and new
 macroeconomic risks are building in emerging market economies.  In
 advanced economies, weak sovereign balance sheets and still- moribund
 real estate markets continue to present major concerns, especially in
 certain euro area economies. New downside risks are building up on
 account of commodity prices, notably for oil, and, related,
 geopolitical uncertainty, as well as overheating and booming asset
 markets in emerging market economies. While the recovery is gaining
 strength, downside risks continue to outweigh upside risks.
 
 In India, based on the performance of the economy over the last five
 years and analysis of the underlying trends of critical variables,
 Indias real GDP is expected to grow by 9 percent (+/- 0.25) in
 2011-12 and revert to the pre-crisis growth levels. A sharp
 deterioration in weather conditions or a disproportionate spike in the
 price of crude petroleum can lead to slower growth. Equally a sudden
 movement of these variables in a favourable direction
 
 can give a boost to the growth rate. Given governments gradual exit
 from stimulus measures, the savings and investment rates are likely to
 rise and thereby support achievement of the GDP growth estimates. As
 stated earlier, certain amount of uncertainty continues to prevail over
 the economic conditions in advanced countries. However in view of the
 diminishing concerns of a second dip recession, the external risks to
 India achieving a 9 percent growth rate appears low.
 
 Given the estimates of growth, the Company is planning to cruise well
 on its growth trajectory with optimism with regard to buoyancy in
 revenues and profits. The main challenge will be spiraling raw material
 prices which will be addressed through price corrections and
 efficiencies. The Company will continue to make investments in capacity
 addition and modernisation and will also actively consider any
 investment opportunities for geographical expansion and technology
 acquisition.
 
 Board of Directors
 
 Mr. Sridhar Ganesh and Mr. Shobhan M Thakore retire by rotation at the
 forthcoming Annual General Meeting and being eligible have been
 proposed for reappointment.
 
 M/s Deloitte, Haskins & Sells, Chartered Accountants, (FR No.008072S)
 Chennai retire as Auditors at the forthcoming Annual General Meeting
 and being eligible have expressed their willingness to be reappointed.
 As recommended by the Corporate Governance Guidelines of the Ministry
 of Corporate Affairs, the partner in charge for the audit has been
 rotated and Mr. B Ramaratnam has taken over from April 2010.
 
 The report on corporate governance along with a certificate from the
 Auditors is annexed as required by the listing agreement with
 
 stock exchanges. The Managing Director and the Chief Financial Officer
 have submitted a certificate to the Board regarding the financial
 statements and other matters as required under clause 49 V of the
 listing agreement.
 
 The Company contributed for various philanthropic purposes in the field
 of education and health-care and also for scientific research. Further
 the Company has been providing need-based support to the community
 around the Companys plant locations both in India and Russia, focusing
 on education, health, sports and also welfare of war veterans.
 Corporate Social Responsibility took a new shape by focusing on needs
 of the local community identified through a structured study.
 Accordingly, projects have been undertaken in the area of health,
 hygiene and education to members of the local community. A total sum of
 Rs.42 million has been spent on community development work in India and
 Russia.
 
 The directors responsibility statement, the particulars relating to
 energy conservation, technology, research and development, exports and
 employees remuneration as required under the Companies Act, 1956 and
 the information relating to employee stock options as per the
 applicable regulations of the Securities and Exchange Board of India
 are annexed to and forms part of this report.
 
 The Board places on record, its appreciation for the cooperation and
 support received from investors, customers, dealers, suppliers,
 employees, government authorities, banks and other business associates.
 
                                                On behalf of the Board
 
 Chennai,                                            M M Murugappan
 
 30th April 2011                                           Chairman