Directors Report Year End : Mar '10

The Directors present the Tenth Annual Report together with the
Audited Accounts of your Company for the year ended 31st March, 2010.

FINANCIAL RESULTS

(Rs. in crores)

2009-10 2008-09

Gross Turnover 7,729.13 7,160.42

Gross Profit 1,976.24 1,684.46

Less: Depreciation 388.08 323.00

Profit Before Tax 1,588.16 1,361.46

Tax Expenses 494.92 384.44

Profit after tax 1,093.24 977.02

Add: Balance brought forward from

Previous Year 2,438.40 1,598.12

Surplus available for appropriation 3,531.64 2,575.14

Appropriation

Debenture Redemption Reserve (34.83) (36.08)

General Reserve 750.00 100.00

Dividend 74.69 62.24

Corporate tax on Dividend 12.41 10.58

Balance transferred to Balance Sheet 2,729.37 2,438.40

Total 3,531.64 2,575.14

OVERVIEW AND REVIEW OF OPERATIONS

The impact of the global financial crises continued to be felt in the

financial year under review. The Indian economy witnessed challenging
times as a result of high cost of credit and fall in capital markets
that stoked the sluggishness in the economy. However, the stimulus
packages announced by the Government together with the initiatives for
boosting rural development, infrastructure and housing aided in the
revival of the economy. The cement industry also benefitted on account
of the measures adopted by the Government. This, together with some
delay in materialisation of new capacities resulted in the industry
posting healthy growth.

Against this background, your Company has produced 17.64 MMT of cement
(15.87 MMT). Effective capacity utilisation was 88% (96%) on an
expanded capacity. The aggregate sales volume at 20.21MMT (18.16 MMT)
was higher by 11%.

Your Company’s gross turnover at Rs. 7,729.13 crores was up by 8%

compared to Rs. 7,160.42 crores achieved in the previous year. Profit
after

tax stood at Rs. 1,093.24 crores (Rs. 977.02 crores) after providing
for depreciation – Rs. 388.08 crores (Rs. 323 crores) and tax – Rs.
494.92 crores (Rs. 384.44 crores). Cash profit was higher at Rs.
1,589.12 crores (Rs. 1,480.60 crores).

DIVIDEND

Your Directors recommended a dividend of Rs. 6/- per equity share

(Rs.5/- per equity share) of Rs.10/- each for the year ended 31st
March, 2010. The dividend distribution would result in a cash outgo of
Rs. 87.10 crores (including tax on dividend of Rs. 12.41 crores)
compared to Rs. 72.82 crores (including tax on dividend of Rs. 10.58
crores) paid for the year 2008-09.

SCHEME OF AMALGAMATION

During the year under review, the Board of Directors of your Company s
holding Company i.e. Grasim Industries Limited ( Grasim ) approved the
demerger of its cement business comprising of cement, ready mix
concrete, white cement and other cement related products and activities
into Samruddhi Cement Limited ( Samruddhi ), its wholly owned
subsidiary. The demerger is proposed to be undertaken pursuant to a
Scheme of Arrangement under Section 391-394 and other relevant
provisions of the Companies Act, 1956 (the Act ).

Subsequently, Samruddhi s Board of Directors submitted a proposal to

the Board of your Company for considering consolidation of the cement
business.

With a view to enhance shareholder value and create a focused entity

engaged in the cement business, the Board of Directors of your Company
have at its meeting held on 15 November, 2009 approved a Scheme of
Amalgamation ( the Scheme ) of Samruddhi with your Company pursuant to
the provisions of Sections 391 to 394 of the the Act.

Further, at separate meetings held on 19 March, 2010 under the

direction of the Hon ble Bombay High Court, the equity shareholders,
secured creditors (including debentureholders) and unsecured creditors
of your Company have also approved the Scheme with requisite majority.
Petitions have been filed by your Company and Samruddhi respectively,
in the Hon’ble Bombay High Court and the Hon’ble High Court of Gujarat
for the sanction of the Scheme. The Appointed Date of the Scheme is 1st
July, 2010 or such other date as may be determined by the Board of
Directors of your Company and Samruddhi.

Upon the effectiveness of the Scheme, shareholders of Samruddhi will

receive 4 (four) equity shares of your Company of face value Rs.10/-
each fully paid-up for every 7 (seven) equity shares of Samruddhi of
face value Rs. 5/- each fully paid-up.

The amalgamation of Samruddhi with your Company will be effective upon

receipt of the approval from the respective High Courts and the
effectiveness of the Scheme of Arrangement between Samruddhi and Grasim
as mentioned above.

Upon amalgamation, your Company will be able to derive economies of

scale and create a platform for future substantial growth with the
continuing parentage of Grasim. Your Company will have a pan India
presence and will also add to its portfolio the speciality products of
white cement and wallcare putty. The balance sheet of your Company will
swell in size as well.

CORPORATE DEVELOPMENT

With the intention of growing in the Indian Ocean rim, your Company’s
Board has approved acquisition of management control of ETA Star Cement
Company LLC, Dubai together with its operations in United Arab Emirates
(UAE), Bahrain and Bangladesh. This acquisition will be financed by
capitalisation of ‘UltraTech Cement Middle East Investments Limited’
(“UCMEIL”), your Company’s wholly-owned subsidiary in UAE.

ETA Star Cement’s manufacturing facilities include a 2.3 mtpa

clinkerisation plant and 2.1 mtpa of

cement grinding capacity in the UAE, 0.4 mtpa and 0.5 mtpa of cement
grinding capacity in Bahrain and Bangladesh respectively.

UCMEIL alongwith its local associates will acquire equity stake in the
above entities and consequently gain management control.

Your Company currently exports cement and clinker to the Middle-East.

With this acquisition, it will gain direct access to the markets in the
Middle-East and adjoining regions.

The acquisition is likely to be completed by the end of Q1FY11.

EMPLOYEE STOCK OPTION SCHEME

During the year 42,019 options vested in eligible employees of your
Company. Further, the ESOS Compensation Committee has allotted 1,200
equity shares of Rs.10/- each of your Company to an Option Grantee
pursuant to the exercise of stock options under your Company s Employee
Stock Option Scheme.

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 during the year:

- Top Exporter Award from CAPEXIL for the thirteenth consecutive year;

- Best Thermal Energy Performance for the year 2008-09 in energy

conservation and performance for Andhra Pradesh Cement Works (APCW)
from National Council for Cement and Building Materials;

- Energy efficient unit in energy conservation for APCW from

Confederation of Indian Industry;

- First prize for Energy Conservation 2008- 09 for APCW from

Non-conventional

Energy Development Corporation of Andhra Pradesh;

- First prize for mines operations and maintenance of machinery and

overall performance in the Mines Safety Week – 2009 for APCW from
Directorate General of Mines Safety;

RESEARCH AND DEVELOPMENT

Your Company s Research and Development efforts continue to be focused

on development of new products and processes, that create value for its
customers.

While meeting customer needs is at the centre of all R&D activities,

your Company is committed to sustainable development and looks for new
ways to preserve the environment and manage resources responsibly.
Towards this, your Company continues to maximise use of industrial
waste, alternative sources of fuel and chemicals and mineral evaluation
of captive limestone reserves.

HUMAN RESOURCES

Your Company continuously strives to foster a culture of high

performance. Your Management has infused a lot of rigor and intensity
in its people development processes and in honing skill sets. Its HR
processes are absolutely aligned to organisational goals.

The implementation of People Soft HRMS (Human Resource Management

System), the variable pay plan and job bands have been
institutionalised.

Ongoing learning, refreshing HR systems in line with global benchmarks,

aligning rewards and recognition with performance, have enabled your
Company sustain its reputation of a meritocratic organisation.

The Groups Corporate Human Resources function has played and continues
to play an integral role in your Company s Talent Management Processes.

CORPORATE GOVERNANCE

Your Directors reaffirm their continued commitment to good corporate

governance practices. During the year under review, your Company was in
compliance with the provisions of Clause 49 of the Listing Agreement
with the stock exchanges relating to corporate governance.

A separate section on Corporate Governance together with a certificate

from your Company s Statutory Auditors forms a part of this Annual
Report.

SUBSIDIARY COMPANIES

During the year under review, your Company incorporated a wholly-owned

subsidiary Company in UAE in the name of UltraTech Cement Middle East
Investments Limited ( UCMEIL ).

In terms of Section 212 of the Act, the Accounts together with the
Report of Directors and the Auditor s Report of your Company s
subsidiaries viz. Dakshin Cements Limited, UltraTech Cement Lanka (Pvt)
Limited and UCMEIL are appended to this Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared in accordance

with the provisions of Accounting Standards 21, 27 and other applicable
Accounting Standards issued by the Institute of Chartered Accountants
of India and the provisions of the Listing Agreement with the stock
exchanges and forms part of the Annual Report.

FINANCE

Your Company has repaid debentures amounting to Rs. 300 crores.

CRISIL has re-affirmed the AAA/Stable/P1+ rating for your Company s

long term borrowings and bank loan facilities. Your Company has
adequate liquidity and a strong balance sheet.

Your Company has not accepted any fixed deposits and, as such, no
amount of principal or interest on fixed deposit was outstanding as of
the balance sheet date.

ENERGY, TECHNOLOGY 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 Annual 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 set out
therein, 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.

DIRECTOR’S 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
Company’s financial condition and results of operations.

Your Directors confirm that:

I. in the preparation of the Annual Accounts, 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, 2010 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. Misra was re-appointed as Managing Director of your Company for

a period from 16 October, 2009 to 31st March, 2010. Mr. Misra retired
as Managing Director on 31s March, 2010. Consequently, he also stepped
off from your Company s Board with effect from the close of business
hours on that date. The Board places on record its deep appreciation
for the services rendered by Mr. Misra during his tenure as Managing
Director of your Company.

Mr. O. P. Puranmalka was appointed as an Additional Director with

effect from 16 January, 2010 to hold office till the conclusion of the
ensuing Annual General Meeting. Notice pursuant to Section 257 of the
Act has been received from a Member proposing Mr. Puranmalka for
appointment as Director of your Company.

Mr. Puranmalka has also been appointed as Whole-time Director of your

Company with effect from 1st April, 2010 on retirement of Mr. Misra.

Mr. N. J. Jhaveri, Mrs. Rajashree Birla and Mr. V. T Moorthy retire

from office by rotation and being eligible, offer themselves for
re-appointment.

The Board recommends the above appointments.

Resolutions seeking your approval on these items are included in the

Notice convening the Annual General Meeting together with a brief
resume of the Directors being appointed/re-appointed.

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. Being eligible, they 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 Auditor of your Company s
Unit s at Jafrabad and Magdalla in Gujarat and Ratnagiri in
Maharashtra, based on 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 Company s
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 Auditor s 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 provision of Section 233B of the Act, your Directors

have appointed M/s. N. I. Mehta & Co., Cost Accountants, Mumbai as the
Cost Auditors to conduct the Cost Audit of your Company for the
financial year ending 31st March, 2011, subject to the approval of the
Central Government.

APPRECIATION

Your Directors wish to take this opportunity to express their deep

sense of gratitude to the banks, financial institutions, stakeholders,
business associates, Central and State Governments for their
co-operation and support and look forward to their continued support in
future.

We very warmly thank all of our employees for their contribution to

your Company s performance. We applaud them for their superior levels
of competence, dedication and commitment to your Company.

For and on behalf of the Board

Kumar Mangalam Birla

Chairman
Mumbai 29 April, 2010