UltraTech Cement

The Directors present the Eighth Annual Report together with the
 Audited Accounts of your Company for the year ended 31st March, 2008:
 
 FINANCIAL RESULTS
 
                                                        (Rs. in crores)
                                               2007-08          2006-07
 
 Gross Turnover                               6,286.24         5,484.35
 
 Gross Profit                                 1,744.24         1,392.44
 
 Less: Depreciation                             237.23           226.25
 
 Profit Before Tax                            1,507.01         1,166.19
 
 Tax Expenses                                   499.40           383.91
 
 Profit After Tax                             1,007.61           782.28
 
 Add: Balance brought forward from 
 Previous Year                                  775.16           180.57
 
 Surplus available for Appropriation          1,782.77           962.85
 
 Appropriation
 
 Debenture Redemption Reserve                   (8.17)           30.92
 
 General Reserve                               120.00           100.00
 
 Dividend                                       62.24            49.79
 
 Corporate tax on Dividend                      10.58             6.98
 
 Balance transferred to Balance Sheet        1,598.12           775.16
 
 Total                                       1,782.77           962.85
 
 REVIEW OF OPERATIONS AND OVERVIEW
 
 During the year, your Company produced 15.07 MMT of cement (14.64 MMT).
 Effective capacity utilisation remained flat at 101%. Exports were
 curtailed to cater to the growing domestic demand. This supported
 domestic volume growth of 7%. Variable cost increased by over 8% mainly
 on account of escalation in the cost of raw materials, including
 imported coal and mounting freight charges.
 
 Continuous de-bottlenecking efforts across your Companys Units
 resulted in a capacity increase of 1.2 MMT.
 
 Your Companys turnover at Rs. 6,286.24 crores was up by 15% compared
 to Rs. 5,484.35 crores achieved in the previous year. Profit after tax
 stood at Rs.1,007.61 crores (Rs.782.28 crores) after providing for
 depreciation - Rs. 237.23 crores (Rs. 226.25 crores) and tax - Rs.
 499.40 crores (Rs. 383.91 crores).
 
 DIVIDEND
 
 Your Directors recommended a dividend of Rs. 5/- per equity share of
 Rs. 10/- each for the year ended 31st March, 2008. The dividend
 distribution would result in a cash outgo of Rs. 72.82 crores
 (including tax on dividend of Rs. 10.58 crores) compared to Rs. 56.77
 crores (including tax on dividend of Rs. 6.98 crores) paid for the year
 2006-07.
 
 CAPITAL EXPENDITURE
 
 Your Company initiated various expansion and de-bottlenecking programs
 to maintain growth and improve efficiencies.
 
 The Clinkerisation (pyrosection) unit at Andhra Pradesh Cement Works
 (APCW) was commissioned during the fourth quarter of the financial year
 ended 31st March, 2008. The balance work on capacity expansion at APCW
 is progressing and the split grinding Unit at Ginigera in Karnataka is
 on track. The Unit will be operational in the first half of the current
 fiscal.
 
 Upon commissioning of expanded capacity at APCW, your Companys total
 capacity will be 23.1 MMT.
 
 Trials have begun on the 1st Stream of the Thermal Power Plant (TPP) of
 23MW at Gujarat Cement Works (GCW) in Gujarat. All four Streams
 aggregating to 92MW will be fully operational by H1FY09. In addition,
 TPPs aggregating to 135MWs are being set up at Awarpur Cement Works
 (ACW) in Maharashtra, APCW and Hirmi Cement Works (HCW) in
 Chhattisgarh. These power plants, except ACW, will be commissioned in a
 phased manner in FY09.
 
 In FY08 15 Ready Mix Concrete (RMC) plants have been set up across the
 country.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 The ESOS Compensation Committee of the Board of your Company formulated
 the Employee Stock Option Scheme 2006 (“ESOS-2006) at its meeting held
 on 23rd August, 2007.
 
 The ESOS Compensation Committee granted 1,68,070 stock options to
 eligible employees of your Company. The disclosure, as required under
 Clause 12 of Securities and Exchange Board of India (Employee Stock
 Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is
 set out in Annexure I to this Report.
 
 AWARDS
 
 Your Company was the recipient of the following awards:
 
 - The Top Exporter Award from CAPEXIL for the eleventh consecutive
 year.
 
 - State level award for excellence in energy conservation and
 management for 2006 for ACW.
 
 - The CII National award for excellence in Energy Management 2007 –
 ‘Energy Efficient Unit and ‘Innovative Project for APCW.
 
 - Mines safety award – First prize in ‘Method of Working and Second
 prize in ‘Drilling and Blasting for APCW.
 
 - National Safety Award for outstanding performance in industrial
 safety for HCW.
 
 RESEARCH AND DEVELOPMENT
 
 Your Company continued its efforts towards maximising waste
 utilisation, search for alternative sources of fuel and chemical and
 mineral evaluation of captive limestone mines. These measures will aid
 in conserving natural resources.
 
 HUMAN RESOURCES
 
 At your Company, employees continue to be the key driving force of the
 organisation and remain a strong source of our competitive advantage.
 We believe in aligning business priorities with the aspirations of
 employees leading to the development of an empowered and responsive
 human capital. We strive to create a work environment which encourages
 innovation and creativity.
 
 Through our strong Employer Brand, we were able to attract quality
 people with required skills who have become part of our competent and
 committed workforce. Appropriate measures are being planned by your
 Company to ensure talent retention and employee engagement.
 
 Your Company continued to support learning and development initiatives
 to enhance the functional as well as the behavioural competencies of
 our people. At ‘Gyanodaya - The Aditya Birla Institute of Management
 Learning, executives of your Company were enlisted for various high
 quality learning interventions. These programs supplemented with a
 combination of developmental assignments, classroom and web based
 training, has enabled our people to continuously learn, develop and
 grow.
 
 Our performance management system is primarily based on competencies
 and values. We closely monitor growth and development of top talent in
 your Company, to align personal aspirations with the organisation
 purpose.
 
 CORPORATE GOVERNANCE
 
 Your Directors reaffirm their continued commitment to good corporate
 governance practices.  During the year under review, your Company
 complied with the provisions of Clause 49 of the Listing Agreement with
 the stock exchanges which relates to corporate governance.
 
 A separate section on corporate governance together with a certificate
 from your Companys Statutory Auditors forms a part of this Annual
 Report.
 
 SUBSIDIARY COMPANIES
 
 In terms of Section 212 of the Companies Act, 1956, (“the Act”) the
 Accounts together with the Report of Directors and the Auditors Report
 of your Companys subsidiaries viz. Dakshin Cements Limited (Dakshin)
 and UltraTech Ceylinco (Pvt) Limited (UltraTech Ceylinco) forms a part
 of this Report.
 
 In line with the provisions of the Accounting Standards prescribed by
 the Institute of Chartered Accountants of India and the provisions of
 the Listing Agreement with the stock exchanges, the duly audited
 Consolidated Financial Statement has been prepared after considering
 the financial statements of your Companys subsidiaries viz. Dakshin
 and UltraTech Ceylinco.
 
 FINANCE
 
 CRISIL has upgraded your Companys rating from “AA+/Stable” to
 “AAA/Stable”. Your Company is also one of the few companies to have its
 bank loan facilities rated. CRISIL has assigned your Companys bank
 loan facility, the highest rating of “AAA/Stable/P1+”. Such a rating
 allows your Company to borrow on competitive terms.
 
 Your Company has raised Rs.90 crores by way of fully hedged Buyers
 Credit for a tenure of three years. These funds have been used for
 various ongoing capex.
 
 Your Company has repaid debentures and loans amounting to Rs. 285
 crores.
 
 Your Company has not invited or renewed deposits from the public /
 shareholders in accordance with Section 58A of the Act.
 
 ENERGY, TECHONOLOGY AND FOREIGN EXCHANGE
 
 Information on conservation of energy, technology absorption and
 foreign exchange earnings and outgo, required to be disclosed pursuant
 to section 217(1) (e) of the Act, read with the Companies (Disclosure
 of Particulars in the Report of the Board of Directors) Rules, 1988 is
 given in Annexure II and forms part of this Report.
 
 PARTICULARS OF EMPLOYEES
 
 In accordance with the provisions of Section 217(2A) of the Act read
 with the Companies (Particulars of Employees) Rules, 1975, the names
 and other particulars of employees are to be set out in the Directors
 Report, as an addendum thereto. However, as per the provisions of
 Section 219(1)(b)(iv) of the Act, the Report and Accounts as therein
 set out, are being sent to all Members of your Company excluding the
 aforesaid information about the employees. Any Member, who is
 interested in obtaining such particulars about employees, may write to
 the Company Secretary at the Registered Office of your Company.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Audited Accounts for the year under review are in conformity with
 the requirements of the Act and the Accounting Standards. The financial
 statements reflect fairly the form and substances of transactions
 carried out during the year under review and reasonably present your
 Companys financial condition and results of operations.
 
 Your Directors confirm that:
 
 (i) in the preparation of the Annual Accounts, the applicable
 accounting standards have been followed along with proper explanations
 relating to material departures, if any;
 
 (ii) the accounting policies selected have been applied consistently
 and judgments and estimates are made that are reasonable and prudent so
 as to give a true and fair view of the state of affairs of your Company
 as at 31st March, 2008 and of the profit of your Company for the year
 ended on that date;
 
 (iii) proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Act for safeguarding the assets of your Company and for preventing and
 detecting frauds and other irregularities;
 
 (iv) the Annual Accounts of your Company have been prepared on a going
 concern basis.
 
 DIRECTORS
 
 Mr. S. Rajgopal, Nominee Director resigned from the Board of your
 Company with effect from 20th October, 2007 consequent to the
 withdrawal of his nomination by the Administrator of the Specified
 Undertaking of the Unit Trust of India. However, considering his vast
 knowledge and experience, the Board inducted Mr. Rajgopal as an
 Additional Director with effect from that date. Mr. Rajgopal holds
 office upto the conclusion of the ensuing Annual General Meeting.
 Notice pursuant to Section 257 of the Act has been received from a
 Member of your Company proposing Mr. Rajgopals appointment as
 Director.
 
 Mrs. Rajashree Birla, Mr. V. T. Moorthy and Mr. R. C. Bhargava retire
 from office by rotation and being eligible, offer themselves for
 re-appointment.
 
 A brief resume of the Directors being appointed / re-appointed are
 attached to the Notice of the ensuing Annual General Meeting.
 
 AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai and M/s.
 G. P. Kapadia & Co., Chartered Accountants, Mumbai were appointed Joint
 Statutory Auditors of your Company from the conclusion of the previous
 Annual General Meeting until the conclusion of the ensuing Annual
 General Meeting. M/s. Deloitte Haskins & Sells, Chartered Accountants,
 Mumbai and M/s. G.P. Kapadia & Co., Chartered Accountants, Mumbai being
 eligible, offer themselves for re-appointment as auditors of your
 Company.
 
 The Board proposes the re-appointment of M/s. Deloitte Haskins & Sells,
 Chartered Accountants, Mumbai and M/s. G. P. Kapadia & Co., Chartered
 Accountants, Mumbai as Joint Statutory Auditors of your Company based
 on the recommendation of the Audit Committee, to hold office from the
 conclusion of the ensuing Annual General Meeting until the conclusion
 of the next Annual General Meeting.
 
 The Board also proposes the re-appointment of M/s. Haribhakti & Co.,
 Chartered Accountants, Mumbai as the Branch Auditors of your Companys
 Units at Jafrabad and Magdalla in Gujarat and Ratnagiri in
 Maharashtra, based on the recommendation of the Audit Committee, to
 hold office from the conclusion of the ensuing Annual General Meeting
 until the conclusion of the next Annual General Meeting. In terms of
 the provisions of the Act the Board also seeks your approval for the
 appointment of Branch Auditors in consultation with your Companys
 Statutory Auditors for any other Branch / Unit / Division of your
 Company, which may be opened / acquired / installed in future in India
 or abroad.
 
 Resolutions seeking your approval on these items are included in the
 Notice convening the Annual General Meeting.
 
 The observation made in the Auditors Report are self-explanatory and
 therefore, do not call for any further comments under Section 217(3) of
 the Act.
 
 COST AUDITORS
 
 Pursuant to the provisions of Section 233B of the Act, your Directors
 have appointed M/s. N. I. Mehta & Co., Cost Accountants, Mumbai as the
 Cost Auditor to conduct the cost audit of your Company for the
 financial year ending 31st March, 2009, subject to the approval of the
 Central Government.
 
 APPRECIATION
 
 Your Directors place on record their appreciation of the contribution
 made by employees at all levels. Your Companys growth was made
 possible by employees support, co-operation, commitment, solidarity
 and hard work.
 
 Your Directors wish to take this opportunity to express their deep
 sense of gratitude to the Central and State Governments, banks,
 financial institutions, shareholders and business associates for their
 co-operation and support and look forward to their continued support in
 future.
 
                                       For and on behalf of the Board
 
 Mumbai                                       Kumar Mangalam Birla
 22nd April, 2008                             Chairman