HeidelbergCement India

The Directors are pleased to present their 49th Annual Report together
 with the audited statement of accounts for the financial year ended
 31st December, 2007 (twelve months).
 
 Your Company completed a successful year of operations in 2007. This is
 the first full year of operations after Heidelberg Cement Croup of
 Germany acquired controlling stake of 54.89% in the Equity Capital of
 the Company.  Heidelberg Cement Group is a global market leader in
 aggregates and a prominent player in the fields of cement, concrete and
 other allied activities, making it one of the worlds largest
 manufacturers of building materials.
 
 CEMENT INDUSTRY
 
 The Indian cement industry has a capacity of around 1 73.08 million
 tonnes per annum at the end of December 2007 as reported by the Cement
 Manufacturers Association (CMA). Against this, the cement production
 was 163.90 million tonnes during the period January to December 2007
 exhibiting a growth of 7.12%. The cement despatches during this period
 were 159.20 million tonnes, showing a growth of 9%.
 
 OPERATIONS
 
 The cement sales of the Company were 2.12 million tonnes during the
 financial year ended 31st December, 2007 against 1.58 million tonnes
 achieved during the financial year ended 31st December, 2006 (nine
 months).
 
 Production and Sales figures of the Company are as under:
 
                           Financial year ended     Financial year ended
                            31st December, 2007      31st December, 2006
                               (twelve months)           (nine months)
 Production (in tonnes)
 -Clinker                         15,44,365               11,40,853
 -Cement                          21,26,835               15,87,920
 Sales (in tonnes)
 -Clinker                            76,957                  33,197
 -Cement                          21,24,465               15,77,545
 
 Your Company launched a new brand name Mycem for selling its cement,
 which has been very well accepted by the market.
 
 The Company is also focusing its efforts to reduce costs in all spheres
 of activities.
 
 The Company has stepped-up the quality of cement produced at all the
 plants. This has been achieved through careful blending of raw
 materials as well as by some change in the manufacturing process. This
 will go a long way in improving customers perception and establishment
 of a very strong brand over a period of time.
 
 FINANCIAL RESULTS
 
 The Company achieved gross sales of Rs. 71,112.52 lacs during the
 financial year ended 31st December 2007, against Rs. 47,818.80 lacs
 during the financial year ended 31st December 2006 (nine months) ,
 thereby, registering annualized growth of 11.5 %. The net profit of
 the Company during the financial year ended 31st December 2007 was Rs.
 9,765.28 lacs as compared to the net loss of Rs. 986.15 lacs during the
 financial year ended 31st December 2006 (nine months).
 
 During the year under review, the Company has achieved best-ever
 results due to rationalization of operations/higher sales volume and
 increase in net sales realization.
 
 The summarized financial results of the Company are given below :
 
                                                         (Rs. in lacs)
                          Financial year ended   Financial year ended
                          31 st December, 2007    31st December, 2006*
                               (twelve months)          (nine months)
 
 Working for the year resulted
 in an operational surplus of       11,579.09             6,375.05
 From which are subtracted :
 -  Finance Charges                   (304.42)           (1,676.09)
 -  Depreciation / Amortization     (1,444.48)           (1,220.77)
                                    (1,748.90)           (2,896.86)
 Resulting in a prOfit/(loss) 
 for the year of                     9,830.19             3,478.19
 To/From which are added / 
 subtracted :
 -  Prior Period Adjustment (Net)       -                   (46.50) 
 -  Deferred Tax (Prior years)          -                (3,614.89)    
 -  Income Tax (Prior years)           (0.54)                  -
 -  Fringe Benefit Tax                (64.37)               (64.91)
 Net Profit / (Loss) from 
 continuing business (I)             9,765.28              (219.96)
 Profit / (Loss) from 
 discontinued business (II)             -                  (766.19)
 Net Profit / (Loss) ( I + II )      9,765.28              (986.15)
 Less : Effect of adoption 
 of AS-15 (Revised) for:
 -Gratuity                              -                  (960.95)
 -Leave Encashment                      -                  (212.99) 
 Add : Debenture Redemption 
 Reserve no longer required            350.00                  -
                                    10,115.28            (2,160.09)
 To which is added loss b/f 
 from the previous year            (37,098.37)          (34,938.28)
 Profit / (Loss) carried 
 to Balance Sheet                  (26,983.09)          (37,098.37)
 
 
 * Previous year figures have been regrouped wherever necessary.
 
 In view of the carry forward accumulated losses, your Directors are
 unable to recommend any Dividend to the shareholders for the financial
 year ended 31st December, 2007.
 
 EXPANSION
 
 The Company is contemplating expansion of cement manufacturing capacity
 at its existing plants at Ammasandra (Karnataka), Damoh (M.P.) and
 Jhansi (U.P) from the existing total capacity of 2.2 million tonnes per
 annum to 5.9 million tonnes per annum. Since the aforesaid expansion
 project has to be approved by various Regulatory Authorties, as a first
 step, the Company has submitted its application to the Ministry of
 Environment and Forest, Government of India, New Delhi. After receiving
 all the requisite approvals, the Company will commence work relating to
 the projects.
 
 DIRECTORS
 
 Dr. Bernd Scheifele and Dr. Lorenz Nager will retire by rotation at the
 forthcoming Annual General Meeting (AGM) of the Company. The retiring
 Directors being eligible have offered themselves for re-election at the
 said AGM. The Board recommends the re-appointment of the aforesaid
 Directors.
 
 Cementrum I B.V. has withdrawn the nomination of Mr. Daniel Gauthier
 and has appointed Dr. Albert Scheuer as its new nominee on the Board of
 Directors of the Company w.e.f. 24th April, 2008. Consequently, Mr.
 Daniel Gauthier has also ceased to be the Chairman of the Board. The
 Board wishes to place on record a note of appreciation for the services
 rendered by Mr. Gauthier during his tenure as Director as well as
 Chairman of the Board.
 
 Dr. Albert Scheuer who was appointed as Additional Director on 24th
 April, 2008 holds office upto the ensuing AGM of the Company. The
 Company has received a notice under Section 257 of the Companies Act,
 1956 from a shareholder proposing the name of Dr. Scheuer for
 appointment as Director of the Company liable to retire by rotation at
 the ensuing AGM. The Board recommends the appointment of Dr. Albert
 Scheuer.
 
 AUDITORS
 
 M/s. S.R. Batliboi & Co., Chartered Accountants who were appointed as
 Statutory Auditors at the last Annual General Meeting held on 14th
 June, 2007 hold office up to the ensuing AGM. The said Auditors have
 confirmed that their re- appointment, if made, shall be within the
 limit under Section 224(1 B) of the Companies Act, 1956. The Auditors
 ¦observations in their Report and the relevant notes to the accounts
 are self-explanatory.
 
 HUMAN RESOURCES
 
 In order to optimize the utilisation of Companys human resources, a
 Voluntary Retirement Scheme (VRS) was launched at all the Companys
 plants, which was opted by 455 employees during the year under review.
 
 Industrial relations remained cordial during the year under review and
 there was all round cooperation. Employees continue to put in their
 best efforts for the progress of the Company and your Directors wish to
 place on record their appreciation for the dedication and commitment of
 the employees at all levels.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As per Section 217(2AA) of the Companies Act, 1956, the Directors
 indicate that they have taken reasonable and bonafide care (a) that in
 the preparation of the accounts for the financial year ended 31st
 December 2007, the applicable accounting standards have been followed
 and proper explanations relating to material departures, if any, have
 been furnished; (b) that such accounting policies were selected and
 applied consistently and judgements and estimates that are reasonable
 and prudent made so as to give a true and fair view of the state of
 affairs of the Company for the year; (c) that proper and sufficient
 care had been taken for the maintenance of adequate accounting records
 in accordance with the provisions of the Companies Act, 1956 for
 safeguarding the Companys assets and for preventing and detecting
 frauds and other irregularities; and (d) that these Accounts have been
 prepared on a going concern basis.
 
 PARTICULARS OF EMPLOYEES
 
 Particulars of employees as required under Section 21 7 (2A) of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 Rules, 1975 as amended are given in the enclosed statement forming
 part of this Report as Annexure A.
 
 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO:
 
 The particulars relating to conservation of energy, technology
 absorption and foreign exchange earnings and outgo, as required under
 section 21 7(1 )(e) of the Companies Act, 1956 read with the Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules
 1988, forming part of this Report are annexed as Annexure B.
 
 MD/CFO CERTIFICATION
 
 As per the requirements of Clause 49 of the listing agreement on Code
 of Corporate Governance, the certification made by Mr. Ashish Guha,
 Managing Director and Mr. Bradley Reginald Taylor, Chief Financial
 Officer in the prescribed format, in respect of the financial
 statements and the cash flow statement for the financial year ended
 31st December, 2007 is annexed as Annexure C.
 
 CORPORATE GOVERNANCE REPORT
 
 Corporate Governance Report for the financial year ended 31st December,
 2007 as required by clause 49 of the listing agreement together with
 the certificate of Mr. Nityanand Singh, Practising Company Secretary in
 this regard is annexed herewith. Managements Discussion and Analysis
 forms part of this Report and is annexed herewith.
 
 ACKNOWLEDGEMENTS
 
 Your Directors convey their grateful thanks to the Government
 Authorities, Shareholders, Distributors, Dealers, Banks and valued
 customers for their continued assistance, cooperation and support.
 
                                        For and on behalf of the Board
 
                                                      Sd/-
 
 Place : Gurgaon                                 P.G. Mankad
 Date  : 24th April, 2008                           Chairman