Our Directors have pleasure in presenting their 18th Annual Report on
 the business and operations of the company and the Audited statement of
 accounts for the year ended 31st December 2004 together with the
 Auditors Report thereon.
 
 PERFORMANCE OF THE COMPANY:
 
 a. Turnover:
 
                                                             Rs. in Lacs
                              Current Year   Previous Year    % Increase
 
                                   2393.72         1685.07            42
 
 b. Financial Results:
 
 The financial results of the operations, summarized, are as under: -
 
                                                           (Rs. in Lacs)
                                          Year ended          Year ended
                                 31st December, 2004 31st December, 2003
 
 FINANCIAL RESULTS
 
 Profit/(Loss) before Depreciation,
 Financial Expenses & amortisation
 of Miscellaneous Expenditure                 401.33               18847
 
 Less: Financial Expenses                      47.69               38.40
 
 Depreciation                                  82.31               80.47
 
 Profit/(Loss) before amortisation of         271.33               69 60
 Miscellaneous Expenditure
 
 Extraordinary Item - Excise Duty                  -                7339
 
 Amortisation of Miscellaneous Expenditure    341.23               34123
 
 Profit/(Loss) after amortisation
 of Misce. Expenditure                       (69.90)            (345 02)
 
 Provision for Tax: Current Tax
 Deferred Tax                                   7749             (15807)
 
 Net Profit/(Loss) after Tax                    7.59            (503 09)
 
 Loss Brought forward from Previous years    2440.78             1937 68
 
 Total Loss Carried forward to Balance Sheet 2433.20             2440.78
 
 MANAGEMENT DISCUSSION AND ANALYSIS:
 
 Review of operations & financial performance:
 
 The capacity utilization of your company increased to 100% from 93%
 achieved in the previous year. Your company has produced 12,144 MT
 during the year under review as against 11,595 MT produced during last
 year. Sales during the year were 12,350 MT compared to 11,524 MT during
 last year. The year under review witnessed an increase in both
 production and sales.
 
 The companys turnover for the year under review has increased by 42%
 over previous year, to Rs. 2393.72 Lakhs. The other income for the year
 under review was Rs.75.18 Lakhs compared to Rs.61.59 Lakhs in the
 previous year.
 
 Capacity utilization of the plant was 100% and this was possible due to
 various improvement measures taken such as increase in cupola run time,
 reduction in break down time and reduction in rejections of the
 products.
 
 Pre-certification audit for granting ISO certification has been
 conducted by BVQI and they have recommended for issue of ISO 9000
 Certification.
 
 The year witnessed more than 100% rise in the price of low ash
 metallurgical coke and prices of phenol have also witnessed a steep
 increase. In addition, prices of steel wire and wire mesh have also
 increased. However, the prices of Low Ash Metallurgical Coke have
 softened towards the year-end. The impact of increase in the prices of
 inputs was offset by increase in the selling prices of our products.
 Increase in selling prices, improvement in productivity, reduction in
 operating costs has contributed to the improvement of financial results
 during the year.
 
 OPPORTUNITIES & THREATS:
 
 Market for Rockwool products is improving with the general improvement
 in the economy There is increased awareness about the benefits of using
 Rockwool products generally for all applications and especially for
 thermal insulation purposes. Your company continues to follow price
 strategy and is selective in accepting orders from customers with lower
 realization. Your company is exploring opportunities to develop new
 products. No major threats are foreseen in the short term.
 
 FUTURE OUTLOOK:
 
 Demand for Rockwool products continues to be satisfactory. Your company
 continues to follow price strategy and is optimistic of achieving
 improved results.
 
 The company has installed Variable Frequency Drives and allied
 equipment for reduction in power consumption. It is expected that the
 power cost would come down by 15% due to installation of these drives.
 
 The company is likely to gain advantage from the ISO certification
 process. The certification will enhance trust of customers in our
 products in terms of quality, improve the manufacturing process, define
 rotes and responsibilities of employees and improvement in internal
 auditing practices.
 
 RISKS & CONCERNS:
 
 There has been an increase in prices of key inputs, which is of main
 concern to the company. The company is putting in all efforts to reduce
 wastages, improve yield - and cut costs to neutralize the price
 Increase. Various studies are being conducted to find out alternative
 inputs and processes for cost reduction. Value engineering and vendor
 development plans are in progress.
 
 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
 
 The company has adequate Management Information System and Internal
 Control System commensurate with its size and volume of business.
 
 FINANCE:
 
 State Bank of India has renewed the working capital limits of the
 company during the year. Your company has taken an unsecured term loan
 of Rs.175 Lakhs from Bank of Nova Scotia to repay a term loan from Citi
 Bank.
 
 In view of the directions given by Central Excise Department, your
 company has discontinued payment of Central Excise Duty on clearances
 of Rockwool products effective from 1st April 2003. However, Central
 Excise Duty is being paid on clearances of Loose Wool and Cover Wool
 under protest. There is no adverse impact on the companys
 profitability on account of the above.
 
 DIRECTORS:
 
 Mr. Alain R David, Mr. S. V. Rao and Mr. P. K. Tandon, Directors of the
 company retire by rotation and are eligible for re-appointment.
 
 Pursuant to the requirements of the Listing Agreement of Stock
 Exchanges on Corporate Governance, the information about the directors
 proposed to be re-appointed is as follows:
 
 1. Mr. Alain R. David is working as a Senior Executive and has around
 30 years of rich experience in senior management. He is not holding
 directorship in any other company.
 
 2. Mr. S. V. Rao is a practising Chartered Accountant with over 20
 years of experience in the field of finance and taxation. He has been
 nominated by APIDC as a Director with effect from 12-08-1984. Mr. Rao
 holds directorship in Naves Developers Private Limited and is a partner
 in S. V. Rao & Associates.
 
 3. Mr. P K. Tandon is a Chartered Accountant and has rich and
 extensive experience in Finance, Management and Administration. He
 holds directorship in Kirtoy Building Systems (India) Limited.
 
 AUDITORS:
 
 M/s T. R. Chadha & Co, Chartered Accountants, the Statutory Auditors
 of the Company retire at this Annual General Meeting and are eligible
 for re-appointment. Certificate from the Auditors has been received to
 the effect that their re-appointment, if made, would be within the
 limits specified in Section 224 (1 B) of the Companies Act. Auditors
 have made certain observations in their report, which do not call for
 additional explanations, as the notes on accounts (Schedule 21) to the
 Balance Sheet and Profit and Loss Account are self-explanatory
 
 M/s A F Ferguson & Co., Chartered Accountants are functioning as
 internal auditors of the company and the Audit Committee of the Board
 of Directors of the company is regularly reviewing their reports.
 
 FIXED DEPOSITS:
 
 The Company has not invited any deposits from the public in terms of
 Section 58A of the Companies Act, 1956.
 
 DIRECTORS RESPONSIBILITY STATEMENT:
 
 In terms of Section 217(2AA) of the Companies Act, 1956, your Directors
 hereby declare and confirm that:
 
 a. applicable accounting standards have been followed in the
 preparation of accounts for the year ended 31st December, 2004.
 
 b. the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the company as at the end of year and of the Profit of the company
 for the year under review.
 
 c. the Directors have taken proper and sufficient care for the
 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.
 
 d. the Board further confirms that the accounts of the company for the
 year ended 31st December 2004 have been prepared on a going concern
 basis
 
 REPORT ON CORPORATE GOVERNANCE:
 
 Report on Corporate Governance together with the certificate of
 Auditors on the same as required under Clause 49 of the listing
 agreement are annexed and form part of this report.
 
 CONSERVATION OF ENERGY:
 
 Disclosure of particulars with respect to conservation of energy
 required under Section 217 (1) (e) of the Companies Act, 1956 read with
 Companies (Disclosure of the particulars in respect of Board of
 Directors) Rules, 1988 is not applicable to our Industry
 
 TECHNOLOGY ABSORPTION:
 
 The details in Form B as required under Section 217 (1) (e) of the
 Companies Act 1956 read with relevant rules as amended from time to
 time form part of this report
 
 PARTICULARS OF EMPLOYEES:
 
 No employee was in receipt of remuneration in excess of the sum
 prescribed under Section 217 (2A) of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975 as amended.
 
 ACKNOWLEDGEMENTS:
 
 Your Directors take this opportunity to express their appreciation and
 place on record their gratitude for the confidence reposed and
 cooperation extended to the Company by the Governmental Agencies, State
 Bank of India, Bank of Nova Scotia, Citi Bank and Shareholders from
 time to time. Your Directors also wish to convey their thanks to the
 valued customers and dealers for their continued patronage The Board of
 Directors wishes to express its appreciation to all the employees of
 the Company for their outstanding contribution to the operations of the
 Company during the year.
 
                             For and on behalf of the Board of Directors
                                                ROCKWOOL (INDIA) LIMITED
 Place: Hyderabad                                         ALAIN R. DAVID
 Date: 11th June, 2005.                                         Chairman
 
 ANNEXURE TO DIRECTORS REPORT
 
 FORM - B
 
 Form for disclosure of particulars with respect to Technology
 Absorption, Research and Development (R&D)
 
 1 Specific areas in which R&D carried out by the Company The company
 has developed products for building industry for application in
 acoustic insulation.
 
 2 Benefits dewed as a result of above R & D : The above products were
 well accepted by various customers within the Building Industry
 
 3 Future plan of Action The Company commenced production of these
 products for commercial application.
 
 4 Expenditure on R&D
 
 a) Capital                                                       Nil
 
 b) Recurring                                                     Nil
 
 c) Total                                                         Nil
 
 d) Total R& D Expenditure as a percentage of total turnover      Nil
 
 Technology Absorption, Adoption and Innovation
 
 1 Efforts in brief made towards technology absorption, adoption and
 innovation Not Applicable
 
 2 Benefits derived as a result of above efforts, eg. Product
 development, import substitutions etc Not Applicable
 
 3 In case of imported technology (imported during the last 5 years
 reckoned from the beginning of the current financial period) following
 information may be furnished:
 
 a) Technology imported Not Applicable
 
 b) Year of import Not Applicable
 
 c) Has technology been fully absorbed Not Applicable
 
 d) If not fully absorbed, areas where this has not taken place, reasons
 thereof and future plans of action Not Applicable
 
 Foreign Exchange Earnings and Outgo
 
 1 Total Foreign Exchange earned Rs.7.92 Lakhs
 
 2 Foreign Exchange used ** Rs.177.17 Lakhs
 
 Includes repayment of AIM loan of Rs. 25.21 lakhs and Accumulated
 Interest of Rs. 115.75 lakhs