The Directors have pleasure in presenting their 71st Annual Report
 together with the Audited Accounts for the financial year ended 31st
 March, 2012.
 
 Financial Results
 
 Brief summary of the Company''s financial performance (Stand Alone and
 Consolidated) is as under:
 
                                                          (Rs. In Lacs)
 
 Particulars                   For the year ended      For the year ended
                            31-03-2012  31-03-2011  31-03-2012 31-03-2011 
                               Stand Alone           Consolidated (GROUP)
 
 Revenue from operations        68,725      36,182    1,10,557     70,467
 
 Profit for the year (PBDIT)    15,208       8,224      23,625     15,288
 
 Less: a) Interest and 
 Finance charges                 3,795       1,394       4,154      1,565
 
 b)   Depreciation               2,935       1,233       4,104      2,233
 
 Profit before Tax               8,478       5,597      15,367     11,490
 
 c)   Current tax                1,675       1,118       1,983      1,529
 
 d)   Deferred Tax               1,701       1,361       1,685      1,380
 
 e)Tax provision for 
   earlier years                    28           -          28          -
 
 f)   Minority share of profit       -           -        2146      1,725
 Add:
 
 a)   Refund of Income Tax          10          18          11         18
 
 b)   MAT Entitlement            1,070         751       1,070        751
 
 c)   Excess Provision of 
 income tax of earlier 
 years credited back                 -         248           -       248
 
 Profit for the year             6,153       4,135      10,605     7,874
 
 Add: Surplus brought 
 forward from earlier year       4,108       2,755      13,228     8,597
 
 Amount available for 
 appropriations                 10,261       6,890      23,833    16,471
 Less:
 
 Transfer to Preference 
 Capital Redemption Reserve        500           -         500         -
 
 Transfer to General Reserve     2,000       1,000       2,119     1,033
 
 Proposed Dividend - 
 Preference Shares                 240         240         240       240
 
 Proposed Final Dividend - 
 Equity Shares                     322         322         322       322
 
 Proposed Special Dividend - 
 Equity Shares                     645           -         645         -
 
 Interim Dividends Paid - 
 Equity Shares                     967         967       4,074     1,396
 
 Tax on Distributed Profits - 
 Equity Shares                     314         214         314       214
 
 Tax on Distributed Profits - 
 Preference Shares                  39          39          39        39
 
 Surplus at the 
 end of the year                 5,234       4,108      15,580    13,227
 
 Segment wise Sales performance
 
 Particulars                  2011-12                    2010-11
                     Sales Value  % to Total  
                                       Sales    Sales Value   % to Total 
                                                                   Sales
                     (Rs. In lacs)              (Rs. In lacs)
 
 Engineering         14,091           20.50%    13,067            36.12%
 
 Cement              54,232           78.92%    22,375            61.84%
 
 Power                   56            0.08%        52             0.14%
 
 Others                 346            0.50%       688             1.90%
 
 Total               68,725          100.00%    36,182           100.00%
 
 Year in Retrospect Financial results
 
 There has been a quantum increase in turnover of the company of about
 90% consequent to the commissioning of the 1.52 MTPA green field cement
 plant at Muktyala during the year under review. The Plant commenced
 production with both Cement mills in operation in August 2011 and
 during this period of stabilization, achieved an average capacity
 utilization of around 49%. The quantity of cement produced from this
 Plant was 5,48,991 MTs accounting for about Rs 26,300 lacs of the total
 turnover.
 
 During the current year, the new plant has further increased its
 capacity utilization and is expected to achieve a figure of about 70%
 by the close of the year.
 
 The Engineering Division maintained the turnover of the last year with
 a marginal increase of about Rs.  1,024 lacs (8%). Dispatches'' continued
 to be sluggish in view of the continuing slow recovery of the global
 economy. With the weight of the European financial crisis looming
 large, world industrial production has been slack with the capital
 goods industry, as is natural, bearing the brunt as enterprises cancel
 or delay expansions, additions and new ventures.  Domestic demand
 remained stable but active and contributed to a good portion of the
 Order Book.
 
 Overall Financial position
 
 The Profit before Depreciation, Interest and Tax also increased by Rs.
 6984 Lacs, that is about 85% over the previous year. The Net Profit of
 Rs. 6153 Lacs against Rs. 4135 lacs accounts for an increase of 49%
 largely due better cement realization and dividend from Subsidiary. The
 continued healthy liquidity
 
 position is a matter of considerable satisfaction even while the
 company had to defray substantial amounts towards the New Cement Plant,
 the upcoming Hotel Project etc. The income from investment in the
 subsidiary, namely KCP Vietnam Industries Ltd in the form of dividend
 substantially contributed to this position in addition to the increased
 cash generation from operations.
 
 The utilization of working capital limits with Banks was, however
 higher on account of the necessity to maintain significant stock of
 coal for both the cement units in the face of the uncertainty in its
 availability.
 
 Your Directors are confident that the current position will be
 sufficient to meet the company''s obligations in completing the
 on-going Projects, service capital and debt and also take care of
 unexpected exigencies.
 
 Power units
 
 The various captive power generating units performed satisfactorily
 during the year. Shareholders'' attention is drawn to the detailed
 Management Discussions and Analysis.
 
 Captive Power Plant at Muktyala
 
 Your Directors are of the opinion that a Captive Power Plant is
 essential to protect the large investment in the new cement plant by
 ensuring uninterrupted supply of quality power.
 
 However, with the coal situation undergoing considerable changes since
 the last report, it has been decided to limit the capacity of the Plant
 to 18 MW only with provision for subsequent addition of another 18 MW
 at an appropriate time. Power generated over and above the captive
 requirement will be sold to third parties at reasonably profitable
 market rates.
 
 The Project Cost and the loan component thereof have been suitably
 revised.
 
 Upcoming Hotel Project
 
 The Hotel Project at Somajiguda in Hyderabad is progressing well and is
 expected to be commissioned before the first half of the next financial
 year that is by June 2013. The Hotel will be a four star business
 category which has good business potential, under Management Agreements
 with a leading international chain.
 
 Replacement of cement Mills at Macherla
 
 With the continuing improvement in production technologies as a result
 of innovation on a global scale, to meet competition, eliminate
 pollution and increase margins, the company has taken steps to replace
 the existing four old grinding mills with a single mill with latest
 technology at an estimated cost of Rs. 3400 lacs with a loan component
 of Rs. 2100 lacs. The process of replacement is expected to be
 completed during the current fiscal.
 
 Outlook for the future
 
 A detailed analysis on the various segments in which the company
 operates has been furnished in the Management Discussions and Analysis.
 
 Dividend from subsidiary
 
 During the year under review the company received a dividend of Rs 2800
 lakhs from its subsidiary, KCP Vietnam Industries Ltd, Vietnam on its
 investment of Rs. 2371 lacs.
 
 Investment in BGE Global Inc
 
 As a strategic investment which would provide the Engineering Unit an
 opportunity for growth and also establish an export base, the company,
 during the year under review, has invested an amount of USD
 9,00,000 equivalent to Rs. 462 Lacs as on 31.3.2012 in a US based
 company BGE Global Inc. U S A mainly engaged in providing Engineering
 and other related services and also offer key cement machinery and
 equipment through its affiliates, The investment comprises USD 150,000
 in Common Non Voting Stock of a face value of USD 0.01 per share and
 USD 750,000 in Preferred Non Voting Stock of face value of USD 0.01
 bearing a fixed dividend of about 2.5% per annum.
 
 Your Directors are of the opinion that the strategic investment will be
 beneficial in furthering the interests of its business prospects in the
 coming years to meet global competition.
 
 Dividend on Preference Share Capital
 
 Your Directors recommend a dividend of 12% on the Preference Share
 Capital of the company. The amount of such dividend is Rs 240 lacs for
 the year.
 
 Redemption of Preference Shares
 
 Pursuant to the Share subscription agreement dated 23rd November, 2009,
 entered with M/s Tata Capital Limited, 25% of the total subscription
 amounting to Rs.500 lacs is due for redemption in December 2012. As
 required under the Companies Act, 1956, a Preference Capital Redemption
 Reserve of an equivalent amount has been allocated out of the profits
 and created during the year under review.
 
 Dividend on Equity Shares
 
 Based on the continued good financial performance and working results
 of the company during the last three quarters of the financial year
 2011-12 and other relevant parameters, the Board had declared and paid
 three interim dividends of 25% each during the financial year amounting
 to 75 % (Rs 0.75 per share) as of date.
 
 Your Directors are now pleased to recommend a final dividend of 25% (Rs
 0.25 per share) making a total equity dividend of 100% (Rs 1/-per
 share) for the year. The total amount of dividend paid on equity
 capital excluding Dividend Distribution Tax thereon will be Rs 1,289
 lacs, which is the same as in the previous year.
 
 Special dividend on completion of 70th Year
 
 Shareholders will be happy to know that the company has completed 70
 years of its existence having been incorporated in 1941. During this
 period, it has made consistent progress and taken great strides in
 expansions, diversifications etc. to reach a record group turnover in
 excess of Rs. 1000 crores.  In appreciation of the continued support of
 the shareholders and to commemorate the 70th year, your Directors have
 considered it appropriate and fit to declare a Special Dividend of
 Rs.0.50 per Share that is 50% on the paid up Equity Capital.
 
 The dividend will be paid to members whose names appear in the
 Register of Members as on 13th August,2012 and in respect of shares
 held in dematerialised form, it will be paid to members whose names are
 furnished by National Securities Depository Limited and Central
 Depository Services (India) Limited, as beneficial owners as on that
 date.
 
 Transfer to Reserves
 
 Your Directors recommend the following appropriations from the profits
 available for appropriation:
 
 To Preference Capital Redemption Reserve
 
 (under the provisions of
 
 the Companies Act, 1956)            - Rs. 500 lacs
 
 To General Reserve                  - Rs.2000 lacs
 
 This will leave Rs 5234 lacs in the Surplus Account to be carried
 forward to the next year.
 
 The total amount in General Reserve as on 31st March, 2012, after the
 proposed appropriation, would stand at Rs.27000 lacs.
 
 Fixed Deposits
 
 The total amount of Fixed Deposits outstanding as on 31st March, 2012
 was Rs.6824.18 Lacs as compared to the figure of Rs.7624.61 Lacs as on
 31-3-2011.  As on 31st March, 2012, Fixed Deposits matured and remained
 unclaimed were Rs.141.14 Lacs from 243 depositors. As on the date of
 this report, Fixed Deposits relating to 57 depositors amounting to
 Rs.28.62 Lacs have been renewed and Fixed Deposits of Rs.20.51 Lacs of
 25 depositors repaid.
 
 Corporate Social Responsibility (CSR)
 
 For a business to take responsibility for its actions, that business
 must be fully accountable. Social accounting, a concept describing the
 communication of social and environmental effects of a company''s
 economic actions to particular interest groups within society and to
 society at large, is thus an important element of CSR.
 
 The rise in popularity of ethical consumerism over the last two decades
 can be linked to the rise of CSR.
 
 As global population increases, so does the pressure on limited natural
 resources required to meet rising consumer demand (Grace and Cohen
 2005, 147).  Industrialization, in many developing countries,
 
 is booming as a result of both technology and globalization. Consumers
 are becoming more aware of the environmental and social implications of
 their day-to-day consumer decisions and are therefore beginning to make
 purchasing decisions related to their environmental and ethical
 concerns.
 
 The company in its own way has been taking a number of initiatives in
 supporting on-going long term projects while undertaking new ones.
 
 With Corporate Social Responsibility in India having acquired a new
 dimension and being discussed at Government levels as a formal
 necessity for business in the recent years, your company has always
 laid considerable stress on voluntary compliance in this regard. It
 will be a repetition to state that long before CSR acquired its current
 nomenclature, KCP has been actively engaged in setting up projects and
 services to take care of surrounding community in its factory zones and
 has made their life more meaningful. Education, Health care, Community
 welfare measures are major areas in which it has laid its foundations
 in the early years of its existence and carefully added to them in
 succeeding years.
 
 A more detailed report on activities under Corporate Social
 Responsibility is furnished separately in this Annual Report.
 
 Directors
 
 Sri. A. Ramakrishna and Sri V.H.Ramakrishnan, Directors of the Company,
 retire by rotation and being eligible offer themselves for
 reappointment at the ensuing Annual General Meeting in accordance with
 the provisions of the Companies Act, 1956 and Company''s Articles of
 Association.
 
 Sri. Vijay Sankar had been appointed an Additional Director of the
 Company effective from 7th November, 2011 and will hold office till the
 conclusion of the ensuing Annual General Meeting. The Company has
 presently received a notice in writing from a member, with the
 requisite fee proposing the candidature of Sri Vijay Sankar as a
 Director of the company subject to retirement by rotation, in terms of
 Section 257 of the Companies Act, 1956 to be considered at the ensuing
 Annual General Meeting.
 
 A resume of the Directors seeking re-appointment/ appointment is
 furnished along with the notice for the Annual General Meeting for the
 information of shareholders.
 
 Director''s Responsibility Statement
 
 The Directors confirm that:
 
 1.  In the preparation of the Annual Accounts, the applicable
 Accounting Standards have been followed and that no material departures
 have been made from the same.
 
 2.  The selected accounting policies were applied consistently and the
 Directors 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 at the end of the financial year ended 31st March, 2012 and of
 the profit of the Company for the year ended as on date.
 
 3.  They have taken proper and sufficient care for maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the company and for
 preventing and detecting fraud and other irregularities, and
 
 4.  They have prepared the Annual Accounts on a going concern basis.
 
 Auditors
 
 M/s Brahmayya and Co, Chartered Accountants, Vijayawada, Auditors of
 the company retires at the conclusion of the ensuing Annual General
 Meeting.  They are, however eligible for reappointment. They have
 furnished a certificate to the effect that their appointment will be in
 accordance with the limits specified in sub section (IB) of Section 224
 of the Companies Act, 1956.
 
 The Board recommends the reappointment of M/s Brahmayya & Co
 Vijayawada, as Auditors of the company to hold office till the
 conclusion of the next Annual General Meeting.
 
 The Notes on Financial Statements referred to in the Auditors'' Report
 are self-explanatory and do not call for any further comments.
 
 Cost Auditors
 
 The Central Government has approved the appointment of M/s
 Narsimhamurthy and Co, Cost Accountants, Hyderabad the Cost Auditor for
 the Cement units for the year 2011-12. The Cost Audit Report for the
 year 2010-11 was filed by the Cost Auditor within the due date.
 
 Pursuant to the Companies (Cost Accounting Records) Rules, 2011 M/s
 Narsimhamurthy and
 
 Co Hyderabad has been appointed to conduct the Compliance audit for the
 Biotech unit and M/s Mahadevan and Co, Chennai has been appointed to
 conduct the Compliance audit for the Engineering unit of the company.
 
 Revised Schedule VI
 
 It has been notified that in the preparation of the Balance Sheet and
 Profit and Loss Account for financial year commencing on or after 1st
 April 2011, the Revised Schedule VI as prescribed shall be followed.
 The accounts for the year have therefore been drawn in the new format.
 The most significant requirement of the Revised Schedule VI is the form
 of segregation of Assets and Liabilities to more effectively reflect
 their Current and Non Current nature and would be one step toward the
 achievement of IFRS.
 
 Human Resources
 
 Realising that human resources are the main assets of an enterprise,
 the company follows a policy suited to train and retain talent,
 recognise performance, provide motivation and opportunity for growth.
 Ensuring that the right person is assigned to the job best suited to
 his background and experience, the potential to grow and contribute
 towards organisational excellence has been encouraged and nurtured for
 mutual benefit.  Stability of the workforce and meeting their
 aspirations is the foremost objective of the company and to this end
 the company has being taking a series of measures which includes
 training and development at different levels, merit-based promotions
 and other incentives.  The families of employees are also brought into
 the overall fold in the form of periodical cultural meets, friendly
 get-togethers and other welfare measures.  The Company has developed a
 unique KCPeers culture which binds employees together and keeps
 them happy resulting a high engagement level in the company.
 
 The total number of employees as on date was 1233.  Particulars of
 Employees
 
 Information as per Section 217 (2A) of the Companies Act, 1956 read
 with Companies (Particulars of Employees) Amendment Rules, 2011 is
 provided in Annexure - 1 forms part of this report.
 
 Subsidiary company
 
 The Company has fulfilled all the conditions prescribed under Sec 212
 (8) of the Companies Act 1956 read with General Circular 2/2011 dated
 8th February, 2011 to avail exemption from publishing the Balance Sheet
 and other statements of its subsidiary company, M/s KCP Vietnam
 Industries Ltd. Vietnam for the financial year 2011-12. However, a
 statement giving certain information as required in the said circular
 is included in the Annual Report.
 
 The company will provide to any shareholder, on request and without any
 cost, the Balance Sheet and other particulars and statements of
 accounts of the subsidiary company, M/s KCP Vietnam Industries Ltd.
 Vietnam. The said Annual Accounts of the subsidiary Company will also
 be available for inspection at the Registered/Corporate Office of the
 Company.
 
 Consolidated Financial Statements
 
 Pursuant to the requirements of Accounting Standard - 21 and the
 Listing Agreement with National Stock Exchange Ltd, financial
 statements consolidating those of its subsidiary KCP Vietnam Industries
 Ltd and its Joint Venture company, Fives Cail K C P Ltd, considering
 the minority interest in them and duly audited have been attached to
 this Directors'' Report.
 
 Conservation of Energy, Technology absorption, Foreign Exchange Earning
 and Outgo
 
 The particulars as prescribed 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 are attached as Annexure
 2 to this report.
 
 Occupational Health and Safety
 
 We have well defined health and safety policies which are widely
 circulated internally to ensure appropriate attention to health and
 safety hazards and to build a safe working environment. All the
 manufacturing plants have medical facilities with qualified doctors.
 Annual medical check-up is mandatory for all employees of the Company.
 Training related to safety aspects is provided to all employees prior
 to engaging them in respective jobs.
 
 The company insists their lab our contractors to adopt similar
 Occupational Health and Safety practices while engaging them for
 Company work.
 
 There is a system of periodical review of the activities done in the
 area of health, hygiene and safety and to address challenges in these
 areas.
 
 Regular personal development sessions like Art of living etc. are
 also conducted with a view to maintain work life balance.
 
 Transfer of amounts to Investor Education and Protection Fund (IEPF)
 
 Pursuant to the provisions of Section 205A (5) of the Companies Act,
 1956, relevant amounts which remained unpaid or unclaimed for a period
 of 7 years have been transferred by the Company to the Investor
 Education and Protection Fund.
 
 Corporate Governance
 
 Corporate governance is a term that refers broadly to the rules,
 processes, or laws by which businesses are operated, regulated, and
 controlled. The term can refer to internal factors defined by the
 officers, stockholders or constitution of a corporation, as well as to
 external forces such as consumer groups, clients and government
 regulations. India''s SEBI Committee on Corporate Governance defines
 corporate governance as the acceptance by management of the
 inalienable rights of shareholders as the true owners of the
 corporation and of their own role as trustees on behalf of the
 shareholders. It is about commitment to values, about ethical business
 conduct and about making a distinction between personal and corporate
 funds in the management of a company.
 
 Corporate Governance has always been at the core of the company''s
 management philosophy aimed at bringing about a managerial style of
 functioning which reflects transparency coupled with efficiency so as
 to benefit the larger interests of all stakeholders.  The theme of
 management is to provide for sufficient internal checks and balances to
 ensure professional decision-making in the day-to-day affairs of the
 company with minimum exposure to risks. All Directors and employees are
 bound by Code of Conduct that
 
 sets out the financial standards to be followed in all actions carried
 out on behalf of the company.
 
 A Detailed Report on matters relating to Corporate Governance as
 statutorily required is annexed as part of this Annual Report together
 with the report of the Auditors on its compliance.
 
 Acknowledgements
 
 Your Directors wish to thank the Central and State Governments,
 Financial Institutions, Banks,
 
 Government authorities, customers, vendors and shareholders for their
 continued co-operation and support extended. Your Directors wish to
 whole heartedly thank our employees for their sincere and devoted
 contribution to the company''s continued good performance.
 
 Ladies and gentlemen, your involvement as shareholders is deeply
 valued. Your Directors look forward to your continued support in all
 Endeavour''s for stability, growth and prosperity for the company.
 
 Place: Chennai            For and on behalf of the Board of Directors
 
 Date: 28th May, 2012                             VL DUTT
 
                                        Chairman and Managing Director